House Of Commons
Monday, 1st May, 1972
The House met at half-past Two o'clock
Prayers
[Mr. SPEAKER in the Chair]
Petition
Planning Permission (Ealing)
I have most readily agreed to a request from many hundreds of my constituents resident in Perivale in my constituency of Ealing, North, to present a Petition to Parliament to protest against planning permission granted to developers by the planning committee of Ealing Council which has contemptuously ignored a request for an investigation into the issue from myself and the Secretary of State for the Environment.
Since permission was granted, a prima facie case of misunderstanding involving British Railways, the owners of the land, and the planning department, has been established. The council tried to buy this meadow, but was frustrated by financial considerations. My constituents have suffered much anguish and frustration. The Petition shewethThat planning permission granted by Ealing Town Planning Committee to allow three warehouses and estate roads to be constructed on the meadow and virgin land upon which our homes do border, will grievously affect our lives and property, have deleterious effect on the environment of our community, blight our homes and lives, destroy much wild life and cause mental anxiety and anguish to the residents, especially the elderly and infirm in the adjoining houses, by the increase in noise and pollution from lorries and cars.
Wherefore your Petitioners pray that the House do direct the Secretary of State for the Environment to institute a public inquiry or release us of the threat to our lives and peace of mind which has been with us for seven years, by preventing this measure from being implemented.
And your Petitioners, as in duty bound, will ever pray.
To lie upon the Table
Oral Answers Toquestions
Wales
Land And Property Sales
1.
asked the Secretary of State for Wales if he will publish a list of the property and/or land sold in Wales by his Department to private persons or groups of persons, giving the price obtained in each case, and, where land sales are concerned. the acreage sold, in each year between January, 1961 and January, 1972, inclusive.
Information on sales of property and land is not assembled and it would be disproportionately costly to provide a list of transactions. It is not in any event Government practice to reveal the price involved in transactions of this nature.
Is not that a scandalous answer? Does not the right hon. and learned Gentleman realise that land is of prime interest in keeping down house prices? Should he not be aware that it is the duty of the Welsh Office to assist in any way in this direction? Is he aware that in South Wales land values are soaring astronomically and that his answer, denying assistance to local authorities in the provision of extra lard, will be received with great dismay?
The amount of land which the Welsh Office has to sell is not very great. It would be a small amount of land which would be surplus to requirements, mainly on the roads. I do not normally sell surplus land to private persons or groups of persons until other Government Departments and local authorities have been given the option to acquire it.
Dee
2.
asked the Secretary of State for Wales what is his latest estimate of the date on which a decision may be expected on the proposal for a Dee Barrage.
An announcement will be made as soon as my right hon. Friend the Secretary of State for the Environment and I have completed our study of this proposal.
Will my right hon. and learned Friend take this and every other opportunity that occurs to deny reports that are circulating that this scheme, which will bring immense benefits both to North Wales and to the North-West generally, is beginning to lose favour in Government circles?
This is a complex scheme, and it could be regarded as being of immense value to both North Wales and the Wirral, but it requires to be looked at extremely carefully because of the complexity of all the matters attached to it.
Is the right hon. and learned Gentleman not prepared to say that the Government are going to rat on this project and give priority to the Morecambe Bay scheme?
No, Sir. There is no question of the Dee proposals being sacrificed in the interests of the Morecambe Bay scheme. Both will be judged strictly on their merits. In any case, the barrage over Morecambe Bay would not improve links between the Wirral and North Wales, which is one of the purposes of the proposed Dee scheme.
7.
asked the Secretary of State for Wales if he will sanction the Central Flintshire Water Board's application for a Dee extraction scheme.
The report from the independent consultant commissioned to look into the scheme was received only two weeks ago. My right hon. Friend the Secretary of State for the Environment and I now have it under urgent consideration.
Is the Secretary of State aware that the refusal of the Government to give the go-ahead to this scheme has led to a doubling of the water rate in East Flint this year, to the great disress of elderly people on fixed incomes and young married people struggling with mortgages? Will he please shake himself out, and take urgent steps to relieve this problem in East Flint?
I am aware of the cencern felt by everyone interested in the scheme. A decision will be reached very soon.
Steel
5.
asked the Secretary of State for Wales what recent discussions he has had with the British Steel Corporation about the future of the industry in Wales; and if he will make a statement.
I am in regular close contact with the Corporation.
Does the right hon. and learned Gentleman appreciate that his right hon. Friend the Secretary of State for Trade and Industry promised a statement early in the new year about the future investment programme of BSC but that we are still waiting? Meanwhile, will he bear in mind that BSC is going ahead with the proposal to close the tube works at Newport, Monmouthshire, and has also taken a decision to take the iron ore trade from Newport Docks, which will in turn have a major effect on the Spencer Works, which is the cornerstone of the economy of the Newport area? Will he appreciate that this major works will then be at a distinct competitive disadvantage compared with Port Talbot, which is in a development area and has iron ore on the doorstep? How much longer—
Order. The hon. Gentleman has done very well so far.
As the hon. Member knows, I have been in correspondence with him on the matters he mentions. My right hon. Friend the Secretary of State for Trade and Industry will be making a statement very shortly.
Has my right hon. and learned Friend noted reports of probable massive development of the industry in Scotland? While not objecting in principle to development elsewhere, may I ask my right hon. and learned Friend to look carefully at the claim of Wales to modernisation of a similar kind?
I must ask my hon. Friend to await the statement by my right hon. Friend the Secretary of State for Trade and Industry. My hon. Friend will appreciate that the BSC investment programme for 1972–73 is a major step forward—a figure of £265 million at 1971 prices compared with £81 million in 1969–70—and that Welsh projects will account for about one-third of the Corporation's investment in 1972–73.
Does the right hon. and learned Gentleman recollect that on 16th December his hon. Friend the then Minister of Industry told the House that the report would be available shortly in the new year? Is he aware that hon. Members on this side of the House know that the report was in the hands of the Secretary of State for Trade and Industry on 7th March this year? Is publication delayed because there is a deadlock between the views of the Govern- ment and the views of BSC on the effect of entry into the European Economic Community?
The answer to the last part of the hon. Gentleman's supplementary question is "No ". As to the other part, I cannot add to what I said a moment or two ago, which is that my right hon. Friend the Secretary of State for Trade and Industry will make a statement shortly.
Fire Precautions (Holiday Resorts)
6.
asked the Secretary of State for Wales what representations he has received from representatives of the Welsh tourist industry about regulations under the Fire Precautions Act, 1971; and what reply he has sent.
I have received one letter on behalf of Llandudno hoteliers. This matter is the responsibility of my right hon. Friend the Home Secretary, and the letter has been passed to him for reply.
Is my hon. Friend aware that there is a good deal of anxiety in Welsh holiday resorts and that these fears would be much alleviated if more time were allowed for applications and if the industry were treated as an industry qualifying for free depreciation? Will he please make these points to his colleagues in the Home Office and the Treasury?
I note what my hon. Friend says, and I am more than prepared to pass on his comments to my right hon. Friends.
Housing Land (Prices)
8.
asked the Secretary of State for Wales whether he will institute a survey into land prices for housing development in Wales; and whether he will make a statement.
19.
asked the Secretary of State for Wales what estimate he has made of the increase in building land prices in South Wales in the period 31st March, 1970, to 31st March, 1972; and what proportion of the increased cost of building a house in South Wales is attributable to the increase in the price of building land.
Information on which to base a reliable estimate of increases in land prices for a sub-region is not available. I am considering whether it is practicable to improve our information, but I am very doubtful of the reliability or usefulness of figures purporting to show changes in land prices within a limited area.
Does not the Secretary of State care about the fact that land prices have been soaring in most parts of South Wales in the last year and a half? Does he not realise that both local authorities and private housebuilders have been rooked by the land hoarders and the land sharks that we have in Wales, as elsewhere? Is he aware that the price of land in South-East Wales has risen from about £5,000 to £15,000 an acre for housing, and that this rise is inevitably passed on in increased housing costs? Does not the right hon. and learned Gentleman intend to do more than just say that he will think about it? Will he not get on and try to do something about controlling land prices?
I certainly care about the increase in prices. There is no evidence, in fact, that the price of building land offered for sale has markedly risen for Wales as a whole—[Interruption.]—for Wales as a whole, in the last two years, but undoubtedly prices have risen sharply in certain areas, particularly, as a result of demand having been stimulated, in South-East Glamorgan and Cardiff. To help meet this situation, I am applying, as appropriate to Wales, the major measures announced last week by my right hon. Friend the Secretary of State for the Environment.
Is it not scandalous that the right hon. and learned Gentleman should reply that he cannot say that land price information is available? Is he further aware that the increase in land prices in the Swansea area is scandalous, and should be stopped? Is he aware that registration fees are being taken from my constituents at Ynysforgan, the date agreed and the price determined but that the house is not forthcoming at that price? Is he further aware that, in a case about which I could furnish him information, a deposit of £420 was taken in August last and that last week the prospective purchaser was told that he could not now have the house? Is he aware that land prices are being used as an excuse for this practice, and that interest-free loans are being taken from people? Should not this scandalous practice be stopped?
The hon. Gentleman asked me whether it was not scandalous that I could not give figures for a particular area or for Wales as a whole. Regional figures of changes from year to year are of limited usefulness, and, indeed, could be positively misleading. They must be based on actual sales, and the amount and quality of land sold in a particular area is bound to vary from year to year. I accept that there is a problem of land prices, in particular prices in Cardiff and South-East Glamorgan, but those cannot be put together and averaged to provide a meaningful figure for the whole of Wales. We recognise that there is a land problem in those areas and are adopting policies to solve it, but misleading figures would not help us to do that.
Has my right hon. and learned Friend noted that in numerous cases in South Wales, as elsewhere, houses which have just been purchased are almost immediately resold by the purchasers at a greatly enhanced figure, which suggests that the real problem is the insatiable demand for houses, backed by the enormous amount of mortgage money available?
My right hon. Friend the Secretary of State for the Environment explained the position in the debate last Thursday. There has been a stimulation of demand recently, and therefore an increased demand on available building land.
Is the Secretary of State aware that there will be surprise and disappointment in Wales that he does not show a greater sense of urgency in this matter? Land prices are galloping up all over Wales and I am very surprised that the right hon. and learned Gentleman has been unable to find the evidence of it. If he paid another visit to the Principality I am sure that local authorities would provide him with the evidence.
Let me first say how pleased I am to see the right hon. Gentleman back in his place, particularly after his recent bereavement.
The right hon. Gentleman asked whether I should not have a greater sense of urgency. I suggest that what I have told the House—that I am applying as appropriate to Wales the major measures which were announced last week by my right hon. Friend the Secretary of State for the Environment—indicates that I realise that there is a sense of urgency in the matter.On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the right hon. and learned Gentleman's replies, I beg to give notice that I shall seek to raise the matter on the Adjournment.
Industrial Development(Departmental Staff)
9.
asked the Secretary of State for Wales how many officials in his Department are engaged in securing additional industrial development in Wales; and how many additional officials will be required in his Department as a consequence of the proposals in Command Paper No. 4942, Industrial and Regional Development."
A wide range of the work of my Department, involving a large number of my officials, is directly or indirectly related to making Wales more attractive to industrial developers. The office will continue to be fully staffed to carry out the duties laid upon it.
Was not that a classic, fluffy parliamentary answer? Does not the Secretary of State recall that it is over a month since this very important White Paper was published, which at least gave the first breath of hope to the people of Wales since the present Government took office? Is it not time the Government girded up their loins and tried to introduce these improvements in regional policy, because there is great confusion and anxiety among industrial developers and it is costing Wales jobs?
I am glad that the hon. Gentleman welcomes measures which were introduced. This will require legislation, as he knows, and it is not for me to say when legislation will be introduced.
School Leavers
10.
asked the Secretary of State for Wales what is his estimate of the number of pupils in Wales due to be leaving school in July but for the raising of the school leaving age.
None, because pupils whose fifteenth birthday falls before 1st September, 1972, will not be affected.
When the time does arise, does not the Secretary of State realise that the numbers will be very low, because increasing numbers are staying on as there are no jobs for them? Would he consider paying these pupils a grant while at school, because they will be losing unemployment pay to which they would have been entitled?
I answered the hon. Gentleman's Question, and the answer was "None."
Civil Aviation (Facilities)
11.
asked the Secretary of State for Wales if he will request the Welsh Economic Council to make a study of the part which the development of flying facilities could make to the growth of rural areas in Wales.
I understand that the Council is already looking at civil aviation facilities in Wales and will shortly be considering a report on this subject by the former Welsh Advisory Committee for Civil Aviation.
Will the Secretary of State request the Council to pay particular attention to mid-Wales, which is not at present served by any air facilities? The establishment of even a small air strip could play a very important role in the development of this sub-region.
I am sure that the Welsh Council will pay attention to what the hon. Gentleman said. As he knows, the Council has recently commissioned a survey of public transport in Wales, for which I have made a research grant. There is no reason why this should not include the role of civil aviation in the transport system. There is no reason why the rural aspect should not be considered.
Would the Secretary of State consider making bridging finance available for the Swansea airport? I am sure he appreciates that in the days of multi-branch and multi-national firms, an airport at a place such as Swansea would be of great attraction to firms looking to South-West Wales.
Yes, I appreciate that one can attach some importance to the Swansea airport. As the hon. Gentleman knows, the recently established Civil Aviation Authority is responsible for securing the general development of civil air transport in the United Kingdom, and I shall continue to put to that Authority the claims of all the aerodromes in Wales.
Planning Conferences (Welsh Officerepresentation)
12.
asked the Secretary of State for Wales what representation the Welsh Office sends to planning conferences in Wales.
This depends on the nature of the conference.
Does not the hon. Gentleman realise that the failure of the Welsh Office to respond to an invitation from the Town Planning Institute to attend a recent regional planning conference caused the gravest disappointment to members of that Institute—as the hon. Member for Cardiff, North (Mr. Michael Roberts) will no doubt confirm—and has inculcated the impression that the Welsh Office just does not care about regional planning? That impression is reinforced when one realises the miserable economic record of the present Government in Wales.
I cannot agree with any of the hon. Gentleman's comments. The chief planner from the Welsh Office was invited to attend this conference. He explained to the chairman of the branch that, as a civil servant, he could not accept the invitation because that conference seemed likely to develop along party political lines. The chairman of the branch said that he quite understood the reasons for this decision.
Remploy Factories (Minister'svisit)
14.
asked the Secretary of State for Wales when he last visited a Remploy factory in Wales.
In October, 1970, when I had the pleasure of opening the Treforest factory.
Would not the Secretary of State consider visiting these factories again? Is he aware that the Remploy workers in Wales are feeling extremely disgruntled at present, that they feel that they are being treated as second-class citizens and are extremely dissatisfied with the miserable wage offer recently made to them, and that their conditions of service are such as to take away any form of confidence they have? Will the right hon. and learned Gentleman make a special effort to visit Remploy factories in Wales to talk to the workers, and will he consult his Cabinet colleagues to ensure that our disabled workers get a fair deal?
Everyone is anxious to see that our disabled workers have a fair deal. I assure the hon. Gentleman that my interest in Remploy has existed for a considerable time, ever since I was Parliamentary Secretary to the Ministry of Labour. I am aware, also, of a dispute involving some Remploy workers in South Wales. but it would not be useful for me to comment on that.
Would the Secretary of State consider changing the policy for Remploy, which requires that they should be profitable organisations, because many disabled people are unable to be accommodated there as managers are afraid that production would be slowed down?
The question of any change in policy for Remploy is not for me but for the Department of Employment.
Regional Policies
15.
asked the Secretary of State for Wales if he will consider seeking to initiate a study by representatives of the local authorities and the Welsh Council to make proposals for a new regional strategy for Wales.
I see no need at present for some new strategy. I believe that the policies we are following are comprehensive, sound and appropriate to meet the needs of Wales but I shall not hesitate to commission a further study if I think it is necessary.
Would my right hon. and learned Friend agree that regional development in England is likely to be encouraged and helped by the regional studies now being undertaken by his right hon. Friend in the Midlands and in the North-West? Would he also agree that at least "Wales: The Way Ahead "could be brought up to date? Would he reconsider his answer on this matter?
Our strategy, which adopts many parts of "Wales: The Way Ahead ", is continually being up-dated and adjusted to suit changing circumstances. As I said, I shall not hesitate to commission a further study if I think it necessary, but I am not persuaded that this is needed at present.
Will the Secretary of State indicate when unemployment in Wales will next come to the level of June, 1970?
I am sure that the hon. Gentleman must know by now that one never forecasts levels of employment or unemployment.
I thank the Secretary of State for his personal remarks, which I much appreciate. Is he aware that the complacent note on which he addressed the House in reply to his hon. Friend will not be shared by either his hon. Friends or my hon. Friends? Is he aware that Wales has never been in a bigger economic mess than she is today and that there is need for urgent action?
The right hon. Gentleman knows that I am pursuing with added vigour, and certainly greater expenditure, many of the plans which were deferred, which were set out in "Wales: The Way Ahead ". If he considers that any of these are not worth it, perhaps he would let me know. We are proceeding on matters of transport, the dereliction of land and house improvement at a level which has never previously been known.
21.
asked the Secretary of State for Wales whether he has studied the report of the conference held in Venice, details of which have been supplied to him, at which representatives of the Common Market countries and the applicant States discussed regional development policies; and what conclusions he has drawn for the future of development policies in Wales.
The official report is not yet available. A wide range of topics was, I understand, covered and I will certainly give careful attention to any implications for Wales.
Does my right hon. and learned Friend agree that the reported proceedings of this conference bear out what has been said by a great many of us all along, namely, that entry into the Common Market will result in the faster expansion of regional development throughout Europe? Does he further agree that Flintshire should be glad that a Conservative Government are in power in Britain, first because when the Labour Party were in office Flintshire had no assisted area status and would not have been eligible for the increased aid and, second, because under Labour the regions would not have had the expanded regional benefits that will come from membership of the EEC?
I was in Flintshire about a fortnight ago, as my hon. Friend knows. It was clear that the change of status is very much welcomed there. I understand that at the Venice conference there was a useful and heartening discussion on the subject of regional policy.
Who were the Welsh representatives at this conference? Does the right hon. and learned Gentleman agree that something would have been lacking without Welsh representations? What, in the right hon. and learned Gentleman's view, would be our development policies in the unlikely event of our joining the Common Market? Would such policies produce jobs for the 54,000 unemployed in Wales, for whom there are only 6,000 or so vacancies notified? In other words, what, in his view, is in it for Wales in terms of regional development if we join the EEC?
The conference was broadly of an industrial nature, as the hon. Gentleman knows, and for that reason representatives of the Department of Trade and Industry were present, but no Welsh Office officials were present. It was clear from the discussion that the situation in Britain was well understood. Those who attended the conference came away feeling that it would be of great benefit to Britain, from an industrial point of view, if we were to become full members of the EEC.
Employment And The Economy
17.
asked the Secretary of State for Wales what further steps he is taking to implement the recommendations of the Welsh Council's Report, "Wales: Employment and the Economy."
I will keep the report under review. A very substantial part of it has already been implemented through the Government's economic measures.
Is the right hon. and learned Gentleman aware that there is growing concern in South Wales now at the recent trend whereby long-established factories in South Wales are closing and withdrawing to places in non-development areas? One such closure is taking place at present in my constituency, and another is taking place in the constituency of my hon. Friend the Member for Pontypridd (Mr. John). What does the right hon. and learned Gentleman propose to do to rectify this position very quickly, before the rot sets in?
The question asked was about the Council's recommendations. To a very large extent, the recommendations of the Welsh Council were covered by the massive measures announced in the recent Budget and in our White Paper on regional policy, and these measures have been warmly welcomed by the Welsh Council.
Can my right hon. and learned Friend think of a single suggestion emanating from the other side of the House which would prompt firms to set up profitable enterprises in Wales and thus to improve employment there?
Unless right hon. and hon. Members opposite radically change the policies they were pursuing when in Government, I cannot.
Is the right hon. and learned Gentleman so ignorant of the statistics that he does not know that firms were coming in at a massive rate under the so-called unprofitable Labour Government but are not coming in at all now? Will he stop being complacent about the problem of Welsh unemployment? Is he now pretending that the answer to unemployment is what his hon. Friend the Member for Conway (Mr. Wyn Roberts) said last week, namely that one million unemployed is not such a grim prospect after all?
The hon. Gentleman is not correct. There has been a considerable upsurge of interest in Wales in the last few months.
Swansea General Hospital
18.
asked the Secretary of State for Wales what further consultations he plans to hold before reaching his decision on the future of the old Swansea General Hospital.
The Welsh Hospital Board has consulted local interests on its proposals for the future of geriatric services in the Swansea area, in which it was not proposed to re-open Swansea General Hospital. I have no present plans for further consultations, and I now await the Board's recommendations.
Has the Secretary of State seen the petition which I sent him recently? Does he realise the overwhelming support that exists in Swansea among all sections of the community for the partial reopening of the old Swansea General Hospital? Is he aware of the feeling that a Government who could give away £1,200 million should be able to devote a small part of that sum to improving the health services?
The petition to which the hon. Gentleman referred has been received. The hon. Gentleman will be aware, concerning the second part of his supplementary question, of the great increase in expenditure on the health services in Wales in the last two years. The answer to the first part is that I am certainly aware of the strong local feeling on this subject. Not many months ago I saw a deputation from Swansea, and I assure the hon. Gentleman that I realise the feeling in the area.
Newport (Minister's Visit)
22.
asked the Secretary of State for Wales if he will pay an official visit to Newport, Monmouthshire.
When a convenient opportunity arises I shall be very pleased to visit Newport again.
Will the right hon. and learned Gentleman come to this part of Wales and tell the electors about the "Better Tomorrow" which his party promised two years ago? Does he appreciate that that will be of interest to the 3,000 men who are unemployed, to the 1,500 others who are to be made redundant and to the dockers who are finding the bulk of the local trade being taken away, this at a time when the area is faced with great competition from the Bristol West Dock which the Government recently authorised? Does he appreciate that his fairy tale has an unhappy ending because by Government decree the County Borough of Newport is being wiped out?
As the hon. Gentleman knows, when I go to Newport I do not do so to make political speeches to the electors. I go there to act in my capacity as Secretary of State for Wales. Some of the remarks which the hon. Gentleman has made recently about Newport have not helped the situation. For example, for him to describe, presumably for political motives, Newport as about to become a ghost town is not only untrue but does a great disservice to the fortunes of the electors he represents.
Teddington Factory (Merthyrtydfil)
23.
asked the Secretary of State for Wales what efforts he has made to find a new tenant for the Teddington factory, Merthyr Tydfil; and whether he will make a statement.
I have satisfied myself that the factory has been and will continue to be brought to the attention of industrialists seeking premises in Wales. I understand that since the premises became available they have been visited by five firms seeking additional production space.
The right hon. and learned Gentleman may have satisfied himself, but we in Merthyr Tydfil are not satisfied because this factory remains empty. Does he realise that hundreds of people who worked in this factory for 20 years or more have been thrown on the scrap heap and have remained unemployed or have had to take jobs which require far less skill? Has the right hon. and learned Gentleman taken any new initiatives to find a new tenant for this fine factory which housed one of Merthyr Tydfil's stable industries?
I agree with the hon. Gentleman that this is a fine factory. I am satisfied that the Department of Trade and Industry is doing its best to find a new occupant. It is, of course, primarily a matter for that Department. As the hon. Gentleman will be aware, my responsibility is one of oversight, and I have been and am discharging that responsibility.
Employment Opportunities (Youngpeople)
24.
asked the Secretary of State for Wales what efforts he is making to ensure an expansion of industrial employment opportunities for young people in Wales.
The major measures already taken or announced by the Government to stimulate general economic growth will help to provide additional employment opportunities for our young people.
Does the right hon. and learned Gentleman appreciate that, having heard all this before, we want to hear something different? Does he recognise the chronic unemployment situation which is affecting the whole of the working population, in no sector more than among young people? Does he appreciate that it is time that he did more than talk about the problem? Will he take emergency action and institute an emergency youth employment premium to encourage the employment of young people in Wales?
The hon. Gentleman will be glad to know that the number of young people in Wales placed in employment is now rising again. Employment opportunities for young people cannot, of course, be considered in isolation. What matters most of all is the state of the national economy. We have taken massive steps to increase the rate of growth and to sustain that increase.
The Secretary of State keeps talking about "massive steps" and "massive measures ". Does he understand that since his coming to office only five new advance factories have been established in Wales, while one factory after another has remained empty, not only in the remote areas but at first-class sites, such as the Gramic Engineering factory at Port Talbot? When can we expect some fruits from the Government's recent change of heart?
The interest which is being shown by industrialists in Wales has considerably increased lately, and particularly since my right hon. Friend's recently introduced measures.
Derelict Land
25.
asked the Secretary of State for Wales what is the present position on derelict land clearance in Wales; whether he is satisfied with progress; and if he will make a statement.
The present situation is satisfactory and future prospects are encouraging. Since its inception, the Welsh Office Derelict Land Unit has approved over 150 schemes covering nearly 4,000 acres for reclamation. Gross cost of these works is £7·5 million and grant of £5·8 million has been authorised. Additionally, Welsh local authorities are firmly committed to an ambitious forward programme.
Is my hon. Friend satisfied that this rate of progress can be maintained? How does our record compare with that of the Labour Government?
The record of the previous Administration virtually started in 1967, with the starting of the Derelict Land Unit. Since then the amount of land for reclamation has increased year by year. I assure my hon. Friend that the future picture is very good indeed.
Is the hon. Gentleman aware that we welcome the way in which the expansion of the work of the Derelict Land Unit is being undertaken but that until the last Administration there had been no effort at all at clearing derelict land in Wales and that the setting up of the unit is something of which we are particularly proud?
I have never sought to deny the fact that the setting up of the unit was a wise step. We have carried it on and the House will accept that we have improved upon what it had done.
Government Policy(Ministerial Broadcast)
26.
asked the Secretary of State for Wales if he will make an early Ministerial broadcast on the problems facing Wales in 1972 and the Government's plans for dealing with them.
I have no plans to make a Ministerial broadcast as such, but I have accepted an invitation to be interviewed on BBC Wales TV next month, when no doubt there will be occasion to discuss Government policies in Wales.
Is the right hon. and learned Gentleman aware that we are not entirely surprised that he has not an incandescent enthusiasm for such an exercise? Does not he appreciate that the problems of Wales are far greater in magnitude than he seems to indicate, and that the number of new jobs necessary is more by many tens of thousands than at the time of publication of "Wales: The Way Ahead "? Is he prepared to use every energy and artifice in Cabinet to get long-term contracts placed by Government Departments for firms in those unattractive areas of Wales which would not otherwise get development by way of private enterprise?
The last part of that supplementary question was a little different from the Question which the hon. Gentleman asked about a Ministerial broadcast. In the course of the broadcast I hope to be able to point out the wide range of measures already taken by the Government which undoubtedly will be making Wales a far better place to live in.
Will the right hon. and learned Gentleman devote a few minutes of the broadcast to telling the people of Wales why the Government first abandoned investment grants and then reintroduced them 18 months later, in the meantime having caused thousands of people in Wales to be needlessly unemployed or needlessly redundant?
It is clear that the hon. Gentleman has never understood the measures which have been taken by the Government. The grants they introduced recently are confined to the development areas. The grants which were given by the last Government, in the absence of any free depreciation, were of general application. In fact, far more money was spent in grants outside the development areas than within them. What we have done is to have free depreciation, tax allowances and grants which are linked not only to the development areas but also to profitability, with a bigger differential than ever before.
Chronically Sick And Disabledpersons Act
27.
asked the Secretary of State for Wales whether he will issue a circular to local authorities in Wales reminding them of their responsibilities under the Chronically Sick and Disabled Persons Act.
No, Sir. General guidance has already been issued to local authorities and they are fully aware of their responsibilities.
Is the hon. Gentleman aware that many groups of disabled persons throughout Wales feel that the Act is not being implemented, that some local authorities feel that they are unable to finance its implementation, and that some further guidance is necessary if our disabled are to receive the advantages which they believed the Act was intended to give them?
I understand the hon. Gentleman's concern. General guidance was provided to local authorities in August, 1970, and information about the performance of local authorities in implementing Section I has been requested by 1st May, 1972.
Government Offices(Special Development Areas)
28.
asked the Secretary of State for Wales what consideration he is giving to the dispersal of Government offices into the special development areas in Wales.
The needs of special development areas in Wales are carefully considered.
Will the right hon. and learned Gentleman give special consideration to the valley communities for the dispersal, for example, of the smaller Government offices, particularly where central sites are available, as is the case in my constituency?
Yes, Sir. Special consideration is given to the dispersal of smaller Government offices. I shall be writing shortly to the hon. Gentleman about the question of the value added tax office which he raised with me and which it has been decided should go to Merthyr. Necessarily, major office dispersal is more likely to be made to large towns and cities, but experience shows that such dispersals provide significant employment opportunities over wide areas, including special development areas.
So far we have seen no new dispersal of Government offices throughout Wales since the right hon. and learned Gentleman came to power. Is the right hon. and learned Gentleman aware that he put the position regarding the dispersal of Ministry of Defence personnel to Cardiff inaccurately in the last debate, when he said that it was not a question whether they would go but to what part they would go? Will he make the correction in a statement to the House as he made it to me in a private letter?
Work is going ahead to provide accommodation for some 1,500 civil servants dispersed to Cardiff, mainly at Mainly Barracks. The decision about which Department will provide the staff has yet to be made. I am glad to make the position clear. In reply to the first part of the hon. Gentleman's supplementary question, I remind him that a review is taking place now and that a decision will be announced in due course about the dispersal to various parts of Britain of Government offices.
Is the right hon. and learned Gentleman aware that 11,000 jobs in Wales were to be created by the decision taken by the last Government for the dispersal of Government offices? Can he tell us how many jobs have actually been created by decisions taken in the almost two years since he undertook responsibility?
The right hon. Gentleman knows that decisions taken by one Government frequently take some time before they take effect. I have told the House that a review is taking place at the moment of further dispersal of Government offices and that an announcement will be made in due course.
Welsh Economy
29.
asked the Secretary of State for Wales what representations he has received on the prospects for the Welsh economy since the Budget; and if he will make a statement.
The Welsh Council and others have told me that they welcome the measures announced in the Budget and in the White Paper "Industrial and Regional Development ".
Has the right hon. and learned Gentleman read the outrageous article in last Wednesday's Western Mail by his own Parliamentary Private Secretary and headed
a proposition which would have made even Dr. Goebbels blush? Does the right hon. and learned Gentleman agree with his hon. Friend? Was the article written in the light of a Government brief presented to the hon. Gentleman? Is it not an attempt to prepare the people of Wales for the fact that next winter we shall have an appallingly high level of unemployment—just as we had this winter?" Million jobless figure is not as grim as it looks ",
The article was not only excellent but extremely readable and was much appreciated by people who wish to see in detail what these figures represent. For instance, the hon. Gentleman has referred to recent unemployment figures. The April figure was significantly distorted by the presence of 2,500 students who were temporarily on the unemployment register.
Following that article, did the right hon. and learned Gentleman read the magnificent letter written by the hon. Member for Bedwellty (Mr. Kinnock), which appeared on Friday morning and which agreed that there was a need for deeper analysis of the unemployment problem but cautioned that the Government should take into account the vast army of unemployed who do not now appear on the register? When is he going to do something about this?
That goes to show how extremely interesting this matter is. One need to go into the figures to find out where the truth lies. I have not read the hon. Gentleman's letter because I was in North Wales on Friday and did not get a copy a the Western Mail. I will make sure that I get one when I return to my office.
Solicitors (Complaints)
30.
asked the Attorney-General if he will introduce legislation to enable him to control the way in which the Law Society considers complaints of misconduct against solicitors.
No, Sir. I have no reason so suppose that the Law Society does not consider complaints in the right way.
Is my right hon. and learned Friend aware that a complaint made privately to the Law Society alleging misconduct by a firm of solicitors was recently rejected by the Society with a threat of defamation proceedings if it were not unconditionally withdrawn and that this appears to be the standard practice? How can the public be protected against dishonest solicitors if the Law Society joins in threats designed to discourage the pursuit of such complaints?
