I beg to move, "That the Bill be now read a Second time."
I must ask the House to turn from ploughing the land to ploughing the sea. The object of this Bill is to deal with the insurance or re-insurance of ships, aircraft and cargoes against war risks. Let me say at the outset that there is no intention to interfere in any way with the ordinary peace-time activities of the insurance market.
What this Measure does, in the main, is to re-enact Part I of the War Risks Insurance Act, which the House passed shortly before the outbreak of hostilities in 1939, and which deals with the insurance of ships and cargoes, and of so much of Part III of that Act as relates to Part I. Part II of that Act, which deals with the insurance of goods in the United Kingdom, is not in any way affected by this Bill.
The purpose of Part I of the 1939 Act was to secure that on the outbreak of hostilities ships would not be laid up and the commerce of this island interrupted by any lack of insurance facilities. Accordingly, powers were at that time conferred upon the Goverment of the day enabling them to insure ships and cargoes in war-time, and also to cover them against what are known as "Queen's enemy risks" —to bring the term up to date—in advance of an outbreak of war if reasonable and adequate facilities for such insurance were not otherwise available.
During the late war the 1939 Act, which was passed very hurriedly by the House, was amended in certain respects under Defence Regulations. These amendments are, unlike the original Act, subject to renewal annually under the Emergency Laws (Miscellaneous Provisions) Act. 1947, and it is this fact, combined with the need which there is for securing certain other additional powers, which is our justification for bringing the present Bill before the House at this time.
Under the Bill it is proposed to re-enact the provisions of Part I, and those provisions of Part III of the War Risks Insurance Act, 1939, which relate to the insurance of ships and cargoes, together with the amendments made during the war by Orders in Council. It is also proposed to seek additional powers under the Bill, first, in relation to the insurance and re-insurance of aircraft, and, secondly, in relation to the insurance of goods while in transit between ship and warehouse, or vice versa,at an overseas port. Before, however, I deal with these two points I should like to refer briefly to the two amendments to Part I of the 1939 Act which were effected by Defence Regulations during the war, and which it is now proposed to incorporate in permanent legislation through the medium of the present Bill.
The first of these gave powers to reinsure foreign ships as well as to insure them. The Regulation was made in 1940 after the outbreak of war, and, indeed, after certain friendly countries had been overrun by the enemy. It merely gave authority to re-insure foreign ships during war-time. It did not empower the Government, in advance of hostilities, to enter into an agreement for the reinsurance of foreign ships during war.
It did not empower the Government—I am talking now of the 1940 Regulation—in advance of hostilities—to enter into an agreement for the re-insurance of foreign ships during war. Not during peace, but during war; in advance of the actual outbreak of hostilities, owing to the circumstances in which that occurred.
In the present Bill we are seeking power to enter into an arrangement, in advance of an outbreak of hostilities, for the re-insurance of foreign ships against war risks. But if hon. Members will look at the proviso to subsection (1) of Clause 1 they will see that any re- insurance granted in respect of foreign ships can operate only if we ourselves are actually engaged in war or other hostilities. The House will see that it is important that we should have this power to enable us to conclude agreements with foreign countries in peacetime concerning the facilities which we shall offer for the re-insurance of their ships during hostilities, so that they may know in advance that their ships can be adequately protected by insurance.
The second amendment authorises the issue of certificates of insurance instead of formal insurance policies. I think that hon. Members will recall the circumstances whereby full policies were required by two statutes which proved out of date at the time—the Marine Insurance Act, 1906 and the Stamp Act of 1891. The issue of certificates resulted in very considerable economies of staff and paper during the late war, and it was a practice which appears to have commended itself to all concerned at that time.
Let me give comfort to the House and to my right hon. Friend the Chancellor of the Exchequer by reminding hon. Members that this did not result in any loss of revenue from stamp duties, because the appropriate Revenue duty was accounted for by the issue and stamping of master policies which covered large blocks of these certificates. In our view, it is extremely desirable that this power should now be re-enacted.
May I now turn to the two additional powers incorporated in the Bill? First, that to insure and re-insure aircraft. It is clearly desirable that the Government should have this power because certain British aircraft may continue to operate commercially during a future war, and it may well become necessary for the Government to provide means for their insurance or re-insurance against war risks. There is, too, the possibility that certain foreign aircraft may be taken on charter for commercial purposes, or that some foreign aircraft may be based on this country in war-time.
In either of these events, we may have to provide facilities for their insurance, and it is to that end that Clause 1 of the Bill includes authority to re-insure aircraft whether British or foreign, while Clause 2 gives similar authority for direct insurance of aircraft. Hon. Members will, I am sure, appreciate that it would be quite unnecessary for the Government to build up two insurance offices.
I heard the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton), at the close of the recent discussion, asking whether certain additional officials would be required in connection with the Agriculture (Ploughing Grants) Bill. Here is an attempt to avoid anything of that kind. The office built up to deal with insurance and re-insurance of ships will also be able to deal with the insurance and re-insurance of aircraft, so it is unnecessary to set up a separate Department or have extra officials for the purpose.
As the hon. Gentleman has been good enough to refer to me, would he explain why the administrative expenditure incurred in the operation of the Bill in peace-time is expected to exceed £7,000 or £8,000? Why is this £7,000 or £8,000 extra required?
May I go on with my main interpretation of the Bill, because I want the House to be seized of the general machinery before going on to deal with points of detail? I was making the point that the insurance of aircraft would not require a separate organisation or office, and I think that the House took the point.
The second additional power incorporated in the Bill is the power to insure in war-time—and I think that that is a point of considerable importance in view of the times in which we are living—goods when in transit between the ship or warehouse or vice versaat an overseas port.
The 1939 Act authorised such insurance only in the case of goods moving between the ship and warehouse in the United Kingdom, but if we remember the far wider and more terrible range of modern warfare and the bombing of ports which becomes possible in almost any area in the world nowadays, it is only prudent that additional powers should be taken to cover goods between the warehouse and the ship in an overseas port. This additional power would be exercised only if there were evidence that these goods were not being sent forward because of lack of this insurance facility, and then only, as the Bill provides, with the approval of the Treasury.
The need for the Government to embark upon this class of insurance, that is, insurance of goods in transit, lies in the fact that the marine insurance markets of the world have arranged that the insurances which they offer do not cover goods against war risks either before they are loaded on board the ship or after they have been discharged over the side on to the quay. Accordingly, in the absence of Government insurance facilities, merchants might well feel deterred from allowing stocks of goods to move through ports in vulnerable areas or from proceeding to such ports so long as they were more liable to attack—again I stress the air weapon—than if held in their own premises.
Further, in the very early days of hostilities the goods might be lost or damaged before the merchants had any opportunity to insure them under the Government's schemes, and it is for this reason that Clause 3, which follows the terms of Section 3 of the 1939 Act, makes provision for compensation to be paid if goods are lost in transit between warehouse and ship or vice versawithin the first seven days of the opening of a Government office to undertake war risks insurance. Hon. Members will see from the Bill that this provision is applicable only in the United Kingdom, the Isle of Man and the Channel Islands. There is the usual machinery for the establishment of such claims for ex-gratiapayments.
There is a further change incorporated in the Bill to which I should make reference. It is the fact that throughout the Bill authority is sought to undertake insurance against any war risks. In view of the circumstances in which we might in the future become involved in hostilities, it has been considered wise to avoid the differentiations we made in the 1939 Act between so called "King's enemy risks," as they were at that time, and "war risks."
I do not know whether hon. Members are aware of the difference between the two types of risk. The "King's enemy risk" is the one when this country is in a state of war, while a "war risk" is that involved in passing a ship through an area where hostilities may be taking place in which this country is not involved through any declaration of war. I do not think I can give any better example, strange as it may seem, than the situation now prevailing in Korea where Her Majesty's Government is not, in fact, in a state of war but where the hazards are such that "war risks" exist when one is sending ships into the area.
Surely the hon. Gentleman has accidentally inverted it? The "King's enemy risk" is the risk in peace and the "war risk" is the risk in war? If he will refer to Section I of the 1939 Act he will find that by the addendum to the paragraph "war risks" are substituted for "King's enemy risks" the moment war is declared.
I know that the hon. Gentleman is well informed on these legal matters, but that is not how I am advised.
In any case, the two terms are merged here, so we need not argue about it. There will be no differentiation in future because the Bill takes general powers to cover all kinds of war risks within the limits defined in Clause 10, where the term covers all eventualities. The definition of "war risks" has been drawn in broad general terms, indicating the scope of the risks which may be covered, leaving the particular risks insured or reinsured in each instance to be specifically defined in the individual contracts.
Marine insurance—this is one of the difficulties when framing legislation of this kind—is conducted in many foreign markets as well as in London and the division of liability in insurance policies as between what are strictly marine risks and war risks varies in different countries. It is therefore most desirable that the powers to be afforded under this Bill should be sufficiently flexible to enable the Department to provide for war risks in the specific terms required in the particular cases.
