Application of Sections 6 to 11

Orders of the Day — POLICYHOLDERS PROTECTION BILL [Lords] – in the House of Commons at 12:00 am on 30 October 1975.

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Photo of Mr Robert Taylor Mr Robert Taylor , Croydon North West 12:00, 30 October 1975

I beg to move Amendment No. 50, in page 3, line 41, leave out '29th October 1974 'and insert' 1st June 1974 '.

Mr. Deputy Speaker:

With this we are to take the following amendments:

No. 51, in page 4, line 6, leave out 'that date' and insert '1st June 1974';

No. 14, in Clause 15, page 14, line 24, leave out '29th October' and insert '1st June';

No. 16, in page 14, line 30, after 'liquidation' insert: '(provided that the petition for the winding up of the company which led to the liquidation was presented on or after 1st June 1974)'.

Photo of Mr Robert Taylor Mr Robert Taylor , Croydon North West

These amendments have the common purpose of seeking to backdate the starting day to include the unfortunate policyholders of Nation Life. I am assured by the Public Bill Office that all four amendments are necessary to achieve that object, and I am grateful to Mr. Speaker for grouping the amendments together. I am grateful, too, to the Under-Secretary of State who wrote to me telling me that my original amendment was unsatisfactory.

This is the third occasion this year on which we have had an opportunity to debate the insurance industry, and on each of the two previous occasions Nation Life figured considerably in our discussions. I make no apology for raising this subject for the third time today because this is the first occasion on which the House has had an opportunity to say whether it is in sympathy with those policyholders.

On Second Reading, when I last spoke of this issue, the Under-Secretary of State accused me of inconsistency. He said: I have never known anybody stand on his head so publicly as the hon. Gentleman has done."—[Official Report, 18th July 1975; Vol. 895, c. 2019.] The hon. Gentleman will recall that I sought to intervene at that moment, believing that an attack like that would give one an opportunity to reply, but he would not give way. In case the hon. Gentleman adopts that tactic again today let me tell him that the fact that my hon. Friend the Member for Faversham (Mr. Moate) and I were the only two Members from the Opposition benches to vote against the Second Reading of the Bill, and the fact that I subsequently advocated the back-dating of the Bill to include Nation Life, does not seem to be in any way illogical, and I am prepared to defend it.

If one detests the idea of successful companies having a levy thrust upon them to protect those companies that are less successful it is still logical, if that system becomes the order of the day, for somebody who opposes it to say, "Very well, if it is the law of the land, do not let us leave out a group of people because their birthdays occurred a matter of weeks before the Government decided on this course of action". The Government have never really made clear why they object so violently to Nation Life being included within the Bill. One presumes that the objection is on the basis that to do that would make the Bil retrospective. Therefore it is obligatory on me to try to answer that point. The Bill is, to a certain extent, retrospective, because if we pass it during the next few days it will be back-dated to October of last year.

The point, supported by all those hon. Members who signed my Early-Day Motion, is that in the early days after Nation Life had run into trouble and a liquidator was necessary there was a time when it was decided that the insurance industry itself would come to its rescue, but there is always a lull between the event and the insurance industry making a decision on matters of this nature, because the total liabilities compared with the assets must be investigated. The industry could not suddenly commit its members to substantial sums without first ascertaining what those sums amounted to.

Very quickly after Nation Life collapsed the Government announced their decision to help companies in such periods of difficulty. That pre-empted the need for the industry to take action. Certainly it introduced a period of uncertainty.

6.30 p.m.

That was the point of the Early-Day Motion which has given rise to this debate. It was signed by 211 Members up to yesterday, and I am glad to see that another Labour Member signed it last night. It says: That this House believes that the uncertainty of the Government's intentions and proposals for the insurance industry is positively harmful to the prospects of Nation Life policyholders due to the unlikelihood of any remedial action by the British Insurance Association during the period of uncertainty". That was not meant as a criticism of the Government. There must be a period of uncertainty between a Government announcing their intention and producing detailed legislation. It was a statement of fact. There were substantial grounds for believing that some of the unfortunate policyholders of Nation Life would have found support from the insurance industry but for the fact that the Government announced that they would intervene in this sphere of our commercial life.