I am aware of this correspondence, some of which my hon. Friend sent to me. It is not correct to suggest that the Law Society made a threat. An allegation had been made against a firm of solicitors. They had given their explanation and they resented the allegation of misconduct which was made against them. It was they who made the reference to defamation, and the Law Society, in repeating the letter, repeated that word to the gentleman.
Is the right hon. and learned Gentleman aware that many of us are highly dissatisfied with the manner in which complaints against solicitors are dealt with by the Law Society? They are judge and jury in their own cause. This is not fair to the majority of solicitors who operate absolutely impeccably. Will the Attorney-General look at this matter, because I am sure that many hon. Members are able to give instances of grave dissatisfaction?
I cannot agree that the Law Society does not perform meticulously the duty which is imposed upon it. The Professional Purposes Committee is the appropriate Committee established to examine these matters. On a complaint against a solicitor, the Law Society rightly discovers what the solicitor's answer is, and if it is unsatisfactory it is sent to the Professional Purposes Committee. In fact, the Society is at present considering whether lay membership should be included on that Committee.
Solicitors' Conveyancingcharges
31.
asked the Attorney-General what progress has been made in the consultations by Her Majesty's Government concerning proposals relating to solicitors' conveyancing charges.
As a result of his discussions with the Law Society, my noble Friend the Lord Chancellor hopes that an order may be made in the near future which will have the effect of abolishing scale charges and minimum charges. This would mean that all conveyancing charges would be governed by the principle of what is fair and reasonable in the circumstances of the particular case. If the client were dissatisfied with a proposed charge, he would be able to obtain a certificate from the Law Society as to what a fair and reasonable charge would be, without prejudice to his right to have his solicitor's bill taxed by the court.
Is the Attorney-General aware that that statement, as far as it goes, is very welcome to those hon. Members on this side of the House who have been pressing the Government to take action on this important ingredient in the cost of buying a house? Will he accept, however, that we shall not be satisfied until the Government, having gone this far, fully implement the report of the National Board for Prices and Incomes?
As the answer indicated, the abolition of these scale charges is an important matter. I should have thought that it would be generally accepted by hon. Members on both sides of the House. We hope that the proposal will have the effect which we all want, that fees and costs involved in the purchase of a house should be proper, fair and reasonable.
Elgar Birthplace Trust
32.
asked the Attorney-General, having regard to the protracted police inquiries following submission of the report by Mr. Settle, QC, to the Charity Commissioners on the affairs of the Elgar Birthplace Trust, whether he will now make a statement.
After taking counsel's advice, the Director of Public Prosecutions has decided that there is no evidence which would justify criminal proceedings. I agree with that decision.
While thanking my right hon. and learned Friend for bringing this matter to a decision after all these years, may I ask whether he will give advice and guidance on the position of the trustees, including myself, who are faced with these defalcations over many years, and evidently have no redress in a civil sense unless my right hon. and learned Friend is prepared to publish the report by Mr. Settle. QC, referred to in the Question?
I am, possibly fortunately, precluded by the terms of my appointment from giving advice to anybody save the Crown. The decision which I have announced is the decision of the Director of Public Prosecutions, but, as my hon. Friend appreciates, it is open to the trustees to pursue their civil remedies if so advised.
On a point of order, Mr. Speaker. In view of that reply, I wish to give notice that I shall raise the matter on the Adjournment at the earliest opportunity.
Queen's Counsel (Youngsolicitors Group Report)
33.
asked the Attorney-General whether he will, in view of the report of the Young Solicitors Group of the Law Society entitled, "Tomorrow's Lawyers ", a copy of which has been sent to him, take whatever action is necessary to recommend the abolition of Queen's Counsel; and to what extent he estimates this would reduce legal costs.
I am not persuaded that the abolition of Queen's Counsel would lead to any reduction of costs. Most of the recommendations of the document are questions for the legal profession itself.
One would not be surprised at that reply. Is the right hon. and learned Gentleman aware that even some QCs in the House have expressed the view that this suggestion might well be adopted? Could lie give a good reason for not accepting the view of this progressive Young Solicitors Group of the Law Society?
This is just one of the proposals in the document entitled "Tomorrow's Lawyers ". In fact, the practice of engaging leading practitioners with the rank of Queen's Counsel in litigation and handling cases in court has worked satisfactorily. I suggest that it is a system which many other countries would like to, and perhaps may, follow.
Legal Costs
34.
asked the Attorney-General whether, in view of the new facts. figures and detailed information sent to him by the hon. Member for West Ham, North, giving evidence of the increasing costs connected with obtaining justice under the present legal system, he will now take action to reduce all legal costs connected with the British judicial system.
The hon. Member sent me a recent article in the Press which compares figures of increased cost of litigation in the eleven years since 1960. The increases reported were commensurate with the rise in the cost of living. Nevertheless, my noble Friend the Lord Chancellor loses no opportunity of saving litigation costs where he can do so by simplifying procedure.
The Attorney-General is right. This gave a whole host of figures and pointed out that these QCs and lawyers appear virtually to be able to get any fees they want without any question of the Government telling them that it is inflationary and trying to refer the matter to the Industrial Relations Court, as happens with the poor railwaymen. It appears that the poor railwaymen getting a few shillings a week more—
Order. Is this a Question?
Yes, Mr. Speaker. I am asking whether the Attorney-General is aware that when it comes to the poor railwaymen getting a few shillings a week more, the Government hastily refer the matter to the Industrial Relations Court. But no action seems to be taken with these lawyers who get thousands of pounds.
The article shows that in 1960 counsel's fees in specified litigation was 27 guineas, whereas in 1971 those fees had risen to 35 guineas. I do not know whether the hon. Gentleman would like to compare that with, for instance, the increase in parliamentary salaries.
We do not get refreshers.
Some of us might say. "Thank Heaven for that."
Animals (Escape Fromabattoirs)
35.
asked the Attorney-General whether, in the light of the representations made by the lion. Member for Nuneaton, he will institute an inquiry into the state of the law relating to responsibility for the escape of animals from abattoirs and for damage and injury sustained by members of the public caused by such animals.
No, Sir. The law relating to liability for damage done by animals was examined by the Law Commission whose recommendations, published in 1967, were implemented in the Animals Act last year.
Liability for harm resulting from escape from an abattoir must be covered by the general rules.Does not the Attorney-General understand that in many cases it is difficult to prove negligence on the part of some of the parties involved? Consequently some members of the public who may have suffered may go entirely without compensation. Will the right hon. and learned Gentleman agree to look at this again, because it is a very important question?
I appreciate the point which the hon. Gentleman is raising. I know of the case on which he has had correspondence with my noble Friend. In that case, the difficulty is one of proof rather than of any defect in the law. This whole matter was discussed during the consideration of the Animals Bill last year, and I cannot hold out to the hon. Gentleman any proposals to alter that law.
Has there been any improvement in the provision of reasonable care for the custody of animals since the passing of the Animals Act, which was intended to make things much safer for the public?
I can only say that I hope there has been. I have no reason to suppose that there has not been.
Crown Courts,Staffordshire (Delays)
36.
asked the Attorney-General whether he will take steps to reduce the delays between committal and trial at Crown courts in Staffordshire.
My noble Friend is not aware of the existence of any general delay; 84 per cent. of the cases tried at Crown court centres in Staffordshire are heard within eight weeks of committal. The Circuit Administrator will always consider special cases, and my noble Friend will arrange where necessary hearings before additional judges.
Is the Attorney-General aware that it has taken several months to bring to trial one case of which I have been made aware? As it involves a teacher who has been suspended while awaiting trial, this is a very serious matter.
I appreciate that this is always a very serious matter for the individual concerned. I understand from inquiries I have made that the summons in the case was issued in January, 1972, the man was committed in March, and the trial is to take place in May.
Is the right hon. and learned Gentleman aware that a delay of eight weeks is not bad in the London area? What progress is being made to reduce the large delays in the London area?
I agree with the right lion. and learned Gentleman that the delay in this case is not too bad compared with the tremendous difficulties in London, where the pressure on the courts is immense. My noble Friend the Lord Chancellor has made provision for extra courts which have been sitting in different places which have been adapted in London, so that cases can come on for trial, and also for a large increase in the number of the judiciary. This matter very much concerns my noble Friend.
Questions To Ministers
On a point of order. As the Second Church Estates Commissioner rarely has a chance of giving voice in the House, and since Question No. 38 which I have tabled to him is so near and yet so far, is it possible to set a rare precedent and give him and me a chance of having" a bash "?
I have received no request for "a bash ".
Northern Ireland
I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
As a Member from Northern Ireland, I regret that the only way that I am able to raise a matter of urgent importance is by asking for leave to move the Adjournment of the House. This is completely unsatisfactory because these matters could have been raised in Stormont when it was carrying out its work. It is impossible for a back-bench Member to raise these matters in any other way, even in a week when Questions are to be answered by the Secretary of State, because the Order Paper is so loaded with Questions that there will be no chance of a Question on this matter being reached. The matter is specific. Cathal Goulding entered the city of Londonderry where he paraded and inspected members of the IRA. He delivered a lecture on the IRA in the 1940s and then addressed a publicly advertised meeting. I emphasise that the meeting was publicly advertised by circular and by posters exhibited round the area in which the meeting was held. It is interesting to note that while the chief of staff of the official IRA was in Northern Ireland addressing the meeting attacks were being made by members of his organisation on innocent civilians and members of Her Majesty's Forces. It is important to note that the Government have declared that it is their intention to disentangle the Roman Catholic population from the IRA stranglehold. How can the Government pursue such a policy if they are prepared, by their actions, to allow the IRA to show that it is on top of the situation? Surely the only way by which the IRA's hold on any section of the population can be disentangled is by ensuring that it is vigorously pursued and defeated in its terrorist objects. The matter is urgent because there is a growing sense of frustration among the loyalist people of the community who see the laws of the country flouted and no attempt evidently made by the security forces to prevent it. For these reasons, and because I have no other way of raising the matter, I beg to ask leave to move the Adjournment of the House under Standing Order No. 9." the success yesterday of Cathal Goulding. chief of staff of the official IRA, in breaching the security network on the border of Northern Ireland and entering Londonderry and addressing a publicly advertised meeting there, and the failure of the security forces to take any action whatsoever ".
I am grateful to the hon. Member for having given me notice that he would make this application. I do not intend to be drawn into the question, which I think was implicit in his preliminary remarks, about what might or might not be in order in supplementary questions asked next Thursday. I have simply a procedural decision to take on whether there should be an emergency debate on this matter, or whether it should be pursued in other ways open to the hon. Gentleman. I am afraid that I cannot accept his application.
On a point of order, Mr. Speaker. I have no wish to question what you have just said, and I shall never question any ruling of yours. Sir. But when applications under Standing Order No. 9 or to ask Private Notice Questions are made on such matters as this, is full regard given to the fact that they can no longer be raised by Northern Ireland Members at Stormont?
This is a matter for the Chair; the Chair must take responsibility for it. Obviously, one takes into account the fact that the Secretary of State for Northern Ireland is to answer Questions this week. However, the Chair considers all the relevant circumstances.
Business Of The House
Ordered,
That, at this day's Sitting, paragraph (6) of Standing Order No. 6 (Precedence of Government Business) and the Order relating to Business of the House made on 3rd November shall have effect with the substitution of Ten o'clock for Seven o'clock.—[ Mr. Pym.]
Vehicle And General Insurance Company Limited(Tribunal Report)
3.37 p.m.
I beg to move,
The Motion appears to be very desiccated, but it concerns many human beings and many human problems. It concerns members of the public who have already lost over £20 million, mostly in small sums, as policy holders, shareholders or perhaps even as victims of accidents. It concerns civil servants, who are human beings, contrary to the belief of some people: if we prick them, they bleed. It concerns also the three human beings who constituted the distinguished tribunal whose report we are discussing. The report is clear, readable and persuasive. The tribunal did an immense amount of work for no reward. It spent day after laborious day and night after sleepless night in dealing with this intractable problem. Two main issues emerge. First, what is to be done as a result of the report to protect the public, policy holders and shareholders from the enormous losses resulting from the failure of motor insurance companies? Secondly, was the procedure of this statutory tribunal defective, and, in particular, was it unfair to civil servants? There are many other issues—for example, the quite minor issue of the "leak" which seems to have played no part whatever in the main themes of this story—but the two main issues are those I have stated. How are such losses to be avoided in the future, in so far as they can be? I think everyone agrees that there should be closer and more continuous investigation. Compulsory insurance means that there are large classes of people, unfortunately, who care nothing for the quality of the cover of the insurance which they get; they just want to get on the road, and they get their insurance as cheaply as they can irrespective of whether the insurance policy is worth much. Some of us, perhaps, have had experience, in going round our constituencies, of convivial figures who tell us in confidential tones in the clubs "Before they crashed I got four good years out of Omega "—or Gamma or Epsilon or whatever it was, meaning that they paid very little in premiums and regarded themselves as licensed to go on the road with little or no insurance cover. That is one of the dangers. The second danger is that there are a number of persons who are only too anxious to exploit this situation and can make a lot of money, apparently, very quickly, and apparently successfully, out of this situation, and can maintain themselves successfully only by continuous expansion. One awful day dawns when they can expand no longer, and then it is that the ailment of the policy which they have been pursuing is unmasked and the crash comes, and much quicker than the figures would indicate. That is, clearly, what happened in this case. Briefly, what happened was that, whatever the future prosperity of the company could have been, insolvency was built in, because it was created by under-provision for outstanding claims. This built-in ailment, which could never really be cured, was masked by increasing premiums income, but it could never be got right. It was like a skater who goes faster and faster to enable him to keep upright. In the words of the tribunal, "the company was running blind ". One might have thought this easy to detect, but this under-provision for outstanding claims is difficult to detect; it requires a lifetime of experience, and even then there is disagreement among the experts in appreciating the importance of various factors. In my submission, one needs the training of an actuary, though not all actuaries agree, and in this they are like all other experts. Indeed, the experts still disagree in many respects about these matters. One has the feeling about this—it is a matter to which I shall be returning—that poor Mr. Christopher Jardine was a gifted amateur, educated in the liberal arts, entirely playing by ear, picking up as he went along, this immense expertise of great depth and difficulty. This, I think, is recognised by one recommendation of the tribunal, which went a little beyond its terms of reference —although I am sure that we are grateful that it did—when it recommended power to require accounts to be audited by specialist accountants. Not only must these investigations be closer in future; they must also be more continuous. One of the reasons for that is that if they are exceptional, if they are rare, the fact that somebody's accounts are being investigated in itself becomes a cause for the crash, because immediately it is known that this rare and serious investigation is being conducted, that provokes the very crash which the Department is anxious to avoid. This, I think, was one of Mr. Jardine's great considerations. It seems to me, therefore, that there should in future be nothing exceptional about this sort of close investigation which we all consider is necessary. Who is to do the investigating? There is great appeal to the British mind in leaving it to what is known as the trade, which, in practice, means the British Insurance Association. We leave the question of takeovers to the Take-Over Panel, and we leave the policing, if that be the right word, of travel agents to the British Travel Association. I am not sure that either of those two precedents it entirely satisfactory, but, in any event, they are not possible, in my submission, as precedents in this case. The powers required and the expense of continuous investigation are surely beyond any association, however grand and distinguished: it must be done by the State. Nor do I think it desirable that the establishment of a profession or trade like this should do it, because the aspirants, those who are anxious to break into what might be called this magic circle, would resent it even if it were done with the best of intentions and in the most impeccable manner; they would resent the ring ", as they would regard it, who, they might think, would have a collateral motive for keeping them out. Indeed, this theme runs through the report of the tribunal, where it would appear that some of the civil servants involved seemed to disregard the warnings of the British Insurance Association. They were suspicious of them on the ground that the British Insurance Association was somehow a professional body very jealous of newcomers who had not had the same sort of background as its members had and whom it regarded as upstarts. Therefore, I think it must be done by the State; and while the State is doing it there is one by-product which should be looked at, and that is whether or not it is right that insurance companies should avoid insurance brokers. It seems to me that the two functions are separate and that verticalisation in this, as in so many economic activities, is bad. A broker, surely, gives dispassionate professional advice on where to place business—or so he should—but if he is owned in whole or in part by an insurance company he cannot exert the degree of detachment that he should and that the public are entitled to expect. What sort of agency should do this? Should it remain in the hands of the gifted amateurs such, as I shall seek to show, Mr. Jardine, Mr. Homewood and Mr. Steel were? I do not think we can expect this of those who are not specialists and who pick up as they go along, however acute their minds may be. I am attracted by the suggestion of the right hon. Member for Birkenhead (Mr. Dell), who suggests that this should be a State agency staffed by, as it were, poachers who have turned gamekeepers, who know the ins and outs of the insurance business and are, therefore, perhaps, more acute and have acquired a sort of professional nose, which is the important thing in these matters, and which the gifted amateur can scarcely hope to achieve. Another suggestion is that the State should guarantee any losses which might be caused by failure of motor insurance companies, the State having commanded and made compulsory such insurance. I am not at all attracted to this suggestion. Why should the taxpayer pay for the consequences' of reckless owners and greedy insurers? It would make them more reckless and more greedy if they knew there was this cushion upon which to fall back. No, it must be done by a close and continuous inspection by a specialised agency. Looming over all this—and one scarcely dare whisper it because it is so alarming—is the possibility of the failure of life insurance companies, and I mention it only to draw back with fear. I am very worried about this, but I drop it like a hot brick. It is much wider than this debate but very important, and a great deal of fear is abroad. I have stated as briefly as I can my conclusions on the first of the two issues. I come now to the questions that were raised by the tribunal and its findings. Tribunals of this sort have always caused trouble. This one has caused less trouble, or at least it has gone out of its way to try to avoid the trouble that others have caused, and I regard it as infinitely better than many of its predecessors. Tribunals of inquiry are difficult things. Like parliamentary democracy, they seem to have many faults, but no one has come up with a better suggestion. I therefore defend the system, as did the Royal Commission on Tribunals of Inquiry under the chairmanship of Lord Justice Salmon which went into all the alternatives and came to much the same conclusions as I have done. The findings of the tribunal inevitably centred on Mr. Jardine, the Under-Secretary in charge. It is true that the tribunal said that Mr. Homewood was opinionated, that Mr. Steel was weak and that both were wrong, but neither was incompetent or negligent. The world is divided into the opinionated and the weak, and possibly a third category, those who are both opinionated and weak. It is against Mr. Jardine that the full weight of the report has been directed. In the words of those who criticise the report, he has been "singled out" or "made a scapegoat ". Even if on a reading of the report one comes to the conclusion that no other finding was open to the tribunal, one must ask whether the safeguards and procedures were the best possible and were fully satisfied. One of the difficulties about Mr. Jardine's being singled out—and here a great deal of the natural reaction of the Civil Service has arisen—is that even if he was negligent his fault is minute compared with the fault of those who were running the company. Therefore, it seems unfair to the civil servants that the headlines should be directed against Mr. Jardine, whereas the parallel investigation into the affairs of the company, unfortunately, was not able to be completed at the same time. I do not know whether it is yet completed or. if completed. whether its findings will he pub- lished, and it would be nice if we could be told. There must be a natural feeling in the Civil Service that the comparison is unfair. The Civil Service goes so far as to say that it is wrong to name civil servants at all. This I do not accept. When matters of great public concern arise with losses of up to £20 million the public require an open investigation in which the blame shall be apportioned by name. Nobody criticised the Aberfan Tribunal for naming the employees of the National Coal Board which it held responsible A different sort of tribunal but comparable was that which inquired into the accident at Hither Green when the employee of British Railways was named. It would, therefore, not be right in our public life for those who are at the centre of power and high up in the hierarchy to have an immunity which other people do not have. It is said that this claim of the civil servants will be the death blow to ministerial responsibility, and that the doctrine of ministerial responsibility under which we have lived for so long—and which some of us remember being reinforced by the resignation of Lord Crathorne in the Crichel Down case— has deteriorated, and so it has. In the interventionist State in which we live it must; there is no option. The tribunal found that, unlike other Departments, under 1 per cent. of the work of this great Department of State goes to the top. Of course, if the Secretary of State, although he did not have the opportunity of knowing or could not be expected to know what was going on, was still regarded as being responsible, we should have a new Secretary of State every week, if not every day. So it is not possible in practical terms that the doctrine of ministerial responsibility should continue in the pure Crathorne fashion as it did until fairly recently. The corollary is that if civil servants are to be named and blamed they must not have any feeling of being muzzled. What they say is that although this doctrine has been eroded they are still under the same rules and regulations for defending themselves as they used to be. I do not believe that this is altogether the fact. I think that they are entitled to defend themselves much more publicly than they used to be, but it may be that it ought to he made clearer to them that this is so in order that the remnants of a great tradition of silence shall no longer be regarded as an impediment to them. That is one criticism, the naming of civil servants, which I do not accept.That this House takes note of the Report of the Tribunal appointed to inquire into certain issues in relation to the circumstances leading up to the cessation of trading by the Vehicle and General Insurance Company Limited (House of Commons Paper No. 133).
The hon. and learned Gentleman has raised an extremely important point. I agree with him that the total anonymity of civil servants is now in question, but he seemed to imply that he would draw a new line of ministerial responsibility at the point at which a Minister can be asked whether he did or did not know what was going on. If the Minister knew what was going on, would the hon. and learned Gentleman say that he should have full ministerial responsibility and that the civil servants should be exonerated from responsibility?
I am much obliged to the right hon. Gentleman. The line is very difficult to draw, but the case he has adduced is a perfectly fair one. If the Minister knew what was going on the responsibility is his and not that of the civil servants, but there are far harder cases than that. I have been speaking for nearly half an hour and I have a lot more to say, so I will not go further on that point.
I want to discuss the right of appeal, on which I feel very strongly. It is true that the Salmon Commission said that there should be no appeal. I will read one sentence from paragraph 134 of that report:There is a large question of law smack in the middle of the report, and it is wrong that there should be no reviewing body. I say this on the general principle that if a man is in danger of suffering professional death—because that is what a finding like this is, and in many cases it is much worse than his physical death, or can be—he should on general principles have a right of appeal to some body. It is true that the tribunal was immensely distinguished, but so is the Court of Appeal and yet there is an appeal from that court. Therefore, there should be a reviewing body. It is often better to have a fresh mind on a matter where most of the time of the tribunal has been spent on finding the facts, and, the facts having been found, it is often a good idea to have another kind of review body. This is particularly relevant when a point of law is involved. I shall seek to show that there is a point of law of great importance. The point of law involves the question: what is negligence in the case of civil servants of this grade? This point is connected with the whole question of whether Mr. Jardine should have been separately represented and whether a different conclusion would have been reached if he had been. I shall quote what the tribunal said about what constitutes negligence in this respect. This passage is to be found in paragraph 320, and the tribunal adopted the submission of Mr. Webster appearing for the Department rather than the submission of Mr. Arnold who was the Commission's own counsel. The paragraph says:"These Tribunals have no questions of law to decide."
Then later:" By analogy with persons exercising a professional calling, civil servants employed in the work of supervision of insurance companies under the Insurance Companies Act hold themselves out as persons exercising special skills in that particular field."
Then much later, in paragraph 336, it says:" The standard by which they must be judged is the ordinary competence required of a person working in his specialist field."
Nobody has considered the concept of negligence in that connection, and the concept adopted by the tribunal was that it was parallel to that of a professional man holding himself out as having certain skills—a concept well understood in law. But is it the same? I must say that I do not know. I am not suggesting that I am right and the tribunal is wrong. I am saying that there is at least an argument which should have been put for saying that this is not apparent. Here was somebody who was put into the Department, somebody who did not seek the appointment, and who did not hold himself out in a particular capacity in the same way as somebody who puts up a brass plate and solicits custom. He was trained not as an actuary but in the liberal arts, and, he was thrown in at the deep end. It is true that after six years he should have acquired a great knowledge of the business; even if he had not, he should have been more exacting and demanded answers to his letters and should have taken a firm grip on the matter. But that does not affect the question of law on whether this was negligence and whether the negligence lies not in man but in the set-up—that is to say, in the people who arranged the set-up. Counsel for the Department—who appeared for the whole Department, including Mr. Jardine—could not conceivably advance the argument that the negligence lay in the set-up. He was there to defend the set-up, and rightly. How could he advance the argument that it was not right that Mr. Jardine should be held negligent in the same way as a professional man holds himself out to be competent? Perhaps the tribunal was right in adopting Mr. Webster's argument, but this involves a difficult point of law. So far as I know, there has never been any decision on Civil Service negligence for many years—until recently in the Dorset yacht case, and then on a different point. How could it be said, as Salmon said, that these tribunals raised no point of law? There is a point of law smack in the middle. It may be said that we should have a review body for the future, but that there is not one now and there is no way of covering the situation now. I think that there is a way of arranging things to assist Mr. Jardine if the Government are prepared to agree. It is this. Hon. Members will remember that under Section 4 of the Judicial Committee of Privy Council Act, 1833, it is competent for the Government to refer matters to that Committee on a point of law. It is within the powers of the Government to take such a course even when there has been no litigation, as was the case here. It was last done in the case of privilege involving the right hon. Member for Vauxhall (Mr. Strauss), commonly called the Strauss Privilege Case, and also in the McManaway case. It has been done occasionally but rarely, and more frequently in cases from overseas. However, it can be done in United Kingdom cases. It would be just for the Government to consider whether they could even now refer the point of law to the Judicial Committee of the Privy Council. That would give Mr. Jardine the appeal that he should have. The next point of criticism is that the charges or allegations were not given, or, if they were, they were given late. This is a difficult question. Salmon calls this one of the six cardinal principles, and it becomes clear from the transcript that the answers were very difficult but that the charges were very simple. The question at the beginning was:"The officers of the Department however were neither experts nor laymen. They were given a supervisory role over the insurance industry, without any training in technical matters in the early years, and only a brief training in the later years. They did not have the benefit of assistance from experts drawn from industry. They had to gather knowledge and they did gather knowledge; but inevitably they did not acquire the detailed insight into the workings of an insurance company afforded to, for example, Mr. Smeddles and Mr. Boswell. In judging competence it must be borne in mind that the Department was evolving a system of supervising insurance companies for which it had no blue print; it contained no experts; and it was open to criticism if it acted and if it failed to act. Moreover, the Department was not given a mandatory task but a discretion. So far as we are aware no one has previously considered the concept of negligence in relation to a supervisory authority deprived of detailed knowledge, inhibited to some extent by the doctrine of confidentiality and to some extent by suspicion from relying on the experts of the industry, and charged with the exercise of a discretionary power designed to prevent insolvency, but liable in itself to bring insolvency in its train."
That is the substance of the charge against each of the civil servants. A large list of questions to be answered was given by the tribunal three weeks before it sat. During the course of the inquiry, as things happen in inquiries, and as Salmon recognised they would happen in inquiries, the course of events took different forms. That is why from time to time allegations are formulated as they emerge, this being not a trial but an inquisitorial process. I have a list here of about seven occasions on which allegations were formulated. Beyond that, opportunities were given to Homewood, Steel and Jardine to deal with any points they wished to deal with after they had given their evidence and heard the formulation of charges. Therefore, I do not think it is right to say, as the hon. Member for Cornwall, North (Mr. Pardoe) said in a short debate on this subject earlier this year, that no charges were made until during the last few days and then only by inference." Did you wait too long before you exercised your powers? "
Does the hon. and learned Gentleman agree that the so-called charges made in the earlier stages of the hearings were directed in terms always, so far as I have read, at the Department and not in terms at individuals.
I accept that entirely. The reason for that is surely that until the inquiry had been going for some time the tribunal could not know at which persons to direct charges. It could not know until it had made the inquiries. This is inherent, as Salmon recognised, in the form of procedure adopted. Indeed, it would have been very unfair to make charges generally or individually before the inquiry had gone some way. There was a suggestion of this being done against Mr. Nail. Hon. Members who have read some of the transcript will remember that early on in the proceedings Mr. Nail was charged with being negligent. This was very unfair. because there was not sufficient material at that time for any such charge to be made, as the tribunal had not then proceeded far enough.
I agree that the original document did not specify persons but raised the question which, although it is an easy question to ask. is difficult enough to answer, but it is the question against every one of these people: "Did you wait too long before you exercised your powers?" I believe that no injustice was done to anybody on the ground of not having a sufficiently detailed account of what the tribunal was inquiring into. Much more serious is the fact that Mr. Jardine was not separately represented; but that was not the tribunal's fault. No application was made to the tribunal for separate representation. Therefore, the tribunal cannot be blamed for that.If Mr. Jardine had been separately represented, who would have paid his counsel's fees?
That is a very interesting point, because the Salmon Commission advised that the tribunal itself could as of right grant costs. This does not seem to have been adopted by any of the successive Governments. Therefore, the tribunal was unable to give anybody a complete assurance that his costs would be paid for, because it was still on an ex gratia basis and the tribunal could not bind the Treasury. Indeed, one of the directors of the company wanted an assurance that his costs would be paid for. The tribunal said "No, we cannot do that. This is a matter for the Treasury after the event." Therefore, it is relevant to the question of separate representation. Whether that was the decisive factor I beg leave to doubt.
At what point would the hon. and learned Gentleman have brought in separate counsel for Mr. Jardine? At what point was there the apprehension that the tribunal would lay the main blame upon him? There were many people during the course of the long hearing upon whom the blame could have been centred.
About day 30 there was a discussion—this is an open secret in the Department—on whether Mr. Jardine should be separately represented. My right hon. Friend the Chief Secretary, in answer to the debate initiated by the Liberal Party, said distinctly that Jardine was
his"…strongly advised by the Department not to seek individual representation but to allow "
Therefore, it is well known that as the hunt narrowed, so to speak, Mr. Jardine was coming into the zone of danger. The question was whether at that stage he should be separately represented. I do not want to be harsh. It is easy with hindsight to criticise, but it is difficult to make the right decision in the agony of the moment. I can well understand the Department and its legal advisers saying to Mr. Jardine "If you have separate representation now it will look like an admission of guilt. We strongly advise you not to." I think that was wrong advice, because separate counsel could, in particular, have argued the point about the law of negligence in relation to this matter—namely, that it was the set-up that was responsible and not Mr. Jardine himself—which counsel for the Department as a whole would be inhibited from doing. The lack of representation is an added reason why the appeal that I have suggested should be permitted, because then for the first time a concept of negligence —a description of negligence—more favourable to Mr. Jardine, albeit more damaging to the Department. could be argued. So far it has not been argued. as far as I know. That is no fault of the tribunal's, and I do not think that it is any fault of the Department's, in the sense that, although it may have taken a wrong decision, it was a perfectly natural decision to take. Therefore, although I regard it as very important that Mr. Jardine should be represented, and represented separately, at any such appeal—of course, with other counsel arguing the contrary, if necessary—I can understand why it did not happen before the tribunal. The other objections, which are all concentrated round the words "singled out ", are that some of the high-ups were not called. Mr. Golt and Sir Max Brown have been named. I do not believe that there is any reality in that allegation. I think, however, that there is what the Italians call la bella figura; it would have looked better if they had been. Judging from the printed documents and from the manner in which the Department was conducted, I do not think it would have made any difference if they had been called. But the purpose of this criticism is to spread the load. Putting it more pejoratively, it is the Samson syndrome: if someone is going down, his guilt is less if he pulls clown the temple and brings down others with him. I know that that is putting it in a disparaging fashion—" case to be handled by the Department's own team of lawyers."—[OFFICIAL REPORT, 20th March, 1972, Vol. 833; c. 1263.]
I hope that the hon. and learned Gentleman will forgive my interrupting him. I have no control over the length of speeches. But there are very many right hon. and hon. Members who wish to intervene on this topic. It has been suggested that a clock should be put up so that an hon. Member may know how long he has been speaking. If I may be the clock in this instance. the hon. and learned Gentleman has been speaking now for 44 minutes.
I am obliged, Mr. Speaker. I am very sorry, and I shall bring my conclusions rapidly to the front. I have much to say, but so have other right hon. and hon. Members.