I repeat that the Government have no intention of interfering in any way in peace-time with the normal activities of the insurance market, but I am quite sure that hon. Members will appreciate that in time of emergency the position is very different indeed. The reason for this Bill is that it is desirable to have powers on the Statute Book now so as to ensure that the machinery of war risk insurance could be brought into operation without delay should the necessity ever arise.
That is not the intention. What I was saying was that the situation in Korea is a curious anomaly. No state of war officially exists and it is an example of the kind of world in which we live. That is why we feel it is wise to ask the House to give us this Bill to have it on the Statute Book now in the event, which we all pray will never occur, of a much wider outbreak of warfare taking place.
The hon. and gallant Gentleman the Member for Brixton (Lieut.-Colonel Lipton) put a question to me and I would say that the small sum of money involved is to provide for any additional expenditure there may be in the setting up of the organisation machinery in the initial stages. It is a small sum and the provision may or may not be necessary. We hope not.
Reverting to the question of Korea, does the war there have an effect upon the insurance market, because presumably if it did then this Bill could easily operate under the present circumstances? I wonder whether the Parliamentary Secretary has any evidence that the war in Korea, the situation in the Canal Zone or any similar incidents of that kind had sufficient effect on the insurance market for his Department to feel that reasonable and adequate facilities for insurance were not available. That is the point put by my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan).
If that is so I fail to understand why Clause 2 (1, b)is drawn the way it is because it lays down as power for the Minister to carry on insurance business:
During the continuance of any war or other hostilities in which Her Majesty is engaged…
True, there has been no declaration of war, but is it not rather hard to deny that
what is happening in Korea is that they are hostilities in which Her Majesty is engaged?
But it does not bring about the conditions which were envisaged for the Government to step in and act in this manner. Nothing has happened to upset the normal machinery, and that is the real point. The object is that the Bill should operate in the event of a declaration of war by this country.
The Parliamentary Secretary has not quite understood what I was saying to him. If he looks at Clause 2 (1) of the Bill he will see that it gives power to Ministers to insure ships, and so on. The first paragraph of the subsection deals with the difficulties of the insurance market, but the second paragraph deals with a state of affairs without reference to the insurance market at all. It says that the Minister may carry on business not only
during the continuance of any war
but during the continuance of
other hostilities in which Her Majesty is engaged".
I am asking him whether that is not exactly what is happening in Korea at the moment. If the Bill is not intended for this purpose why was it so phrased?
We are getting on to legal grounds of some complexity. The hostilities referred to are those arising out of a declaration of war. If the hon. and learned Gentleman is asking what machinery is being used for ships proceeding to the Korean theatre, the answer is that the Government are using the method of indemnity for such ships, and that is not being done under insurance. That is the position at the moment. We are asking for this Measure to operate in the event of a declaration of war, and I hope that the House will give it a Second Reading.
The Parliamentary Secretary has got through a somewhat complicated brief but he has left me completely at a loss to understand why the Bill is being introduced. He has stated categorically that there is no intention whatsoever of interfering with the insurance market in time of peace. He has added that the Bill is not to be used in relation to the war in Korea, and finally that it will be brought into operation only in the event of a declaration of war.
In those circumstances I cannot quite see why it is introduced at this time. Why is this Bill now being given priority? If the situation is so serious that it is necessary to introduce the Bill, surely there are many other more urgent Measures for this House to consider than this one. There is a very large field in connection with war risks which might require the attention of this House in priority to this Measure if the situation were such that these matters had to be considered by the House.
Why is it necessary to introduce the Bill when the powers contained in it exist at the present time? As is pointed out in the Explanatory Memorandum, there is no doubt that under the Emergency Laws (Miscellaneous Provisions) Act, 1947, the continuation of the 1939 Act is possible, and that up to the present time the relevant Defence Regulations have been continued and presumably are in operation, or could be brought into operation if necessary.
When the 1939 Bill was introduced, war appeared imminent, and proved to be imminent. On 17th July, 1939, it received its Second Reading. The late Mr. Oliver Stanley, who was then President of the Board of Trade and introduced the Measure, said that it was one of many Measures, a seemingly unending series of war Measures, which the House had been considering in the previous few months.
Certainly that is not the position in this House today. We are not in the same position now as we were then. Despite the maintenance of considerable international tension, we cannot claim that an emergency exists today which calls upon this House to take these measures without giving further and serious thought to the problem of the manner in which the nation will deal with war risks in the event of war arising. As I have said, if that emergency exists today, there are far more important or more urgent measures which should be taken. If it is so urgent, the Government are acting rather against their own beliefs, and certainly against the national interest, in other actions which they are taking.
The Chancellor in this House on Thursday last week admitted that we were running down stocks at this time. If the situation is so urgent that we now have to take steps to protect shipping in the event of war, it is not in our interests that we should run down our stocks. That action is a contradiction because, by running down the stocks, we shall make it more and more important for shipping to be available, and for the risks of the ships to be covered, as suggested by this Bill; and such action then will be even more necessary than it would otherwise be if our stocks were not being run down. It is obvious that the greater the stocks the less shipping is required.
So I want to ask the Minister what is the real purpose of this Bill and what is it attempting to achieve that cannot be achieved under the present Acts and Regulations in force? From his opening remarks it was clear that he does not propose to take any action at the present time. He said that it is not intended to interfere with normal insurance, that the Government do not propose to enter into any direct insurance. There are certainly additional powers regarding aircraft in the Bill, but that addition is hardly adequate to explain the introduction of a Bill of this type.
Is it a fact that the insurance companies are unable to re-insure against war risks today? Is that the reason for the Bill being introduced? Is it a fact that today, because the insurance companies are unwilling to insure against war risks they have come to the Government and appealed to them to carry the risk?
If that is so, one could understand the purpose of the Bill. If it is not so, I cannot understand why the Bill is introduced. It is made clear in Clause 2 (1,a) that:
at any time when it appears to him that reasonable and adequate facilities for the insurance of British ships or British aircraft against war risks, or any description of such risks, are not available…
Is it a fact that they are not available today? I was not aware of that fact, and it does not seem reasonable that, if private enterprise is not in a position to carry the normal risks that have to be run today, the Government should
be called upon to step in and carry a risk without going into the business otherwise and benefiting from the gains. In other words surely it is another case of the Government being called upon to take the risks and leave others to earn the profits where risks do not have to be taken.
I do not see why the Government should shoulder the risk now. The Parliamentary Secretary said that the marine insurance companies do not insure goods when they are in transit from the port to their destination on land and that, therefore, if there is war risk attached to that, provision has to be made for it. Why is it that the marine companies cannot undertake that insurance at this time or that the ordinary insurance companies cannot undertake it? Is it again a question of the Government being asked to carry the burden?
I notice that in Clause 1 of the 1939 Act it was stated that if they—that is His Majesty's Government of that time—
… are of opinion that it is expedient so to do for the purpose of securing that ships are not laid up and that commerce is not interrupted by reason of lack of insurance facilities, may, with the approval of the Treasury, enter into agreements…
for carrying out re-insurance or direct insurance by the Government.
That preamble to the Clause has been dropped from the present Bill because the purpose is not quite the same. But the whole purpose of this Bill, apparently, is that if it is not possible to insure ships adequately against war risks or to re-insure against war risks the Government will do that. But if war comes, if an emergency arises, will the normal shipping operations be carried on by the private enterprise shipping companies? If an emergency arises will it not be necessary for the Government to requisition the shipping of this country?
Can we imagine that in a modern state of war shipping will go on normally and be insured in the normal way instead of the Government themselves taking the responsibility for carrying on shipping and, if necessary, indemnifying shipping companies, as is being done at present in the war in Korea? I should have thought that it would have been far better to look more closely at this problem from a wider point of view than is done in this Bill and to tackle this whole question of war risk in the event of a future war.
Ships will certainly not be an insurable risk in the next war. It seems to me quite probable that any Government, of whatever party, will find it necessary to requisition the shipping of this country and to operate it themselves, or certainly to control it, and that the normal process of insurance will cease to exist. I agree, of course, that it is necessary to keep ships operating when an emergency arises and until the requisition has come about.
It is horrible to contemplate the losses which might arise in another war due to the use of modern weapons to which the Parliamentary Secretary referred. But the losses are likely to be so great that they cannot be met in the normal way of compensation. The cost of destruction that is likely to come about probably cannot be met in the same way as it was met last time.
Therefore, it seems to me that this whole problem needs more thought and needs to be dealt with as a whole. Perhaps it might have been wiser to have waited until there could be a comprehensive review or until a comprehensive scheme could be produced rather than to rush forward this piece-meal legislation. Perhaps it is a little unwise to try to legislate now for liabilities which cannot possibly be assessed and which may be on a tremendous scale.
We do not propose to oppose this Bill tonight but we propose to give it further consideration. No doubt, after the many legal points which my hon. Friends propose to raise tonight have been examined we shall be able to see what further action should be taken in regard to it during the further stages through which it has to go.
Surely the urgency of this Bill is crystal clear in spite of what the hon. Member for Enfield, East (Mr. Ernest Davies) has just said. It is because there may at any time be an extension of the situation, not of war in the old sense of near war, but in the Korean sense, and that at that moment the market will be unable to cope with the matter. We hope it will not happen: we all think it will not happen; but it may.