There is another point, which I have raised on this issue before, that my hon. Friends and hon. Members opposite who object to the retroactive part of the amendment should search their minds for justification of their attiude when they did not vote against the Air Travel Reserve Fund Bill which was retroactive for the Court Line holidaymakers.

I have heard the Under-Secretary's excuse for that different approach. He has said before in our insurance debates that the people involved in the Court Line collapse had felt that they were protected by the Civil Aviation Authority. If that was so, how much more did the people who put their life savings into an insurance company believe that they were protected by the supervision of the Department of Trade? How can anyone who did not vote against the previous Bill not help the small savers involved in this amendment?

Some of my hon. Friends have said that the amendment will cost the industry a good deal of money. The Policyholders Protection Board will be able to scale down the repayments if it believes that the offers are too attractive to be realistic. As we have heard, the membership of that Board will have a majority from the industry. I do not suggest that the policy-holders of Nation Life should get anything like 90 per cent. I believe that the payment should be in the region of 75p in the pound, which is the net sum of the assets.

What is important is that many of these savers are elderly and do not have a lot of time to wait. In a letter as recently as 22nd September the Under-Secretary of State wrote to one of my hon. Friends: The liquidation may take a number of years to conclude". He is saying, therefore, that many of the small savers who invested in Nation Life have no chance of seeing the balance of their money, even up to the agreed net asset figure. This is the only chance that the House will have to help those who were trapped in the collapse of Nation Life.

It is interesting to note that on 7th March the hon. Member for Aberdare (Mr. Evans) said: I have already said that we have the problem of Nation Life before us, and I know that we have undertaken to do something about it."—[Official Report, 7th March 1975; Vol. 887, c. 2015.] When he used the word "we", presumably he meant the Government. That was certainly an encouragement to the 32,000 people who lost their savings. Since that date, so far as I can discover, the only thing that the Government have done is lay the Statutory Instrument which appeared this month and which will enable them to claim not the agreed fee of £280,000 from National Life but an increased figure of £350,000. That is the only action taken in spite of that clear statement which was read by every Nation Life policyholder.

I repeat, this is our only chance to correct that situation. It is right that the House should do it, because it is totally unfair to say that we should exclude them on the grounds of the passage of a few weeks. I believe it to be the sense of the House that these amendments should be passed.

Photo of Mr Ian Stewart Mr Ian Stewart , Hitchin

I accept that it will be argued that there are aspects of this legislation which, if the amendments are passed, will act to the detriment of policyholders of other insurance companies, but despite the technical and legalistic arguments which can be advanced for resisting the amendments, there is one absolutely crucial underlying point of equity which marks this case out for special treatment.

Over a number of years, successive Governments have failed properly to exercise their powers of supervision over insurance companies. There has been a growing awarenes of this fact among the public, and the collapse of a number of companies last year brought the matter to a head. At that stage, the Government indulged in some thinking out loud, as my hon. Friend the Member for Croydon, North-West (Mr. Taylor) said in his able speech. They indicated that they would take measures to deal with the situation which arose from the collapse of Nation Life—by implication, if not specifically. The date chosen for the operation of the Bill was that of the Government's announcement of the legislation. That is the normal procedure, but it ignores the fact that, over a considerable period, support for insurance companies and their policyholders had been understood, even if incorrectly, to be a Government responsibility.

The Under-Secretary said an hour or two ago, in another context, that the powers of supervision had been exercised effectively, but added that if the Bill were enacted they would be exercised increasingly effectively—suggesting that they were not wholly effectively exercised before.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

The hon. Gentleman should recognise that the Department of Trade, through successive administrations, can act only within the parameters of its legal powers, those powers having been conferred by Parliament in legislation or subordinate legislation.

Photo of Mr Ian Stewart Mr Ian Stewart , Hitchin

I accept that point, but what I am trying, obviously inadequately, to express is the view that there was a general public belief about the situation of insurance companies and the Government's responsibility, which makes the Government's choice of a particular moment an arbitrary one in relation to those in similar circumstances who had taken out policies with a number of different companies. The fact that a company happened to fail before or after a certain date is, therefore, an arbitrary and damaging occurrence for a particular group of policyholders.