I draw two final lessons from this affair. The first is that those who criticise this report, especially the civil servants who 0riticise it, paint an awful picture for the future. They say that civil servants will never take any responsibility in the future but will always refer every matter upwards and take no action. All I say about that is that the report clearly shows that inaction can be as negligent as action. It is good that that has at last been said. The second lesson is of the kind which greatly irritates foreigners and foreign observers. I am much struck by the fact that in the whole of this episode, on delicate ground where companies, the City and rich people touch the Civil Service, there has never been the slightest suggestion either of misconduct or of corruption of any kind. Not even in that pathetic leak at a very low level was there any corruption, as far as I can see. Certainly there was not higher up. It is a great token and compliment to our civil servants that in such a very delicate area where, even as we debate this matter, all over the civilised world there are allegations of a corrupt intercourse between big companies and public servants, there was never any suggestion of this, much less any finding of it. Throughout this episode, out of which in the long run great goodwill should come, we should comfort ourselves that our civil servants and public servants remained as above reproach as ever in our history in that vitally important respect.4.23 p.m.
Over the past year or so the view has been propagated that I know a great deal about insurance. That is very far from the truth. However, I do know an awful lot about people like the hon. and learned Member for Darwen (Mr. Fletcher-Cooke), and if I depart from the tone and content of his speech it is not for any reason of vindictiveness or spitefulness directed at anyone on the benches opposite, both the Treasury Bench and the back benches. It is simply out of a desire on my part to defend the interests of ordinary people, a million of whom lost every penny that they had in their insurance policies with the Vehicle and General Assurance Company.
I am mindful of the fact that I have been in this House only 23 months. That length of time ago, in a much less well paid position, I was struggling from year to year, sometimes from quarter to quarter, to find the money for my insurance policy. In the last few months especially policies have gone up enormously in cost. For that reason, this debate is of great importance to 12 million motorists. It is extremely difficult to know precisely where to begin and where to end, and to what to limit one's remarks. I have lived with the collapse of the company, the tribunal, and now the report, together with its aftermath, for more than a year. This debate, for which I am grateful to the hon. and learned Gentleman, at long last gives me an opportunity to get a lot off my chest and vent my feelings on the subject. Such is the congestion in my mind, I feel that before embarking on the subject I should list those aspects of the Vehicle and General affair with which we ought to concern ourselves today and then deal with them, some in depth and others in a more passing fashion. First, there is the basic question of how it was possible for a company like Vehicle and General to rise to the heights that it achieved in such an important area as motor car insurance while clearly being run and managed in a way which showed contemptuous disregard for the normal and accepted standards and practices of the insurance business. Secondly, why did the Government, who compel the motorist to take out insurance cover, fail to protect his or her interests in the manner in which they are directed by this House? Thirdly, having appointed a tribunal to investigate and report on the collapse of the Vehicle and General Company, why have the Government left it to a back bencher to initiate a debate on the subject, thus indicating clearly that, although it is regarded by the public and at least by a million motorists as extremely important, it receives low priority from the Government? Fourthly and finally, did the tribunal do its job properly and produce findings that this House can accept and that lay the foundations for improved security for motor car insurance policy holders in the future? I intend to start with the last head and work backwards. In doing so I shall conclude by dealing with the matters and circumstances which produced the motive for today's debate; namely, the collapse of the company, the leak, and the adequacy or otherwise of Government supervision. The first area with which I deal is whether or not the tribunal carried out the task with which it was entrusted and the worth of its findings. I say at once that the appointment of the tribunal, far from being an instant response on the part of the Government to considerable public disquiet and the clear need for investigation, was obtained only after a week of constant vigilance on the part of the Press and daily harrowing of the Government by Members of Parliament. I am convinced that without that pressure there would have been no tribunal. When the setting up of the tribunal was finally announced by the Prime Minister on 27th April, 1971, it was made clear by the right hon. Gentleman that its powers would be wide-ranging and, indeed, that it would be possible for it to summon anyone and everyone to appear before it. In response to a question from my right hon. Friend the Leader of the Opposition about whether Ministers of the Crown could be called, the Prime Minister replied:" Yes, the right hon. Gentleman is quite correct that the terms of reference which I have quoted this afternoon include Ministers both in this Administration and previous Administrations."—[OFFICIAL REPORT, 27th April, 1971; Vol. 816, c. 240.]
Will the hon. Gentleman acknowledge that, whether the Government decided to establish the tribunal or not, there was the reference to the Parliamentary Commissioner made by me on behalf of my constituent, Mr. Martin Moir, so that the matter would not have gone without investigation?
I am mindful that, as soon as the tribunal was established, the investigation by the Parliamentary Commissioner was called off.
In replies to further questions from the Leader of the Liberal Party, my right hon. Friend the Member for Bristol, South-East (Mr. Benn) and my hon. Friend the Member for Bassetlaw (Mr. Ashton) on the range of the tribunal's investigatory powers, the Prime Minister made it clear that the tribunal's powers would be wide-ranging. I highlight these statements of the Prime Minister and the way in which the tribunal was originally presented to this House because one of my principal criticisms and objections to the way in which the tribunal conducted its affairs was the narrow way that it interpreted its terms of reference. Yet it is abundantly clear that the Prime Minister, in proposing the tribunal to the House, wished to convince us and the public that all aspects of the Vehicle and General affair could be examined, including the ultimate facility of calling Ministers or former Ministers to appear before it. This narrow and restricted interpretation of its terms of reference is the primary cause of mounting disquiet about the tribunal's findings. In addition, the terms of reference having been determined, there is the matter of the wav in which the tribunal conducted its affairs. On this point there is cause for severe criticism. Because of similar criticisms of past tribunals to which the hon. and learned Member for Darwen has referred—the personal damage done to those appearing before tribunals, the part played in them by the Attorney-General and the difficult question of contempt—the Salmon Committee was appointed to examine and report on all matters relating to tribunals. The report made certain recommendations which represent advances and improvements on past practice. Although these recommendations were not accepted by the House, they were the guiding spirit prevailing at the Aberfan tribunal. When the Prime Minister brought before the House the proposal to establish the V and G tribunal, he was asked by the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) whether those new standards applied at the Aberfan tribunal would be observed by the V and G tribunal. The reply was in the affirmative. It is beyond any shadow of doubt that the V and G tribunal ignored the Salmon recommendations and, in addi- tion, the way that they applied to Aberfan. It was clear from the earliest stages of the tribunal that civil servants were to be singled out as scapegoats for the V and G crash. Yet they were not afforded the protection recommended by Salmon. Therefore, they went unprepared to the witness stand. It having been made clear that responsibility was to be laid at the door of middle-ranking civil servants in the Department of Trade and Industry, the Prime Minister's assurance that the tribunal would be wide-ranging was disposed of. No doubt—this matter has already been commented upon by the hon. and learned Member for Darwen—the frustrated cry from the witness stand by one civil servant, that others more senior and responsible than he should be standing where he was, adequately summarises the present views of the civil servants: that they were used as scapegoats for governmental and ministerial failure. The time honoured principle of ministerial responsibility has, clearly, died a death. Times have indeed changed since Crichel Down. Apart from these two basic failures on the part of the tribunal, the conduct on the part of some of the tribunal counsel can only be described as appalling. It should also be pointed out that none of the civil servants was individually represented. The hon. and learned Member for Darwen has already said that they took the naïve view that counsel for the DTI could and would act for them. I am sure that this was the biggest single mistake of those who now stand accused of negligence—quite wrongly, in my view—by the tribunal. It was and is possible for anyone appearing before a tribunal to be represented and reimbursed for any reasonable expenses incurred. If the civil servants involved had availed themselves of this facility, it is more than possible that the tribunal's findings would have been markedly different. It was not until day 49 of the 56-day hearing that those who now stand accused were given an outline of the final allegations to he made against them. That is an absolutely grotesque distortion of justice. Could anyone deny that if they had been properly represented such a situation would neither have been allowed nor gone unchallenged? Those who now stand accused tried to get a formal statement from the tribunal so that they could prepare individual defences. They were informed that the Department was aware, as was its defending counsel, of all matters that were to be discussed and considered by the tribunal, the clear equation being that the Department was the sum total of its civil servants and would defend their collective and individual interests. In view of these facts, I am of the opinion that the way that the tribunal interpreted its terms of reference and conducted its affairs was neither what Parliament intended nor sufficient to provide an answer that Parliament could accept. Before dealing with matters to which the tribunal should have directed its attention, I should like to draw the attention of the House to the circumstances which led to the establishment of the tribunal. One million people were involved. When V and G collapsed one in 10 of all private motorists lost their cover —the biggest insurance failure in our history. The enormity of the failure, suffering and loss involved has still not communicated itself either to the House or to the public at large. One million policy holders lost their cover and thousands of shareholders, big and small, lost every penny. The collapse of the V and G meant that, as a result of the failure of motor insurance companies, over 2 million policy holders lost their cover over the previous decade. So any examination of the collapse of V and G would have to take account of much wider issues than those raised by the collapse of that one company. If this was the hope at the beginning of the tribunal, it evaporated in a very short time. Having disposed of any question of ministerial responsibility by restricting its level of inquiry, the tribunal embarked on what can only be described as an accountancy and bookkeeping teach-in. Looking through the evidence, it seems that whoever was examined, whether from the DTI, the BIA or the V and G itself, the tribunal was transfixed with the idea that the collapse of the company was more a matter of financial maladministration than the structure, organisation and control of the insurance industry. Indeed, the tribunal came pretty close to admitting that when, in the final paragraph of its report, it said:That sentence, alone, invalidates all that the tribunal has to say about who was responsible, for it is clear from the report that the most outstanding feature of the way in which the insurance industry is supervised is the inadequacy of public control. That point was thoroughly and adequately made by the hon. and learned Member for Darwen, and I should have thought that it reinforced the point that I have made. The concluding sentence of the report, which follows my previous quotation, is" It may be that the present system is as good as can be devised and that the failure of an insurance company from time to time is a necessary and small price to pay for preserving the balance between commercial freedom and public control."
" We consider that in the light of the facts disclosed in this Report, some of them astonishing, the present system requires close examination."
I turned un paragraph 352 while my hon. Friend was speaking. The tribunal had something to say after that rather damning sentence. Why did my hon. Friend not read the last sentence?
I have just read it.
In the same context.
I have just read it, but. for the benefit of my right hon. Friend, I shall read it again:
My point is that that surely qualifies as the understatement of the year. When one considers that the tribunal makes no serious suggestions about how the Government or the insurance industry should deal with these facts but, instead, simply attributes blame to the incompetence or negligence on the part of civil servants, one wonders why it was necessary for the tribunal to sit for 56 days to arrive at what I consider to be rather flimsy conclusions. The tribunal should have cast its net wider. It should have looked at the fundamental economic climate in which the industry operates. In particular, it should have accepted at the outset that, until disproven, the principle of ministerial responsibility was open. Had that action been taken, the tribunal could have asked for the views of the Minister—and he is here today—who wrote to me on 31st July, 1970, after I had warned of the possible jeopardy to the interests of the motor car insurance policies, that:" We consider that in the light of the facts disclosed in this Report, some of them astonishing, the present system requires close examination."
that is the Board of Trade—"The Board"—
Why in the case of the V and G Company was such promised action—and it was a clear promise in July, 1970—never taken? Why was it that no action was taken when on numerous occasions since the collapse of the V and G Company these powers have been invoked and used in connection with other companies?" are alive to this possibility and, where appropriate, will use their statutory powers to endeavour to protect policy holders against the dangers of their insurers becoming insolvent."
I am sure that the hon. Gentleman would want to be fair. Leaving aside the question of not giving me notice that he was going to raise the matter—that is purely a matter of courtesy, and I take no objection to its not having been done—will the hon. Gentleman, in order to be fair, emphasise that the letter which he wrote to my right hon. Friend the Minister for Trade and to which I replied—which was the only letter that he received from me —related to the rise in premiums, a matter about which he was complaining generally? It made no reference to the V and G Company and, in any event, the tribunal, in 10 days of evidence, had a full opportunity to examine what he said.
That may be so, but it was, nevertheless, a clear commitment by the Government that they intended to take action, and nothing that was said during the V and G hearing can explain why the Government did not take action. On the point made by the hon. Gentleman about my not giving him notice, when I passed him on my way into the Chamber I told him that I was going to refer to this matter.
I listened with interest to the hon. Gentleman's account of his letter written in [970. Looking at paragraph 176 of the report, would he agree that it was as long ago as May, 1967, that Mr. Barnby, a constituent of mine, through me drew the attention of the then Government to the parlous state of the company, with a detailed examination of its assets and liabilities, on which no action was taken by the then Government?
If the hon. and learned Gentleman is trying to say that his letter was better than mine, that is a matter that he can raise later.
I am saying that my Government is better than the hon. Gentleman's.
That is something to which I do not need to reply.
Is the hon. Gentleman aware that on two occasions between 1967 and 1969 the Small Investors and Shareholders' Association, through its late chairman, brought to the notice to the then Department of Trade what it considered to be the parlous state and inadequate financing of this company, and that it received brush-off replies?
It is convenient that those two interventions have come at the point at which I was going to refer to the fact that whilst that letter was sent to me it was known that one Minister was discussing with the officials concerned the whole state of the V and G Company.
The hon. Gentleman must not be allowed to make that false innuendo. The letter that he wrote to me related to the level of insurance premiums. He was complaining that they were too high. The letter that I wrote made no reference to the V and G Company. The hon. Gentleman is not entitled to make that accusation.
I was not referring to the Minister who has just intervened. I referred to a Minister, whose name is clearly spelled out in the tribunal's findings. The hon. Gentleman is not involved in what I have said so far, and perhaps I may be allowed to continue my speech.
Why did the Government's legal department constantly advise the insurance division of the Department of Trade and Industry to avoid action under the Companies Act, and why did the tribunal not call before it to give evidence the Government solicitors who were giving advice on this matter? Why at the moment when V and G was in its death throes and other insurance companies were in great difficulty did the Department which was responsible for insurance announce an attempt to reduce its staff by 10 per cent.? That hardly seems to be the action of a Government determined, as promised in a letter to me, to protect the interests of policy holders. Why did the tribunal never direct its attention to the speed with which the source of a leak was located after the establishment of the tribunal, when apparently an internal investigation and a police investigation prior to its establishment had, so we are told, failed to unearth the source? Why did the Government take so long to reply to the many questions which I put to them over the course of two or three months about the collapse of the V and G Company? Would the Government ever have come to the House with all the information surrounding V and G without a final public exposure of the leak? Indeed, would there have been a tribunal at all without parliamentary and public pressure? The tribunal could examine none of these things once it restricted the nature and extent of the inquiry, a sad reflection on the tribunal in view of the importance of these questions in a parliamentary democracy, with the accountability to Parliament of the Government and Ministers. Why did not the tribunal examine carefully the economic and legal framework within which the insurance industry operates? In view of the fundamental importance of these questions, it is deplorable that nothing came out of the tribunal's work that in any way removes the possibility of another V and G occurring. Indeed, while the tribunal was sitting other insurance companies went into liquidation. The only suggestion made in this context by the tribunal is that accountancy procedures should be tightened; but that, if implemented, would merely mean the advancement of liquidation rather than its elimination. I could go on detailing matters which should and could have been examined by the tribunal, but to do so would make too lengthy an invasion on the time of the House. Suffice to say that what the tribunal examined was in inverse proportion to those areas which it ignored but which were central and important to the whole question of the collapse of V and G. I bring to the attention of the House some information which has been passed to me in recent days about matters which the. tribunal should have examined carefully. The tribunal examined Mr. Hunt, the managing director of V and G, and the way in which he was examined was in contrast to the rather hostile approach shown towards civil servants. I said that the tribunal should have looked in a wider and deeper way into the operating and running of the insurance industry. This was particularly relevant to Mr. Hunt. V and G's principal architect was cross-examined by the tribunal, yet—this is clear from a reading of the evidence—the attitude adopted towards him was little short of agonising courtesy. That was strange because Mr. Hunt's background was of particular interest and would, given a more searching inquiry, have provided invaluable evidence both for the tribunal and for those who wish to create an improved insurance system out of the ashes of V and G. On day 43 Mr. Hunt was asked if he had ever had any contact, prior to the collapse of V and G, with officials of the Board of Trade. "Once" was his reply, "With Mr. Nail, in 1969 ". I have no doubt that that was true, but what Mr. Hunt did not declare was that in the early 'sixties the Board of Trade was very interested in him. In 1960 Mr. Hunt was a director of the American Military International Insurance Association, a company closely linked with the General Insurance and Guarantee Co. Ltd., both of which were the subject of a Board of Trade inquiry in 1963, and the report was issued in 1964. Before the report was issued, however, both companies had gone into liquidation. Mr. Hunt was also a director of the American International Assurance Association. This went into liquidation in 1963 also. Thus, prior to 1964, when the President of the Board of Trade declared himself satisfied with V and G, Mr. Hunt had had a good deal of experience of insurance companies that had failed. Why did the tribunal not question Mr. Hunt on this aspect of his past, especially as I now know that it was informed of this information and could have acted on it? Is it not fair to say that the business record of people who wish to engage in insurance was and is a vital factor in their eligibility? The Government's post-tribunal attitude can only be described as disgraceful. Today's debate is taking place only because of the generosity of a back-bencher. Although guilty of repetition, I must declare that when one recalls that over 1 million motorists lost their cover as the result of the collapse of V. and G., the Government stand accused of indulging almost in a whitewashing operation, with a complete failure to respond to the disquiet about the state of the insurance industry. I am not making a political point. [Interruption.] I most certainly am not. Many people in the insurance industry—I have met some of them today--are extremely concerned about the state of the industry. I again remind hon. Gentlemen opposite that this debate is taking place only because of the generosity of a back-bencher and not because of the Government, who will make known their views about the report during this debate. We are, of course, deprived, for obvious reasons, of the results of the departmental inquiry into the collapse of the company, although it is central to our debate. We have a deplorable situation in which the Civil Service is indicted—[Interruption.]—that is how some individuals stand —and bemused collectively in the light of the report's findings. I wonder how long a Labour Government would have been allowed to get away with a similar situation? One can imagine what hon. Gentlemen opposite would have said had we been on the benches opposite today. The second major question that I asked at the outset of my remarks was why the Government, who compel motorists to insure against third party losses, failed to protect the interest of the people in the way in which Parliament directs Governments to do. This is another aspect of the tribunal's deliberations which was over before it started. In fact, it does not even get a mention in the findings. Nevertheless, the House will want the Secretary of State to direct his attention to this important subject. The first important question I asked at the outset was how it was possible for a company like Vehicle and General to rise to such a prominent position in the insurance world, to be accepted into the highest reaches of the profession, to be awarded the seal of approval by the President of the Board of Trade, and yet clearly to conduct its affairs in a wholly irregular manner. This question goes to the heart of the matter and involves not just the company but the ethics, practices and standards of commerce of the Government, the business community and, more particularly, the insurance industry. There is no doubt that because this is such a wide-ranging issue which would involve and raise so many difficult points the tribunal decided, in its wisdom or otherwise, to ignore it. The rags to riches story of Vehicle and General, like so many business scandals of recent years, is a sad and sorry indictment of the business community and the British Insurance Association in particular. How was it possible for this wheeler-dealer outfit to con anyone into thinking that it was reputable, honest and solvent? Why was it not possible to take action against it when apparently everyone in the City knew that it was a rogue outfit? And what convinced a former President of the Board of Trade and those advising him at the time that this was a worthy company even after serious doubts had been expressed about its true state? Those are not questions that can be allowed to go unanswered while a handful of civil servants, working under appalling pressures, are singled out to shoulder the blame for the whole calamity. It will by now, Mr. Deputy Speaker, not have escaped your attention that I do not place great store by the findings of the tribunal, but if you are now seized of this fact you are aware of no more than the general feelings of the great British public outside, and who could disagree? Compelled by law to insure, they are let down by the very agencies which impose the compulsion. The only fair and just course of action for the Government to take tonight is to reject the findings, accept responsibility and come forward with proposals which completely safeguard the interests of insurance policy holders. It is beyond the bounds of possibility for the Secretary of State today to do otherwise. The public have suffered long enough. Nearly 2½ million policy holders have lost their cover over the past decade due to the failure of their insurers: in this situation can the Government justify the maintenance of the present system? Judged by recent comments, as late as last Wednesday, the prospect of further early bankruptcies is very likely indeed. Mr. R. B. Warswick, chairman of the European Federation of Insurance Brokers, speaking to the Surbiton Conservative Association, is reported by the Financial Times as having warned:The report of his speech went on:" Unless urgent and stringent precautions were taken at both departmental and Parliamentary levels there would be further insurance failures this year."
If that last observation is correct, it is an observation and a fact which completely escaped the tribunal's notice. But the general criticism I wish to make is directed to that area to which the Government should direct their attention following the tribunal's report. Unfortunately, this is not the time for a wide and probing debate on the subject of the motor car insurance industry. We are concerned today only with the failure of one company, but that single company was part of an industry the legal controls of which were examined in the course of the tribunal's hearings, and it is beyond question, that while not the subject of recommendations by the tribunal, that industry should be commented on today and, of more importance, dealt with today by the Government. There is much more that I and other hon. Members could say about what we could and should learn from the V and G crash and the other failures that have occurred over the past decade or so, but if I confine myself to a few remarks on the subject of reform I shall no doubt stay within order. I say at once that in a commercial area like motor car insurance, where the State compels the individual to comply with an economic law without any choice in the matter at all save between one company and another, the State must not only act as guarantor and watchdog but should, in my opinion, go the whole way, as is the case in some States in Canada, and provide a fully-fledged State service. I realise that to talk in these terms tonight, with a Government of the complexion they are, is unrealistic. The present Government are likely only to reform rather than to revolutionise. That being the case I can only say that of all the possibilities the establishment of a body completely independent of Government and run by a commission to supervise all aspects of the insurance industry is the next best and probably the most realistic proposition. A precedent will be set by the Government next year when they appoint a commission to advise on and control superannuation schemes. Why should the same principles not be applied to other areas of insurance? No doubt the Government will hope to get away with the least they possibly can, and tonight, therefore, we can look forward to the Secretary of State simply, and in my opinion rather feebly, accepting the main findings of the V. and G. tribunal and cowering behind the coat tails of a lone and now retired civil servant—" The Federation was disturbed by a preliminary report of the ecomonic panel at present studying the solvency of insurance companies and present DTI safeguards of solvency margins were totally inadequate '."
A lame duck.
I shall refer to that aspect of the Secretary of State's past in a little while.
In my opinion, the Government's attitude so far reflects neither credit nor courage on anyone—Ministers, Governments and Parliament. Should my prophecy of what the Secretary of State says tonight prove to be correct, it will be a bad day for the Government, a bad day for the Ministers involved, a bad day for parliamentary democracy and an even worse day for a handful of civil servants who, although having worked under appalling conditions, are to be sacrificed to a new Tory principle: "For what goes right and succeeds we accept full responsibility. What goes wrong or fails was someone else's fault or was not brought to our attention." No wonder that Parliament is not nowadays held in the highest esteem outside. I ask the Secretary of State to bear one thing in mind when replying. It is that I million motorists in particular and 12 million of them in general will be acutely interested in everything he has to say. In conclusion I draw the attention of the Secretary of State to his strident past and to the ornithological overtones referred to by my right hon. Friend the Member for Leeds, West (Mr. C. Pannell). When I wrote to the President of the Board of Trade asking him to refer the subject of insurance premiums to the National Board for Prices and Incomes for complete investigations, the then Parliamentary Secretary replied as follows:—that is, of 1970—" On 23rd July "
He concluded with these quite remarkable pre-Vehicle-and-General-collapse words:" the Secretary of State for Employment and Productivity told the House: that the future of the National Board for Prices and Incomes is being reviewed and that the Government's policy was that ' where there is competition that is the most effective means of safeguarding the consumer and the less it is interfered with the better." "
Is that still the Secretary of State's view?" I remain of the view that the motor insurance market is competitive."
5.10 p.m.
I am sure that the whole House will wish to join me in congratulating my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) on raising this matter in today's debate. I do not know that I can exactly characterise the speech of the hon. Member for Birmingham, Northfield (Mr. Carter) with the same terms of moderation. Indeed, there were moments when I wondered, as he referred to my speaking tonight, whether he would not be literally correct and that the extent of his anticipation of what I had to say would not carry him on for some hours yet. But I shall try hard to respond to many of the points made by both speakers and I expect, too, that my right hon. Friend the Home Secretary, if he manages to catch Mr. Speaker's eye later today, will deal with some of the others.
May I first, deal very clearly with one or two specific points that have arisen? The hon. Member for Northfield complained that the Government assessed this issue as one of low priority. I should like the House to believe that this is absolutely not the case. We are very grateful to my hon. and learned Friend the Member for Darwen for devoting Private Members' time to this Motion, but we have added Government time, as is well known, and in any case the very complex nature of the report and the representations made as a result of it quite precluded having an earlier debate. Secondly, I should clear up quite definitely the matter of separate representation before the tribunal, which has been referred to by both speakers today. In this matter, the individuals who were concerned to appear as witnesses before the tribunal were recommended at the outset to share representation by counsel before the tribunal with that of the Department, because it was believed that that was in the best interests of all. But it was made abundantly clear to them that if at any time during the hearings they considered that their interests would be better served by separate representation, the matter would certainly at that time be reconsidered. That opportunity was open. However, throughout the tribunal, they did not seek to have such separate representation. A third point, which has also been referred to and which seems to me of some importance, is the question whether. as civil servants, they were entitled to speak publicly in defence of their position. I should like to make it abundantly plain that it was made clear to them that they would in no sense be forbidden from so doing if they considered that it was in their best interests to do so. But it was equally underlined that in doing so they could not comment adversely upon the setting up of the tribunal itself, which was a matter upon which the Government had taken a decision. I hope that those clarifications will prove of use to the House.Was that the only restriction placed upon them in terms of commenting upon the tribunal and its findings?
That was the one specific recommendation made to them. May I just add to that? The general restraint on their speaking in public on matters referring to the setting up of the tribunal, its terms of reference and the like, to which I have referred, did not apply to the staff associations representing them, and that was made clear, too.
May I first remind the House of the circumstances in which this tribunal was established. In March, 1971, the Vehicle and General Insurance Company collapsed. About 1 million policy holders found themselves uninsured, as the hon. Member for Northfield repeatedly reminded us. Many policy holders found themselves liable to meet the claims of third parties and to pay for their own damage without the protection of insurance for which they had paid. Shareholders lost the value of their hares in the company. At about the same time there were reports in the Press, which were subsequently confirmed, that certain documents had been improperly removed from the Department of Trade and Industry. The fact that the public became aware of these two occurrences simultaneously not only led to serious concern in the House and in the country generally about the fact of a leak and the collapse of the company, but also gave rise to speculation that some person or persons might have obtained financial advantage—or, indeed, suffered financial loss—as a result of the leak. In these circumstances the Government felt that both of these matters should be fully investigated and that in view of the possibility of a link between the two sets of events and the extent of public concern, the investigation would have to cover both the leak—the origin of which had not been discovered by departmental and police inquiries—and the conduct of servants of the Crown in relation to the affairs of the company which had collapsed. A separate investigation had already been set in train—and is not yet complete—under Section 165 of the Companies Act, 1948, into the management of the affairs of the V and G Company by those responsible within the company itself. I take due note of my hon. and learned Friend's inquiry whether that report, when complete, may be published, and I shall consider it. Many of its findings will serve to answer specific questions raised by the hon. Member for Northfield, which go to the heart of the inquiries which are undertaken under Section 165. The Government concluded that the most appropriate form of combined investigation of the leak and of the conduct of servants of the Crown would be a tribunal established under the Tribunals of Inquiry (Evidence) Act, 1921, and the James Tribunal was appointed on 28th April, 1971, pursuant to Resolutions by both Houses of Parliament to inquire into the issues described by my right hon. Friend the Prime Minister in his statement to the House of 16th February. In the light of this announcement, the Parliamentary Commissioner for Administration decided to suspend his investigation of a complaint related to the same matter put to him by the hon. Member for Chigwell (Mr. Biggs-Davison). Subsequently, having studied the tribunal's report, he announced that he did not propose to pursue his own investigation. As the Prime Minister said, and as hon. Members will now have been able to confirm for themselves, the report of the tribunal is a very thorough piece of work for which we are all much indebted to Mr. Justice James and his colleagues. They responded promptly and readily to an invitation to undertake a public service which involved not only hearings lasting 56 days but a great deal of work both before and afterwards. In addition to investigating the leak of information they were required to sift a great mass of material reaching back over a period of 10 years and to wrestle with the difficult administrative issues and technical complexities which are taxing even for those who are concerned with them from day to day. As to the tribunal's findings, we must all be glad that they were able to establish beyond doubt the origin of the leak of papers from the Insurance and Companies Division of the Department. As soon as the truth of this aspect of the matter was firmly established, the person concerned, a photocopier, was dismissed from the Service. It is also satisfactory that the tribunal has been able to establish that no one obtained any pecuniary gain, or for that matter, suffered any financial loss, as a result of the leak. As regards the supervisory work of the Department, the House will, I am sure, have been glad to note the tribunal's finding that there was no misconduct by any servant of the Crown. I also welcome its finding that no officers of the Crown were guilty of idleness or carelessness; and it will be noted that the performance of certain officers, including one who is also criticised in the Report, is specifically commended by the tribunal. The tribunal also concluded that action taken by the Department—or failure to take action—did not cause the collapse of the company. In the view of the tribunal this collapse was due to mismanagement by those in control of the company. The tribunal considers that because of this mismanagement the company was doomed to failure at some time from 1967 onwards whether the Department had intervened or not. In paragraph 350 it states its finding that in the circumstances it describes it is impossible to hold the Department liable for the ultimate loss or any part thereof. I naturally welcome this firm and unambiguous conclusion. In his statement on 16th February, my right hon. Friend the Prime Minister said that the officials concerned and their staff associations needed to have an adequate opportunity to consider the report and to make observations to me. I have now received and considered representations from the staff side and from most of the officials concerned, including the three whose performance is criticised in the report. These representations are voluminous and, as I have reason to know, strongly felt. They cover a great deal of ground but the following points are, I think, those to which the staff attach the most importance. The first relates to the procedures of the tribunal. The staff associations say that in particular the tribunal did not give full effect to one of the six principles recommended by the Salmon Commission in its report of 1966. This principle is that before any person who is involved in an inquiry is called as a witness, he should be informed of any allegations made against him and the substance of the evidence in support of them. The House will recall that the Salmon principles have not yet been accepted by Government and the tribunal was not therefore bound by them, but I should suppose that this particular principle would command widespread support in the context of an inquiry with terms of reference such as those given to the James Tribunal. The staff associations accept that the Department was given a written memorandum of the matters in general with which it and its officers would be expected to deal, but they point out that the witnesses inevitably had the dual rôle of informing the tribunal about the substance of the matter while at the same time defending themselves against general allegations of misconduct or negligence, which at that stage had not been formulated in any degree of particularity. The official witnesses also felt that the tribunal's decision to take their evidence before that of other witnesses, which they could not then challenge, was unfair to them. The tribunal, on the other hand, took the view that the central allegation against the Department—namely, that it erred in not using its statutory powers against the company before 1971—plainly appeared from the very moment the tribunal was appointed. The tribunal refers also to a memorandum of 19th June, 1971, traversing matters in general with which the Department's witnesses were expected to deal and says that the allegations against the Department and its officers did not go beyond those mentioned in the memorandum. It also gives in paragraph 15 detailed reasons for concluding that there were advantages to the Department and its witnesses in presenting their case and making their explanations at the outset of the inquiry.On, I think, the 50th day, when the tribunal was asked to see that any allegations were properly framed, it merely read out again the original memorandum covering the issues that were to be raised. No allegations were made. I hope that the right hon. Gentleman can clear this up. I think that the tribunal is misleading us, perhaps inadvertently, at that point by suggesting that the memorandum contained allegations. It did not.
I agree with the right hon. Gentleman that this is a very difficult area. I think that the tribunal would point to the 32nd day of the hearing as being important in this respect, since on that occasion there was a fairly full rehearsal of the issues which might form the basis of allegations. This is a matter which the right hon. Gentleman is right to raise in considering whether these were at that time specific allegations or were of a general nature. But it would be, I think, hard to argue that there had been no notice of the allegations upon which the hearings were proceeding. This is a difficult area but I think that it would be hard to argue that.