When the market cannot cope with the re-insurance the powers of the Minister, which are discretionary under Clause 2 of the Bill, come into operation. It is peculiarly in the case of ships and aircraft, and not in the case of other assets such as houses, which the hon. Gentleman had in mind, for which the Bill is particularly necessary in those circumstances.
There is one point about which I should like to ask the Minister, as it was raised by my hon. Friend the Parliamentary Secretary in opening the discussion. It relates to the definition of war risks. In the last war there was expensive litigation, culminating in the case known as "The Coxwold," as to what and what is not a war risk. A ship may be torpedoed and its power reduced. It may be overtaken by a tempest, and it cannot be said whether it was primarily the war risk or the subsequent tempest which was responsible for the loss, although the steering may have been damaged in the beginning.
A great deal of time and money are spent in litigation, and in the end it all comes out of the same "kitty." I would, therefore, ask the Minister to consider putting down some Amendment to deal with this point.
The hon. Gentleman says it comes out of the same "kitty." But I have found that after long, indeed prolonged litigation, nothing came from the "kitty" however steep the loss.
It is important that this point should be cleared up. The ast thing hon. and learned Gentlemen on both sides want is that we should be involved in an immense amount of litigation, when it can be cleared up in the definition Clause of this Bill, which is a useful opportunity for so doing. I am sure the Bill is necessary, and I hope it will pass into law quickly.
The Parliamentary Secretary, with whom I have the honour to represent the great port of Bristol, went quickly over the main reasons for this Bill and its predecessor. It is a fact that in a moment of crisis the private enterprise insurance market, through no fault of the people who operate it, is totally incapable of dealing with that crisis. The Minister of Transport might, when he is calculating his other transport schemes, bear in mind that private enterprise lets one down.
The Minister of Transport (Mr. AlanLennox-Boyd):
As the hon. Gentleman has referred to me directly I think he might bear in mind that hostilities or a state of war create all sorts of problems for a host of people who require special legislation.
If I may answer the right hon. Gentleman and remain within the rules of order, we on this side of the House have advanced the argument, in connection with many matters that the problems of peace are as important as the problems of war, and that we should be able to organize and control the same priorities for problems of peace as for those arising out of war.
I do not want to go into that matter any further except to tell the House of a little reading I have been doing recently, which, I am sure, will be acceptable to hon. Members opposite: that is, in the City columns of "The Times." I looked through the City columns of "The Times" of the beginning of August, 1914, and of September, 1938. As is well known, on both those occasions the marine insurance market got into a state of complete chaos. The rates went up enormously—by 150 per cent.—by 1st August, 1914, over the usual rates, and in 1938——
—the marine insurance rate, which had been normal at, I think, Is., rose on 14th September to 2s. 6d. and 5s. per cent.; on 15th September to 30s. and 35s. per cent., and on 16th September to as much as £5 per cent. for Continental marine insurance. It was as a result of the chaos on the marine insurance market then that the Act which we are seeking to repeal and to re-enact in part was introduced in the summer of 1939. Therefore, I am able to accord perhaps a warmer welcome to the Bill than my hon. Friend the Member for Enfield, East (Mr. Ernest Davies).
It seems to me that this Bill is, in a limited way, a very fine piece of Socialist legislation, and I am surprised that more Members on the opposite side of the House have not risen to speak on the Second Reading of this Bill. Although the Parliamentary Secretary may say that he does not himself intend to use the powers in the Bill, as he knows, he and his party will not be on that side of the House for very long: in fact it is quite possible that in Bristol the hon. Gentleman may have more personal and immediate difficulties in his own constituency. At any rate, he is today asking the House to put on the Statute Book a piece of legislation which my hon. and right hon. Friends, when they come into power, may, and, I hope, will, be very ready to use to keep the market steady, even if a state of total war has not broken out.
I should like to get this definition of Socialism quite right. I hope that my hon. Friend is not advancing the view that it is only the function of Socialism to come on to the market in order to rescue private enterprise from its incapacity. Surely, there is also a case for Socialism making a profit out of something sometimes. There was £3 million profit from road haulage last year, and the party opposite propose to sell that.
I do not want to enter into an almost theological discussion with my hon. Friend on the function of Government in this matter. If he will allow me to reach the point that I hope to reach, I think I can prove that, although in a very limited way, this is something that we might call a Socialist Bill. It will enable us to provide very stiff competition to private enterprise, which would have a beneficial effect first and foremost on the consumers: that is to say, those who operate the ships.
Paragraph 2 (b) of the Explanatory Memorandum gives a false impression of what is in the Bill. It simply says:
Power to insure or re-insure British and foreign aircraft against war risks.
We say, as my hon. and learned Friend the Member for Kettering (Mr. Mitchison) pointed out in an intervention, that the Minister has a great deal more power than that. He will be able at any time, when reasonable and adequate facilities are not available, to take action, during any war or other hostilities, against war risks; and Clause 10 defines war risks very widely indeed. He may take action not only against war risks, but against other descriptions of risks represented to him.
We believe that the Bill should be held open for possible use in peace-time. I have tried to make various inquiries since the Bill was introduced to find out exactly what has been the effect of the various international crises on the insurance market in London; but that is a very difficult thing to find out, because, if I understand it rightly, the marine underwriter is a man who works very much by a technical intuition based on experience, and to get comparable figures of quotations from one time to another is very difficult.
Unquestionably, the situation in Korea, Malaya, Indo-China, the Canal Zone and Trieste may from time to time make the market unstable. I was going to refer to the possibility of this sort of situation resulting in the raising of rates—a situation in which the Government are very properly enabled under this Bill, to take some action. We welcome that, and here we come to the point raised by the hon. Member for Cardiff, South-East (Mr. Callaghan).
Just as last week the Government claimed to have told us they intended to challenge the monopoly in broadcasting with competitive television, so now I hope they will be as willing to recognise that this Bill, used by my hon. Friends on the Front Bench, may easily challenge the private insurance market with responsible offers of public insurance. Although I do not doubt for a moment that the present Parliamentary Secretary to the Ministry of Transport will be very loth to use these provisions, he is giving the power to his successors.
We hope on the Committee stage to secure one or two Amendments to the Bill. Perhaps I may deal with a few points which occurred to me and to which the Minister who replies may be able to refer. First, we wish to be absolutely certain the Government are not going to run a policy of bad risks, leaving the good risks to private enterprise. To use the powers in that way would be to make it absolutely certain that this fund carried all the heavy responsibilities in a time of crisis, and would not do the job in the way we understand the Bill intends that it should be done.
I should like to see an extension of the provisions of this Bill to cover the ancillary transport services. If the hon. Gentleman will look for a moment at Clause 2, he will see that whereas in that Clause he is extending the insurance provisions to cover the cargo from its point of departure in this country to its final destination abroad, subsection (3) specifically excludes the vessels from which the goods are discharged—that is to say tankers, barges and, in the case of aircraft, the trucks which carry the goods to the aircraft.
Since the object of this Bill is to see that adequate facilities for transport are available in time of war, I think it is only reasonable to extend these insurance facilities to the lighters, for example, which are in some ways more vulnerable than the ocean-going ships themselves. They operate in home ports, and are liable to severe air attack of the kind which we had in the last war. I think there would be a very strong case for excluding the limitations imposed and for having an insurance scheme operating to cover all conveyance from beginning to end.
There is a point which I think needs special qualification. How does the present Government intend to interpret "reasonable and adequate"? Unless we know they are going to watch this point very carefully and that any fluctuations in the insurance market will call for a statement from the Minister, we shall not be satisfied that the Bill will do what it is meant to do.
We find that the Treasury has power, by signing a certificate, to prevent the House from considering the accounts of the fund set up under this Bill. I know that that is taken from the 1939 Act, and it is, therefore, presumably customary for this provision to be made, but I hope the Government will reconsider this point and possibly put down an Amendment of their own before the Committee stage. It seems to me that an appropriate arrangement, if security enters into the matter, would be for the Treasury to make an appeal to you, Mr. Speaker, and that you should give a certificate so that we could see the accounts of the working of this fund.
That would give the Treasury about as much power as they need in the working of this Bill. That a Treasury official should be able to deny the right of this House to examine the accounts of the war risks fund seems to me to be going a great deal too far. Everyone understands that in war-time, and with questions of security then arising, it would obviously be improper to release the figures of losses of ships—in time of war; but it really is a job which you, Mr. Speaker, should look after. You are the spokesman of this House, and the protector of our rights in other matters and against other possible tyrants, and I should like to see you taking up the cudgels on our behalf against the Treasury.
I do not see why that arrangement would not work smoothly—that the Treasury, when matters of security are involved, should make representations to you, Mr. Speaker, and ask you to sign a certificate. I hope that the Government will look at this matter again, otherwise the rights of this House to examine perfectly serious and important matters will be gravely prejudiced.