It should be said that every constituent of mine who has been a policyholder in Nation Life and has written to me does not in any way fall within the category of professional investors looking for relief from tax liability. There was an article in the Press a few days ago in which it was stated that the hon. Member for Bethnal Green and Bow (Mr. Mikardo), in answer to a constituent, drawing on a reply from the Secretary of State, had implied that these people were of that type. Certainly, that is not the experience of myself or my hon. Friends with whom I have discussed this matter.

It is possible to look at this case from two different points of view. One is the strict legalistic way—that retroactive provisions of this kind are not acceptable. Indeed, there is obviously a case to be made on those grounds. The other is the general question of equity in relation to groups of policyholders of different companies at a time of developing Government thought and ultimately of commitment in this field.

I believe that the delay of the Government in the announcement that they were going to introduce this legislation, coupled with the inadequacy of powers of supervision—which, as the Undersecretary pointed out, must have been within the limits which applied, but which nevertheless led many people to believe that the Department of Trade had a responsibility for ensuring the viability of insurance companies which issued such policies—amounts to what can only be regarded as a capricious exercise of responsibility, implicit if not actual, by the Government. Therefore, a more even distribution of responsibility for the failure of insurance companies is preferable to allowing a group of Nation Life shareholders to suffer their plight unrelieved.

Photo of Mr William Small Mr William Small , Glasgow Garscadden

I intervene in this debate purely on the basis of my observation of the events under discussion, although I have received some letters from Nation Life subscribers following an article which appeared in the Daily Express.

The picture presented to us of the mode of persuasion to induce me or other people to subscribe their money is a picture of a man with a bowler hat, an umbrella, a bundle of important papers, and a prospectus. Historically, the principle of insurance companies is based more or less on the life of the individual, and therefore the criterion is the doctrine of chance. There is no other doctrine. It is not an exact science. What an insurance company does with my money I can never know. I do not know where the money is invested.

I am sorry for the Nation Life subscribers who have been affected. According to my reading of the matter, 26 different kinds of policies were involved. Why do not the insurance companies operate a scheme on the lines of the Motor Insurers Bureau, to which, in hit-and-run cases, where a person has been left to die in the road, an appeal is made? Sometimes one is successful, and sometimes not. That is the nearest analogy that I can think of. If such a system were operated the insurance industry would be self-supporting.

I shall be obliged to the Minister if he will say whether in matters of this kind the taxpayer is involved in the legal costs.

6.45 p.m.

Photo of Dr Alan Glyn Dr Alan Glyn , Windsor and Maidenhead

I am grateful to my hon. Friend the Member for Croydon, North-West (Mr. Taylor) for moving this amendment. I am sure the whole country would like to see this particularly nasty bit of dealing widely debated in the House. Irrespective of what one may think about the Bill, I do not think there is any hon. Member who has not received many letters on the subject. It is true that hard cases make bad law, but this case is a very small one. I hope that I can show that the costs of putting the matter right—if I am wrong, the Minister will, no doubt, correct me—need not be borne by the taxpayer.

There is no doubt that a certain amount of enthusiasm was whipped up by the Press and that hon. Members received letters as a result of articles such as those which appeared in the Sunday Express. My hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton) has copious notes, among which I am interested to see he has a copy of the Sunday Express. I do not think it is a bad thing that hon. Members received letters. There is no doubt also, from the letters which I received, that many of the policyholders, in whichever of the 40 categories they were, had some idea that the Department of Trade was watching over their interests—that there was a certain measure of watchfulness on the part of the Government.

I am prepared to admit that it is up to the policyholders to decide whether they wish to take a risk. Nevertheless, a lot of enthusiasm has been worked up in the country and in the House. I was surprised to learn that my hon. Friend the Member for Croydon, North-West attracted 212 Members as signatories to his motion. I only hope that some of the Members who signed the motion will follow us into the Lobby.

We are dealing with small savers. We are not dealing with large capitalist speculators. We are concerned with the small man who invests his money. It might be of interest for the House to know the average holdings. Various figures have been mentioned in the national newspapers.

The next important matter is retrospective action. I am sure that my hon. Friend the Member for Worthing (Mr. Higgins) will refer to it. The degree of retrospection in this case is very small. Indeed, the comparison which was made by my hon. Friend the Member for Croydon, North-West was particularly apt.