I have referred to the principles recommended by the Salmon Commission. Experience since the Commission reported has emphasised the fact that the circumstances of each tribunal tend to differ materially, so it is not easy to reach conclusions which will prove satisfactory for all occasions. My right hon. Friend the Home Secretary will be speaking on this aspect later, if he catches Mr. Speaker's eye. I think that at that time he will be able to say something on the points made as to an appeal procedure in relation to the findings of such tribunals. There is one other procedural matter. The staff side and the witnesses consider it unfortunate and unfair that the meaning of the term "negligence" was not established at the outset of the inquiry or, indeed, at any time during the tribunal's public hearings. I would be the last to cross legal swords with my hon. and learned Friend the Member for Darwen. I just do not know whether the definition of a meaning of a word is in fact a legal issue or whether it is simply a matter of definition.It is more than a definition of a word. It goes to the crux of the law. I would say that it is more than semantics. It is of great substance.
Not for a second would I deny the fact that it is of great substance. Whether it poses a legal issue is the legal point in my mind. I understand that the tribunal's procedure in this respect was in accordance with that of a court of law, but the staff are concerned that the officers involved had no opportunity to justify their conduct against an agreed definition of this term, which turned out to play such an important part in the tribunal's report.
The third point relates to paragraph 320 of the report. Here, the tribunal says that, by analogy with persons exercising a professional calling, civil servants employed in the work of supervision of insurance companies under the Insurance Companies Act hold themselves out as professionals exercising special skill in that work. It says that the standard by which they must be judged is the ordinary competence required of a person working in his specialised activity. The witnesses and their staff associations see a difference between the circumstances in which such men as doctors, with formally prescribed qualifications, exercise their calling, and the position of civil servants posted by management to the work concerned and engaged in the exercise of administrative discretion in the supervision of an industry operating in a highly commercial setting. Finally, I ought to report that a number of comments, both from within the Department and outside it, relate to the tribunal's technical analyses and to certain of the conclusions derived from them. I do not think that I need trouble the House with details but I mention this aspect to emphasise that the whole business is highly technical and that experts of standing hold differing views upon it. Before I turn to the tribunal's findings about the performance of officials, I should like to remind the House of the background against which the Department was working. The situation under the 1958 Act is not in dispute. The tribunal makes no significant criticism of the Department's handling of Vehicle and General under that legislation. When, however, the Companies Act, 1967, was passed, Parliament and the public believed that the Department had been given adequate powers to deal effectively with the problem of potentially insolvent insurance companies. Experience since then, and not only in relation to Vehicle and General, has shown that this is not entirely the case. I shall return to this question later. In the meantime, the officials who have to administer the present legislation are constantly treading a difficult tightrope—or perhaps I should say are feeling their way through a highly dangerous minefield. They are not like shareholders who, if they develop doubts about a company, can sell their shares. My right hon. Friend the Prime Minister referred on 16th February to this difficulty. The tribunal itself described it as:"…the exercise of a discretionary power designed to prevent insolvency but liable in itself to bring insolvency in its train."
It may well be that there are discretionary powers but surely the Department cannot be absolved from guilt when, by Statute, it should do certain things but, when asked to do so by shareholders, the general public and hon. Members, definitely refuses to carry out the obligations placed upon it by Statute. I could give the right hon. Gentleman details of 20 or 30 such cases.
The hon. Gentleman is always under the misapprehension that in these matters there is not an important element of judgment involved. He always supposes that there is a matter of specific criteria which can be adhered to absolutely, and that is not the case.
It is laid upon the Department of Trade and Industry that certain things must be done—not as a matter of judgment. These include, for instance, the registration of company accounts, the registration of shareholders, and so on. I have given the Department dozens of cases where the law is being broken but where it definitely refuses to take action despite what is laid upon it by Statute. What does one do then?
I can only repeat that the taking of action to which the hon. Gentleman refers is none the less a matter of judgment. That judgment has to be exercised by the Department in the completion of its work.
This problem of the danger of incurring insolvency faced the officials concerned and it is clear that they were at all stages conscious of it. They were also very conscious of the legal advice which they had received as to the restraints upon their field of action and inquiry even after the passage of the 1967 Act. I come to the finding of negligence against the Under-Secretary in charge of the Insurance and Companies Division from 1964 to 1971. It is important to be clear what the tribunal meant by this term. It states in paragraph 320:In paragraph 336 it says:" The relevant concept of negligence is a departure from the required standard of com- petence, whether it be by action or failure to take action, though not every departure is necessarily negligence."
This paragraph contains the phrase to which my right hon. Friend the Prime Minister referred and quoted—and I will not quote it again—in relation to this extraordinary difficult tightrope which has to be trodden by people engaged in this work. Having examined all the evidence put before it, the tribunal concluded with, as it says, reluctance that Mr. Jardine must be characterised as negligent. Many people who saw that conclusion headlined in the newspapers must have thought that he was careless or idle. But this is not so. The tribunal says in paragraph 334 that each and every civil servant who appeared before it" In the present case there is very great difficulty in fixing the standard of competence which can properly be required from officers of the Department."
Second, I think that the tribunal's findings against him of "inaction" may have given rise to some misunderstanding. It is true that he took no action against the company, but there is no doubt that his successive decisions not to act were taken after the most careful deliberation and with the benefit on all appropriate occasions of legal advice. Third, in any general judgment of Mr. Jardine it is right to take into account the wide range of his duties that he performed satisfactorily as an Under-Secretary and his many years of honourable and conscientious service. I do not think there are many civil servants—or, indeed, many of us in this House—who would be confident of emerging unscathed from so searching a public examination of our actions over a period of seven years or more as the tribunal found it its duty to apply to Mr. Jardine and his colleagues. As the House knows, Mr. Jardine retired from the service of the Department at the end of last year after reaching the age of 60. He is at present employed on the staff of the Monopolies Commission. I should perhaps explain that it has for long been the practice to allow civil servants who retire to apply for reemployment in the public service at a lower rank. This has happened with Mr. Jardine. There is no reason to doubt that he is fully competent to perform the duties on which he is at present engaged, and Sir Ashton Roskill, the Chairman of the Commission, having observed him at work, tells me that he agrees with this assessment. Mr. Jardine's appointment to the Commission staff will not be disturbed. I can deal more briefly with the two assistant secretaries who were not found negligent but who attracted formal criticism from the Tribunal. They have each submitted to me detailed comments on these criticisms. Their comments have raised some doubts whether all of the criticisms were justified. I do not think their performance in relation to V and G was faultless. But their performance of their duties as a whole, which the tribunal was not required to assess, has been good—and, indeed, in a number of respects meritorious—and it is, I think, fair to bear in mind that they have undergone a major public ordeal both during the tribunal's hearings and since that time. I propose to take no action in relation to them. I now come to Ministers and senior officials. It has been suggested in this House and outside it that it is unsatisfactory that attention should have been concentrated almost exclusively on an under-secretary and his senior staff. I well understand why this suggestion should have been made. Neither I and my colleagues nor, I am sure, our predecessors in office would wish to evade this issue, and I know that this is true also of the senior civil servants concerned. The tribunal approached this problem from two angles. First, it had available to it every single file going back to 1961. It was, therefore, able to study the part played by all the Ministers and senior officials over the relevant period of 10 years. In the light of this study and of the fact that no allegation of negligence was made against anyone above the rank of under-secretary, it decided not to call any Ministers and to examine only the two permanent secretaries concerned. I would draw the attention of the hon. Member for Birmingham, Northfield to the terms of reference of the tribunal. It was obliged to pursue an inquiry into whether there was negligence or misconduct by servants of the Crown. If there were no allegations as such, there was no occasion for the tribunal to pursue the people concerned. I can only say that its conclusion in this matter does not seem to me to warrant the kind of charge and attack that the hon. Gentleman made on it. This, of course, had the effect that the role of Ministers and senior officials was not examined in any detail during the public hearings. I hope, however, that it is not necessary for me to emphasise that this decision was entirely one for the tribunal. In its report it proceeded to describe and appraise what each Minister and senior official had done and found nothing to criticise, though at the end of its report it made some tentative but helpful comments on certain questions of organisation. Secondly, the tribunal took note of the system of delegation that was in force in the Board of Trade. The effect of this was that almost all the work of the Department in administering existing legislation was dealt with finally at the level of under-secretary or below. The same system is in force in the DTI; indeed, when the Department was created it was re-emphasised with a view to maintaining the position of the under-secretaries in this larger organisation. Like all the under-secretaries, Mr. Jardine conscientiously accepted this situation, and he did not refer upwards for guidance as he was perfectly entitled to do. I think it is one of the sadder features of this whole matter that his perhaps over-scrupulous application of the system of delegation led him to deprive himself of the protection that a reference upwards would have afforded him. Having said this, I must add that if as a result of this case there were to be a general tendency to refer upwards on all occasions, the business of Government would become wholly unmanageable. I have great confidence in the judgment of my officials and I am sure they will hold an appropriate balance. My hon. and learned Friend the Member for Darwen made specific reference to this, and I note how keenly the matter is being considered, within the framework of both the Government and of the Department involved. This is obviously a matter of serious import. But it would certainly not contribute to the good conduct of government affairs were these principles of delegation not pursued. I do not think that in these particular and rather unusual circumstances it would be appropriate for Ministers and senior officials, past and present, to assume a responsibility greater than that allocated to them in the tribunal's narrative and conclusions. So much for the past. I should now like to spend the rest of the time available to me in considering the implications of the report for the future. I refer first to three specific suggestions set out in Chapter 10 of the tribunal's report. The tribunal suggested that the Department might seek a power in certain circumstances to require the accounts of an insurance company to be audited by specialist accountants nominated by the Department. We have discussed this proposal with the accountancy profession, which sees great difficulty in the notion of a "specialist accountant" in this field; and I can understand its argument. However, some adaptation of this idea might be practicable whereby, in cases of special difficulty, recourse might be had to individuals or firms known to have extensive experience in the field of insurance auditing. The tribunal also suggested that the industry itself might take part in the supervisory process. I have myself discussed this and similar matters with the British Insurance Association. While standing ready to give my Department all possible general assistance and information, the BIA feels it incompatible with its character as a trade association to be involved itself in monitoring or investigation. My officials are now in close discussion with representatives of the industry about the whole range of future policy. Finally, the tribunal suggested that the Department might recruit or employ as consultants persons with expert knowledge of the industry. I welcome this suggestion; it has already been discussed with the industry and I hope that shortly the Department will be strengthened by the addition of such experience and expertise. As a general comment, the tribunal questioned whether the staffing of the Department was adequate to deal with its insurance work. The staff of the Insurance Branch engaged on the scrutiny of the returns of insurance companies has been approximately doubled. Further strengthening may well be required, but detailed decisions will have to depend on the outcome of our fundamental examination of the supervisory system. As soon as we are reasonably clear about the shape of new policies, including new legislation, we can examine the staff implications. I can assure the House that there will be no skimping. Then there is the question of new legislation. The House will be aware that the new accounting regulations made in 1968 became fully effective for the first time in relation to returns deposited last year; the Department will shortly he receiving the second set of returns on the new and more comprehensive basis. We shall have to examine those returns to see how far they achieve the needs of the more stringent supervisory system which we are now discussing with the industry. However, there is almost certain to be a need to introduce new legislation. I would prefer not to anticipate at this stage the outcome of my current consideration of the legislative problem; but I can perhaps indicate some of the matters which I am considering with those concerned. There is, for instance, the power to impose conditions upon the authorisation of insurance companies—Section 65 of the 1967 Act. We must consider whether the existing powers should be available where there is change of control. Secondly, there are various powers of intervention under Sections 68 and 80 of the Companies Act, 1967. I am not at present convinced that these powers are sufficiently flexible to meet the conditions in which the Department sometimes has to operate. Thirdly, there is the question of judging the fitness of persons to run insurance companies. There are difficult questions to be examined here arising from the conflict between the interest of fairness to individuals and of general safeguards for the public. Fourthly, there is the question of our investigatory powers, particularly under Section 109 of the 1967 Act. It may be right to provide a separate power for the investigation of insurance companies on the lines of Section 109 but more suited to the circumstances of insurance business and this Department's responsibilities therefor. There are a number of more general questions such as safeguards for policy holders in liquidation, the position of brokers and other intermediaries, and a few other matters. All these questions—and my list is not comprehensive or exclusive—are now the subject of urgent consideration. Suggestions have been made during the debate that a separate organisation on the lines suggested by the right hon. Member for Birkenhead (Mr. Dell) might be considered. I shall be prepared to consider propositions of that kind, although I must warn the House that I cannot envisage that it is satisfactory so to hive off an activity of this kind as to eliminate the element of ministerial answerability to the House in insurance matters." must be acquitted of any such charge ".
The right hon. Gentleman has adduced as his principal argument about the suggestion I have deployed that it would deprive the House of the element of ministerial responsibility. How can the right hon. Gentleman maintain that position in the light of this report, which says that in a case of major failure there was no ministerial responsibility?
I do not think that the report, if I have read it correctly, says that. It says that there was no allegation of negligence or misconduct. I should have thought that the issues of ministerial responsibility were not within the competence of the tribunal. It did not refer to matters of ministerial responsibility; it referred to matters of negligence and misconduct. Therefore, I doubt whether the right hon. Gentleman's observation is appropriate to my remark about his suggestion.
Finally, I should like to say this: the supervision of motor insurance companies is both complex and difficult. On the one hand, it is important to provide adequate protection for the very large and still growing number of policy holders, all of whom are compelled to insure to some extent. On the other, I am sure it would be wrong to try to make the supervision too restrictive. The country has profited greatly from the enterprise and competitive efficiency of the best British companies. We have got to find the right balance, and with the help of the industry and the professions concerned we are exerting ourselves to do so. Today our discussion centres on the tribunal's report. We must all be grateful to Mr. Justice James and his two distiguished colleagues, one of whom has since been made a High Court judge, for the care and attention which they devoted to their intricate and difficult task. We owe it to them and to the many others involved in their extensive inquiry to ensure that we draw from the unhappy affair the maximum benefit for the future.5.45 p.m.
The House will be pleased to hear that, as a result of the Secretary of State's final observations, I propose to dispense with about half my speech. I had intended to cover some of the issues with which he dealt.
I congratulate, as did the Secretary of State, the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) on his choice of subject for this debate. Only a few days ago, when I saw the choice of subject on the Order Paper, I would have qualified my congratulations to the point of asking him to take it off the Order Paper so that we could have a full day's debate. I am glad that the usual channels have given us the opportunity properly to discuss this matter, because, as the debate has shown, there are many serious issues we must deal with as a result of the report and they cannot be dealt with in a short time. I was very pleased by one or two of, the observations of the hon. and learned Member for Darwen. I agree that we must seriously consider the form of supervision and intervention in the affairs of insurance companies to guarantee solvency as far as possible. There is the difficult problem, which the hon. and learned Gentleman raised, that, with the present method of supervision and the facts required for the Department to exercise its supervision, a company which is solvent and which must keep on expanding in order to prove its solvency, may be digging its own grave. There must come a point when it goes bankrupt. This is one of the issues we must consider. I congratulate my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) on his persistence in demanding that there should be an inquiry into this affair. I do not know what would have happened if his persistent demands, which some of us supported, had not been made. I thank the Secretary of State for his observations about Mr. Jardine and the other members of the Insurance Branch. I have a personal interest in this matter and I shall declare it again in my speech. My first personal interest concerns the 1967 Act. Part II of that Act, dealing with insurance, was inserted after the Bill had come from the House of Lords. We inserted about 24 new Clauses in the Bill because of the collapse of the Fire, Marine and Auto Insurance Company—the Savundra scandal—and the people who did the work on them were the officials referred to in the report. It was a very difficult operation, as the hon. Member for Scarborough and Whitby (Mr. Michael Shaw) will agree. We had to ensure as best we could that we were inserting in the Measure the powers needed for adequate supervision and the powers of intervention in the sense of telling companies which appeared to be on the verge of insolvency or which were in the process of insolvency what they must do to become solvent. Never once during the stages of the 1967 Bill did we move the closure. We asked the Committee to spend as much time as possible in ensuring that we got everything right, even though we knew very well that we would be up against difficulties in getting the Bill through the other place and on the Statute Book before the Summer Recess. We wanted the Bill to be passed quickly. Therefore, not only were these officials concerned with briefing Ministers for the Committee stage of the Bill here, making sure that they drafted the new Clauses correctly and being present at the Committee meetings to assist, but we were having simultaneous meetings with leading members of the Opposition in the other place who were concerned with trade and industry and insurance matters to make sure that they were satisfied that the powers were adequate and that discussion in the other place could be curtailed to ensure that they were put on the Statute Book as quickly as possible. I would think that Mr. Jardine, Mr. Homewood and other officials were working about seven days a week for months, because they had to carry on their routine supervision of insurance companies at the same time and they also had to train the new people who, at that point, had been brought into the Department in order to deal with the new powers we had taken. This is a tribute to them. If my memory is correct, the 1967 Act went on the Statute Book on 4th August, and on 6th August —at any rate, two days later—all those officials made out their list of the insurance companies they were now going to have investigated. There was no question of summer holidays until they had started the job of work which the new Act had given to them. So I am very glad indeed that the Secretary of State said what he did about Mr. Jardine and the other officials. I think they deserve that. I am in a difficulty about how to approach our consideration of the tribunal and its findings. I am very glad indeed that the hon. and learned Member for Darwen covered, as he could do far better than I could hope to do, the points of law which arose. I have no inhibitions about criticising the tribunal. I got up in this House and opposed it—that is, I opposed the suggestion that we should have a tribunal of this kind. I did that when the tribunal was announced. I am far more concerned with the reputation of this House in this matter than I am with defending what I might call, in shorthand perhaps, the legal establishment. I was concerned that, the tribunal having been set up with this House having no possibility of discussing its terms of reference, or who should form the tribunal, we would have to accept its report. This is one of the views which, I know, is put forward by a number of lawyers although not spelt out as crudely as I have put it, it is implicit in the Salmon Report that having established a tribunal which is well conducted, we have to accept its report. The hon. and learned Member for Darwen quoted part of the Salmon Report. I will quote a little more of the same paragraph:Quite frankly, I do not think that that can be sustained with regard to the report of this tribunal. The Salmon Report goes on:" Having regard, however, to the experience and high standing of the members appointed to these Tribunals and their natural reluctance to make any finding reflecting on any person unless it is established beyond doubt by the most cogent evidence, it seems to us highly unlikely that any such finding would ever be made without any evidence to support it."
We are in difficulty if we are to accept this, because I think that the report of the tribunal is open to very grave criticism. It can be criticised on statements of fact, on misuse of fact, on opinions which do not get universal support—as the Secretary of State, I think, hinted—in the insurance business. So the tribunal's report must be criticised. I deeply regret that the three members of the tribunal who spent so much time on this inquiry are now having to face a barrage of criticism for their conduct of the inquiry. They, too, are victims of this kind of tribunal. I must again remind the House that when the inquiry was proposed I opposed it on several grounds, almost instinctively. One of them was very clear. I held the view then and I hold it now that an inquiry of this kind should not have been set up till the House had considered the Salmon Report and we had debated the matter and, perhaps, laid down rules going beyond what the Salmon Report itself had recommended. It was altogether wrong, in my view, to set up the tribunal till, as I say, we had considered the Salmon Report. There are other factors which I will deal with as briefly as I can. If we are to criticise the tribunal's findings we have to do so in an orderly kind of way. We have to debate the main problem. After all, as has been pointed out by all speakers up to now, and will. I am sure, continue to be throughout the debate, it is not just the shareholders of a public company with whom we are concerned, but a million motorists who lost their insurance cover, and that is not something easily to be disposed of. We have to find out what happened. One of the consequences of the tribunal procedure is that there has not yet been an investigation of the Vehicle and General Insurance Company. We know very well that some evidence of mismanagement is brought out in the report Was it only mismanagement? I believe that what we should have done was not to set up the tribunal but to have had three inquiries. The first one was, obviously, a full inquiry into the leak by the police. The second one was that which is already under way, an official inquiry under the Insurance Acts into the Vehicle and General Insurance Company. That surely should have come first, before we began to examine whether there was merely mismanagement, an inquiry under the Insurance Acts. And then an inquiry to find out whether the insurance branch of the Department itself could have stepped in and used the powers in the 1967 Act to have prevented the firm from going into insolvency. Instead of having the tribunal, as it has done, examining only the question of negligence on the part of the Department, we could have had what my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) has asked for, an investigation into the company itself. For those reasons I objected to the setting up of the tribunal. I also had another objection when I saw the terms of reference. which. I repeat, this House had no opportunity to discuss and approve, and the appointment—I say this advisedly, but I do not want to be rude—of three lawyers not one of whom, I understand—I am open to correction on this—had any previous experience of the insurance business." In matters of the kind with which Tribunals are concerned, it is of the utmost importance that finality should be reached and confidence restored with the publication of the report."
All the members had experience of insurance cases and Mr. Kerr and Mr. Templeman have had great experience.
What kind of experience? This is a point which has been raised before. I am talking about technical experience of a company, of being employed in this business. But never mind. I do not want to pursue that point, but I would have preferred to have had an expert, an assessor, as a member of the tribunal.
I was very much afraid that the tribunal, being conducted in a way which, obviously, it had to follow, from its terms of reference, and from the appointment of three lawyers, would possibly, as it were, pontificate on matters which were not properly considered, and on information which was, perhaps, not properly digested by the tribunal. I think that that is what has happened. There are four issues which we have to consider. First, there should be some body to which the findings and the observations in the tribunal's report can be referred. We have to decide whether the tribunal obtained and assessed correctly all the relevant facts. Secondly, we must make sure that the inquiry was fairly conducted, not just on the basis of the Salmon Commission recommendations but in common justice. Thirdly, if at the end of the debate we have any doubts about the facts as presented in the report and are still gravely concerned about the tribunal's findings, we must consider whether this form of inquiry is appropriate for investigations into allegations of maladministration of this kind. The Salmon Commission emphasised that the tribunal procedure should not be used except in very exceptional cases concerning the safety and security of the State. Fourthly, we must look again at the question of ministerial and departmental responsibility and give some attention to the related question whether authority to supervise and intervene in the affairs of insurance businesses should remain in the Government Department or be transferred to a statutory agency. The trouble started with the terms of reference. I hope that never again shall we have a report of this kind. I do not want to go into detail on the shortcomings of what might be called the technical matters in the report. The parts of my speech with which I have dispensed in accordance with my promise are examples which prove that some factual parts of the report are inaccurate, that the observations made are not always sustained by the factual arguments, that on occasion the facts presented to the tribunal are misused and that there are serious omissions from the report. One omission which I wish to refer to is this. There is a suggestion that not just the officials in the insurance branch were concerned with the examination of the company but that other officials of the Board of Trade were concerned. Of course this is so, unless everything has changed since my days there. My hon. Friend the Member for West Ham, North said that the Board of Trade could intervene at any time under the Companies Act, 1967. Section 109 of that Act provides that the Board of Trade, if it has good reason to do so, may investigate an insurance company. Section 80 provides that if it appears that there is a risk of a company becoming insolvent the Board of Trade may impose certain requirements.I was referring to the general duties laid upon companies under the Companies Act to carry out certain duties, such as preparing audited accounts and submitting those accounts. The Minister did not answer this point. Where companies fail to carry out their statutory obligations and the Department refuses to carry out the law, the Department is responsible.
I had better discuss this with my hon. Friend afterwards. Although his point is a very good one, it does not relate to the two sections I have mentioned. Who, in practice, decides whether there is a good reason to investigate, and, if need be, impose conditions on an insurance company? The Secretary of State knows very well —he has said so—that the insurance branch officials seek legal advice from the Department's solicitors before taking action under the two sections to which I have referred.
I have no evidence, but I guess that during the appropriate period when the tribunal suggests that the officials should have stepped in with these two powers they received legal advice from the Department's solicitors. There is no reference to that in the report, and the legal advisers were not called before the tribunal. We are entitled to know what legal advice these officials had. I imagine that the legal advice to them was to go slow and not to get involved too soon —and for very good reasons at that time. A hasty move might have resulted in adverse publicity for the company and its affairs. Even though it appeared to be solvent, it was probably on a knife edge and perhaps badly conducted, and might easily have been pushed into bankruptcy. It is not the immediate concern of the shareholders in those circumstances that we have to deal with but the insurance cover of a million motorists. If it is true, as I suspect, that these officials were given legal advice to go slow and be cautious, this should appear in the report, but it does not.My right hon. Friend is making rather too much of the legal advice aspect. All sorts of people in Government Departments take legal advice, but at the end of the day it is the officer, in the light of his experience and the expertise he has picked up, who makes the decision. In this House we often ask the Clerk's advice. Ministers ask for the advice of their Permanent Secretaries but eventually have to take the responsibility at the end of the day. If the legal advice argument is pressed to its limits it disposes of the argument that civil servants are just amiable amateurs who are not compelled to know.
I do not think that my right hon. Friend's views on the position of the solicitors in the Department of Trade and Industry quite fit in with the facts.
There is another important Omission to which I will refer. I suppose that the person who knows most about the risks, claims, payments, premiums, reserves, investments and so on of insurance businesses is the Government Actuary, but he was not called to give evidence. I wonder whether he would agree with the observations on actuarial matters appearing in the report. On the question of the conduct of the tribunal, I do not accept some of the views put forward by the Secretary of State. That may be because I have a built-in objection to trying to get at the truth by inquisitional procedures except in a court of law where the person being investigated is either in the dock or is a witness and the prosecution and defence have to be more or less equal. The prosecution and the defence must each have its own counsel and the judge has to direct affairs in the court so as to come to a just conclusion. But in the proceedings before the tribunal the lawyers were not fairly balanced. I will not go into the question why the individual members of the insurance branch did not have individual counsel, but had only one counsel during the proceedings to look after their individual and collective interests, whereas the tribunal's counsel became part of the prosecution. Other counsel were allowed to come in on behalf of shareholders and other interests and carry on the interrogation, investigation and inquisition. From my point of view as a layman, this is unfairly balanced and we must criticise the way in which the tribunal was conducted. I wish to refer to another matter mentioned by the hon. and learned Member for Darwen. One of the most disturbing features of the report concerns the attitude of the tribunal to this request for a statement of the charges and the allegations which were being made. The last of the Salmon recommendations is that there should be no appeal from a tribunal's findings. The reasons for this have been spelt out. I do not think it is at all fair for the tribunal to say, in effect "Although there can be no appeal from our findings, unlike a decision of a court, we shall insist that the final proceedings shall be taken as if this were a court of law ". This is virtually what the chairman said on Day 50. Counsel for the Department had asked for a statement of the allegations and on behalf of the officials, had asked for a chance to reply to them. Counsel then read a written statement from these officials to the tribunal which read as follows:The answer was given after an adjournment, and the chairman of the tribunal read out again the issues to be raised during the tribunal's proceedings, but they contained no allegations. When counsel for the officials said, in effect, that they were dissatisfied with all this the chairman of the tribunal said to their counsel:" We have now studied the Day 49 transcript of Mr. Arnold's outline of the allegations he will be developing in his final submission against the Department and named individual officers. In accordance with the recommendation in paragraph 50 of the report of the Salmon Commission we now ask that we should each be given a written statement of the allegations against us and the substance of the evidence in support of those allegations. We ask further that Mr. Webster's submission should not be embarked upon until either we have been given an opportunity of making observations on such statements of the allegations or, alternatively, until Mr. Arnold's final submission has been made."
It is in this atmosphere that the tribunal was conducted. I wish to draw attention to something further in the statement of the chairman of the tribunal when replying:" We are not singling out these particular six individuals, but it applies to your clients. You must tell them not to be so edgy. Bend them over your knee and smack them! That is what they want."
This is the sentence that I want the House to note:" Those who have interest in the Tribunal have heard counsel's outline speech in opening the case, and in all these circumstances we do not feel as at present advised, that there should be any misapprehension at all in the minds of anybody as to what allegations are made either as to system or as to individual conduct."
I do not know in what circumstances the reference to the Salmon Report would not be applicable. We must also consider the question of ministerial and departmental responsibility. We must make sure in inquiries of this kind to get all the facts, in whatever way we set about it. An inquiry, to begin with, into departmental maladministration could be conducted by the Parliamentary Commissioner and should be directed at the Department. It is an inquiry into the Department. If at the end of this it is felt that the Department has failed, that faults are obvious and that there has been maladministration, then the Department has first to make sure that the officials concerned have been properly dealt with and must give a guarantee that this kind of thing will not happen again. But if it is necessary to name the civil servants they should be named, and this should follow publication of a report by the Parliamentary Commissioner. Ministers cannot evade all their responsibility. I do not agree with the idea that they have to take responsibility for the failures of their civil servants, but the extent to which they do take responsibility must be determined on the facts of the case. I believe that the responsibility for supervision of insurance companies and intervention in their affairs in order to preserve their solvency should be transferred from the Department of Trade and Industry to a statutory agency."The reference to the Salmon Report does not seem to be applicable in these circumstances."
6.18 p.m.
I want to intervene only briefly in this debate. My reason for wanting to do so is that, however one looks at this question, one is left with an uncomfortable feeling that an injustice, or something very like one, has been done. I hope that one of the results of this debate may be to help put that right, and I was glad that my right hon. Friend showed himself to be so forthcoming in this respect.
What disturbs me, and, I am sure, many other people besides, is that in an affair with which a great many people at all levels were concerned and about which a great many people were informed one man, out of all those involved, should have been singled out to carry the can and that that man should have been given no real opportunity to state his case or to have it stated for him. After all, the affairs of the V and G Insurance Company had been under consideration by, or at any rate had come to the notice of, Ministers and senior civil servants for years under at least two administrations. The right hon. Member for Sheffield, Hillsborough (Mr. Darling) has just thrown some valuable light on the history of the case. To the extent that a Minister or a senior civil servant is aware of a problem—any of us who have been Ministers realise this all too well—he is in the widest sense—I do not say "directly" —responsible for it, responsible for keeping an eye on it and in seeing that it does not take a wrong turn. But no Minister, no former Minister and no senior official was required to give evidence, nor were the Government Actuaries, who might have been thought to have some responsibility. However remote Ministers or senior officials may have been from the matter under discussion, it might have been better if someone senior to Mr. Jardine had been called so that justice could at least have been seen to be done. Another thing I find disturbing is that, as a witness, Mr. Jardine was given very little indication of the precise allegations against him until half way through the proceedings or possibly even later, and so had no chance of preparing a proper case. Again, Mr. Jardine and the other Civil Service witnesses were represented by the same counsel as the Department of Trade and Industry, with the result that the learned gentleman in question was bound to be labouring to some extent under a conflict of loyalties, especially if, as my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) has suggested, any negligence there was was on the part of the machine. We have been told that theoretically these civil servants could have chosen otherwise; but, for the reasons that my hon. and learned Friend gave, that choice would not have been an altogether easy one. The alleged reluctance of the civil servant to make his mind up or take decisions is almost as old a music-hall joke as the one about the mother-in-law and has just about as much foundation in fact. Hon. Members can judge for themselves how much that is. But I am inclined to agree with those who say that if civil servants find that they are to be treated in this way they will start referring everything requiring a decision to someone else even faster than they do already. If that happens, it will be the direct result of the proceedings and report of the tribunal. I was glad that my right hon. Friend showed himself to be aware of this danger. I know that tribunals are the "in" thing at the moment. It has become the fashion for Governments to refer any awkward problem to a tribunal. It is a wonder that there are enough legal luminaries to go round. But I cannot help feeling that in this case a tribunal of this kind was the wrong instrument in the first place, and, as things have turned out, it has proved to be an extremely blunt instrument. Its terms of reference were also, clearly, too narrow, and to that extent the report it has produced is unbalanced, and I believe, in the ultimate analysis, unfair. I also believe that if there was to be a tribunal it should have included at least one member who was thoroughly conversant with the workings of Westminster and Whitehall. We live in the world of public affairs, but it does not follow that others do or that they understand the exact implications of everything that happens in this square mile. Had there been such a member on the tribunal, it might have led to a much fairer and much more balanced assessment of what had happened. The fact that we are having this debate at all shows how much concern and disquiet there is about what occurred. Anyone who, like myself, knows Mr. Jardine will find it very hard to believe that a Government servant of his experience and ability could have been guilty of negligence in any ordinary sense of the word. An error of judgment, perhaps. That can and does happen frequently to all of us. But negligence, no. After listening to what my right hon. Friend said about the meaning of negligence I cannot say that I am very much the wiser. It did not sound like anything I have heard called negligence before. After all, words do matter, not least in the mouths of learned judges. I am glad that my right hon. Friend has shown how aware he is of the concern that many of us feel. The trouble is that it is not now easy to see how the damage that has been done can be undone. I hope that the Government will at least try to ensure that this sort of thing does not happen again and also that as far as possible some amends are made to Mr. Jardine and his colleagues for the rather less than fair deal they have received and an opportunity afforded them, if at all possible, to appeal against the tribunal's verdict. Possibly, as my hon. and learned Friend suggested, the Government could achieve this end by referring the point of law involved—namely, what constitutes negligence in a civil servant—to the Judicial Committee of the Privy Council and so provide Mr. Jardine with at any rate something approaching the right of appeal which he would otherwise have been denied.6.25 p.m.