There is another point. What about the insurance of the personal possessions of the members of the crews of these ships and these aircraft? Clause 2 (1, e)talks about
… the insurance by him of goods consigned for carriage by sea or by air, while the goods are in transit"—
and one of the subsections deals with all the goods carried by aircraft or by ships; but no specific mention is made of the personal possessions of the crews. I do think that the Government ought to see that those people, the merchant seamen, and the airmen who fly these cargoes, in
time of war are properly covered by insurance.
Let me say one word about the financial provisions of the Bill. They are dealt with in various Clauses and will be subject to debate later on, on the Money Resolution and also in Committee of Ways and Means, and I do not want to anticipate what I had thought of saying then, but they are, to my mind, extremely unsatisfactory. I know they came straight from the 1939 Act, and the Government spokesman could say that he could blame his predecessors for them—except, of course, that his predecessors in 1939— many of them—are right hon. Gentlemen sitting beside him tonight; so that to blame the previous Government in this respect is not necessarily to blame a Government of a different colour.
If I understand the financial provisions aright, then if there are deficits in this war risks fund they are to be funded by the Treasury without consulting Parliament; and if more is paid out of the fund than is paid into it, and the premiums are not high enough, the House will, if it passes the Bill, have no way of knowing just what is going wrong with the operation of the fund. That is the first point— that deficits can be financed without consulting the House.
Second, the Treasury can raid the fund if it thinks too much money is going into it; that is to say, if the Treasury is of the opinion—or if the Minister of Transport and the Treasury together have the joint opinion—that there is too much in the fund, that there have not been enough losses to take up the premiums, they can take that money out of the fund and use it for debt redemption. The combination of those two things, that if there is not enough money the Treasury can find it without consulting Parliament, and if there is too much can use it for some other purpose, seems to me totally improper in a Bill of this kind.
Third, we find that there is no provision in the Bill whatever for allocating administrative costs as between the Ministry of Transport Vote and the income that accrues from premiums paid into the Fund. I should like to ask the Parliamentary Secretary to explain to us something which is not in the Bill at all, and that is, how does the Ministry of Transport propose to finance its administrative costs? Will it do it by premiums paid in, or on the general Departmental Vote? This is an important aspect for our consideration of this Bill. I think we ought to have some satisfaction on those points.
There is, of course, the question, of how the war risks themselves are to be interpreted. It is reminiscent of the problem we had of defining "active service" during consideration of the Army and Air Force Annual Act. Here we have to face the same sort of difficulty and produce a definition to meet a situation that was not considered likely in 1939. We have to face now the possibility of trouble of one kind or another—outbreaks of rebellion or of civil war—in various parts of the world, may be for a very long time. We want to be certain that the definition of war risk is adequate.
I welcome this Bill, despite what was said by the hon. Member for Darwen (Mr. Fletcher-Cooke), and perhaps despite what was said by the hon. Member for Enfield, East (Mr. Ernest Davies). I think this is a good Socialist measure. I am proud to see the hon. Gentleman introducing it. It is a Measure of the sort which one might expect in the transitional stage. Perhaps, as one of my hon. Friends said, it is in the Socialist tradition. It is good to know that he is a reader of "Tribune," which some of his hon. Friends on the Front Bench sometimes seem not to be.
We like to see the Government putting into permanent form planning measures of this kind in peace-time, and I hope that we shall be able to expedite the Bill through its Second Reading and Committee stage.
Like other hon. Members, I listened with great care to the Parliamentary Secretary introducing this Bill, and I think there was one sentence in that speech with which we can all agree, whatever may be our views about Socialism, the "Tribune," and matters of equal importance. The hon. Gentleman said that the Measure passed in 1939, which we are now seeking to amend by this Bill, was hurriedly passed. I think it is worth recalling that the 1939 Bill was introduced immediately after Question time, and that discussion upon it was carried on throughout almost the whole of the Parliamentary day. There was a vote at 9 or 9.30 p.m., and there was an extensive Committee stage. I am glad to have the Parliamentary Secretary's opinion that that Bill was hurriedly passed.
I am sure that we will all do our best to see that we make swifter progress on this occasion. I must confess that I thought the Parliamentary Secretary introduced the Bill in a cursory and flippant fashion. We know his capacity for aphorisms and his taste for epigrams; but for him to introduce a whole Bill of this importance in a speech lasting a few minutes, without even attempting to deal with the main reasons for the Bill's introduction at present was not giving the House a full and adequate view of the Government's intentions. I think one might say that the Parliamentary Secretary's speech was the shortest on a great subject since Gettysburg.
When the War Risks Insurance Bill of 1939 was introduced into the House— that is the Measure which the Parliamentary Secretary said had been hurriedly passed—it was introduced by the late Oliver Stanley in a speech lasting one hour and 10 minutes. Mr. Stanley had a greater gift for pithy and concise expression than any present hon. Member. If it took him that time to introduce the Bill in 1939 I think we can say that we have had an extremely short speech tonight. It would have been better for the whole course of the debate if the Parliamentary Secretary had dealt with the matter more fully, and had sought to cover some of the points which have arisen subsequently.
I agree with the hon. Member for Enfield, East (Mr. Ernest Davies). Why is it necessary to introduce this Bill? We had no explanation of that aspect from the Parliamentary Secretary, although we had an explanation from the hon. Member for Darwen (Mr. Fletcher-Cooke) that the Bill was urgent because it might deal with matters which are not incorporated in it. He referred to the Korean war, but we have been told that that matter is not covered by the Bill, so that the explanation offered by the hon. Member for Darwen for the urgency of the Bill is not relevant at all.
But the implication is that as the Bill stands the situation would not be covered. Presumably, if there were an extension of the war in Korea it would be an extension of the same kind of war as that which is now going on; and as the present war is not covered, then it would have to be a different kind of war, and differently defined, if it were to be covered by the Bill. I do not see how it can possibly be said that the war in Korea would not be covered, but that an extension of it would be covered. There would have to be a very much bigger change in the wording of the Bill if such an extension were to be covered. If the main purpose of the Bill is as the hon. Member for Darwen suggests, then that should have been incorporated in the Measure when it was put before the House and the Parliamentary Secretary should have stated that that was the reason for the introduction of the Bill.
My hon. Friend the Member for Devonport (Mr. Foot) is now in league with the Parliamentary Secretary, which seems to be highly dangerous. If my hon. Friend looks at the top of page 2, in line 3, he will see that it mentions not only
the continuance of any war
but also any
other hostilities in which Her Majesty is engaged.
Is it not a case that the Korean war might well be construed, as the hon. Member for Darwen (Mr. Fletcher-Cooke) said, as
other hostilities in which Her Majesty is engaged.
I suggest that the Parliamentary Secretary and my hon. Friend are wrong on this occasion and that the hon. Member for Darwen is right.
I am grateful for that elucidation, even if it comes by roundabout means, and I do not want to pay compliments to the Parliamentary Secretary in any way, except this one—that I believe he understands at any rate this Clause. I believe that his interpretation is perfectly correct, because if the main intention of the Bill is to cover a situation which might arise in the near future— we all hope it will not—of an extension of the war in Korea, then it seems to me that we shall need a very much closer and more careful definition.
If, as my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) says, the phrase
any such war or hostilities
covers an extension of the war in Korea, then I think we must go very much further. We have already had it explained to us that these words do not cover the war in Korea. The hon. Member for Darwen, who rushes to the defence of the Parliamentary Secretary, believes that the activities in Korea would be covered by the Clause, and that is precisely why he was enthusiastic about the Bill. In other words, he is enthusiastic about the Clause on account of a purpose which the Parliamentary Secretary has said is excluded from the Bill.
I hope we now have the matter clear, both that the situation in Korea is excluded——
I thought there was agreement about that, except with the hon. Member for Darwen. One of the reasons why there have been these difficulties is that the Parliamentary Secretary thought the way to get the Bill through the House was to make the briefest possible speech. We shall have to wait until the end of the debate to know whether the Government think the situation in Korea is covered and whether an extension of hostilities in the Far East would be covered. We are to be left until the end of the debate before we discover what are the Government's views on these matters. In my view, that is not calculated to put the Bill through with the maximum speed. I think the Parliamentary Secretary was clear at any rate on this point.
Perhaps I am blameworthy to this extent, that I was not as clear as I might have been about the Korean situation. This Bill could be used in certain circumstances, but the point I wanted to make—and perhaps I made it incompetently—was that at the moment there is no commercial trade going on in the area and it has not been necessary so far to do more than give indemnity to ships which carry Government cargoes to that area. Where there is an indemnity no premium is involved. On that point I apologise if I made a mistake.
That is the explanation on which he has been corrected. What I was pointing out was that the Parliamentary Secretary used these matters as an illustration. He referred to Korea as an illustration and the hon. Member on the other side said that the whole purpose and the reason for the urgency of this Bill is precisely because it deals with this situation. AH I can say is that if this is the reason why this Bill is so urgent and if this is overwhelmingly the reason why—which was the only point put by the hon. Member—surely that should be the reason given by the Government. But if that is not the Government's view, then we have no explanation from the other side as to why this is urgent.