The next matter we have to consider is the question of costs. There is no reason why the Government, because of the length of time it will take to wind up a company, should not say "We know there are assets. We shall advance you a loan, pay the shareholders and collect the amount of money "which is undoubtedly due in the form of fixed assets or investments, all of which take a considerable time to liquidate.

Rather aptly, before this debate the liquidator announced that policyholders would receive 41½ per cent. For once the sense of timing, perhaps prompted by the Treasury, was extremely good.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

The liquidator acted completely independently on this matter. We put no pressure on him to make a payment on this day of all days.

Photo of Dr Alan Glyn Dr Alan Glyn , Windsor and Maidenhead

The hon. Gentleman knows that the Leader of the House can say when the debate will take place. It may not have been in his mind, and it is possible that at the time the Government were unaware that this subject would be raised.

Why cannot the Government help in the way I have suggested when we have a problem of this nature, which is comparatively small, and when the case is similar to that of Court Line, in which the people understood that there was some form of guarantee? I shall not be more controversial. In the case of Court Line the public had no assurance, but they would have had it with an insurance company, such as Nation Life. If we had to pay the whole cost, what would it be?

Secondly, if both the liquidator and the Government got together and said that they had estimated what was left in the kitty, could the Government not make a down payment, which the liquidator could then distribute to the unfortunate people and, at a later date, recover the sum through the normal process of liquidation?

The point made by my hon. Friend the Member for Croydon, North-West is important. Old people, who have small savings and who may not live very long, are involved. Today, when we are dealing with this comprehensive Bill, it is right that we should include Nation Life. I hope that the House will take a compassionate, if retrospective, view in this case and vote for this amendment.

Photo of Mr Robert McCrindle Mr Robert McCrindle , Brentwood and Ongar

I declare an interest, as one attached to an insurance company. Like my hon. Friend the Member for Croydon, North-West (Mr. Taylor), I have been fairly active in the matter of Nation Life ever since the unfortunate events that attended that company some time ago. However, unlike my hon. Friend, I have not seen fit to sign the Early-Day Motion to which he referred and which he said has now been signed by a substantial number of our colleagues. I have refrained from being a signatory, partly because of my experience of the insurance industry but, in particular, because I hoped that some sort of rescue operation would emerge from among the insurance companies and, secondly, because I was confident from all that I knew that the amount which would eventually be paid by the liquidator would be comparatively high. That was my view some months ago.

In the light of that, and because I am genuinely fearful of retrospective legislation—not so much in this regard but because it could be used as a precedent for the future—I decided that it would be unwise to sign the Early-Day Motion. However, because I recognised the hardship from which many of these Nation Life policyholders were suffering, I tried to put forward a compromise solution.

I directed a Question to the Secretary of Stae for Trade to the effect that the Government and the insurance companies combined should, outside this Bill, advance an amount equal to the difference betwen what the liquidator would finally pay and about 85 per cent. of the initial investment.

I pay tribute to the British insurance industry for the part of the rescue of Nation Life policyholders that it was able to mount, which has gone completely unnoticed both inside and outside the House. It would be no more than fair to say that the British insurance industry has been pilloried on many occasions over the past few years, but seldom less fairly than in regard to Nation Life.

I turn to the situation of those policy-holders who had annual premium payment policies. The British Insurance Association and the Life Offices Association together have been able to rearrange and redistribute the cover in a way that merits tribute from this House. That part of the Nation Life problem on which they have not felt able to assist relates entirely, as I understand it, to the single premium policies, the income bonds and the like, which many of us believe, no doubt with the benefit of hindsight, that Nation Life was extremely ill-advised to introduce in the first instance.

I confess that I was disappointed that the insurance industry and the Government were not able to meet my suggestion of a payment of an amount between the total eventually paid by the liquidator, and, as I suggested at that time, 85 per cent. of the initial investment. Nevertheless when I heard that this was not likely to be the case, my feelings were not so strong that I felt it was still possible to sign the Early-Day Motion, and certainly my fears about retrospective legislation could not be overcome.

In the light of this lengthy saga, with its extensive trail of hardship revealed to hon. Members daily, I have been forced to think seriously again. The hardship of which I speak is difficult for those concerned to understand. I endorse the view of other hon. Members that those concerned are mainly elderly people. Therefore, to be told that 41½ P is being paid and that, with a bit of luck, in three or four years' time up to about 65 per cent. will be paid, is really chilly comfort for those who, because they were elderly, placed a large part of their life savings with this company.