I shall be remarkably brief judged by the length of the speeches so far. I shall concentrate entirely on the implications of the tribunal and its report for the Civil Service generally, because I believe that there would be dangers if the procedure followed in this case were to be applied to other such inquiries.
As the House knows, I act as adviser to the Civil and Public Services Association. which is the biggest of the Civil Service trade unions. I therefore speak with some knowledge of the feelings that have been aroused throughout the Civil Service by the tribunal. I also speak with some detachment, because the members of that association were not directly involved; they were not in the dock, as it were, at the tribunal. The views of the Association of Civil Servants, First Division, and of the Society of Civil Servants, whose members were directly involved, are widely held and are genuinely reflected by the National Whitley Council Staff Side. The Secretary of State will know that his own departmental staff side has made representations to the effect that the conduct of the tribunal was a travesty of justice and may well embitter relations between management and the staff side for a very long time, unless there is now a very clear recognition by the Government of the position and an attempt at redress. Having listened to the Secretary of State, I am not clear about the extent to which he has met that requirement. Tomorrow I will read his remarks more carefully in the OFFICIAL REPORT. 1 emphasise that the National Staff Side raised a number of points arising from the appointment of the tribunal with the Prime Minister well before the findings were published. This is important, because the staff side wanted to get on record its objections and make it clear that it believed that those objections would be valid irrespective of what the findings turned out to be. What has concerned the unions was the choice of a tribunal rather than the Ombudsman to deal with what was largely a question of allegations of maladministration, as my right hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) said. I myself have slight reservations about this point. Much more important is the question which my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) raised about the narrow terms of reference excluding the possibility of an inquiry into misconduct by the company. We have heard from the Secretary of State that inquiries are proceeding. We have no guarantee that there will be publication of that report. The right hon. Gentleman said that he would consider that, but I should have preferred a guarantee of publication. Further, the staff side representatives feel particularly strongly about the inquisitorial nature of the tribunal and the fact that the Department's witnesses were subjected to generalised charges and cross-examination without their being given any written statement of the allegations or of the alleged supporting evidence, contrary to the report of the Salmon Commission in 1966. While I appreciate the difficulties of the Secretary of State, he tended to gloss over this matter. When the Home Secretary replies to the debate, I hope he will say something further about it. Then there was the damage caused to the reputations of officials who were "in the dock" by the publicity given to them at a stage long before the findings. Again, in the end one key witness was exonerated completely. The inquisitorial nature of the tribunal has roused very strong feelings. I have had some extremely strong language used to me about it. It has been put to me that a witch-hunt atmosphere was created and that it was largely the responsibility of learned counsel. No one objects to a very searching inquiry in a situation of this kind when one recognises the very real distress that was caused to the million people who were involved in the collapse of the company. None the less, it has been put to me that counsel's cross-examination of the witnesses may have been very good for the headlines in that it was excellent Perry Mason-style court-room stuff, but that it was not in line with the recommendations of the Salmon Commission in respect of the treatment of witnesses. We have been told that the possibility of an appeal procedure is to be considered. Again, the Home Secretary may be able to say something about it. But, despite what the Secretary of State said, after the publication of the tribunal's report the civil servants concerned were not able to take part in a totally unrestricted way in the public controversy. I think that the right hon. Gentleman's answer on this point was most unsatisfactory. I cannot see why they were not free to comment on any of the matters connected with the tribunal. I am a genuine devotee of open government. I take the view that far too much goes on unnecessarily behind closed doors. Despite this Government's promises to the contrary, they are no better than their predecessors in this respect. I could probably make out a case to show that they are worse, but I shall not pursue that. Too many senior civil servants, like politicians in office, are reluctant to see a change in this matter of open government. That is why we see demands for investigations, for an extension of the powers of the Ombudsman, and so on. Increasingly people take the view that not only should justice be done but that when ostensibly it is done in their name it should be seen to be done. Equally, when the Civil Service is under fire it is entitled to argue that justice must be seen to be done. That has not occurred in this case, and that is why there is this sense of burning resentment throughout the Civil Service as a result of the tribunal and its activities and findings. There are tremendous shortcomings arising from the way in which the tribunal reached its conclusions, and the Government must draw very serious lessons from them. We are told that a great deal of consideration is going on still. I hope that the Government learn those lessons. Unless they are prepared to do so they will be saying that they are content to undermine perhaps permanently the essential relationship with their own employees.6.34 p.m.
This House has always viewed with disquiet proceedings under the Tribunals of Inquiry Act. I share the dislike of many of the aspects of this inquiry that have been voiced by right hon. and hon. Members who have spoken in this debate.
The point was well made by the right hon. Member for Sheffield, Hillsborough (Mr. Darling) that this tribunal had no expert knowledge of insurance matters. What is more, it had no expert assessors to help it. Therefore, rightly, it is to be faulted on that part of its inquiry. In paragraphs 287–289 of its report, without any of that help, the tribunal makes disparaging criticism of a leading firm of consulting actuaries. The words used in the report show that the tribunal did not understand the technicalities of the insurance world. Those actuaries were not called to give evidence. They had no opportunity to question whether the tribunal was right and explain what they meant. It seems to be very unfair if it is possible to take away a firm's reputation without any means of redress. When my right hon. Friend the Home Secretary replies to the debate, I hope lie will make some suggestions about what is to happen to the firm concerned, which has been condemned just in passing. I hope that my right hon. Friend will ask for the tribunal's observations to be submitted to an expert actuarial committee for its observations. In my view, the condemnation of Mr. Jardine is even more unsatisfactory. My right hon. Friend the Secretary of State for Trade and Industry quoted the Salmon Report. That report says that witnesses should be given not only details of charges but the substance of supporting evidence. In this case, in many of the charges against Mr. Jardine there is no supporting evidence because that evidence was not called. Perhaps I might give one illustration of that. In paragraph 341 of the report Mr. Jardine is condemned as negligent because he is alleged not to have attached sufficient importance to Mr. Cahill's warning in September, 1966. Mr. Cahill was not called to give evidence. The tribunal had to rely on Mr. Jardine's minute to his subordinate. Having made this reflection, the tribunal went on in paragraph 187:But the tribunal did not call Mr. Cahill. What a pity it did not. If it had called him, no doubt he would have been cross-examined. In the course of cross-examinatiton, counsel would have put to him "Mr. Cahill, in 1968 and for a long period thereafter you were recommending the general public to insure with the Vehicle and General Company." That illustrates the travesty of justice which there has been under which a high-ranking civil servant has been condemned without supporting evidence and without the evidence of witnesses. The right hon. Member for Hillsborough also asked about all the missing witnesses. Before a man can be condemned, ought not other witnesses to be called? There is, for example, the solicitor to the Department on whose, advice Mr. Jardine rested for whether he was to operate the section. Why was he not called to give evidence? Why were not Ministers called? Why were not senior civil servants called? Why were not Sir Max Brown and Mr. Golt called? According to paragraph 62 of the report, they had full knowledge of all that was happening and they were concerned with the company's affairs. Indeed, Mr. Golt and Sir Max Brown themselves received complaints from the British Insurance Association through its chairman, Mr. Robarts, that were far more specific than those which Mr. Cahill, with his unrecorded telephone conversation, gave in September, 1968. Mr. Golt and Sir Max Brown received the complaints in February and September, 1970, the material time, when no action was taken. Yet those two senior civil servants were not called. Why? My right hon. Friend said that no allegation of negligence above the level of Under-Secretary was made. Who made the allegations against Mr. Jardine, Mr. Homewood and Mr. Steel? Presumably the senior civil servants. This seems the wrong way to have undertaken the matter. I compare it very much with an earlier inquiry, which I remember well, when there was an allegation of maladministration in respect of the Crichel Down affair. At that time Sir Andrew Clark headed the inquiry. No one suggested that Ministers and senior civil servants should not come before the inquiry. No one suggested that in that Department one devolved responsibility conveniently down to Under-Secretary level so that everyone above was absolved and the load was put upon that officer. In that case the Minister, the present Lord Crathorne, resigned. I remind the House what Sir Thomas Dugdale, as he then was, said:" It does not appear to have occurred to anyone at the Department that there must have been a great deal of hard thinking and concern at the BIA before a warning of this sort would be transmitted by the Chairman of the BIA to the Department concerning a member ".
My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke), in his massive but brilliant speech, made one mistake. He said that now we should be eroding the doctrine of ministerial responsibility. This is a new idea, a new doctrine, in this report of ministerial responsibility which I regret. If the report is allowed to go uncriticised and unreformed we shall do great damage to our adminstrative system. How can we put this right? There is no appeal against this decision, which I believe has been brought about by methods which we have not hitherto believed to be right. Parliament cannot tolerate this injustice. My hon. and learned Friend the Member for Darwen suggested the use of the Judicial Committee of the Privy Council. I do not believe that is sufficient. We should either have the mistakes in this report corrected or have the matter referred to a Select Committee of this House to examine the methods used in this tribunal of inquiry and, if necessary, as I believe it would be, exonerate the civil servants and actuaries whose honour and competence have been in issue." I am quite clear that it would be deplorable if there were to be any departure from the recognised constitutional position. I, as Minister, must accept full responsibility to Parliament for any mistakes and inefficiency of officials in my Department, just as, when my officials bring off any successes on my behalf, I take full credit for them. Any departure from this long-established rule is bound to bring the Civil Service right into the political arena, and that we should all, on both sides of the House deprecate most vigorously."—[OFFICIAL REPORT, 20th July, 1954; Vol. 530, c. 1186.]
6.45 p.m.
I should be willing to consider carefully whether to support such a suggestion as the right hon. Member for Thirsk and Malton (Sir Robin Turton) has made in the last few minutes about a Select Committee. I had not been following his argument as leading to that point. I should be willing to consider that proposal, and I hope all right hon. and hon. Members will do so, too.
I was impressed by what the right hon. Gentleman said at the beginning of his speech about the tribunal's loose use of words, without appearing to realise the full significance of them, especially to a lay or not expertly informed group who might read them in a different context from the report. I shall refer to that again in one minute. I think the right hon. Gentleman put his finger on the key to this injustice by his reference to the use of words. I had an active time through my local newspaper on the V and G collapse and I received not an enormous number of letters, but many that I received showed the hardship my constituents suffered when V and G collapsed. I have the letters here. I look to the day when the law and administration of the law will be such as to make it impossible for my constituents to be penalised again in this way. I welcome that short passage in the Minister's statement when he said we should look to the future. That is not the basis of the argument today because it is not that that we are discussing. However, I feel we should all in this House pursue the policy of looking to the future and see what can be done for greater protection for our constituents. Now to the injustice done to civil servants: I have worked closely with senior civil servants—indeed I can claim to have been a senior civil servant—and I am concerned with the evidence I have had of the Minister's attitude towards Mr. Jardine.The tribunal's attitude.
No, the Minister's. The tribunal has been unfair to Mr. Jardine, and unless Ministers do something it will have serious results on the morale of senior civil servants. The Government could be more generous. I do not think they realise the position. My hon. Friend interrupted me, quite rightly. I should have made it clearer. I am saying that Ministers should do something about this injustice. It is for them, not for the tribunal.
It is not their fault that the Press picked up the word "negligence" and used it to attribute great blame to Mr. Jardine. It was the popular Press that did this.The Times and The Guardian presented a balanced summary of the report, but many of the others did not. But it is a fact that the tribunal appears to have turned its back on the ordinary rules of natural injustice. I do not believe from what I have heard that the people condemned—it is not a question of people being "accused" —were given adequate details of what the allegations were against them. It does not appear to me that they were given the substance of the supporting evidence. Certainly they were not given any indication of how negligence was to be defined. The Minister questioned the suggestion by his hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) about the need for a definition of the word "negligence". I assure the Minister that it is a legal matter, and I support the hon. and learned Member for Darwen in his suggestion that under the Act of 1833 the Government should refer to the Judicial Committee of the Privy Council this definition of "negligence". I believe that it is a matter of law and that it is a way in which the Government can do some justice to Mr. Jardine. I hope that, when he comes to reply, the Home Secretary will take up this point.6.50 p.m.
Not only do I echo the sentiments expressed by the previous two speakers; I shall also try to emulate the new brevity that has crept into the debate.
I particularly echo and emphasise the sense of injustice that has emerged from a reading of the tribunal's report. Many of us, especially those who had some contact or professional involvement with the Board of Trade in the past, will not be uncritical of that Department. Nor need we be uncritical of the Ministers concerned. Nevertheless, reading the report, one cannot help feeling that an injustice has been done. I hope that some way will emerge—by way of either a committee of the type suggested or an appeal procedure—whereby the civil servants who have been dealt with in some respects unfairly will have a chance to clear the air. In this debate we are also looking to the future, and in this respect I want to begin by referring to some of the suggestions that have been made. I am an advocate of the outside agency that has been suggested. The right hon. Member for Birkenhead (Mr. Dell) went into print advocating this. Some of my hon. Friends and I formed anad hoccommittee—if I may use a phrase that has lately fallen into disrepute in this house—to consider the type of proceedings which should be put forward for the insurance industry. My hon. Friends the Members for Pembroke (Mr. Nicholas Edwards), Billericay (Mr. McCrindle) and Cheadle (Mr. Normanton) contacted a number of eminent insurance men, to discover what they thought should be the right solution. We all came down in favour of an idea such as an outside agency. We have put our proposals to the Government and hope that they will consider them seriously. I was disappointed when my right hon. Friend the Secretary of State suggested that such an agency would be incompatible with the idea of ministerial responsibility That does not seem to me to be a valid objection. Such a statutory agency would, clearly, have to exercise its routine functions—and we believe that it could exercise those functions far more effectively than the Department of Trade and Industry—but for its ultimate political sanction it would have to come back to the Minister for whatever action might be thought necessary in extreme cases. My right hon. Friend also put up an argument, which I hope he will reconsider, in connection with the idea of specialist accountants. He thought that this would pose considerable difficulties but that it could be resorted to when special circumstances arose. That is exactly the way not to approach this problem. If we do these things only when particular circumstances arise fear and panic are created, and that does the damage. That has been one of the principle causes of inaction on the part of the Department in the past. A system of a specialist panel of auditors is in operation now for syndicates of Lloyd's underwriters, and if it works there it should work with insurance companies. My right hon. Friend put forward the idea that outside consultants should be employed. That is a good idea, but I hope that my right hon. Friend will regard it as only a temporary expedient, to be used until he can come forward with more positive proposals, I hope in the not too distant future, which will ensure a new system of statutory supervision of insurance companies. On the question of staffing the department, the report says that there were eight on the staff in 1960 and 22 in 1970. I have no doubt that the depart- ment has since been further expanded, but it still sounds a very small department. One sometimes hears comparisons made with other countries, especially the United States. In New York alone there are 700 inspectors. No one would advocate a system which would indulge such bureaucratic instincts, British insurance is pre-eminent throughout the world because it has avoided such bureaucratic intervention, which involves supervision for far more than solvency questions. It means involvement in rating details, in policy conditions and the examination of individual policies to ensure that there is no discrimination. We must avoid that type of excessive interference. Nevertheless, we seem to have bent over backwards in the other direction. The section of the report referring to training says:To expect people on a short course to amass the experience that others have gained in a lifetime is quite impractical, and irrelevant to these considerations. There is a story which I hope is apocryphal but which indicates the lack of confidence that exists between the State and the insurance world. A general manager was speaking to a fairly junior clerk in the insurance department when a query arose, to which the manager said, "That relates to our quota share reinsurance facilities." The clerk then said, after a long pause," I am terribly sorry. I only came here a week ago from the Milk Marketing Board and I would be grateful if you could explain that further." I hope that is not true, but it is the type of story that one hears. I mean no disrespect to the Milk Marketing Board, but it is true that there is little confidence between the insurance industry generally and the operation of the DTI. It is almost impossible for a Department of Government to exercise these functions in the way in which they should be exercised, not because it might not have all the technical competence or fully understand the Act and all its implications, but because this type of supervision is essentially one that requires commercial judgment, and it is a very delicate thing on the one hand to follow the letter of the law—which we expect civil servants to do—and, on the other, to take a commercial judgment—which we are saying should have been done in the case of the Vehicle and General Insurance Company. I believe that commercial judgments of that nature should be taken by Ministers. There should have been a policy at that time which stated that the Department was to operate the Act rigorously, bearing in mind all the previous collapses that had taken place—a policy which made clear the political sensitivity of the matter and that it was intended to be tough. If there was no such policy at that time the Minister was responsible for not having created it, or for not having created such a structure within the Department to ensure that such steps could be taken and would be taken. To criticise the Department itself for not having exercised its judgment and for not taking very severe and damaging steps against an insurance company is wrong. I turn to the idea of an outside registrar, as we called him in our submission. I believe that if an outside organisation were situated in the City of London, with its finger on the pulse of commercial life, instead of some distance away in Government offices it could, as a routine matter, keep in daily touch with insurance companies, sending in auditors and inspectors as a matter of routine, and not out of panic. It could then expect to maintain a degree of commercial judgment, and only in the absence of a sympathetic response by an insurance company would it need to go to the Minister and ask for his sanction. I hope that we shall shortly see a new supervisory system emerging. The report imposes a grossly unfair burden on the civil servants who have "carried the can" so far. Many of us who were involved in insurance during the years in question knew about the Vehicle and General Insurance Company. We had heard many rumours flying around about, year in and year out. Many of us thought—some might even have hoped—that the prophets of doom would be right. Equally, many critics may have been buying shares in the company at the same time, because they believed that it might succeed. That is the answer to the hon. Member for Birmingham, Northfield (Mr. Carter), who wanted to know how the company survived when it was not following the accepted rules. The hon. Member would probably not want to see himself in the role of a defender of the Establishment, but that is what he was doing. We had an Establishment, generally of the larger companies, which has protected itself by its tariff. They established a system which was not necessarily to the benefit of the motorist. I am not a great advocate of the Vehicle and General Insurance Company. Many of us were aware of the history of some of its principals, and were unsympathetic to the company generally. Nevertheless, it was fair to say that the company had made considerable strides forward. It had achieved a worthwhile breakthrough and considerable success in the insurance market generally. It had been accepted in November, 1966, by the British Insurance Association." More recently, however, arrangements have been made to give the staff some initial training as well. When the staff of the Branch was increased in 1967–68 for instance, arrangements were made with the Chartered Insurance Institute for most of the new people to go on a course specially arranged by the Institute, and the present practice also is to send new officers on a short Treasury course of accountancy."
That is the point that I was trying to make. How was it possible for a company like the V and G, about which a mass of rumour was circulating, and some of whose principals had doubtful pasts, in the final analysis to gain entry to the highest echelons of the profession?
It is easy, with hindsight, to say that that commercial policy was wrong, but at that time the British Insurance Association, which represented those who had followed traditional methods of underwriting, was prepared to look at the company's operations and say "We did not really believe that it would succeed, but it appears that it is succeeding ".
With the wisdom of hindsight it is easy to say that the Association was wrong, but if at that time it appeared that the company was going to succeed, and if the Board of Trade, as it was, had said that it was going to close down the company, there would have been a far bigger outcry from the Opposition of the day than there has been since. Even if, as I should have liked, there had been a positive policy by a Minister, it is more than probable that the same conclusion would have been come to; namely, that the company should be allowed to continue because there was not enough evidence to put it into liquidation. We expect people in the Department to make a commercial judgment. Sometimes that judgment will be wrong, and sometimes it will be right. If there is to be a tribunal of inquiry every time they make a wrong judgment, that will put civil servants in an impossible situation. I therefore urge the idea of a strong outside agency as soon as possible. There is a degree of over-complacency that the small companies can be controlled and looked after, and that the big ones are safe. It is more difficult for the Government to take action over large companies, because the repercussions are so much greater. I do not believe that the Act, the control that we have and the returns that we can demand are a complete safeguard against the collapse of a large insurance company. I shall not go into the question of the life and pension companies, which could involve great repercussions but which I believe generally are safer. What worries me is that with the scale of international financial operations and the facility which the insurance market offers to raise large sums of money quickly, it is not impossible to foresee a time when large international organisations of doubtful reputation could decide that here is a vehicle for raising a large sum of money and then departing rapidly from the scene. No kind of returns would prevent that from happening. We must ensure that we have a sensitive and sophisticated organisation manned not necessarily by hundreds of people but by people who know the industry, who are close to the heart of the City and who, when they suspect that something is going wrong, can quickly report to the Minister so that action can be taken. I hope that one of the results of the debate will be that before long we shall see legislation presented to us on the lines that I have endeavoured to outline.7.4 p.m.
My regret is that the Government do not carry out the provisions of the legislation that is on the Statute Book. We do not need new legislation. What we want is for the Department and Ministers responsible to carry out that which is statutorily imposed upon them.
We cannot divorce our debate on the report from the complete neglect, maladministration, ineptitude and deliberate attempts by the Minister and his Department to defraud the public. I say that frankly because the Government and these Ministers—and I am going back over the years to the days of the Board of Trade—have completely failed to carry out the obligations laid upon them by Parliament, and it is because of their sheer neglect and ineptitude that these things have happened. I could cite 20 companies, but I shall cite only some of them—Dollar Land, Hartley Baird, Savundra Auto-Fire Group, John Bloom, I.O.S., Overseas Investors Group, Craddock Group, Pinnock, Dr. Wallstander Group, and now V and G. What has happened? All this is tied up with the fact not that we want more legislation, but that we want the existing legislation to be put into effect. There is legislation which says that public companies must—not may—have proper company directors, that they must have proper company meetings, that they must keep proper accounts and have them properly audited, that they must have proper secretaries and that they must do a hundred and one other things. What happens in practice? When shareholders, directors, solicitors, barristers, accountants or Members of Parliament ask the Minister to carry out the statutory duties imposed upon him, he bluntly refuses to do so. When Members send through 30 or 40 Questions asking the Minister why he will not carry out his obligations, he bluntly refuses to answer. There are on the files records going back to long before the John Bloom affair blew up. They show many requests to the Board of Trade, now the Department of Trade and Industry, to carry out its statutory duties, but it refused to do so. Recently I asked a Question about Dollar Land. It has had no company meetings. For two or three years it has issued no financial statements. There have been no company reports. Indeed, some people were illegally calling themselves directors of the company. All the details have been given to the Minister but nothing has been done about it. The right hon. Gentleman knows Mr. Martin Moir. He is very well known to the right hon. Gentleman, because he has given the Minister information about hundreds of cases in which this kind of thing has been going on. The Department does not want too many investigations. It hopes that it can sweep these things under the carpet. It hopes that things may be forgotten and that time will resolve the difficulties. The trouble is that wicked, naughty Members of Parliament make things difficult for the Department. They clamour in the House and become known as awkward, difficult customers, merely because they ask the Minister to do his duty and carry out what the law requires him to do. Eventually, when a company collapses and the Department can hide the situation no longer, there is an inquiry. When that happens someone has to be the fall-guy, and that fall-guy often happens to be a junior civil servant because the appropriate senior civil servant will not take the can back. The Father of the House is right. The Minister concerned should take responsibility for what happens and say, as Sir Thomas Dugdale did, that he will resign and accept responsibility. Instead of that, a civil servant who is due to retire shortly is told "You are due to retire fairly soon but do not worry, old boy, we will see that you get another job "—which he will get on the Monopolies Commission—" and we shall try to clear the matter up later. Whatever you do, do not let any of the top civil servants, and, above all, any of the Ministers, fall in the cart ". It is the Ministers who should be blamed. It is the job of Ministers to carry out the duties laid upon them by the Companies Act. The law says that you, Mr. Deputy Speaker, and I shall not walk out of the Palace of Westminster and hit a policeman on the nose. If we were to do that, I am sure that action would be taken against us, and rightly so. But what happens with companies—and there are thousands of them—which never trouble to send in returns? When we ask the Minister to take action to deal with them, he refuses to do so. Last week I put down Questions about two companies. In his reply the Minister admitted that those companies were in default, but no actiton has been taken against them. They have been in default for years. When—as happens sometimes—they go into voluntary or compulsory liquidation, when all the poor shareholders lose their money and there is an outcry, action will be taken, but then it will be too late, and it will be said by the Minister that he did not know or that he could not take action earlier. I await with interest the reply of the Home Secretary. After all, until taking office he was the chairman or a director of a "phoney" American company called Overseas Investments. I have asked for an inquiry to be held into the affairs of that firm but so far there has been no action from the Department of Trade and Industry. Although we have given chapter and verse about many cases, no action has been taken. Consider the Pinnock case. Information was given until the man who was mainly responsible got away to Australia. It was then that the Department of Trade and Industry decided to take action. When we gave information about the man being in Australia, the Department told us" It is too late. We cannot do anything about it now." [Interruption.] This it not a laughing matter. It is certainly not humorous from the Secretary of State's point of view. He is personally responsible for his Department. Consider the companies whose affairs have been brought to the attention of the Department, not just by me but by various hon. Members. Former directors of companies, barristers, counsel, solicitors and accountants have come forward with chapter and verse decreeing "You, the Department of Trade and Industry, are failing to carry out your statutory duty. Will you take action?" Always the answer has been "No ". I am glad to note that a former Parliamentary Secretary has left his job. He was given a large batch of Questions to answer but refused to do so. I took the matter a great deal further. I approached the Prime Minister, but even he refused to deal with the issue. I refer not simply to V and G but to the Bloom case and many others. In all of them he failed to take action, and now we have this "phoney" V and G inquiry—[Interruption.] I deliberately use the word "phoney" because it is a big whitewash. The basic fact remains that there should not have been a V and G inquiry. There should have been an inquiry into the deliberate neglect on the part of the Department and its officials to carry out the duties imposed on them by Parliament. In other words, it should have been a far-reaching inquiry at which hon. Members could have given evidence because it is clear that there has been a conspiracy on the part of civil servants —[Interruption.]—including the right hon. Gentleman, who must accept responsibility. There has been a big operation to try to cover things up, not just in the V and G case but in respect of a number of companies. Instead of attempts to safeguard the shareholders and the insured persons, there has been neglect, maladministration and ineptitude on the part of the Department. The Department and those concerned knew what would have happened if thorough investigations into the relevant matters—Bloom, Pinnock, Savundra and V and G—had been carried out. What we are discussing is only the tip of the iceberg. The Secretary of State should agree to have a thorough, real and independent investigation into the whole administration of his Department, not only on the question of V and G but on all the surrounding circumstances and cases. Only by this means will we get some satisfaction and give the general investing public the confidence which they do not have at the moment.7.15 p.m.
I join with others in agreeing that my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) has done the House a service in bringing this matter forward for debate. I also congratulate my right hon. Friend the Leader of the House for extending it. Mr. Jardine, who has been mentioned today, is a constituent of mine and were it not for the extension I would not have had an opportunity to say something about him.
I do not want to follow the wider mattert many hon. Members have mentbout the control of insurance comad so on, not because I fail to appreciate how important they are—there is nobody in any part of the House who does not understand the human as well as financial significance of these matters—but because I wish to concentrate on the simpler question whether justice was done to Christopher Jardine. I start from the belief that any tribunal is always unfair in some degree to someone. The inquisitorial system is one which we in this country discarded centuries ago as being unfair, and we use Star Chamber Court for parking cars and not for trying people. However, we accept that there is sometimes a matter for public concern where a tribunal, with all the risks and injustices involved, is necessary. The fact in this case is that the Government proposed and the House agreed—and it agreed, after all, without a Division—that the circumstances were of such a kind as to justify a tribunal. It is all very well for the right hon. Member for Sheffield, Hillsborough (Mr. Darling) to say now that he would have preferred a different sort of inquiry. It is all very well to forget the situation that persuaded the House unanimously to agree to a tribunal at that time. But we thought that a tribunal was desirable and that this exceptional procedure was justified. The main concern—the element that persuaded us that this sort of situation had arisen—was the leak. In his opening remark my hon. and learned Friend the Member for Darwen called that a minor issue and looking back, and reading the report, it is clear that he was right. It was a nothing. However, it was not a nothing in terms of public opinion and opinion in this House at the time the tribunal was set up. Had there been no leak there would have been no tribunal. Equally, if one is to have a tribunal, one must give it wide terms of reference. It must attempt to get to the bottom of the matter. Thus the terms were widely drawn, whatever the hon. Member for Birmingham, Northfield (Mr. Carter) may say, and the width of the terms were commented on favourably by the Leader of the Opposition. Because the terms of reference were widely drawn they included matters which, though important, would not have merited a tribunal on their own and, as it turned out, were unsuited to a tribunal. I refer, of course, to the referenceThe tribunal did its best to sift the exceedingly difficult evidence fairly, but the fact remains that its findings were unfair to my constituent, though in my view any tribunal in the circumstances would be bound to be unfair. In the first place, and this has already been very much commented upon, it was not until the end of the tribunal's proceedings that the accusations were put to Mr. Jardine in a precise way. He knew what the tribunal was about, but as to accusations of a kind that he could expect to answer in a court of law, it was only at the very end of the proceedings, if at all, that such a formulation was made. The very fact that Mr. Jardine did not seek to be separately represented supports that statement, because had those accusations been made, had he known what the charge was, surely separate counsel would have been unanimously demanded by everyone. This degree of injustice seems to me to be of the nature of the inquisitorial beast, and it is unduly optimistic to think that one can set up a tribunal and at the same time produce all the defences and securities of a court of law. Secondly, Mr. Jardine is not a top civil servant, still less a Minister, yet he was left, and to a lesser degree his subordinates with him, to "carry the can" on behalf of the Department. This brings us to the matter which, again, has already been mentioned in this debate—the matter of ministerial responsibility. My right hon. Friend the Secretary of State very properly said earlier today that that matter was outside the terms of the tribunal and not considered by it. That is right. I certainly do not seek to attempt to defend ministerial responsibility. Indeed, very few of those who have spoken in the debate have seemed anxious to do so. We seem to know that it exists but to have forgatten what it is. Nor do I seek a ministerial scalp. If one were to do that one would have to seek very wide indeed, because Ministers of no fewer than three Governments are involved. That is not my object. But if ministerial responsibility has any meaning, and I do not think anyone has suggested that there is no such thing, it must exclude treating a civil servant as Christopher Jardine has been treated—found negligent on charges which were never properly formulated and left to take the blame for matters of judgment the responsibility for which, if ministerial responsibility has any vestige of meaning at all, he shared with his superiors. There is absolutely no suggestion of misconduct in the case. The concluding remarks of my hon. and learned Friend the Member for Darwen were a reflection of that fact. Had the accusation been that impropriety had taken place, that money had passed, or anything like that, perhaps the tribunal would not have been so unsuitable a piece of machinery. All that is suggested is negligence, but negligence of a very special, carefully defined kind; more of a lack of competence and excluding by this, to me, extraordinary verbal rigmarole, the concept of carelessness and idleness. Negligence so narrowly defined must be a matter of an exceedingly difficult and subtle value judgment—matters which one hon. Member after another has said are intensely complex. I do not think that a tribunal, a sledgehammer to crack open a very difficult explosive issue, is in the least suited to make this sort of careful value judgment. My belief is that though the Government quite rightly, as they have done, think that the tribunal had a job which was conscientiously done—and I do not join in the attacks on the tribunal on those lines—they could also say that, through no fault of the tribunal, circumstances prevented a fair deal for Christopher Jardine. My right hon. Friend said many sympathetic things and I am sure that Mr. Jardine will appreciate his remarks. I only wish that the Government could go just a little further and say that in all the circumstances I have indicated they do not accept the charge of negligence against Mr. Jardine. My right hon. Friend the Secretary of State for Trade and Industry has not gone that far, but I hope that my right hon. Friend the Home Secretary will be able to do so. Since my remarks have been to defend a constituent, I hope that what I have said will not give the impression that I am saying—and as far as I know no one else is saying—that civil servants can never be called to account if they make mistakes. Indeed, this Parliament has set up a whole machinery for calling them to account and the Civil Service has its own internal disciplinary procedures, but these are fair procedures with proper, built-in safeguards. It is the absence of such safeguards in this case which makes what has happened an unacceptable injustice." (b) Whether there was negligence or misconduct by persons in the service of the Crown ".