Will the hon. Member not distinguish between the situation today and as it might be tomorrow and that though commercial trade has not been interfered with, that is not to say it may never be interfered with? That is a dangerous situation which any prudent Government must guard against.
If that is so, that should be stated in the Bill—that some conceivable extension of hostilities in the area would be covered by the Bill; but on reading this Clause I do not believe it is covered.
The only defence of the introduction of this Bill came from my hon. Friend the Member for Bristol, South-East (Mr. Benn). He made a very good defence of the Bill—although most of the points on which he thought it a good Bill were points that he will introduce during the Committee stage and, therefore, his compliments to the Government were altogether deserved. As for complimenting the Government for introducing the Bill, they have obviously introduced the Bill not only for reasons very different from those approved of by the hon. Member opposite but very different from those approved by my hon. Friend.
I agree with my hon. Friend the Member for Enfield, East that it is extraordinary that this Bill is being introduced at the present time. I do not think it can really be said that this Bill is urgent; certainly, we have had no ex- planation as to why it is urgent. All I can say is that if this the most urgent Bill which the Government have to introduce and if it is really necessary for them to initiate the Second Reading of a Bill of such importance at 10 p.m. to get it through, it certainly justifies—if any justification is needed, and I do not think it is—the same careful consideration given by my hon. Friends to the other Bills introduced into the House lately.
It is not often that we have a Second Reading of the Bill introduced at 10 p.m. Let us imagine the conversation between the Leader of the House and the Chief Whip, the latter lolling there most of the week and saying, "Can we fill out time?" This is a new kind of event in Parliamentary affairs, a kind of legislative filibuster to try and spin out the time of the House of Commons. There is the Finance Bill to get through this week, but at any rate, say the Government, let us get the Marine and Aviation (War Risks) Insurance Bill through, because there cannot be anything more important than that.
Because we could not understand the urgency with which the Bill has been introduced we all came to listen to the Parliamentary Secretary's speech, expecting some concrete reasons. We heard not a word. So it comes to this: the Government have scraped the bottom of the pigeon-holes for this Bill. I hope that that will be understood by the Press and everybody else if any suggestion is made that the House is being kept up late at night. The reason is that the Government, possessing many powers already, wanted to introduce an amendment to a Bill dealing with war risk insurance —mere refinements of the powers they might need in the event of a third world war. The House is kept up tonight because the Government consider this to be one of the most urgent Bills to deal with after the recess.
After such an exhibition by the Leader of the House, who is not even here, there can certainly be no complaints if the Measure goes through with more comment than the similar Measure in 1939. The Bill deals with compensation for people who suffer loss during war. There are many of my constituents who justly feel that they have not been legitimately paid for losses suffered in the last war.
Many are still arguing with the War Damage Commission. Many have been unable to get proper compensation for houses smashed by bombs 10 years ago. There are many in the Parliamentary Secretary's constituency who suffered similarly. I do not expect the Minister of Transport to take much account of this matter.
I must apologise, Sir, I allowed myself to fall into temptation, but I shall not be misled by the Minister again.
I was reminding the Parliamentary Secretary that there are many people who are still suffering from the failure to be compensated properly under insurance schemes in the last war, and that it seems odd that we should be introducing at this time this hypothetical Bill for dealing with losses in a future war. But there is a further ground upon which I believe we could have had a much fuller account of the present situation from the Parliamentary Secretary. After all, under the War Risks Insurance Act, passed in 1939, which we are now seeking to amend, although there are many people who in my view have not recovered proper compensation for their war losses, there are other people, particularly the owners of property dealt with under this Bill, who did receive very considerable compensation.
Take shipowners. They received very considerable compensation under the Act of 1939 for the losses they suffered. I am not saying that they are not perfectly entitled to it, but, surely, when we are re-enacting a scheme to meet what may happen in a further world war at least we are entitled to have an account of how it worked in the Second World War. How does the scheme passed in 1939 look like in 1952? In 1939, when we passed that Measure after four hours' discussion, almost every speaker said that it was very difficult to estimate what the losses might be, and how the scheme might work out.
But in one sense, although not entirely, we are not suffering under that disability today for the simple reason that at any rate we have the experience of how the War Risks Insurance Act, 1939, has worked out in respect of shipowners and cargoes. One might have thought when we are asked to pass this urgent Measure in such extraordinary circumstances we would have had some account of how the Act had worked and whether the scheme was a paying one from the taxpayers' point of view. I believe it would be discovered that the original Bill paid handsomely from the point of view of the shipowners and badly from the point of view of the State.
Surely it should have been the duty of the Parliamentary Secretary to give us some explanation? Everyone knows, and is glad to know, that the British mercantile fleet is more modern now than in 1939. It has practically been rebuilt since the end of the war, a most spectacular achievement. That means that a lot of shipowners who had old ships before the war now have new ones. Did they pay the difference, or did the State? Is it a fact that a great number of owners who lost ships during the war got back more valuable ships? How much did the taxpayer have to pay? Is it not right that in a Measure like this we should be given some financial statement as to how these details have worked out? Surely we should be told whether things are going to happen in the future as they appear to have happened in the past?
I do not know the exact figures, but I should guess that whereas before the war the number of old ships was, in proportion to the total of the British mercantile fleet, about 30 or 40 per cent. it must now be down to 15 or 10 per cent. There has been a dramatic change. I know there have been some complaints by shipowners about the way they have been compensated. I believe some were compensated as late as 1948 or 1949, and they complain that if they had been compensated in 1945 or 1946 they could have got a little more out of it because of the increase in costs.
If that is the case it proves my case all the more, because they are saying they have the right to pick the exact year they could claim on the insurance fund. Of course, it is not an insurance fund at all. It is a method of compensating the shipowners. I am not opposed to that in some respects although, as I have said before, it is a strange way in which we deal with these matters so that there is much bigger compensation for property than there is for loss of life.
But if we are going to deal with a Measure of this nature it would be much better from everybody's point of view, from the taxpayers' point of view and from the point of view of the House of Commons and even from the point of view of the Government, that instead of thinking that they can put down a Measure of this kind at 10 o'clock at night and rush it through, and telling the Parliamentary Secretary, who is not given to brevity, that he must gabble off his speech in five minutes, if the Government gave to the House a full explanation of this Measure. If they did that they might find that business would go through a good deal quicker.
This is really a Measure re-enacting what was carried on during the last war and, to some extent, during the 1914–18 war when the Government had and used power to reinsure against marine risks. I entirely share the view of my hon. Friend the Member for Devonport (Mr. Foot) that there is really no reason whatever for introducing a Measure of this sort at 10 o'clock at night; and I doubt very much whether there is any particular reason for introducing this Bill now.
I shall come to that in a moment, but I should like to say first that I regret that more consideration has not been given to the Measures which it is proposed to re-enact. The most significant thing that emerged during this debate was the Parliamentary Secretary's statement about what is being done now about Government cargoes going to Korea. He told us that the ships carrying them are being indemnified. I put it to him that that was much the same thing as insuring them but he did not assent.
It may well be—and I hope that whoever replies to the debate will tell us— that there is no premium being paid for the purpose and that indemnity is being given to some extent to those ships because they are carrying Government cargoes. For some time past some large ship owners in this country have carried their own risk. That means, of course, that in addition to providing for other expenses for running their ships they set up an insurance fund of their own.
I have often wondered why that has not been done, at any rate during wartime, in respect of Government ships and cargoes and why there has been this constant reliance upon the facilities of the market when the scale on which the Government necessarily work in war-time is quite large enough to allow the Government to do their own insurance business themselves and to set up their own fund without any reliance upon the market at all.
It is true that this Bill gives most sweeping powers. How sweeping they are I am quite sure the Parliamentary Secretary has not yet realised. I shall point them out to him in a minute. But the point is that in practice there has been constant reliance upon the market and quite insufficient effort made to organise an insurance business linked, as it were, to the business of ship owning and ship chartering and the carrying of Government goods, which any Government are bound to carry on during the war. That is a perfectly general point, but I wish it had been considered now in time of peace when one has an opportunity of considering these things and there can be no question of doing things hurriedly.
In short, I feel that the Government, as perhaps one would expect from this Government, have been somewhat unimaginative in re-enacting war-time legislation with only minor modifications. They might have taken this opportunity to reconsider the whole position, and might have borne in mind in that connection, that the arrangements which prevailed at the beginning of the last war were substantially different and better than those in the 1914 war; none the less those arrangements were modified and extended considerably during the last war itself.
If I may turn for a moment to the question of the powers given by the Bill, I do not believe that the Parliamentary Secretary himself quite realised, or certainly has not told the House, how sweeping they are. I call his attention, and that of the House to Clause 2, which gives the Minister power to carry on business
under and in accordance with all or any of the following provisions of this subsection'
and I quote paragraph (b)
during the continuance of any war or other hostilities in which Her Majesty is engaged, for the insurance by him of ships and aircraft (whether British or not);
Let us see what that comes to. There is not the least doubt at the moment that there is "war or other hostilities in which her Majesty is engaged," not only in Korea, but actually in other parts of the world; more particularly when one looks at the wide reference of hostilities which the Parliamentary Secretary has already given us in Clause 10 (1) the definition part of the Bill. There is, therefore, not the least doubt that at present under this Bill, as, I may point out under the previous legislation, the Minister has power not merely to insure against war risks, but to insure ships and aircraft at any rate whether British or not against any risk whatever.