7.26 p.m.
I must first apologise for intervening at this stage, but I have some responsibility on this side of the House for Civil Service matters. Perhaps some of my hon. Friends will take comfort from the fact that the time that my hon. Friend the Member for Heywood and Royton (Mr. Joel Barnett) will take later, together with the amount of time I shall take, will equal approximately the duration of one winding-up speech.
My first point is that the Government themselves should have initiated this debate instead of leaving it to a backbench Member. I understand the Government's difficulty. I fully understand their feeling of duty, and the wish on the one hand to defend the Civil Service and the wish on the other hand not to condemn the tribunal. Very often when faced with difficult judgments one has to choose between two difficult alternatives. If the Government believe that the Civil Service, particularly Mr. Jardine, was right, their duty to defend Mr. Jardine was rather greater than their anxiety to refrain from condemning the tribunal. I am rather sorry that the Secretary of State for Trade and Industry did not see fit, if he thought that Jardine was not negligent, to say so in quite outspoken terms for the benefit not only of Mr. Jardine but of the Civil Service as a whole.The hon. Member for Ashton-under-Lyne (Mr. Sheldon), like others of his hon. Friends, condemns the Government for not initiating the debate. The Government had no option. I won the Ballot and I tabled the Motion. It therefore seems hard to condemn the Government. And I may say that I put down the Motion entirely spontaneously and without consultation.
I understand that, but it was within the rights of the Government themselves to have set down a date for this debate, and this they failed to do. In particular, Mr. Jardine has been left for two and a half months without having his case brought before the House and examined more fully than perhaps the tribunal examined it. What I am particularly concerned about is that a Government who set such store by good industrial relations have failed to carry out that part of their industrial relations in respect of the Civil Service.
I know what the hon. Gentleman means, but he implied that the tribunal was not impartial. I am sure he did not mean to do so, but he gave that implication.
That clearly was not my intention, nor to my recollection did I say it. But if I did, I apologise. What was clearly important was that any condemnation by the tribunal of Mr. Jardine's actions should have been put right by the Secretary of State for Trade and Industry.
My contribution really turns upon the organisation of the Department of Trade and Industry. It is important to get one or two facts clear about that Department. At the beginning of last year there were about 71 civil servants of the rank of under-secretary and below the next tier, which is deputy secretary, and between them and the top of the hierarchy there were 20. So one had Ministers, 20 senior civil servants and 71 of approximately the rank of under-secretary. As we know, for those 20, above the 71, a great deal of their work is to do with the management function. So it ought to be. The 71 under-secretaries and similar ranks are supervised by the 20 above them. This is the management function. I quote paragraph 156 of the Fulton Report to show what their responsibilities ought to be:the kind we are discussing—" It is still, however, important that those engaged on administrative work of this kind "—
It goes on to say:" should know what their objectives arc and that their performance should be judged by their results."
Was the performance of this undersecretary assessed? Did his superiors meet regularly to review progress? Of course not. So far from that, paragraph 344 of the Vehicle and General Report says:" But the principle of management by objective is not applied as systematically or widely in the Service as it should be. It should be normal practice everywhere for heads of branches doing this kind of work to agree with their superiors and subordinates the tasks assigned, relative priorities and dates for completion, and regularly to review progress. Individuals at all levels should know what they are responsible for and what authority they have. The effectivenes of the branch and the contribution of its individual members could then be more objectively assessed."
In other words, his superiors opted out. The Fulton Report recommended the ascertainment of objectives and a comparison between those objectives and the results. What happened was the opting out by these superiors of any assessment of the performance of that branch or any attempt to review the progress of the branch in meeting its objectives. This opting out was endorsed by the tribunal. Another piece of evidence I should like to bring forward is the views of Sir Richard Clarke, one of the most distinguished civil servants of our time. He gave a series of lectures to the Civil Service College in the spring of last year. At page 102 of the collected lectures he talks about the under-secretaries—a particular matter before the House at present. He says:" We consider that Mr. Jardine's superiors were entitled to assume that he did not feel in doubt as to the course of action to be pursued and to rely on him to take the appropriate decisions."
He is talking of those at under-secretary level and above. None of them can shrug their shoulders. However, throughout these debates we have been hearing a lot about the shrugging of shoulders. When we see the Fulton Report and the Civil Service lectures of Sir Richard Clarke and compare these authorities with the somewhat shallow section of the report of the V and G tribunal which condemns, on the basis of the tribunal's assessment, in direct conflict with the views I have given, it might have been expected that in the face of this the tribunal might have shown a certain amount of humility instead of the outright condemnation it gave. Both the Fulton Report and the lectures of Sir Richard Clarke had in common the expression of the realities of the situation. If one gives the final responsibility to these divisions, if one says to one of these several hundreds of under-secretaries in the Civil Service—I believe there are over 300 now—that Government responsibility ends there, at that level, we could have a situation in which a Minister could come to the Dispatch Box on a matter which may involve issues dear to the House, perhaps concerning the liberty of the subject, and say "I am sorry. This was a wrong decision, but it was taken by the under-secretary and, therefore, we have no responsibility for it. We have done something. We have called the under-secretary negligent, or even gone so far as to dismiss him. But that is the end of the matter." If that were ever to be so, we should have gone along the way to government by undersecretaries, with responsibility allocated to them alone. This is an impossible situation. I believe it arises from a fundamental misconception as to how the Civil Service is organised and ought to be organised. One can quote the practice in industry, where those fairly low down are given very large measures of responsibility. But the advantage of industry is that there exist methods of accountability that are unique for industry, because one has quarterly or monthly accounts and one can let the man or woman decide what he wants to do in the firm or the area of management he controls, and he is always subject to the discipline of those figures which have to be produced at the end of the day showing levels of profitability and so on. So it is absolutely right in industry to have delegated powers and authority, as is increasingly being done, because blame and praise can be allocated; the good can be rewarded and the bad can be punished. But in the Civil Service one cannot apply the same kinds of principle because in much of its work there is no such simple accountability or test one can apply in order to distinguish those who are doing their job well from those who are doing their job badly. One therefore requires this kind of closer supervision and an assessment of the objectives of the division, and an examination by their superiors from time to time as to the amount of progress being made and as to the success or failure of the people concerned. That is what it is all about at the end of the day. The allocation of responsibility cannot be left unaided for year after year. To assume that one can hand over responsibility and then know nothing about it several years hence is utterly unreal. The doctrine of responsibility of the under-secretary, by him alone, is pernicious and needs to be squashed. I do not think it is real. I do not think that this is what happened. I believe that broadly the Department knew roughly what was going on. The Department may have been unhappy about certain aspects of it, but it was faced with very difficult circumstances and, in those difficult circumstances, it failed to do as much as it should have done. I believe that the Secretary of State for Trade and Industry failed to realise this and failed to put right what must be put right in the interests of this Department." These are the people who are in positions of direct responsibility to Ministers for conducting the State's business and running the government machine. They are responsible for advising Ministers in all kinds of matters with an immense variety of expertise; they manage the departments and a diversity of institutions. They do different kinds of work. Some are concerned primarily with general policy and continuous advice to Ministers; some with technical work and advice—scientific, legal, economic; some with management; and some with all three. But with few exceptions they share the common strand of direct personal responsibility to their Ministers. None of these can shrug his shoulders and say that it isn't really his business: and this is really what makes them one group."
7.40 p.m.
I add my congratulations to those which have already been expressed to my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) on the outstanding quality of his speech and the way he has brought the Motion to the House. I am particularly concerned, and I hope my concern will be shared by the majority of hon. and right hon. Members on both sides, about the amount of criticism that has been levelled today against the tribunal and learned counsel who appeared before it. Some of that criticism, I submit, has been expressed in intemperate language.
Although he is absent—I regret that, although one understands why—I would like to reply to the hon. Member for Birmingham, Northfield (Mr. Carter), who spoke of the tribunal having distorted justice. He said also that in his view the conduct of counsel before the tribunal was appalling. I have read, as no doubt other hon. Members have read, all the report of the tribunal on this case, together with some of the transcript. I can find nothing which would justify language of that kind applied either to the conduct of the tribunal or to the members of the Bar who appeared before it. The right hon. and learned Member for West Ham, South (Sir Elwyn Jones) was listening to part of this debate earlier. He was a counsel who appeared before the tribunal. It is, as the House well knows, the etiquette of the Bar that a Member of this House who has appeared in a case or has appeared before a tribunal as a member of the Bar should not speak in his defence if he is attacked, or upon the case in which he has been appearing. The tribunal was composed, as we all know, of a chairman who is one of our most distinguished High Court judges, and two learned counsel, one of whom has since become a High Court judge. Those who give their services to tribunals of this kind do so always at some sacrifice, and it would be deplorable if the best of our legal brains were in any way discouraged from volunteering for work of this kind in future. If there has been, as has been suggested, for example, by the right hon. Member for Kettering (Sir G. de Freitas) and my right hon. Friend the Member for Thirsk and Malton (Sir R. Turton), any unfairness or any injustice—and well there might have been—I submit that that unfairness and injustice, if it existed, was the result and the sole result, of the fetters which were imposed upon the tribunal by the Tribunals of Inquiry (Evidence) Act, 1921. The tribunal did everything it had been given as a task to fulfil, and learned counsel who appeared before it also fulfilled their function in an exemplary way. My right hon. Friend the Member for Thirsk and Malton asked why Ministers and senior civil servants were not called before the tribunal.And why not Members of Parliament?
If the hon. Gentleman likes—and why not Members of Parliament? Anyone who has read the report will see the answer. The tribunal found as a fact that the duties of the Department of State concerned included the supervising of insurance companies. It also found as a fact that those supervisory duties imposed on the Department of State a clear responsibility for satisfying itself so that it was in no doubt about the present and past solvency of the company and, since 1967, in no doubt about the statutory solvency margin, and, indeed, that there was no risk of insolvency by the insurance company concerned.
The duty of finding out whether these statutory conditions were fulfilled fell upon the insurance and companies division of the Department of State, and the person in charge of that division was, of course, the under-secretary, Mr. Jardine, and, furthermore, his assistants, the assistant-secretaries, Mr. Homewood and Mr. Steel. I am not seeking to say—and I do not want to be misunderstood—that there has not been some injustice, but I have pointed out already that any such injustice arises from the nature of the inquisitorial tribunal and not in the way the inquisitorial tribunal was conducted. It is a finding of fact of this tribunal—it would be hard to dispute it—that above the level of under-secretary of state senior civil servants could have had no information available to them in the circumstances which would have justified their intervention in the affairs of the company, anda fortiori,as the tribunal found, if one could not say of senior civil servants that they should have intervened or should have had some cause for questioning the competence of the undersecretary and those below him, there was no reason to suppose that any Minister could be blamed or should be blamed for a failure to have information which would have alerted him to the true state of affairs. My hon. and learned Friend the Member for Darwen said, as I understood it, that the doctrine of ministerial responsibility as a result of this report has deteriorated. I submit that it has died. I submit that the doctrine of ministerial responsibility in these circumstances in the light of this report can be regarded as nothing more than a myth. My hon. Friend the Member for Chelsea (Mr. Worsley) said that no one in the House had apparently dared to define what ministerial responsibility was. I am somewhat cautious in taking up the challenge, but I submit that where a Minister relies on the competence of a civil servant, in whom he has, with good cause, complete confidence, to carry out the duties imposed by Statute and gives no further instruction on his own initiative to implement or in any way to qualify the terms of the Statute and then that civil servant, acting within the confines of the trust the Minister has in him, for one reason or another fails to come up to the standard of competence that was thought to be his, the Minister, in practice, whatever may be said in theory, cannot be held to be responsible. Different considerations and different conclusions might arise if the Minister had given his own instructions on his own initiative, but in this case, and for the reasons I have submitted, the doctrine of ministerial responsibility does not apply.7.50 p.m.
The speech to which we have just listened implies a rather over-simplified view of what goes on in Government Departments. Although some telling criticism has been made of the tribunal, I agree with some of its conclusions. I agree that action against Vehicle and General was probably impossible under the 1958 Act, but could have been taken under the Companies Act, 1967.
Looking back on those events, I am sure that we were right in taking the sweeping powers we did in the 1967 Act. It always seemed to me that if Parliament imposed on the motorist this obligation to insure, there was an obligation on Parliament to protect the motorist at the same time. I feel serious doubt whether justice has been done to Mr. Jardine in these proceedings. He is singled out—the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) did not seem to like the phrase" singled out "—alone by the tribunal as having shown negligence, while others are criticised for errors of judgment. I, like my right hon. Friend, worked closely with Mr. Jardine for several years, mainly in the preparation of the 1967 Act, into which he put an immense amount of hard and detailed labour. I must say that I always found Mr. Jardine, in his work on that Act, as conscientious, well-informed, reliable and, indeed, as balanced as one could possibly wish. If this is not said by someone in the House I think that the publication of the report may give a false and, indeed, unfair impression. If one asks oneself whether Mr. Jardine's failure in this issue was an error of judgment or amounted to negligence—I am not going into the legal definitions—there is a good deal to say on both sides. First, as several hon. Members have said, there is the obvious difficulty in the case of a suspect insurance company of being sure that one will not do more harm than good by intervening when the company is shaky but not yet insolvent. Secondly, there are the immense technical difficulties which everyone has mentioned today, and there is great room for difference of opinion. Thirdly, anyone with experience in the Board of Trade knows that one has to be cautious about the natural prejudice of any established firm or industry against adventurous newcomers. Fourthly, I agree with the hon. Member for Chelsea (Mr. Worsley). I think it was, if not unfair, at least unfortunate for Mr. Jardine that the lamentable affair of Mrs. Norgan. with which he had absolutely no connection whatever, should, even if it did not initiate the inquiry, have become publicly linked with the issue of V and G. Therefore, in finding that there was negligence in Mr. Jardine's case and only errors of judgment elsewhere, the tribunal seems to me to have been making a pretty fine distinction. It has been said that negligence means neither carelessness or idleness on the one hand nor an error of judgment on the other. It means, apparently, failure to do all that one should have done or that a reasonably competent person could have been expected to do. If that stern test were to be applied to all of us here in this House, I would feel inclined to say "Let him who is without sin cast the first stone." Again—here I follow the argument about under-secretaries—the tribunal, in allocating this very special responsibility to Mr. Jardine, relies heavily on the docttrine that the under-secretary as head of the department carries a much more explicit responsibility than those either above or below him. I must say, as one who worked for six years as a civil servant and seven years as a Minister, that I have seldom, if ever, found responsibilities to be interpreted as formally and precisely as that. I rather doubt whether so hard and fast a doctrine is fair to an under-secretary in conditions like these. Therefore, having studied the report but not having discussed it with any of the individuals concerned, except briefly with my right hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling), I am left with the feeling that more opportunities should have been given to Mr. Jardine at some stage to comment on and answer specific allegations made against him which are surely different from general charges against the Department. I therefore have much sympathy with the suggestion that some appeals procedure, whether a Select Committee or whatever it may be, should still be contemplated at the end of the story. There is one remarkable statement in the report which has not been quoted today. It is in paragraph 344, as follows:Can that really be true? Can the tribunal really have known that at no time over six or seven years had Mr. Jardine verbally asked for guidance, unless Mr. Jardine himself had categorically said so? I should like to know, and that is why I think there is ground for further examination into whether Mr. Jardine himself accepts that remarkable statement. I am sorry that we have to be so brief this evening, but on the wider aspects of this unhappy story I hope, in spite of what the hon. and learned Member for South Fylde (Mr. Gardner) has just said, that the doctrine of ministerial responsibility will not be a total casualty along with Vehicle and General. I am afraid that if matters are left where they are it will be an open invitation to civil servants to refer more and more issues on paper upwards. I do not believe this is an imaginary fear. Delegation will suffer and delays will grow, much to the disgust of my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis), who for the moment has departed. I cannot in a few minutes lay down a clear doctrine of ministerial responsibility. Perhaps Sir William Armstrong and Sir Burke Trend will get together and try to do it for us. I would only say that if Ministers are going to resign when anyone makes a mistake in a Department there will very soon be no Ministers left. If, on the other hand, everything is referred to Ministers, Departments will very rapidly grind to a stop because Ministers will not even have two hours in the 24 to sleep and their decisions will suffer as a result. I can only say that I hope we shall not stray too far from the traditional doctrine of ministerial responsibility. As to the issues of policy themselves, I think the report clearly establishes that the Department needs more trained personnel, including accountants, but also more insurance experts and a much larger staff devoted to this task which, after all, Parliament has laid upon it. I regret that it did not grow faster, although it did grow in my time. Clearly, this job cannot be carried on by three or four, or even six or 10, enthusiastic non-professionals, however hard they try. I have some doubts about the expert agency outside the Government machine. I agree with the Secretary of State that we should not give up ministerial responsibility altogether, which means the ability of the House to ask questions and to find out what is going on. It should be possible, with a little thought, to combine the two. If 1 were the Minister responsible now, I would err on the side of active vigilance in respect of these firms and vigorous use of the extensive powers which the Government have. Suspect firms should be told confidentially that if they do not take certain remedial steps by a specific date the Department will have to apply the legal sanctions. If the present sweeping powers, vigorously used, together with some more powers which I gather we are to have, cannot prevent more motor insurance company collapses, I am forced to the conclusion that the case will have been made out for a publicly administered insurance scheme and a free choice being given to motorists between such a scheme and the private companies. If it is said that that is unfair competition, the answer must surely be that the private insurance companies must organise some reinsurance system which will demonstrate to motorists that the risk is no greater with private insurance than with the publicly administered scheme. During the First World War Sir Winston Churchill said to the War Office, which was demanding a comb-out of manpower all over the country, "Physician, comb thyself". We may reasonably say to the insurance industry if it wants to keep motor insurance in private hands "Physician, insure thyself"." no question concerning the Company was ever referred by him for guidance or decision to anyone above his level."
8.0 p.m.
Like the right hon. Member for Battersea, North (Mr. Jay), I hope that the doctrine of responsibility is not quite dead.
I must declare an interest in this matter in that I am professionally engaged in the business of insurance and, as my hon. Friend the Member for Faversham (Mr. Moate) pointed out, I have been one of a group of Members on this side of the House who have made a special study of possible legislation and other measures to improve the security of insurance companies. We are debating a topic which those of us engaged in insurance have lived with since the formation of the Vehicle and General Insurance Company in 1961. Its collapse came as no surprise to me. 1 had for many years confidently predicted it. I claim no special wisdom for that. It was a widely held view in the market, and I mention the fact only to emphasise that we are dealing with a situation which was well known. All the evidence pointed to the fact that the company was writing the business too cheaply and taking it on too fast. When that happens, the pattern of events is certain and predictable. The first question is: who, apart from the directors of the company, were responsible? I will pass over the responsibility of the British Insurance Association—which was, in my judgment, guilty of commercial folly if nothing else—largely because I have already commented on it in a letter toThe Times. In the light of this report, there can be no doubt of the failure of the Board of Trade and its successor, the Department of Trade and Industry, over a long period. On the other hand, I have very serious doubts about whether the blame should be placed on the officials who have been criticised. I noted what my right hon. Friend the Secretary of State said on the subject of ministerial responsibility, and I accept that we are not dealing with charges of negligence or misconduct by Ministers. But politicians and senior civil servants are supposed to have a nose for trouble. In this case, the scent of danger hung in the air, clinging and pungent, over a number of years and they failed to take effective action. Those who head great Departments, like those who head great companies, have a duty to ensure that the right questions are asked and answered and that action is taken. They may delegate, and it is right that they should, but the responsibility remains theirs. To me it is incredible, in the literal sense of the word, that those who held the responsibility were unaware of what was going on, that they failed to detect the scent, and that they failed to hear anything of the rumours or clearly stated criticisms of those high in the industry. Indeed, they heard at least some of them. We know that, because the report makes it clear in paragraphs 62 and 343. We are surely entitled to question whether they should have been so easily satisfied by the assurances of their subordinates. But whether or not there is room for criticism on this point—if there is it applies equally to the Administrations of both parties—there can be no doubt that Ministers were responsible for failing in their one inescapable and fundamental duty; namely, to provide an adequate organisation and an adequate staff. While it is no doubt absolutely right to keep the level of decision-making from creeping up and right to delegate so that decisions are taken at low level, the buck cannot stop there. Those above must be responsible for ensuring the abilities of those below them are adequate to their tasks and that they are given enough staff, sufficient training and the machinery to make their job possible. Ultimately, too, they must take responsibility for the adequacy of their Departments. The insurance and companies division was manifestly inadequate, yet throughout the period in question nothing, apparently, was done to put it right. It needed no tribunal to establish its inadequacy. It had been known to the whole insurance world for a number of years. It had been indicated by previous failures. It had become apparent during the passing of the 1967 Act; and it has been publicly acknowledged by some of those most closely involved. The right hon. Member for Sheffield, Hillsborough (Mr. George Darling), Minister of State at the Board of Trade when the Act was passed, is reported byThe Times on 21st February as having pressed for a marked increase in the staff of the division so that prompt use could be made of the new powers he had helped to place on the Statute Book. He has spoken today of the heavy burden placed on civil servants in his Department. The right hon. Gentleman's successor as Minister of State, the right hon. Member for Birkenhead (Mr. Dell), frankly stated in a letter to the same newspaper on the following day, 22nd February, that he had similar views and that a separate agency should be set up. I believe that the right hon. Member will be respected not only for the wisdom of his proposal but for acknowledging whatever small share of responsibility may have been his as a junior Minister. Clearly, this is not a resigning matter. It is not a question of specific negligence by a Minister or an issue in which an individual Minister should accept responsibility for a particular action taken at a particular time. Certainly it is not a resigning issue for any member of the present Government. They could hardly have been expected to carry out the reorganisation within 10 months of taking office. When we might have expected action was in the period after the passing of the 1967 Act when the need for it became obvious. But the fact that it is not a resigning matter does not mean that the many senior Ministers and junior Ministers of both parties which had responsibility (luring the 10 years of the Vehicle and General affair can collectively be regarded as blameless and that all the blame should be placed on particular officials. That those officials may have been guilty of serious errors of judgment seems clear. That they, and particularly Mr. Jardine, should be labelled as responsible for the failure of the Department seems to me monstrous, and this House should say so. Having said so, we have a duty to say how we should avoid similar events occurring again. I therefore turn briefly to the conclusions reached by myself and my colleagues. We believe that there would be considerable advantages in setting up some form of quasi-governmental organisation under a registrar of insurance to ensure that the law is enforced and a code of practice followed. The registrar would be not a civil servant but an individual of high standing and with commercial experience. His function would be to examine accounts, to receive the information called for by Statute, and report to the Secretary of State for Trade and Industry, who would remain responsible for enforcement. I think this is the point made by the right hon. Member for Battersea, North on the combining of the two together.Perhaps it would be worth pointing out at this stage that, for instance, the Inland Revenue is responsible to the Chancellor of the Exchequer and not to the Permanent Secretary to the Treasury.
In making this recommendation I think we are at one, if not on all points of detail, with the right hon. Member for Birkenhead, who has already suggested it publicly. In my view the only way to police the industry is to have power to look at the books. One would need enough people to do it.
The second conclusion we came to was that, whether the registrar were created or not, responsibility would remain with the DTI, and there should be an increase in the number of inspectors from the present handful to about 100 or so. We think that would be enough, and that we could avoid the excesses of the American system which has been referred to already this afternoon. There should be, in our view, a system of spot checks on all insurance companies, irrespective of their size or reputation. If this became routine no discredit would arise from a visit by the inspectors. This would be regarded as a normal event and thus would not in any way endanger the existence of a company. The inspectors would have power to examine the books, insist on quarterly figures, inspect and run-off claims statements. We considered very carefully the possibility of establishing a solvency fund. Here again, I take up a point raised by the right hon. Member for Battersea, North. It is felt—it is fair to say this—by many in the industry that the proposal is wrong in principle and would be a licence for irresponsibility. It would, however, I think, be accepted as the price for avoiding excessive direct interference. We came to the conclusion that the objections were exaggerated and that, combined with adequate policing in other directions, and limited only to motor insurance, this is something which should at least be looked at very closely, as it would do much to reassure the public. It might take the form of a system of premium deposits held in trust. I have not time to elaborate on that proposal. I would oppose any extension of the fund or deposit principle beyond the field of direct motor business, not least because of the possibility of reciprocal retaliation from other countries. I do not consider that a motor deposit would provoke such retaliation. I believe that if a fund is to be effective and not to be a licence to the imprudent it is essential to increase the supervisory mechanism. For this reason we came to the conclusion that, in addition to the proposals I have already outlined, we would like to see, as my hon. Friend the Member for Faversham has already pointed out, a panel of approved auditors, and I was delighted that the James Committee came to the same conclusion. I say to my right hon. Friend that the problems which he described, and which I fully understand, could be overcome by a commonsense approach, as they already have been by the Committee of Lloyd's. It is hardly surprising that if we ask a professional body of accountants what they think about it we should get the very answer which it gave. None the less, I think it wrong that any small firm of accountants in any small town or city up and down the land should be able, without any previous experience, to audit the accounts of large-sized companies. Our final recommendation was that there should be some tighter asset control. We have proposed an increase in the minimum capital required to £250,000. We recommended a tightening up of the rules relating to assets admitted for solvency purposes, with particular regard to goodwill, overdue accounts, investment in subsidiary or associate companies. and adequacy of claims reserves. We would not be in favour of any restriction on lending to associated companies, but we would like to see greater disclosure in this and certain other areas of investment. In conclusion, I would like to emphasise that I would be opposed to any interference with companies' freedom to set rates, or to draft policy wordings, or in selection of investments, except in the limited way I have indicated. In designing safeguards for the future we must never overlook the fact that the industry has attained its present preeminent position in world markets on a basis of freedom and competition. If we are too restrictive we are certain to invite retaliation from abroad, and we shall equally certainly ensure higher rates and less satisfactory terms for those insured at home. To be panicked by the V and G affair would be a disaster. Equally, it would be foolish not to learn from our experience.8.16 p.m.
I am glad to follow the hon. Member for Pembroke (Mr. Nicholas Edwards). With much of his speech I agree. I should like to say how indebted the House should be to the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) for introducing this debate today. It has provided an opportunity for a valuable discussion. I feel sure he was too kind to the Government in providing them with his time. I think the Government should have provided a full day them selves. However, he has assisted the Government, as he was entitled to do.
As is known, I was at the Board of Trade during some of the relevant period. So far as my memory goes, the V and G affair never came up to me, and the report of the James Committee certainly does not mention my name. However, since I was at the Board of Trade I am, to that extent, not an impartial witness about this affair. One of the difficulties of the debate today is that in a sense it is two debates fused into one. One debate is about the proceedings of the tribunal. On that aspect of this discussion I do not intend to comment at all. The second debate has been about what lessons are to be learned from this affair about supervision of the insurance industry, what lessons are to be learned about the supervision of companies generally and what lessons are to be learned about the capacity of the Department of Trade and Industry to exercise its responsibility under the Acts governing companies and insurance companies. Here there is a key issue which has to be stated right at the beginning and it was mentioned by my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) concerning ministerial responsibility. How does one define ministerial responsibility in cases like this? I say at once there is great difficulty in defining it. The hon. and learned Member for Darwen took a view which was criticised by his right hon. Friend the Member for Thirsk and Malton (Sir R. Turton). The difficulty arises from the fact that one cannot realistically today have a definition of ministerial responsibility which excludes the possibility of civil servants being held responsible for their failures. I think that if one excludes that possibility one is saying that government cannot be carried on effectively. There have to be issues which are delegated and fully delegated to civil servants, subject to the possibility of reference upwards, and if reference upwards does not occur that must be admissible evidence. In that way only can we look realistically at the problem, which is one of great difficulty. A Minister cannot say to the House that he cannot comment on a matter because an under-secretary or some other civil servant took a decision. At that point, if not earlier, the Minister must involve himself in the matter. Clearly the necessity of delegation does not rule out ministerial responsibility for major issues. One would take the view that this was a major issue and a major failure. Above all, it does not rule out ministerial responsibility, as the hon. Member for Pembroke has just said, for ensuring that the Department is capable of doing the job which, under Statute, is allocated to it. In that respect, beyond any question there was ministerial responsibility. One cannot consider the Vehicle and General episode in isolation. There have been doubts about the capacity of the Department of Trade and Industry and its predecessors to exercise this responsibility in the past. Questions have been asked, and it was clearly a matter to be considered whether the machinery for supervision was adequate for the job which had to be done. The fact that emerges from the report is that the machinery of supervision was in certain respects not adequate for the job which had to be done. I intervened in the speech of the Secretary of State for Trade and Industry. I put to him that the tribunal found that there was no ministerial responsibility and the Secretary of State said that the tribunal did not find that; what it found was that no Minister was negligent. I do not want to enter with the right hon. Gentleman into questions of semantics. What the tribunal found was that there was no ministerial responsibility for failure in this case. It found that because the matter was not referred up to Ministers. I am suggesting that the tribunal was wrong in that it would have been entitled to find that Ministers failed to do enough to improve the system of supervision. That is the gap in the report. Whatever one may say about the judgments in this particular case, I believe the tribunal could have found that the machinery of supervision was inadequate and that there was ministerial responsibility for that inadequacy. The report is very enlightening on this subject. I am glad that my right hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling), with his experience, has come to the same view on this matter. He had a little longer period in this job than I had. The report shows that the people in the division were not accountants and lacked relevant types of training. It shows, secondly, the lack of resources in the Department in respect of numbers of people and the number of people who were qualified in certain circumstances to conduct an investigation if it was decided that an investigation was necessary. For example, there is reference in the report to one factor which might have determined at certain points whether an investigation would be made—that is, whether one particular man was avail- able to make that investigation. It is extraordinary that that should be a factor to be taken into consideration given the importance of these responsibilities. One man was engaged in another inquiry and therefore could not have engaged in this inquiry had it been decided to proceed in that way. One curious fact revealed in the report is regarding the availability of finance for such an investigation. I knew that the tentacles of the Treasury stretched far, but I see from the report that to finance an investigation it was necessary to get Treasury approval. Paragraph 142 speaks of nearly a year being required to get Treasury approval for a second phase of investigation. This is an absurdity and indicates the conditions under which the division was having to operate. Above all what the report reveals is that the personality of the supervisory machinery was not right for the job. How seriously was this supervision taken by those who were supervised? Was the attitude activist or passive? Was it too cautious, with a fear perhaps of embarrassing Ministers? Was the interpretation of the law too cautious perhaps for that reason? The tribunal came to the conclusion that because of permissible doubts the Department was perfectly right not to take action under the 1958 Act. A more activist attitude to its responsibilities would have justified action under the 1958 Act let alone the 1967 Act. We read that every year the V and G was considered to be a problem company, yet the personal relationship between V and G and the Department was such that the head of the division had through many years never personally seen the company. In this sense the personality of the supervisory apparatus was not adequate. If the personality had been right—and that would require the right background of experience—none of these delays, none of this putting off of requests for essential information, would have been permitted to extend over this period. Functions of this kind cannot be adequately performed by people who have no experience of the business, however dedicated, however intelligent and however good their theoretical training. One needs a well developed instinct for trouble to operate successfully in this field. The division took the view that the company had special characteristics which distinguished it from other companies, a view which turned out to be wrong. Even though it may have been right at one stage it rapidly ceased to be right. That sort of error would not have been made if there had been a background of experience in the insurance business. I do not by any means go all the way with the Fulton Committee about preference for relevance in policy-making generally, but in this field there should be a preference for relevance, relevant experience and relevant training. The report refers to this question but is in this respect contradictory. Paragraph 65 talks about a valid distinction between the job of supervising and the job of actually running an insurance company. Of course there is a distinction between them but the question is whether it is an important distinction when one considers the problems of supervising an insurance company. The report undermines what it calls this valid distinction in paragraph 336 when it says that prescisely because of a lack of actual experience in insurance companies the division lacked" detailed insight "into the workings of an insurance company and this was a handicap. In all these respects the division was lacking in certain essential capabilities for doing this job. The question is whether these faults can be repaired within government or whether they are part of the essential nature of an instrument of government. I think they will he shown by experience to be an inevitable part of an instrument within government. What we need is an independent statutory agency staffed by people with experience in running insurance companies —people like Ian Fraser, Director-General of the Takeover Pane] who knew all about the business which he was appointed to supervise; staffed by people who would come into the agency and perhaps go out with enhanced and valuable experience—indeed to serve in such an agency could become a valued part of a person's career The agency would exercise control functions. It would advise the Government what changes were needed in the law when experience accumulated and methods changed. One thing we might get out of this would be a Companies Act more frequently than happens now. I believe we need Companies Acts as frequently as we have Criminal Justice Acts. They are needed to keep the system of control up to date. Why should we not arrange things in this way? Why not hive off this function? This is not in any real sense a political function. If decisions were politically motivated it would be intolerable. I suspect that one reason for excessive caution in these cases is that if one makes a mistake one might embarrass Ministers. To take politics out of this would assist, not hinder; to take it away from ministerial responsibility would assist in doing the job. It is not a political matter. It is far more a policing or judicial matter. Should one investigate further? Have companies or persons the right qualifications for certain exemptions or functions? Is information properly presented? These are the questions which are being asked all the time and as I have said they are not political questions. Various reasons have been argued against handling the matter in this way. The first is that the operation would not be large enough to justify the quality of staff or provide the career prospects to get the people necessary to control the system. I do not believe that this is true. I believe the V and G affair shows that one of the difficulties in this case has been lack of resources and that with such an agency one would have a much larger job to do than is done by the Department of Trade and Industry at the moment because, even as expanded by the right hon. Gentleman, it lacks adequate resources. Another reason given for refusing to take this action is that Parliament wants detailed oversight of ministerial action in this respect. I wonder whether Parliament places more highly the desire to have detailed oversight over ministerial action in these cases or the need to have an effective supervisory agency. Clearly if we can in this way achieve a more effective agency, Parliament should be prepared to relinquish this detailed oversight. Then, it is asked, if this is a semi-judicial function, where would be the appeal if there were an independent agency? Is there an appeal now? This is the question which has been put to the right hon. Gentleman about the present situation. Within such a system I have no doubt one could build in some form of appeal system. I cannot see any gain from ministerial involvement in this area, only loss, confusion of responsibility and inadequate performance. The Vehicle and General inquiry has now said that in this case there was not direct ministerial responsibility for a major failure because it was not referred upwards. But if it had been, what would have happened. In practice would there have been any great gain? What we need in this case is expertise, not ministerial control. I do not know whether the right hon. Gentleman would have had the expertise to judge in this case, but I say with due modesty that I would have preferred in such a situation somebody with senior experience in running an insurance company than to have to carry the responsibility in this case. The Government should look again at the whole question and at the method of supervising companies and insurance companies. If the Government will not listen to me on this subject, I hope they will listen to their hon. Friends who have reinforced this plea. It does us no credit that Mr. Jardine has been made to suffer for the failure of the system. Let us at least learn the lesson and change the system.8.33 p.m.