I am very glad to see these powers given. All I would like to see is whether they are going to be used or whether the kind of half baked—if I may use the phrase—arrangement that the Parliamentary Secretary indicated just now with regard to ships going to Korea will operate. Perhaps the hon. Gentleman did mean that the powers were being used. He declined to assent to my suggestion that that is what is happening. We ought to be told what use is being made, or is proposed to be made, of these exceedingly sweeping powers. I am glad to see they are there, but I wish they had been rather wider.
The Minister ought to consider, before putting the Bill before the House at this late hour, whether insurance through the market was the best way of dealing with this matter when the responsibilities of the Government as regards ships and cargo are as much as they are bound to be under present conditions, and to a lesser extent, of course, as regards aircraft. What is interesting to see is what has been done by way of additional powers, and these are accurately summarised in the memorandum. I appreciate aircraft insurance being added. There is no doubt it ought to be.
I shall have another word to say of the "goods warehouse to warehouse" provision later, but it occurs to me that the real reason why this Bill is being introduced now is so that some re-insurance arrangements can be made. That is the only thing it seems likely that is going to be done, short of complete and open war. That is, of course, the first of these additional powers. That is in paragraph 2 (a)of the Financial and Explanatory Memorandum, and what it is intended to do—and the Bill gives power to do it—is to conclude certain re-insurance agreements which could not otherwise be concluded until an outbreak of hostilities has occurred.
When we come to the re-insurance agreements, I want to call attention to Clause 7. We were told by the Parliamentary Secretary, quite insufficiently, that that Clause really related to the practice of issuing certificates. It is true that in subsection (1, c) there is a reference, and a pertinent reference, to certificates. But there is another purpose in the Clause, and one that ought to have the Government's attention.
At present, the vast majority of reinsurance business in this country is done under agreements that cannot be enforced at law because they cannot be stamped; and the Clause is required to validate for these purposes re-insurance treaties, as they are commonly called—re-insurance agreements—which are the common practice in the City of London.
As long ago as 1929—I am exceedingly glad to see that the Financial Secretary to the Treasury is present—Lord Atkin pointed out in the House of Lords that re-insurance as practised in the City of London was an illegal business, because no Government would make up its mind to do one of two things: either to say that this shall be exempt from Stamp Duty, or that this shall be stamped at such and such a rate.
The practical difficulty, as, I am sure, the Financial Secretary to the Treasury knows, is that the ordinary re-insurance agreement does not contain a definite sum in it. It is simply an undertaking to carry the whole or a certain part of the risks insured, and for that reason it is not a policy. It is, therefore, not a valid agreement of insurance, and, incidentally, it cannot be stamped.
This opportunity ought to have been taken not merely to validate these particular agreements specially, but also, if we are bent on economy, and if we are bent on sensible business agreements and not carrying on an exceedingly important business in an illegal form, to put this matter into order. It has remained a real disgrace to one Government after another ever since 1929, and just because it is a small thing and the practice has grown up, it has never been put right.
Now, we get in the Bill a Measure for putting it right only in certain cases. It is something that ought to be attended to, and I commend to the Minister, to the Parliamentary Secretary and to the Financial Secretary to the Treasury, the observations that were made with regard to it as long ago as 1929. I ask them whether, instead of validating for a particular purpose these particular agreements, they could not have taken this opportunity to put the matter right as a whole.
I have one other objection to take to the Bill. The effect of that Clause is to validate certain agreements without having them stamped. That is to say, the effect of it is to save the insurers a certain amount of money that they would have had to pay on a re-insurance contract by way of stamping. There is a similar provision in Clause 3, where there are transitional provisions, roughly speaking, for goods damaged on arrival in this country shortly after the outbreak of war.
This is supposed to be a Bill about insurance. The Financial Secretary to the Treasury is in his place, and all that the Bill provides for is that compensation should be given without any payment at all being made for it in respect of war damage in that specific case. Why should there be no payment for stamps in the one case, and in the other case no payment of a premium for entitlement to this compensation?
I suggest that the Government, which sets out a claim to being a Government minded for economy, should be a little more economical when it has to deal with the business community, and should not stick into this, and other Bills, provisions for giving them in particular certain advantages without payment, which are not available to the rest of the country. I regard that sort of thing, although no doubt not of glaring importance in itself —not a large and obvious matter—as rather significant error which should never have been allowed to occur.
While I agree that something what is intended in this Bill has to be done— and quite obviously it is not a Bill that can be opposed on Second Reading—I think it is a pity it did not receive further consideration beyond the particular scope of the war-time legislation, which has only had slight additions made to it here. It is a very great pity that what is after all a rather complicated, difficult and complicated Bill was introduced at 10 p.m., with the result that we have not got time to consider it carefully, and was introduced in an extremely cursory speech by the Parliamentary Secretary. It really did not seem to me to indicate that he had considered what was the scope of the Bill at all.
I think it is a pity that, when one comes to look at it, one finds the sort of technical objections which I have just mentioned. It validates certain contracts for narrow purposes without looking at the problem as a whole and in that and one other particular it gives one class of people, who are not particularly entitled to any free benefit, a benefit which they will have without paying for it at all, when, as the Member for Devonport indicated, just now there are a lot of people who, in matters of compensation, feel they have had rather short shrift. Why at this point give extra benefit to the rather well-to-do classes of people likely to be affected by this Bill?
I do not claim any authority to speak on this matter. My hon. and learned Friend for Kettering (Mr. Mitchison) does speak with very great authority on matters of marine insurance, but I have one or two small matters by my side at the present time, and I have been checking up a few points in the documents. I should like to say one or two words on this point with all due humility.
The Parliamentary Secretary referred to "King's enemy" insurance and war risks insurance. There is nothing perfectly recondite in either expression. You can have King's enemy insurance in time of war and war risk insurance in time of peace, because an insuring country or other countries may be at war, and you are covering these risks. Somewhat curiously Clause 1 of the 1939 Act did use that terminology. It said that they would call them all King's enemy risks in time of peace, and when war came they would substitute the words "war risks." The scheme was formulated in 1935 for the first time at the time of the Abbysinian war, although it was never put into formal execution until early in 1939, when some agreements were entered into in advance of the passing of the Act on July, 1939.
Then we come to the very interesting question of whether the Bill is any use today. The Parliamentary Secretary told us it does not apply to the present emergency, but in certain circumstances it could apply; at any rate it was not the intention of the Government to apply it. That was quite implicit in the memorandum of the Bill which shows the expenditure under the Bill would be £7,000 or £8,000 a year. The hon. Gentleman the Member for Darwen (Mr. Fletcher-Cooke), making one of his rarer contributions to debate, worked himself into passionate enthusiasm because the urgency of this Bill was rendered acute, he said, by the emergency in Korea, and he seemed convinced that somehow or another something was going to happen which would make this Bill a matter of great urgency and of great necessity and of wide operation.
My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) expressed the view, on a reading of the opening words on page 2, which ought to be qualified by a reading of the closing words on page 1, which are also material in this connection, that, on the whole, it could apply to Korea; but, of course, it could only so apply subject to the approval of the Treasury, as, indeed, almost everything we ask now has to be. It is fair to say, therefore, that if the Minister of Transport thinks so, and if the trade thinks so, and if the Treasury approves, it could, perhaps, be applied.
But that really does not present any explanation whatever of why, at 10 o'clock at night, we should suddenly be asked to consider this Measure at a time like this, when unemployment and poverty are rife, and we have vital problems to deal with. It is frightening, in those circumstances, to be asked to spend a considerable time discussing this rather hybrid Measure. It is a hybrid Measure indeed, if not in the technical sense, because my hon. Friend the Member for Bristol, South-East (Mr. Benn), in an exceedingly able and eloquent speech, referred to it as a Socialist Measure— an observation which incurred, I will not say the ire, but at any rate slight criticism by my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) and my hon. Friend the Member for Cardiff, South-East.
Let us face it. It is hybrid in this sense, that it does, of course, represent a very typical Tory attitude—that the profitable sector of private enterprise should be left to private enterprise and that the unprofitable sector should be borne by the taxpayers of the country—the policy of the Tories in relation to transport and insurance. I agree with my hon. Friend the Member for Bristol, South-East—I think his remarks are important—that, at least, this Bill gives us a skeleton of a policy for taking over the motor insurance, which we ought to take over, and which is one of the profitable sectors of insurance. It may be that the experience of working this Bill will help us to introduce a further measure of Socialism when the Labour Government is formed in a few months' time.
The hon. Gentleman the Member for Darwen made, I thought, a cogent and effective reply to his own statement, that this would apply in an emergency that might occur if any expansion—and we all pray that it will not—were to occur of hostilities here or there, because he went on to refer to the case of the "Cots-wold." It was generally ruled or'laid down that it was taken as a principle that to sail from one peaceful port to another peaceful port was not encountering war risks, except in special circumstances.
I want to be fair about this matter, because I think it is very important. This question of war risks to be insured is a matter of vital importance, and I was rather surprised at the taciturnity dis- played by the Parliamentary Secretary, which left us devoid of much of the information that would have enabled us to form a judgment as to the extent to which war risks were interpreted in the last war. But my hon. Friends will recall that we rely for most of our law upon this matter upon the famous name of Samuel Thomas Evans, which brings, even into the law courts, a tang of salt and a whiff of sea air—the name of that most distinguished of the Presidents of the Probate, Divorce and Admiralty Division, and probably the most distinguished Admiralty lawyer since the great William Scott of 100 years before.
It is true, of course, that most of the vital decisions were taken in the First World War when conditions at sea were somewhat different. Certainly, the methods of convoying, and so on, had altered in the intervening years, I apprehend that it may well be that one of the reasons why so many contested actions took place in those years, and so few, comparatively speaking, in the years from 1939 to 1945, was the fact that, in many respects, a fairly generous interpretation of war risks insurance in 1939 was being applied by the Government, so that opportunities for controversy did not so frequently arise.
Apart from questions of how far we are to make these fantastically large presents to shipowners and not make them to sailors or merchant seamen, or insure their own property, it is fair to say that when we are going to cover a risk it is right to say what the risk is. People are entitled to know, so that they do not have to go to the courts time after time to find out. We are still using in this Bill a series of archaic and somewhat recondite terms—recondite in that they are obscure. "War risks" is one of them.
I do not propose to take up the time of the House, because I am interested in other matters which have to be discussed, but I want to mention two cases which seem to me to be of vital importance. I am sure that the Parliamentary Secretary will recall the case of the "Petersham." It was, if I remember rightly, carrying pig iron from Spain to Bilbao during the 1914–18 war. It was travelling at night, and at speed, without lights because of the war and the fact that the vessel was in dangerous waters, and because those were the instructions given to that type of shipping by the Ministry of Transport.
The vessel came into collision with another ship travelling in the opposite direction, also travelling at night without lights on the advice of the Minister of Transport. The "Petersham" was sunk. I would have thought that there could not have been a more obvious war risk; but if I remember rightly the King's Bench Division, the whole of the Court of Appeal of the Admiralty Division, and a unanimous House of Lords decided that it was not a war risk within the meaning of the Act.
It was decided that it was a normal marine risk on the basis, if I remember the wording correctly, that where the loss was due to the elimination of a peacetime precaution, or to the displaying of some precaution laid down for peacetime to a less degree, that did not automatically make it a war risk; that displaying such was a normal peace-time precaution, and that this was a display of rather less precaution than in peacetime, and was not ipso factoa war risk.
I think that that is still the law. It may be that the Parliamentary Secretary is able to say that it was not the practice of the Department to interpret it so during the last war. He could have given us a little more information in his speech. [An HON. MEMBER: "He does not know."] I do not suspect that he does not know. My recollection is—I am quoting the title of a book—that he is something in the city.
Therefore I take it that these are matters of almost day to day knowledge to him. The other case I wish to mention was that of the "Matteana." This vessel was going in convoy from Alexandria during the same war. The case went to the Court of Appeal and to the House of Lords about 1921. The vessel was travelling in convoy in dangerous and narrow waters, and under the instructions of the commander had to pursue a zig-zag course.
Travelling precisely in accordance with these instructions, which were given by the naval officer commanding the convoy, the ship went on to rocks and became a total loss. Their Lordships disagreed for some time, but, finally, by a majority of three to two in the House, it was held that the loss was not a war risk. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) looks a little disturbed; I am talking about the F.C.S. Clause—"Free of Capture and Seizure"—which was standard about that time. The result was that there was no chance of recovery, and in some cases there was no chance of recovery from what the hon. Member for Darwen somewhat elegantly called the kitty—from an insurance fund.
We shall try to improve the Bill as the Committee stage proceeds. This is a Measure about which we might adopt the important suggestion which my hon. and learned Friend the Member for Horn-church (Mr. Bing) made in another debate a day or two ago—try to table Amendments which would put the Bill into intelligible language, if that could be done for once. That might be a very substantial endeavour in a matter of this complexity, but if we do not have to sit up on other matters, and if we have time, we will try to do it.
I want to touch on the very important point made by my hon. and learned Friend the Member for Kettering on Clause 7. I think it was in the 1939 Bill, about Clause 18, that provision was made for this extraordinary relief from Stamp Duty. It says that most agreements referred to in the Bill shall not be liable to Stamp Duty and that re-insurance agreements and others shall not cease to be admissible in evidence by reason only of the fact that they are not adequately stamped and so on.
Surely this is setting a very bad example. It is not correct and it cannot be good law and it cannot be common sense that there should be one law for Her Majesty's Government and another, and more stringent, law for the rest of Her Majesty's subjects. It is nonsense that that should be so, because the provisions of the Stamp Act of 1891 can operate with great hardship. Sometimes the person who produces an unstamped document has nothing to do with the lack of stamps. Sometimes there is no blame whatever on the person who has to seek to establish a right by documents which include a document which has not been stamped. Yet there is the liability to a penalty in addition to the amount involved, and the penalty can be very substantial.
We are very much concerned about this suggestion that the Treasury, who have to approve everything, should be exempt from the duty. I know the argument—the rather pathetic argument— which can apply to a Post Office (Monies) Bill or a Post Office (Amendment) Bill or a Railway Transport Charges Bill— that to some extent the money goes from one pocket to another; but this is, nevertheless, a very unfortunate phrase.
I suggest that what really happens is this. When we validate these agreements the insurer is relieved from paying the stamp on the re-insurance contract and is, therefore, relieved from making what ought to be a contribution to public funds.
I am much obliged. I would qualify that by saying that as far as I recollect the Clause—and, unfortunately, I have lost my index to the Bills for discussion—it deals only with insurance contracts which are made at one end with the Minister or within the purview of the Clause.
In other words, if the Minister effected a re-insurance agreement it might well be that the original insurance of the ship could be included. That would be arguable, but in general—and I think my hon. and learned Friend will correct me if he can find it in the Clause—it applies only to contracts in which the Minister is involved in one way or another or contracts in respect of which the provisions of this Bill apply.
Now we come to some of the financial provisions of the Bill. We are told that the preliminary cost of operating the Bill would be £7,000 or £8,000. I do not know whether that means—and no doubt the Parliamentary Secretary will tell us —that when he introduces the new Bill that repeals the old Bill, that he carries forward the old expenditure as the new expenditure. It may mean that the same people will have to be employed as the skeleton staff required to operate the narrower provisions of the Act of 1939.
I hope it does not mean an increase: I would challenge the need of establishing a new staff to administer a Bill of this kind, particularly when it is said that the moment a certificate is given, and they want to operate Clause 2, the increase will be £70,000 or £80,000 instead of £7,000 or £8,000. The figures are so curiously similar that one imagines that there must have been a multiplication by ten, for there is an extraordinary resemblance in the figures.
Now I come to the main point of the Bill. It always has been a matter of very serious criticism and, indeed, of emotional feeling all over the country that in a case where, of two small shipowners, one, on the outbreak of war, decided to "pack up" and go to the front and the other decided to stick it out, and in the course of the war rendered very useful service and did exceedingly well, in the one case the man comes back with a broken leg and is not covered while in the other he comes back and is fully covered and is compensated in every possible way for every out-of-pocket liability.
Why do we always regard the loss of property as one of those things that must be regarded as worthy of the fullest and most generous measure of compensation? Why do we always regard moral and physical damage as the thing that we compensate least? We have always done it on that scale. That has always been so, right down from the compensation paid to the wealthy man for the loss of office—and this is one of the most wicked examples of that.
So far, we have not been told of the premium that would be paid. One of my hon. Friends referred to the fact that in the opening stages of the Bill in 1939 the late Mr. Oliver Stanley, whose loss the House and the nation genuinely deplores, made a very good speech indeed. He then said that that Bill was intended to cover 80 per cent. of the ships and that 20 per cent. would be left uncovered. Is this 80 per cent. or 100 per cent. cover? To what extent does it cover consequential losses? To what extent does it cover the personal property of the crew and the members of the merchant shipping service, who in general seem to have had a much worse deal in the last war than the shipowners or shareholders in shipping companies? The Parliamentary Secretary should take us into his confidence on these matters.
There is a further important point. So far as I have been able to learn in the course of Library research, the House has never been told in any detail what this Bill cost us during the last war. What compensation was paid and how was it based? I say that the House has never been told with apprehension, because although I have sought in vain for this information it is surely impossible to conceal what must be a considerable expenditure. Why is there not in the Library a report of what was paid in premiums and what was paid out in losses?
That is important because the Bill, after deciding that the Treasury is the sole arbiter when it shall come into force, goes on to make a sloppy generalisation about the submission of the accounts to this House, and adds that when the Treasury think they should not be produced they need not be produced. This is an example of the censorship mind. It reminds me of an occasion in the last war when I was decanted on York platform at 2 a.m. and the name had been taken from every platform; but nobody had removed the cathedral that stands 200 yards away. Censorship can go to fantastic lengths. After all, the sinking of ships in the last war was fairly accurately known all over the world, and this Bill covers compensation to foreign owners of ships.