I am glad to have the opportunity of making my contribution after that of the right hon. Member for Birkenhead (Mr. Dell) since he is a former colleague of mine in ICI, and it enables me to congratulate him on an excellent speech which was full of good sense. I wish to take part only briefly in this debate because recently I had the opportunity to address the House for a somewhat longer period when introducing my Companies Bill which draws attention to gaps in the supervision of management.
Nobody who has read the report can have escaped a sense of deep uneasiness. Surely it must be agreed that justice has not been seen to be done. All who have spoken so far in the debate have expressed sympathy and anxiety over Mr. Jardine. I am not an insurance expert nor am I a lawyer, and I hesitate to speak too trenchantly about the tribunal's report, but my feeling is that justice has not been done in this case, and I hope that a method will be found of allowing Mr. Jardine to take his case to appeal or that Parliament will exonerate him in some other way. It is not the fault of the insurance and companies division of the Department that it cannot make bricks without straw. Parliament has not given sufficient authority or sufficient resources to the Department to ensure that it is able to carry out this intensely difficult supervisory role adequately. If the V and G case had not brought that fact to our notice, another disaster would have done so sooner or later. I accept that it is not the fault of senior civil servants who were ultimately responsible neither for the making of policy nor for the day-to-day management of the detail. I accept, too, that one should not in this case fasten too much blame on Ministers. After all, the fault originated not within their Department but outside it in an independent agency —namely, the V and G company. However, I think that Ministers must take blame to this extent, that they should not have concurred in asking a man or a Department to do the impossible, because that is what I believe has happened in this case. I believe that the fault lies with Parliament, in that we have left a gap in our company law for over a century and it is only now that we are bending our minds to doing something about it. It was in 1862 that the concept of limited liability was extended to insurance companies. Since then we have never sought clearly to define where responsibility now lies. If more than a century ago it was accepted that the responsibility for the honesty, profitability and general performance of insurance companies did not lie with the shareholders, it certainly cannot be pinned on the shareholders now when the whole business of insurance and the management of these large enterprises has become so very much more complex and inscrutable. I do not entirely exonerate the institutional shareholders who make profits without responsibility and are in a position to exercise very much more influence over the way companies are managed. I hope that they will wake up to their responsibilities and exercise more power in the future. I do not think that the British Insurance Association comes out of this unhappy business with too much credit. I hope that it will be increasingly recognised in the City of London and in British private enterprise as a whole that we all have a responsibility for maintaining our country's good name in the way we conduct our business. I suppose that we ought to fasten blame more specifically upon the directors, but I cannot help reflecting that nowadays the directors of companies are increasingly the senior executives; it is not possible to expect them at the same time to handle the management of the day-to-day running of the company and show sufficient detachment to be able to criticise and supervise their own work and never to be wrong. Then what about the auditors? I do not believe that we can ask the professional accountants to go too far beyond their training and normal professional practice. Their business is to say whether the books present a true account of the affairs of the company; and, even though they may feel grave anxiety about the management policies or about the future of the concern, it is not their business to say so. They are retained by the shareholders, not to create anxiety but simply to comment on the accuracy with which the books are kept. If they have done that, they cannot be blamed if they have not gone further. I have sought on many occasions to draw attention to the need for what I and many people much more learned in these subjects than I call a management audit. If we are to fill this gap in our company law which has remained ever since we introduced the idea of limited liability more than 100 years ago, we shall have to take steps, and take them rapidly, towards the institution of some sort of management audit. Should that management audit be carried out by the Government? That is the problem which is before us in dealing with motor insurance. There is a special case with motor insurance because Parliament has decided that people must insure. Therefore, at the same time Parliament must accept governmental responsibility for seeing that efficient and competent companies are available which are able to supply this statutory requirement. I do not feel that any degree of strengthening of the Department of Trade and Industry or giving more power to Board of Trade inspectors can provide the necessary safeguards. Either the company is independent of the Government or the Government must take it over completely. I think that the right hon. Member for Birkenhead made an unanswerable case for the Government abandoning the attempt to intervene in and supervise the management of these companies. The job should be taken on by a statutory agency outside the immediate arena of politics. I should like to see outside directors or a supervisory board set up by Statute for all our large companies; but in the case of motor insurance I recognise that there is an urgent and special need. Therefore, I join those right hon. and hon. Members on both sides of the House who have said, first, that something must be done to enable Mr. Jardine to clear his name and, secondly, that we should now move forward with haste to set up a registrar—or some statutory supervisory agency—to take over in the future the role that the Department of Trade and Industry cannot carry out.8.42 p.m.
I shall attempt to make this the shortest speech in the debate. I want merely to say a few words on behalf of the million motorists who were insured with Vehicle and General, many of whom were my constituents.
I agree with the hon. Member for Kensington, South (Sir B. Rhys Williams) that because it is the law of the land that people have to insure their cars there should be aquid pro quowhere the Government go at least some way to guarantee the solvency of insurance companies. Various suggestions have come from the Government benches about the provision of some kind of solvency fund or common fund, as we have for the travel trade, which can assist when assurance companies find themselves in this position. I am aware that this would go only part of the way towards the real and fuller remedy which is necessary, but even a strengthening of some kind of a common fund would be a good starting point. Beyond that, the Government should go along the lines mentioned by my right hon. Friend the Member for Birkenhead (Mr. Dell) and the hon. Member for Kensington, South and set up a full-blooded agency to supervise the conduct of insurance companies. This in itself is the minimumquid pro quofor the Government requiring that people insure their vehicles. My own belief is that the Government should go the whole hog and provide at least third party motor insurance. With the insolvency difficulties of companies like Fire, Auto and Marine, others which have gone broke in the past, and the latest—one of our biggest car insurance companies; now that this has happened, aprima faciecase is established for the Government to provide at least third party and, I hope, comprehensive motor car insurance. Another matter which worries me, apart from the difficulties of previous Vehicle and General policy holders to which reference has been made, concerns companies which start to prey on the minds of people who have been insured with companies like this one. I have come across instances of people who were insured with companies like Fire, Auto and Marine and Vehicle and General receiving spurious claims from other insurance companies and bogus type solicitors. All kinds of things can beset former policy holders when they lose the protection of their insurance company. I now turn to the main point of my speech. I am afraid that the way in which the Government have handled the disposal of this company's assets, particularly the way the liquidator has handled the matter, could lead to this kind of thing happening all over again. I pay tribute to theDaily Mailparticularly for exposing some of the things that have been going on in the disposal of the company's assets. One of the assets disposed of by the liquidator includes the computer tapes giving the names and addresses of all the policy holders of the company. Indeed, among the conditions of sale the London and Edinburgh Insurance Company, based in Slough, a subsidiary of ITT, of which we have all currently heard in the United States, managed to get exclusive use of these computerised tapes for one month. It extracted 850,000 names from five tapes—two of the tapes were no good—and it was thereby able to send 340,000 individual quotations to former V and G policy holders. That was done in two days flat. These were people who had surrendered to the Vehicle and General Insurance Company details about no-claim bonuses, medical histories and the kind of cars they operated—highly personal and very often confidential information. This information which had been surrendered to the Vehicle and General Insurance Company, presumably in the hope that it would remain confidential, was given to London and Edinburgh exclusively for one month by the liquidator. What guarantee has the liquidator about London and Edinburgh, except that it happens to be a subsidiary of ITT? Whatever kind of guarantee that may be, I do not know. What kind of guarantee have the Government and this House that those tapes will not in future be used by other insurance companies? I understand that after the London and Edinburgh Insurance Company had exclusive use of those tapes for one month, the Liquidator said that anybody who wanted to purchase or to use those tapes could do the same kind of thing. In the way in which the liquidator has disposed of these tapes under the auspices of the inquiry, under the auspices of this debate, we may at some time be setting up the basis of yet another V and G collapse. The liquidator considered that these were commercial assets for sale and disposal to make money. I understand that spokesmen for the liquidator have said that they regard the disposal of these computer tapes as part of the normal commercial assets of the company. They cannot see what all the fuss and bother is about. I understand that it is normal commercial practice, when a liquidator disposes of a bankrupt company's assets, to sell off information in this way. So we have a situation where highly confidential and personal information was given to this company exclusively for one month. Now we have a situation where anybody can buy that information and use it however he wants. Apart from the ramifications of insurance, I have on many occasions in this House tried to draw attention to some of the unscrupulous operators who use confidential information. I wonder, for example, what kind of information has been gleaned from these tapes by companies like British Debt Services, Tracing Services Limited and some of the private credit rating agencies which go around peddling personal details and credit records. It seems that unless we have some kind of stop put on the liquidator carrying on sales of this kind we may, even at this time, be laying the basis for a second major collapse along similar lines. The Home Secretary will remember that we have already had altercations in the House on the issue of privacy. I hope he will be able to say something about the kind of restrictions that will be imposed upon the liquidator when he disposes of a company's assets. This is not the first time it has happened and I am confident that, unfortunately, it will not be the last. Unless some kind of restriction can be placed upon the sale of this information—unless there can be some supervision and a procedure under which we can check thebona fides,the financial solvency and the reputation of people who are now in a position to use this information quite freely—I am afraid that despite the facts that have been brought to light by the tribunal it could all happen again—and very soon.8.51 p.m.
I want to deal with the second of the two debates which the right hon. Member for Birkenhead (Mr. Dell) pointed out are taking place—the question of the charge of negligence against Mr. Jardine and whether, even if we conclude that the proceedings against him were decided in the right and proper way, he should have some means of redress.
The first point to make is concerned with the finding of negligence which, by the definition of the tribunal of inquiry report, was a departure from competence of the proper kind. A finding of negligence against a professional man like a civil servant is extremely serious. It leaves an indelible mark upon a man's career and receives the greatest amount of publicity. It would not be an exaggeration to say that it produces effects rather more serious than does an appearance in court on a criminal charge. Therefore, it is the duty of Parliament to ensure that the system by which we arrive at these decisions is as fair and as near perfect as we can make it. The second point that I want to make is that the inquisitorial system—the method of examination that we use—is alien to this country and, therefore, does not receive the attention that it should do. Normally, a citizen cannot be brought before a tribunal unless he is facing criminal charges or is involved in civil proceedings. In such proceedings safeguards are built into the legal system. I should have thought that we would all wish to see safeguards similar to those that are applied in a court of law made available in proceedings before tribunals of inquiry of this kind. Clearly, the public interest must be foremost, but there is no reason why when an exceptional step, such as the setting up of a tribunal, is taken the interests of the public should necessarily override the interests of the individual. It was because of these reasons that the Salmon Report laid down six fundamental principles. The one most relevant to our debate is, perhaps, the principle of legal representation. I agree that the decision in this case was made in good faith, but I would have thought that in a case of this kind it was not enough for the seven members of the Department who were appearing to be represented by only two counsel—presumably overworked counsel. The corollary is that if at some stage it is decided that they should take individual counsel it will seem very clear to the public and the tribunal that the spotlight has come upon them. The major question to be asked is: how can the situation be improved? What can we do about it? I am firmly of the view, as was my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke), that some form of appeal machinery should be available. I realise that the Salmon Commission found against that, but I find its arguments on the point rather unconvincing. First, the commission said that because the tribunal was likely to be composed of men of experience and high standing the whole business was somehow settled. But, as has been said, we do not say that because the Court of Appeal consists of men of high standing and experience there should not be some appeal up from it. The major reason why it was said that no appeal should lay was that these tribunalsand yet there is a fundamental question of law at the heart of this tribunal, and that is the definition of negligence and the way in which it has been applied in this case. When one considers the trouble and the long history of the law of negligence in this country, when one considers the great doubts that have arisen, when one considers the doubt about liability for professional advice, one is a little surprised to see the speed and ease with which the definition has been framed in this case. As the tribunal said:" have no questions of law to decide",
I believe that it is in the Governments interest that the position of civil servants under the definition of negligence should be clarified, because, clearly, the Civil Service and civil servants have followed this case with great care and if the ruling that has been made by this tribunal is allowed to stand unchallenged and untested that will not be in the interests of good government and the machinery of government. Indeed, it may have a bad persuasive effect upon the Civil Service. An appeals system should be built into the tribunals system. We have to recognise that the finding of a tribunal is made with enormous publicity and can do enormous damage. It is, therefore, only just that there should be some form of appeal from it. Lastly, and in many ways most urgently in this case, consideration must be given to finding some method of enabling Mr. Jardine himself to seek a remedy, because the interests of justice demand nothing less." So far as we are aware no one has previously considered the concept of negligence in relation to civil servants in relation to the supervisory authority."
8.58 p.m.
I do not have the time to say all the things that I wanted to say. I shall restrict myself to the Civil Service aspects of the case. Perhaps I should make clear that I suppose I am speaking as much as a former civil servant as a Member of Parliament, having been in Whitehall for eight or nine years. It is desirable that someone —and perhaps more than one person—should represent that view.
During the debate there has been a natural dwelling upon the position of Mr. Jardine, because he was the one official referred to as negligent, but we should not allow ourselves to forget that two other officials were criticised, though not in terms of that word. One of those officials is at a much earlier stage in his career, and in a certain way the criticism made could be more damaging to him than to the others who are more advanced in their careers. The first question that one asks on reading the report is: whatever happened to the Fulton recommendations? As has been said, the staffing and the organisation of Departments are the kind of thing which the Fulton Committee clearly condemned—the use of people with no experience in the field, and given little training in the field before they have to take decisions of an extremely technical character. It is not that civil servants are not accustomed to dealing with matters of a technical nature—they do so all the time —but they are not normally required to deal with technical matters of this character, experience of which can be gained only outside the Civil Service machine. In so far as blame arises from that fact, that blame cannot attach to three officers picked out by the tribunal. It must attach to successive Governments, by which I mean Ministers, and to the most senior officials above those who have been criticised. There is a reference in the report to the fact that in the relevant department at the Department of Trade and Industry there was thought to exist a so-called policy about the point at which there should be intervention. Anyone with experience of Whitehall knows that there it is often thought that there are policies covering this, that or the other. It is a sort of spirit of the hive, and generally, it is a discouragement rather than an encouragement to action, and Ministers and senior officials are responsible for it. There are many areas of Whitehall where one is constantly meeting the answer "It is not the policy of the Department to do this or that" Hon. Members will be familiar with that reply. The fact that that occurred in this case shows that this tendency needs to be looked at carefully in the light of the report. We must be careful before weakening in any way the traditional doctrine that Ministers are responsible for absolutely everything in their Departments. I agree with my right hon. Friend the Member for Birkenhead (Mr. Dell) that we cannot stand pat on that doctrine, which is unrealistic in modern conditions. Nevertheless, whenever departing from it we should give serious thought to the consequences, recognising that where there is a margin of error we should always err on the side of assigning responsibility up rather than down, because that will ensure more responsible government and careful supervision of subordinates. It is understandable that the Civil Service associations feel resentment at the naming of individual servants. I do not object to what has been done, but I do object to stopping short at a particular level of blame, with the level of blame increasing from junior rank to undersecretary, but with a lesser amount of blame higher up, to the point where there is no blame at all. The procedures that were followed in this instance have received some attention in the debate. Although I have not read most of the evidence that was put before the tribunal, it is clear that, whether right at the beginning or at the conclusion, the allegations against officers were not clear and they were in terms of the Department rather than against individuals. From my reading of the report and evidence there was at no stage throughout the 50-odd days' hearing any suggestiton that the tribunal was intending only to find whether or not there was negligence on the part of the Department but would go on to assign responsibility to and between individual officers. Had that been known by the officers, a totally different or additional type of defence would have been required. Then not only would one have had to say whether the department somewhere or other was to blame but, for example, it would have been relevant to consider the extent to which the Second Secretary, the Second Permanent Secretary and the Permanent Secretary asked about the operations of this department. My hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), who produced the figure of 70 officers of under-secretary rank to 20 or so officers above that rank, gave a very useful indication of the ratio of work. In my experience of Whitehall there is no block of work which does not generate supervisory work for the senior civil servants in charge of it. Indeed, if it did not do so the senior civil servants—that is, the top three ranks who are exonerated by the report—would have to ask "What is happening underneath? What is happening in this Department about which we appear to be hearing nothing at all? ". It is, therefore, not proper that responsibility should be attached to these three officers to the exclusion of those above. I do not mean that it should be said that the responsibility of Ministers was serious —certainly not that it called for resignation—but I do say that it is not possible for this degree of blame to attach to three officers in the middle ranks without some blame attaching to the officers immediately above and some blame attaching to Ministers. Neither the members of the tribunal nor the counsel of the tribunal, according to the evidence I have read, showed any knowledge of how Whitehall normally works. It does not work by assigning to under-secretaries a block of decisions which they take on their own and which they do not refer above them. I venture to think that the senior civil servants above the rank of under-secretary were surprised at the contrast between finding blame attached in respect of the under-secretary and his two subordinates without attaching blame to those above them. I do not believe that any civil servant in Whitehall—95 per cent. of them are not normally charged with duties as difficult as these—can read the report without saying to himself "There, but for the grace of personnel department, go I." Any normally competent and well-thought-of civil servant might well have acted in precisely the same way. I would go further and say that many a Minister looking at this condemnation perhaps ought to say to himself "There, but for the vigilence of my civil servants on many occasions, go I." We in the House of Commons are very fond of criticising civil servants; nothing pleases us more when we can do so. It might be interesting some time to read a report by civil servants about Members of Parliament and how we discharge our functions. I do not know whether the word "negligence" would creep into that report. Seriously, I suggest that the findings of the tribunal's report cannot be regarded by anyone as being exclusive to those who have been named. If it is negligence on the part of this officer and an error of judgment on the part of the other officers, everyone of us, and every civil servant in Whitehall, is equally guilty of that degree of error of judgment.9.10 p.m.
In view of the shortage of time left in the debate I propose to come straight to the point very quickly. I start by readily declaring an interest, in that for many years I have been part of the British insurance industry. This opportunity should not be allowed to pass without saying that that industry has a very great deal to be proud of, and the blot of the Vehicle and General incident is very much to be regretted. I want to restrict my remarks to the ways in which we can, as far as possible, try to prevent what happened over the Vehicle and General, and had happened before, ever happening again.
The House has already been told that some of my hon. Friends and I have been for some time reviewing the whole situation in the light of the reputation of the industry and the role of the Department of Trade and Industry. We concluded that there was little defective in the powers given to the Department under the 1967 Act but that the number of inspectors available to implement its provisions was fairly inadequate, to put it mildly. We felt that the best solution—I am delighted that this has been touched on from both sides of the House —would be to set up a quasi governmental registrar's department, headed by a person of wide business experience and able to examine accounts with a real knowledge of the very great differences that occur between insurance company accounts and others. I do not quite agree with the right hon. Member for Birkenhead (Mr. Dell), because he seemed to be talking about a very detached, disembodied agency. I want to see an agency, which I choose to call a registrar, which would have an independent function but which would be in some ways—which can be defined later —associated with the Department of Trade and Industry, which Department ultimately in my view should continue to carry the responsibility. This registrar must indeed be assisted by auditors. It has been brought out time and again during the debate that one of the great lacks is that ordinary people, ordinary accountants, simply do not understand the ramifications of insurance accounting. We felt during our deliberations that a system of spot checks should become the norm and that it should cease to be an implied stricture if a member of this registrar's department were to descend upon an insurance company. Secondly, we felt that a solvency fund should be created for motor insurance, financed by a system of premium deposits to be held in trust by the same registrar's department. We felt that the deposit should be in ratio to the business transacted. Quite apart from the funds, we concluded that there should be tougher solvency testing procedure. For example, we questioned whether goodwill and overdue accounts should be taken into account in assessing solvency. We would also give the registrar power to question the spread of investment of an insurance company where it appeared that this was too narrow. I apologise to the House for having to race through these points. Taking these three recommendations together—first, the creation of a registrar's department, with spot checks; second, the setting-up of a solvency fund financed by the industry; and third, a tougher solvency testing procedure—we felt that we should go a long way to strengthening the industry and the protection it provides for the public. I am constrained to say something about the British Insurance Association. We in the House probably understand the role that the association has traditionally played, but I am not clear whether the public appreciates the role it played before V and G collapsed. I hope on a future occasion to expand on that to a far greater degree than is possible tonight. I have spoken tonight solely about motor insurance. But the greatest disaster of all would be if a life assurance company were to go insolvent with the savings of millions of people in its care. When the Scott Committee reports it will be right for the House to turn the spotlight on this, and perhaps on that occasion even stronger measures may be necessary. I apologise once again for the speed with which I have had to present these points. The major point I want to convey, the creation of a registrar's department, not within but ultimately responsible to the Department of Trade and Industry, would in our view go a far distance in, if not preventing this ever happening again, at least reducing the possibility.9.14 p.m.
I have a vested interest in the insurance industry. For the best part of my working life I have been on the field staff of one of the largest insurance companies in this country. I have read the report and read that V and G conducted an aggressive policy from the moment it started business. My personal experience is that the policy was aggressive. It was not backward in taking on business at cut rates. It did everything that it should not have done. When one sees that 10 per cent. of the motor insurance risks were based upon 5 per cent. of the annual premiums coming in, one realises how insolvent the company was from the inception. It is all there in the figures.
I find no fault with any present or past Minister in this matter. I think that most of the fault lies in the fact that many Press correspondents, particularly the motoring correspondents, accepted this gimmickry in motor insurance. For example, they were carried away by the use of the computer—and we saw what the computer did to Dr. Savundra. Vehicle and General pursued an aggressive policy and cut rates and ended in disaster. That is the result of gimmickry in insurance. We cannot get away from the fact that basic insurance is not cheap. One pays for what one gets, and if one wants cheap insurance one does not get one's risk covered. It is as simple as that. The British Insurance Association must bear some responsibility in this matter. It was the association which gave the accolade of respectability to Vehicle and General in 1966 and that should never have happened. I have great respect for the association but that error was, I think, the thing which led Vehicle and General to bankruptcy.9.16 p.m.
I am obliged to my hon. Friend the Member for Battersea, South (Mr. Ernest G. Perry) for finishing his speech so abruptly. I, too, congratulate the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) on initiating this excellent debate. I also congratulate my hon. Friend the Member for Birmingham, Northfield (Mr. Carter), who can be said to have been responsible to a considerable extent for our having a report to debate.
The general question of the rights of the individual civil servant has been fully covered in the debate and I do not want to add too much about that. It is very difficult to join in a debate in which so many hon. and learned Members have spoken on aspects of the law relating to negligence, but I must say, speaking as a layman and in common with many other hon. Members on both sides, that I find it a little hard and a little harsh to condemn a man on the evidence of the report, which I have read very fully. Despite the fact that this very distinguished tribunal was headed by a judge and two Queen's Counsel, the report makes clear that they found it very difficult to distinguish between incompetence, negligence and errors of judgment. The Secretary of State and I are of the same profession—not the legal profession. He, too, apparently found it difficult to accept easily the definition of "negligence" taken in the report. I certainly did. The attempt of the tribunal in chapter 8 to define negligence I found to be fascinating reading, but it did not satisfy me, to say the least. In paragraph 327, the tribunal concluded:I must say that if the Department were to wind up every company whose board might be living in a fool's paradise, I cannot help feeling that not too many companies would be left and the Department might then have a rather easier task. That does not mean that one necessarily agrees with the findings of the tribunal, but it is harsh to absolve all those superior to the one comparatively junior civil servant, including Ministers, and condemn him on the somewhat shaky definition in the report. In formally absolving Ministers, as has been said, the tribunal has gone a long way from the old idea of ministerial responsibility. In common with many other hon. Members on both sides of the House, I entirely accept that with larger Departments and with greater Government intervention it is absurd for Ministers to have to resign because of action or inaction which they could not have known about. But this is a rather different situation We must be careful not to go to the other extreme and accept that in effect there should be no ministerial responsibility. As my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) and my right hon. Friend the Member for Birkenhead (Mr. Dell) said, there was clearly something lacking in the supervisory job being done above this particular civil servant. It seems to me that we are in very grave danger of having a new doctrine—one of ministerial ignorance—as an excuse in order to escape responsibility. We must decide where one stops, and therefore this debate has been very useful. The hon. and learned Member for Darwen said that it was difficult to draw the line. He was interrupted by the right hon. Member for Orkney and Shetland (Mr. Grimond), and then the hon. and learned Gentleman seemed to be saying that the answer would be "if the Minister knew ". I think those were the words he used. I would not take that as a definition. One might consider as a definition "that the Minister should have known ", but that is not what the hon. and learned Gentleman said." it is not difficult to deduce…that the Company was or might be living in a fool's paradise…".
I only said "if the Minister knew "because that was what the right hon. Gentleman put to me. I added that there were other and more difficult cases and they included precisely the one which the hon. Member is now mentioning.
I am obliged.
There is a danger of referring everything upwards. On the other hand, my hon. Friend the Member for Ashton-under-Lyne pointed out in his reference to the Fulton Committee Report, of which he has so much experience, the serious consequences of not accepting responsibilities beyond the level of under-secretary. This is a very serious matter if the Government are simply to accept this new doctrine that has been set out by the tribunal. I turn to the very serious matter that has been highlighted by the tribunal; the question of safeguarding motorists, passengers and so many others who have suffered from this and other collapses. The report, without spelling it out, makes the point that whilst there has been, as the tribunal found, negligence in the case of one civil servant, even without any degree of negligence it could happen again and, indeed, will happen again, because the system is wrong. This is really at the heart of the problem. The tribunal did not argue that the powers of the 1967 Act were inadequate. It said that the Act did not work and it blamed this largely on one civil servant. It is, however, far too simple to put the blame on one civil servant, and certainly I hope that the House will not leave it at that. The major problem here is precisely the fact that there is and always will be, whatever we do, this reluctance on the part of Ministers and civil servants to intervene because of the danger that this would cause more trouble than if they did not intervene. This is where the tribunal had a serious problem as to where there was an error of judgment and where it was negligence. In this sense I submit, with respect to all the lawyers present, that a lawyer is not necessarily the best person to define negligence in that respect. The report, at paragraph 337, says that Mr. Jardine should have shown more initiative and imagination. That is a very interesting comment. I suppose we would have a very different form of Civil Service if every civil servant showed the degree of initiative and imagination which seemed to be implied in that paragraph. It would be a very interesting Civil Service. But I am not so sure that that is necessarily a serious criticism. There are many hon. Members in this House who do not always show a great degree of intitiative and imagination. So we should be reluctant to condemn anybody, particularly a civil servant, for not doing so. In motor insurance, however, before we get to the stage of taking a decision, we must make a careful analysis of the balance sheet, Analysing a balance sheet is difficult enough even in a very simple case, as the Secretary of State will be aware. Certainly nobody without any knowledge of accountancy could read the figures in the report and conclude that the balance sheet of an insurance company was simple. In this case it is not a matter of showing insolvency, although that in itself is difficult enough. One has to show the risk of insolvency, and that is a very difficult matter. Six accountants could honestly certify a balance sheet in six different ways and all of them would he genuinely entitled to sign the balance sheet as being a true and fair view. Paragraph 351 of the report points out that there was no suggestion of fraud or misconduct. The accounts were correct; the report says so. There was, on the other hand, "over-optimism". That is not rare among company directors, particularly those who are running companies which have some little financial problems. My experience is that directors in these circumstances are invariably over-optimistic. Paragraph 303 of the report points out that the over-optimism did not happen only after 1966. The report says that it happened throughout the life of the company. Yet, despite this over-optimism, we learn from paragraph 136 that in 1965 two very distinguished actuaries—and they are not normally people whom one expects to make unenlightened guesses—said that they found, after their examination, that the reserves were adequate. On the other hand the tribunal said in paragraph 288 of its report, as the right hon. Member for Thirsk and Malton (Sir R. Tartan) pointed out, that this was not consistent with the evidence it had heard. Therefore, the tribunal disagreed with two actuaries without, as far as I can see, any clear evidence on which to base its disagreement. Thus it can be seen that the question of insolvency, and the risk of insolvency in particular, especially in the light of a complicated balance sheet of an insurance company, is far from clear-cut and is very difficult to ascertain. I accept that with a larger number of competent staff we are more likely to get a better report. But in the earlier years, even with more and better staff, I doubt whether the Department could or would have closed the company. The British Insurance Association admitted the Vehicle and General Insurance Company to the association in November, 1966. It therefore bears some responsibility. The chairman of the B.I.A. said in January, 1967:That was a very serious statement to make. The company remained a member of the association until the crash. Therefore I doubt whether, even with better supervision, the crash would have come much earlier and whether more people would have been saved than were hurt when the crash came. This all arises from the natural reluctance of the premature intervention, with all that that means. It may be, in this sense, that officials are as optimistic as directors of limited companies. In that sense this may be a criticism. I certainly would not concede that it necessarily is a defence of negligence. What, then, is the solution? Does one have to continue as before but with specialist accountants, as the tribunal suggested? I must say, speaking as a nonspecialist accountant, that when I hear the word "specialist" or "expert ", even when applied to myself, I tend to want to run a mile. When I hear a tribunal of specialist lawyers tell me that what we need are specialist accountants, to say the least I am—like accountancy bodies, as the Secretary of State pointed out—somewhat sceptical. But even with specialists and specialist accountants, for the reasons I have given action would inevitably always be late. The question is, how late? It would always remain a matter of judgment as to when intervention should take place. Whether we continue either with specialist accountants or without them, I fear that one can predict with almost absolute certainty that more crashes there certainly will be. I certainly would not like to ask the Secretary of State to give us an assurance today that there will be no more because, of course, he could not give us any such assurance. Even with the solution suggested by my right hon. Friend the Member for Birkenhead and supported by many other Members on both sides of the House about a separate specialised agency, even if better than the existing system, the same arguments would still apply and crashes would continue, but perhaps less frequently; nevertheless, the problem will still be with us, and one is still faced with the problem of making a judgment on the question of the point at which one intervenes. The crucial issue therefore remains, and it is referred to in the last paragraph, paragraph 352, of the report, which is worth quoting again:" The majority of the public had, however, no cause whatsoever for concern because they could rely completely on the security and service unfailingly given by member companies of the B.I.A. and Lloyds ".