Would it not go some way to meeting my hon. Friend's point if we were told what is the sum which, at the commencement of this Act, stands to the credit of the "kitty"? The "kitty" is described at rather greater length—we might call the sum the ante-in 51 (a) (ii).
I think the ante might have been raised before we can operate this successfully. But this Bill—I believe like the 1939 Bill—provides that the moment in credit is bunged into the Treasury and applied to the reduction of debt. If my hon. and learned Friend doubts it, let us say there is a doubt. My reading is that where there is a substantial accumulation of the fund it can be put to the reduction of debt and it does not remain in the fund as a surplus.
At any rate, this is really a serious matter of public accounting. Of course, it becomes very much more serious when we get such a small amount of information today. We really have nothing upon which to go. About 48 hours ago we were discussing the sum of £25 million and we were told nothing about that. Now we are introducing a Measure dealing with a complex insurance scheme to cover mercantile operations in time of war, and we have no more information than we had on the last occasion. There have been no estimates, although I agree that esti- mates of losses are quite futile and confusing.
The Parliamentary Secretary, who usually is very helpful to the House, was a little perfunctory in this matter. No one would blame him for intervening as soon as possible. It would, I know, help many of my hon. Friends to continue the debate more fully informed than those of us who have had to take part in it up to now.
I am doing so in the hope that my intervention will be helpful. It is not for me to conclude the debate. It is for me to answer a number of points which have been put already.
I gather from the speeches of hon. Gentlemen opposite that while they are not opposing the Second Reading there are a number of strong objections to it. Indeed, a number of wounding attacks have been made on some of its provisions. I wonder if the hon. Gentlemen who made these speeches realise the risk they are running from their observations, because this is a Measure which Her Majesty's present advisers inherited. The hon. Member for Devonport (Mr. Foot) spoke of scraping the bottom of the pigeon-holes. That is not what took place, but, nevertheless, the first draft of this Measure is dated 4th December, 1951, and not even a Tory Government could work as quickly as that.
This Measure was contemplated by our predecessors. I think they were wise to do so on two counts. First, it is a valuable Bill to have on the Statute Book now, and secondly, like ourselves, the previous Government thought it wise wherever possible—and I hope there is common ground about this—to replace Defence Regulations by permanent legislation as opportunity arises, and that is why we found these proposals awaiting us when we took office.
As the hon. Gentleman is well aware, a large number of Bills are in draft and are not introduced until the time is appropriate. The main onus of our remarks was that the urgency of this Measure was not clear. While we may have had this Bill in draft the fact that we did not introduce it shows we did not consider there was urgency about it.
On the contrary, the reason was that the Labour Government were removed from office, and it remained for us to do it. At the moment, we are debarred from entering into agreements with foreign Governments for the insurance of their ships and they are anxious to enter into such agreements now. It seems a pity for that to be held up. The hon. Member for Devonport accused me of two qualities or faults— I am not sure which—with which I do not remember being charged before— brevity and taciturnity.
Yes. There are a number of foreign Governments anxious to come to arrangements about the insurance of their ships.
The hon. Member for Devonport pointed out that when the late Mr. Oliver Stanley introduced the 1939 Bill, as President of the Board of Trade, he spoke at far greater length than I did. He was, however, dealing with the commodity insurance scheme as well as insurance of ships and cargoes. As this present Measure does little more than re-enact what was done then, with some alterations, I did not think it was necessary to inflict a very long speech on the House.
My hon. Friend the Member for Darwen (Mr. Fletcher-Cooke) asked for a clearer definition of war risks. That will be considered between now and the Committee stage. It is some slight satisfaction for me as a layman to find that I was right, and the hon. Member for Oldham, West (Mr. Hale) was wrong, on that definition, when he intervened during my earlier Second Reading speech. Our present powers under existing legislation——
May I quote the actual document? Section 1 of the 1939 Act states:
… by reason of lack of insurance facilities, may, with the approval of the Treasury, enter into agreements with any persons—
I will only quote the material parts. I do not wish to waste the time of the House in any way—
In relation to any period during which His Majesty is at war, the preceding provisions of this subsection shall have effect as if for any reference therein to King's enemy risks there were substituted a reference to war risks.In other words. "King's enemy" in time of peace, and "war" in time of war.
At the moment the Queen's enemy risks do not exist. I want to recapitulate this because we are not at war in the technical sense, but, of course, we are in a state of hostilities and this Bill would give us power to cover war risks and thus enable us to deal with the Korean situation. Reference was made in the debate to Clause 2 (1, b). It is true that this covers marine risk insurance. This is necessary because in war or hostilities ships frequently find themselves involved in special and quite unusual hazards. An example that one might give is that of convoys which proceeded to North Russia during the last war in circumstances of unusual danger, and a very heroic story it was.
To answer another point, losses were paid out of the insurance fund as soon as the loss was proved and the owner received no more than the amount stated in the policy. It is very desirable in war conditions to proceed by insurance, for this secures the service of the whole insurance machinery with its world-wide ramifications. This is most important when dealing with claims for damages as distinct from claims for total loss.
I should like to deal now very briefly with the very interesting speech which was made by my colleag ue in the representation of Bristol, the hon. Member for Bristol, South-East (Mr. Benn). May I say now, with the greatest good temper, that Clause 2 (3) to which he referred has been misunderstood by him almost completely? What it means is that the tender or barge into which goods are discharged, or from which goods are loaded, is not to be deemed to be the ship for the purpose of terminating the transit risk. In other words, there is a separate and additional premium to be paid during transit from ship to warehouse or from warehouse to ship. That is the reason for the wording of Clause 2 (3). A separate premium is necessary.
Does this separate premium relate to the cargo or to the tenders themselves? I read the text of the 1939 Act with great care. This point was raised because it was felt that there should be a provision which would prevent these barges being laid up. When I read Section 2 (3) it seemed that the same thing was being pursued now, and I am not clear whether the separate premium is for the cargo.
It is to cover the cargo from the time it is discharged from the ship in which it has come from overseas until delivered into the warehouse.
The hon. Gentleman also wanted to know about publication of losses incurred. I am sure that he will realise that in time of war publication of such information is deferred until the conclusion of hostilities, it being not in the public interest to disclose what those losses are. He will recall that at the height of the Battle of the Atlantic our shipping losses were not disclosed at all. The reason was that the enemy might get hold of that information. It was left to the end of the war to publish them.
Before the hon. Gentleman leaves the money question can he tell us what amount of money is standing to the credit of the War Risks and Marine Insurance Fund? It is mentioned in the Bill: it has to be paid into the new fund, and that is what I call the ante.
I was coming to that point a little later on. It was raised by the hon. Gentleman the Member for Oldham, West, and I am trying to take all these points in some kind of sequence. I hope the hon. and learned Gentleman will not think me discourteous if I do not answer it now.
The hon. Member for Bristol, South-East raised the matter of seamen's effects. These can be insured as goods, but he may recall that during the last war the Government had a scheme of compensation for loss of seamen's effects, without any payment by the seaman, and a similar scheme would doubtless be brought into operation in the event of serious hostilities now. That scheme worked extremely well and could be done again.
The hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) who is very well-informed on these matters, came back again to the question of Korea. It is true that at the moment the market is covering the insurance of ships, except those proceeding to Korea, for war risks. But it has the right to terminate that cover on giving 48 hours notice, and I am sure the hon. and learned Gentleman will appreciate that an extraordinary situation would arise unless the Government were in a position to step in and give the necessary cover in a situation of that kind.
The hon. Member for Oldham, West asked about the figure of £7,000 or £8,000, and wanted an explanation of that expenditure. It related to the work of winding up the business of the late war and the negotiation of new agreements with the British "clubs." The method by which the various shipping companies pool their information is known as the "club system".
Yes, mutual insurance to cover arrangements to be brought into operation in the event of a future war or hostilities. This involves a small expenditure.
I was surprised that the hon. Gentleman worked up a good deal of indignation about the concealment of what has happened—how well shipowners had done and how badly the Government had fared. A little research would have given the information which was sought, because the accounts of the last war insurance scheme were all published as reports by the Comptroller and Auditor-General. Those reports are available and can be studied by hon. Gentlemen. I am sure that they will not ask me to go into detail at this late hour. There are the accounts; there has been no concealment. They are available. We have had a somewhat lengthy and useful debate. There are a number of points which can await the Committee stage, and I hope the House will now give this Bill a Second Reading.
Could the hon. Gentleman clear up the position about Korea? He has rather endeavoured to point out that the Bill is needed to extend the Regulations to Korea, but surely, under the existing Act, the Defence Regulations and this extension, it would be possible to apply re-insurance in the case of Korea if it was so desired. That is irrelevant to the Bill.
The point was raised by other hon. Members. I do not think I can say for a third time what the Korea position is. As to the Defence Regulations, we take the view that legislation should now take their place.