It does require close examination. That is certainly needed, but commercial freedom will mean failures from time to time, even if the new agency suggested were so tough as virtually to remove commercial freedom, because while we retain some commercial freedom there will be some risk remaining. The House will have to decide whether this is a price it is prepared to pay. The choice is to restrict commercial freedom to a lesser or greater degree, or total public control. The Secretary of State talked about the need for balance, but he has already accepted the very considerable difficulty in restriction. I would have thought that one really must decide between the halfway house we have now, total commercial freedom and total public control, but the present system is far from satisfactory if future human tragedies of the sort we saw in the V and G crash are to be avoided. Of course, one can limit the amount of commercial freedom by more stringent control, perhaps through a strengthened BIA or through an agency, but, as I say, either of these still leaves the possibility of some failures in the future. It would mean that inevitably there would be less competition, because one would have to insist upon greater solvency margins, and that inevitably would remove most of the smaller companies from the insurance field. This inevitably would mean higher motor insurance costs. One would not burke that issue, but it would almost certainly apply. It would be cheap if one could prevent future failures. At the same time, if the industry is not prepared to put its own house in order at the end of the day it must be told that no Government, of any party, could shirk their responsibilities in such a vital field. The tribunal makes it clear that this responsibility cannot wholly be met with the sort of commercial freedom which is allowed at the moment, no matter how large and how competent a staff either a specialised agency or the Department may have. Although there would be a smaller number of failures, what has emerged from our debate today is that the failures would continue unless we had a different form of public control from the one we have now." It may be that the present system is as good as can be devised and that the failure of an insurance company from time to time is a necessary and small price to pay for preserving the present balance between commercial freedom and public control. We consider that in the light of the facts disclosed in this Report, some of them astonishing, the present system requires close examination."
9.35 p.m.
I am sure everyone in the House will join me in congratulating my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) on choosing this important and complex subject for debate and on the way in which he introduced it. I am sure hon. Members also agree with the hon. Member for Birmingham, Northfield (Mr. Carter) that the public interest is very great and the number of people involved in considerable.
One tends to forget that at the time the tribunal was set up there were allegations of serious misconduct within Government in a matter affecting nearly a million people. Fortunately the tribunal has disposed of the great majority of the problems. It found that only one person was involved in improperly disclosing information and that no person made any financial gain as a result of that improper disclosure. The tribunal made it clear that there was no misconduct, no idleness and no carelessness by civil servants. That needs to be repeated after a debate which has been largely concerned with discussing the results of the tribunal. In the case of one particular civil servant the tribunal found what it described as negligence. It is worth emphasising that the definition of "negligence" in paragraph 322 of the report is a specialised legal definition and certainly not what you, Mr. Deputy Speaker, and 1 would normally mean by "negligence ". We mean carelessness and idleness, whereas the tribunal said categorically that it did not find that any civil servant had been either careless or idle in the conduct of his affairs. What the tribunal said was that Mr. Jardine in particular in his decisions in this matter had fallen below the level of competence normally expected from someone in his posititon, which is a very different thing from the normally understood interpretation of "negligence." The tribunal consisted of men of great distinction who applied themselves very hard for many days with the greatest care and diligence to sifting an immense amount of information on a matter of great public importance. I am sure that the whole House is grateful to Mr. Justice James and his colleagues for the work they did and for the spirit in which they did it and has great respect for the integrity and quality of mind which they brought to these difficult problems. This is a big assignment for anyone to take on. Inevitably when a report of this kind appears there is bound to be criticism and this must be expected. There has been criticism of the report from the Civil Service in particular which feels that some of its members were not wholly fairly treated in the procedures of the tribunal and that an interpretation might be put upon the findings of the tribunal which is not entirely justified by the evidence. My right hon. and learned Friend the Member for Thirsk and Malton (Sir Robin Turton) mentioned the feelings of the actuarial profession. To be personal for a moment, I have known the firm of accountants concerned, Bacon and Woodrow, for nearly 50 years. I am the son of an actuary, and one of the partners in that firm is a constituent of mine. The actuarial profession feels that the evidence given to the tribunal was not fairly considered. The profession is also in dispute with the tribunal as to the actuarial basis of particular technical findings concerning the actuarial ratio system, which is difficult to follow. It is right that hon. Members should know of the dispute be- tween the tribunal and the professional firms on this technical matter. This leads me to the first main point. Looking at the report with a fairly fresh mind I cannot help but feel that the absence of an appeal is the basis of all the problems. This is as true of the tribunal as it is of the parties concerned. An appeal vindicates the people who make the initial decisions or vindicates the people who criticise them. Both parties are entitled to feel that an appeal is helpful from their point of view. I am certain that against the background of this investigation, carried out with great care, thoroughness and quality, the whole question of appeals should be considered, and I undertake that the Government will do so, because I think it is right this should be done. Clearly the Government cannot act as a court of appeal. It would be totally wrong for the Government to do so against a tribunal inquiring into activities of government. The Government's responsibility is to act on the tribunal's report. In this connection the Government are responsible to Parliament. I had the impression this afternoon that my right hon. Friend's remarks about the action he intended to take met with the approval of the House. It is the Government's responsibility not to act as a court of appeal on the findings of the tribunal but to decide what to do about them and on that decision to be responsible to Parliament. I have the impression that Parliament approves of my right hon. Friend's decision in these matters. We must not forget that this was a very serious matter which affected a million motorists and led them to lose their insurance cover. Many people suffered pecuniary losses in circumstances which legislation was designed to avoid. This should not have happened. Something must have gone wrong. Looking back, we cannot easily dismiss the findings of the tribunal when it finds what went wrong—for something must have gone wrong if the legislation which existed, and which had been passed in 1958 and subsequently in 1967, did not protect the motorist in the way the motorist thought it was desirable to be protected. I turn to some of the points which have been raised in the debate. First, it may be asked why there was this particular method of investigation and why it was conducted by a tribunal under the 1921 Act. In paragraph 27 of its report the Salmon Commission said that where big issues are involved—as there were here not only in terms of the number of people involved at the time but involving allegations of misconduct, possibly of impropriety, on the part of a Government Department, these are important matters which must be investigated by a high level body. I do not think a Select Committee of this House would have been the right body. Paragraph 35 of the Salmon Commission's Report gives very good reasons against this. Nor would the Ombudsman be the right person to investigate this. Once the question of maladministration had been linked with the possibility of impropriety the Government were right to say—and the House approved the decision—that there should be a tribunal of inquiry under the 1921 Act. Secondly, the composition of the tribunal has varied very much because the subjects of investigation have varied enormously over the years. It is right under the system to tailor-make a particular tribunal to the special problem which it is considering. It is obvious, first, that a High Court judge should be the chairman of this sort of inquiry because of the status and prestige carried by such a judge since this is an essential guarantee of impartiality in the proceedings; secondly, because the particular type of proceedings, the inquisitorial type of proceedings, contains many dangers to individual witnesses and persons involved, and the best protection of the individual is the tradition of our High Court judges; thirdly, because the need to investigate, to take evidence, to hear cross-examination, to assess witnesses and facts is very much the skill and expertise of the High Court judge. Therefore, it is right to appoint as chairman of any tribunal of this kind a High Court judge. Whether there is a case for appointing an expert member as well, an actuary or accountant, is another matter which we should consider. Should the expertise rest with the tribunal or with those who assess and give evidence to the tribunal? By and large, our judges are very well-equipped indeed to assess and sift evidence of a very technical character, which they often have to do in the pursuit of law. It is worth bearing in mind in future instances the possibility of having on a tribunal of this kind someone with specialised knowledge who might be able to contribute to the tribunal's proceedings. It is argued that the procedures of the tribunal were not fair to those involved, particularly to the civil servants. This is, clearly, a matter which gives great concern to the Government, and my right hon. Friend the Secretary of State for Trade and Industry dealt with it to a considerable extent earlier today. One complaint is that those involved did not have their own lawyers to represent them as individuals. This, obviously, is arguable. It was certainly by agreement, as I understand, with the individuals concerned and with the staff associations that the Department's counsel should represent them as individuals as well. As my hon. and learned Friend the Member for Darwen said, it might indeed at some stage have been prejudicial to them had they switched from the general representation of the Department to individual representation, because certain implications might have been drawn from that. So far as I can see, the individuals concerned were given every opportunity of choosing their own counsel if they wished to do so, but they accepted the advice, which I still think was good advice, of relying upon the expert counsel representing the Department as a whole. On the question of expenses, it is true that there is no guarantee of the refund of expenses. This is a matter which we must consider in our forthcoming review of the procedure before these tribunals. In paragraph 10 of the report, the tribunal makes it clear that it had the power to recommend to the Treasury anex gratiapayment. Although this is not the same as binding the Treasury, in practice it has the same effect. Anex gratiapayment recommended in these circumstances has not been rejected by the Treasury. The most important argument is to the effect that the civil servants concerned were not given a proper opportunity to assess in detail, and, therefore, to answer in detail, the charges—as they are called —which were made against them. This, after all, as is rightly said, was one of the main principles of the Salmon Report —that people involved in this sort of proceeding as witnesses should be in a position to know exactly what they are called upon to answer. This brings us to the whole nub of the difference between this sort of procedure and the court of law, between the inquisitorial procedure and the ordinary civil or criminal case. In this sort of inquiry there is no plaintiff or defendant, no prosecutor, no pleadings, no charges, indictments or depositions. Therefore, it must, clearly, be more difficult in these circumstances to reconcile justice to the individual with the claims of the public interest. We must recognise this. This is one of the reasons why Governments are very chary about employing this vehicle for investigating any situation. In paragraphs 14 and 15 of its report the tribunal puts forward a very strong argument to the effect that it followed the Salmon recommendations as far as was practicable in the particular circumstances. After all, the basic issue was whether the Department had acted efficiently within the powers of the 1967 Act in dealing with the V and G situation. That was a fairly wide warning to those who were called as witnesses as to what they would be needed to prove or, if necessary, to rebut. In other words, the accusation, or the point at issue, was; did the Department and the responsible officers in the Department carry out their duties efficiently under the 1967 Act in dealing with a situation which we must recognise ended disastrously? This is the fact we must always return to—there was a collapse. The 1967 Act was designed to prevent such a collapse. Why did this happen? I should have thought that the memorandum given on 19th June, 1971, setting out the matters in general which the Department was expected to answer, gave those concerned a very good indication indeed of what they would be expected to deal with in the way of criticism.I quite see the point about allegations. However, the Salmon Report also said that such people should be given the substance of supporting evidence. There is no evidence in the whole of this report that that was ever complied with.
They could not be given the substance at the beginning because the inquiry was looking for the information. But they got transcripts of the evidence given day by day and, therefore, were fully in possession of all the facts put before the tribunal. In fact, I gather that the substantive allegations against Mr. Jardine were conveyed to him in detail on day 32. He was advised to think about them and to return. He and Mr. Homewood were recalled after this and before the Department's evidence was concluded on day 35.
Obviously, there is room for argument on both sides, but I am clear that, under its distinguished chairman, the tribunal did its best in the circumstances to see that those coming before it as witnesses were treated as fairly as possible and in accordance with the spirit of the Salmon recommendations. I do not think we are yet certain as to what we should do as a Government and what succeeding Governments should do about implementing the Salmon recommendations in detail. The lessons of this tribunal should be learned, and learned with considerable care—Does the right hon. Gentleman think it is in keeping with a careful approach to the matter that the Chairman of the tribunal should say in response to the protests of counsel about the point that the right hon. Gentleman has just been discussing "You must tell them not to be so edgy. Bend them over your knee and spank them. That is all they want."?
That has been quoted already. I think it occurred on day 50. However, if one looks at the totality of the proceedings, I think it is difficult to criticise the tribunal for unfairness and for not giving every opportunity to those appearing before it to present their case.
I deal now with the important matter which was raised in the debate by a number of hon. Members, especially by my right hon. Friend the Member for Thirsk and Malton; namely, the responsibility of Ministers in these matters. We must be clear on one point. The decision whom to call as a witness rested entirely with the tribunal. There have been suggestions to the contrary. In fact, the tribunal decided whom it wanted to call. It decided not to call Ministers for the reasons set out in paragraphs 61, 71 and 344. As several hon. Members have said, this raises very important issues about what is the responsibility of Ministers in modern conditions. Being a rash man, I shall try to suggest what it might be. Ministers are responsible to Parliament still for all the actions of their Departments. A Minister takes any praise for anything good that his Department does. He must take any blame for anything bad that it does. That is a simple principle. A Minister cannot say in this House" I am sorry. We made a mess of it. It was not my fault. Mr. So-and-So, the assistant secretary, got it wrong that day." One cannot do that. That has not been the principle, and it never can be. Ministers are responsible not only for their personal decisions but also for seeing that there is a system in their Departments by which they are informed of important matters which arise. They are also responsible for minimising the dangers of errors and mistakes so far as possible, and, clearly, they are responsible for the general efficiency of their Departments. This is still the right doctrine of ministerial responsibility. One must look at this classic doctrine in the light of modern reality. In my own Department we get 1½ million letters a year, any one of which may lead to disaster. No Home Secretary could be expected to supervise all those 1½ million letters. It is no minimising of the responsibility of Ministers to Parliament to say that a Minister cannot be blamed for a mistake made if he did not make it himself and if he has not failed to ensure that that sort of mistake ought not to be made. In other words, this is where the blame of Ministers should arise. If a Minister gets it wrong or fails to ensure that the other chap has not got it wrong, that Minister is to blame. That does not stop Ministers being responsible to Parliament for what their Departments do. In the case of this tribunal a different state of affairs arises. The tribunal was told by Parliament to look into what happened and to ascribe the blame in individual cases. If we appoint a tribunal of this kind, we are bound to get ascription of responsibility to individual civil servants, which would not happen in the case of a parliamentary inquiry into the conduct of a Department. Therefore, the naming of civil servants in the case of this tribunal does not set any precedent for the naming of civil servants in the general responsibility of the Government, which still rests squarely upon the shoulders of Ministers. At the moment that is the best way that I can put what seems to me to be the right constitutional doctrine in this difficult matter.I think that the Minister should make it clear that the terms of reference of the tribunal were whether there was negligence by persons in the service of the Crown. There is nothing there which suggests that the tribunal would find in respect of individuals as against finding in respect of the Department collectively.
The terms of reference refer to persons, individuals. They are the same. I thought that the tribunal carried out its responsibility of ascribing to persons individual responsibility of a kind which would not be ascribed to them in the general criticism within Parliament about the conduct of a Department. This is a different matter and should be treated as such.
I have gone over the ground rather rapidly. I am not sure whether I carry conviction on the other side of the House on this particular doctrine of ministerial responsibility. I suggest that if right hon. and hon. Gentlemen look at what I have said they will see that it combines what I believe to be the tradition of full ministerial responsibility in modern circumstances with the reality of administration of a Department. Ministers will remain responsible for what their Departments do. If their Departments get things wrong, they are to be blamed in this House because their Departments get them wrong. This is the fundamental point.Is the right hon. Gentleman saying that in this case the Minister is to blame because his Department got it wrong, but that the tribunal was not really concerned with that particular point?
If the Department fails to protect the motorist, clearly the Minisster carries the responsibility in this House. When inquiry is made into what happened and what individuals did, that is done by the tribunal. In those circumstances the actions of individuals become known to the public. That is quite a different thing.
Many hon. Members feel that the application of the Salmon recommendations was not fully carried out by this tribunal. That is because they had not been accepted by the Government at the time this tribunal was set up. I think that we were wise in not reaching a conclusion until we had the benefit and experience of this tribunal and, incidentally, the Widgery Tribunal on the Londonderry tragedy. We shall now have the advice of both Mr. Justice James and the Lord Chief Justice. I can assure the House that we will consider carefully all the experience of these two tribunals. It is clear that the present situation is not satisfactory. In particular, I should like to examine again the question of appeal. We had the difficult situation of setting up a tribunal of great distinction which must carry conviction and with whose conclusions the Government cannot argue. The great difficulty is that the people who wish to complain about the results of the tribunal's findings can do so only by making public statements. It is right to examine what has been said about this tribunal and its procedure. I hope to put before the House at an early opportunity further recommendations about how to conduct in future these difficult inquiries into matters of grave national importance.Question put and agreed to
Resolved,
That this House takes note of the Report of the Tribunal appointed to inquire into certain issues in relation to the circumstances leading up to the cessation of trading by the Vehicle and General Insurance Company Limited (House of Commons Paper No. 133).
Customs And Excise
Resolved,
That the Anti-Dumping Duty Order 1972 (S.I., 1972, No. 569), dated 11th April 1972, a copy of which was laid before this House on 17th April, be approved.—[ Mr. Noble.]
Consolidated Fund (No 3)Bill
Considered in Committee reported, without Amendment.
Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 93 (Consolidated Fund Bills), and agreed to.
Bill accordingly read the Third time and passed.
Administration Of Justice(Scotland) Bill Lords
Order for Second Reading read.
Bill referred to the Scottish Grand Committee.— [ Mr. Kenneth Clarke.]
Adjournment
Motion made, and Question proposed,
That this House do now adjourn.—[ Mr. Kenneth Clarke.]
Whales (Preservation)
10.2 p.m.
I want to raise the subject of the preservation of whales. When I say that, 1 refer to the mammal and not the Principality. I am very proud that so many of my constituents take an interest in the conservation of wild life. The Eastbourne branch of the World Wildlife Fund produced most of the money required to buy an island in the Seychelles called Cousin Island, for the protection of feathered birds.
Cousin Island was recently visited by Her Majesty the Queen and Prince Philip on their visit to the Seychelles. The object of the exercise in relation to Cousin Island is the preservation not of whales but of a species of feathered bird called the Seychelles brush warbler. Through the action of the Eastbourne branch of the World Wildlife Fund this comparatively drab but rare little bird has been saved from extinction. We have all heard that many whales will become extinct within a few years if their hunting is allowed to continue. The whale is a friendly mammal, and I am told that it has a type of brain similar to the human brain and is probably a great deal more friendly than many human beings. I wonder how many of my constituents who write to me complaining about the cruelty of fox-hunting, live hare coursing and all the other sports—or so-called sports—that have been carried on by country communities for many years realise that these wonderful mammals— I refer again to whales—are being slaughtered by the thousand in order to provide pet food for their little doggy-woggies and pussy cats. The slogan of one well-known pet food firm*—and I suspect that the firm uses whale meat in its products—is "Prolongs active life "for pet dogs. We know that this means a cruel death for the whales. I should say here, so that nobody can accuse me of being wrong about these things, that the following pet foods, all marketed by Spillers and Wakefields, namely, "Bounce", "Chappie", "Lassie", "Faithful", "Sam", "Kit-e-Kat", "Katkins" and "Whiskas" have no whale meat in them, nor do they contain any kangaroo meat, either. I therefore give clearance to those foods. I understand that none of the pet foods sold by Tesco or by Marks and Spencer includes whalemeat, but many others do. Many people must have seen the BBC television programme "Horizon" which gave the life history and the death by harpoon of whales, and what dead whales are then used for. On 12th December, 1971, the United States Secretary of the Interior called for a moratorium on the slaughter of whales. He said that in this environmental decade it would be barbarous to stand idly by while the last of earth's largest and, next to man, most intelligent creature would be reduced to pet food, face cream and lubricating oils. Unfortunately, the United States Government seem to be rather alone in their enlightened action and, I propose tonight to ask the Government to take similar action to that taken by the United States, which has banned from importation everything to do with whales and whale products. The United Kingdom could give a definite lead to the countries in Europe, which are now the biggest importer of whale by-products. Before the United States imposed the ban on the importation of whale products and whale meat, imports accounted for about 30 per cent. of the total world output of blubber, meat and by-products of the whale. In 1946 the International Whaling Commission was formed in order to protect whale stocks. Although about 16 countries, including the United Kingdom, are members of the International Whaling Commission, it has failed because it has done too little too slowly and has not been efficient enough. The largest whale, which is the blue whale, is in danger of extinction. Incidentally it is the largest animal ever recorded to live within the seas on earth. There are now only a few thousand of them alive. In 1922 the whale population was 150,000. By 1962 it was estimated that 90 per cent. of that total had been wiped out. That was 10 years ago, and I cannot tell the House what the figure is today. Ten other species are in danger of extinction. In the 'fifties the Antarctic whaling grounds yielded 30,000 fin-backed whales a year. The yield is now down to 2,500. The figures speak for themselves. Most of the world's whaling fleets have ceased operating in the Antarctic, but Japan and Russia persist. Japan is probably the biggest nig—I beg pardon—the biggest coloured gentleman in the woodpile, being a member of the International Whaling Commission yet operating outside the jurisdiction of the commission. Japan is taking a reported 1,000 sperm whales under a flag of convenience from the waters round Brazil and within Brazilian territorial waters. Whales are killed by an explosive harpoon. This is a barbarous and inhumane practice which is strongly condemned by every animal preservation society in the world. It may be all right if the whale is harpooned in the head, so that the explosion kills it instantaneously, but whales are not always struck in the head. A recent parliamentary answer to my hon. Friend the Member for Gillingham (Mr. Burden) from the Secretary of State for Trade and Industry stated that sperm whale products were imported into the United Kingdom for use in the manufacture and preparation of high-pressure lubricants, cutting oils, leather tanning oils and textile lubricating oils and in the making of fatty materials for the chemical industry. They are also extensively used in pharmaceuticals and cosmetics. The by-products of whales other than sperm whales are employed as human and cattle food, as I have explained, and as fertilisers. I wonder what would happen to all these important industries if the whale became as extinct as the dodo in Mauritius. I am informed that all these products can be made without whales, from vegetable materials gained from countries in the sterling area. At a time when the nation and the world wishes to preserve and protect wild animals which would otherwise appear to be doomed to extinction, Her Majesty's Government should give a lead and follow the example of the United States in this matter by banning the importation of whale products for pet food, cosmetics and anything else. Through the forces of international organisations they should bring pressure on other nations, and particularly on Japan, to stop destroying something in the high seas which many of us look upon as something of value, and I use the word "value" not in the exploitation sense. I hope that the Government will press for a 10-year moratorium on the slaughter of whales so that their numbers may multiply to reasonable proportions. I understand that my hon. Friend the Member for Shrewsbury (Sir J. Langford-Holt) is shortly to introduce a Bill which would give effect to the recommendations I have made tonight. I look for an assurance from the Government now that they will not only give every chance of success to that Measure but may perhaps take it over and make it a Government Bill.Before my hon. Friend sits down, may I ask whether he is aware that many people and many right hon. and hon. Members support his eloquent plea? I had a letter from a large number of schoolchildren in my constituency wishing him success in the proposals he has so eloquently presented.
I thank my hon. and learned Friend very much. Looking at the empty benches opposite, one can see that there is no great interest on the part of the Labour Party and the Liberal Party in preserving these things, which I believe are of value.
10.16 p.m.
I am sure the House is very grateful to my hon. Friend the Member for Eastbourne (Sir C. Taylor) for raising the question of the conservation of world whale stocks at this time. I am in no doubt at all about the keen interest there is in this matter and the anxiety about it, of which the correspondence I have had from hon. Members on both sides has been clear testimony. I am therefore particularly grateful to have this opportunity to explain how I see the problem and to say, I hope clearly, what are the Government's aims and aspirations in the matter.
I say at once that I believe my aims and the Government's aims are precisely the same as those of my hon. Friend and, indeed, of the substantial body of anxious people who have recently taken the time to let me know their views both here in the House and by writing to me. We all have a common aim, which is to prevent the extinction of any breed of whales. There may be some disagreement as to the methods by which this can best be achieved, but the common aim is, and I underline this, to conserve whales. That being so, we have in my view to control the catching of whales. Many but by no means all kinds of whales are hunted, and it is the stocks of whales which are commercially exploited with which we have to be concerned. These whales are caught in all the oceans by a number of different countries, and while only two countries go in for deep-sea whaling just now many others catch them from land stations. Whales range widely through the oceans, and they are caught in international waters by a number of countries. It is quite clear that any control of the catch can be secured only by international agreement. Such an agreement exists. As my hon. Friend has said, under an international convention which was sired in 1946, 14 nations, including almost all the nations which catch whales, met together in the International Whaling Commission to review the state of whale stocks and to agree upon protective measures where these are necessary. My hon. Friend and others may very fairly ask whether the commission is effective. Certainly of late a great deal of criticism has been directed at it, and I do not think that anyone would want to claim that the commission has been effective and successful throughout its life since 1946. There can be little doubt that until the last few years it either failed to take action at all or did too little too late. But I shall claim, and I hope to be able to show my hon. Friend, that the situation has changed. The measures in force are necessarily somewhat complex, but I shall try to give the House the gist of the protection available to whales and of the results of it. The catching of all immature whales and of all females with calves is totally prohibited. Having made that point, I now turn to specific stocks, as the scientific protection of each one must be considered separately. First, there is the blue whale. As my hon. Friend said, the blue whale was in danger of extinction. It is the largest of them and it is, indeed, the largest animal which has ever lived upon the earth of which we have any record. It has been repeatedly put to me that the numbers of this whale are very low and that its killing should be totally forbidden. The catching of the blue whale has been totally prohibited by the commission since 1964. Estimates of numbers made in 1963 suggest that the total world population of blue whales at that time was between 1,000 and 3,000. My hon. Friend said that he did not know today's figures. I hope I shall be able to help him when I say that we think that those figures are today as high as 10,000. But the total prohibition still remains in force. Therefore one can claim that although the figures may not be as high as one would like, there has been a substantial improvement as a result of the efforts which have been made. Other whales which in the past were brought to the brink of extinction are gray whales, right whales and humpback whales. With very minor exceptions—one of which is that the catching of these whales exclusively for local consumption by aborigines is allowed—these species have also been protected by a total ban on catching since 1965. My hon. Friend was uncertain about the position today. Therefore, I shall quote recent scientific assessments of these stocks made by the Food and Agriculture Organisation of the United Nations. They were made independently of the Scientific Committee of the International Whaling Commission. The FAO report said:If all these breeds are, to all intents and purposes, totally protected, one must turn to the ones which are caught and look into the stocks of those. Those which are mainly caught are fin whales, sei whales and sperm whales. Fin and sei whales are protected in the various oceans of the world by closed areas, closed seasons and catch quotas. Again, until recent years the catch quotas were set far too high and numbers continued to fall. During the last few years, however, quotas have been drastically reduced and the FAO assessment now is that, for the fin whales in the Antarctic," The gray whale has definitely increased. The right whales also appear to have increased though more slowly… It is too early to observe any changes in the southern stocks of humpback whales…but the stock…in the North Atlantic is increasing…".
Outside the Antarctic fin whale quotas set in 1970 and 1971, with an existing commitment for a further reduction in 1972."Catches are within the current range of estimates of sustainable yield. As a result the stocks have certainly not decreased since 1965 and may have increased."
That leaves only the sperm whale to be dealt with, and here, because of the very wide ranging habits of the sperm whale and the great complexity of the different stocks, it is difficult to give an overall picture. But the total world stock does not seem to be over-exploited, although I agree that there may be local areas of over-exploitation within this overall picture. This breed is protected by limits on size which give almost complete protection to females, and very recently catch quotas have been introduced in the North Pacific. I hope I have not bored the House with this review of measures and stocks and I also hope that I have gone some little way to reassuring my hon. Friend, at least in part, by providing this scientific assessment, which I assure him is totally objective. There is no doubt that in the past the International Whaling Commission has failed to discharge its responsibilities fully, and I would be the first to agree on that. But it is equally true that in the last few years, and in part, if I may say so—since we are far too prone as a nation not to blow our own trumpet loudly enough—due to the tireless promptings of the United Kingdom, the commission has got to grips with its problems and its work has been attended by more success than one would suppose if one were to listen only to its critics. I believe that the commission is the only body from which effective and successful protection for whale resources can flow. Any suggestion that we should now redirect our energies away from this body is to my mind a suggestion—and this is an appallingly mixed metaphor, for which I apologise to the House— rather like locking the stable door after the horse has departed. I want to say emphatically that I am not at all complacent about the present state of whale stocks. Despite the indications I have given that numbers either have been stabilised or are slowly increasing, I continue to favour yet more stringent reductions to speed up their recovery, and we shall be pressing for such measures at this year's annual meeting of the commission in June, which either my right hon. Friend or I will be opening. There are also suggestions from time to time that some members of the commission may be irresponsibly evading their own regulations. About this I would say that we have absolutely no evidence to suggest that this is so, but doubters may be further reassured that the commission's international observer scheme, in which the whaling activities of each member will be observed and inspected by inspectors from their whaling rivals, will enter into force this year. A further point which my hon. Friend made, and which is frequently mentioned, is the question of cruelty involved in killing whales. At the instigation of this country, this was investigated by a special sub-committee of the commission in 1960–61, a considerable time before the spotlight of anxiety was focussed upon the fate of the whale. This investigating subcommittee was not a mere congregation of whaling interests. The members included the Director of Whaling Research of the French National Museum of Natural History, the Director of Zoology of the University of Amsterdam, the Professor of Veterinary Science from the Veterinary Institute, Oslo and a physiologist from the Royal Veterinary College, London. These are men of impeccable qualifications and unquestionable objectivity. Their conclusions were that the improved explosive harpoon often produced instantaneous death and in other cases had so considerably reduced the time a whale took to die that any other method was likely to be less humane. We have heard proposals for a ban on imports of whale products, as my hon. Friend has proposed tonight. I understand his feelings, but I cannot see the logic of a ban except in support of a ban on exploitation. So long as whaling continues, a ban on imports by this country will have little or no overall effect. The proportion of whale products which we import is small, and it is falling, and the contribution which we could make by such a ban would be so insignificant as to be of no real worth. To tackle this problem effectively, which is what people want, means making sure that conservation means something. Many of those who write to me press for a ban on exploitation, as well as on imports. What I have said tonight will, I hope, serve to help Members to read with new eyes articles such as that recently published inNature,and, in the light of the authoritative reports I have given, I hope that the readers of that paper and, indeed, everyone else will accept that present rates of exploitation do not threaten the extinction of the species. Whales represent a resource of great value to man. We have a responsibility to ourselves, as well as to the whale, to insure against over-exploitation—" will almost certainly ensure that the 1972 catches will not exceed the sustainable yield."
The Question having been proposed after Ten o'clock and the debate having continued for half an hour,Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at twenty-eight minutes to Eleven o'clock.