Those concerned cannot understand why, if the Court Line rescue could be brought about with an element of retrospection when it relates only—I say "only" advisedly—to holidaymakers who lost out, it is impossible to engage in a degree of retrospection in cases where life savings are sometimes concerned. They cannot understand why the Welfare Insurance Company Limited, the London Indemnity and General Insurance Company Limited and others which have been the subject of failure have somehow been bailed out. Esoteric arguments which emanate from this place about retrospective legislation fail to cut any ice. In short, the people concerned are saying "Why us? Why should not we be given some advantage and some protection by the Government and the industry combined?"

7.0 p.m.

There can be no doubt that the people of whom we are speaking are not by any stretch of the imagination professional investors. The average amount invested by a Nation Life income bondholder was £900. By no stretch of the imagination is that the sort of amount one invests if one wishes to engage in tax mitigation through the use of life insurance policies. Nothing has angered me more or caused me more earnestly to reconsider my own position than the words uttered the other day by the hon. Member for Bethnal Green and Bow (Mr. Mikardo), to which reference was made by my hon. Friend the Member for Hitchin (Mr. Stewart).

These are people who are in need of our support. They are certainly in need of our understanding. The Court Line people and the Welfare and London Indemnity people having been rescued, no argument has been put forward so far to show why we should cast 32,000 people—that is the number of policy-holders concerned—into a situation in which they are completely exposed for all time. They may have been foolish in their choice of this company, but on the face of it they were perfectly safe to make that choice. Perhaps they should have taken better advice. Perhaps on more occasions they should have gone to a reputable insurance adviser. I am forced to remind myself, however, that a great many of them did just that.

Photo of Mr George Gardiner Mr George Gardiner , Reigate and Banstead

Does my hon. Friend agree that some of the people who have been most reprehensible in their conduct in this affair have been the brokers who persuaded their clients to accept these policies in order that they should get larger commissions on the policies?

Photo of Mr Robert McCrindle Mr Robert McCrindle , Brentwood and Ongar

I find it difficult to challenge that, except perhaps to say that had not Nation Life, in its lack of wisdom, been prepared to offer not only ever better terms to the prospective policyholders but ever better terms to the insurance brokers as well, the whole unfortunate saga would never have seen the light of day, so I am agreeing with that argument.

Photo of Mr Keith Stainton Mr Keith Stainton , Sudbury and Woodbridge

Does my hon. Friend intend to enlarge and explain that point in terms of the emphasis on the word "guarantee"?

Photo of Mr Robert McCrindle Mr Robert McCrindle , Brentwood and Ongar

Yes. Again, many people were quite prepared to read things into the word "guarantee" because they were unsophisticated people, unused to the ways of investment and the highways and byways of high finance. They took the word "guarantee" as meaning what? I think, in retrospect, that they were entitled to take it at its meaning. To that extent they were not knaves. They may have been foolish. But purely as a result of that we should not decide that there is nothing that we are able to do in the House tonight to assist them.

However, I am again conscious of the feeling of the House that retrospective legislation is a dangerous path. Therefore, in a spirit of constructive helpfulness I want to put a compromise solution to the Minister. I hope that this time he will genuinely listen and be persuaded that it is a possible way out of the difficulty. I want to ask the Minister again why, if this measure is seen as the wrong vehicle, we should not introduce another similar vehicle, either in conjunction with a contribution from the insurance industry or partly as a further levy on policy-holders, or partly as a Government grant in some other way. I ask why there should not be introduced a Nation Life Policyholders Indemnification Bill. If, indeed, it is a question of the difficulty of incorporating this matter into this Bill, I suspect that my hon. Friend the Member for Croydon, North-West would not dissent if an equally acceptable way could be found of helping these people.

It is one thing to decide on the title for the Bill but another thing to decide how these people are to be assisted. I remind the House of what I said a few moments ago. My previous suggestion was that these people should be paid the difference between 41½ p and what the liquidator eventually would pay. I then suggested 85 per cent. It is now clear that the amount which the liquidator can obtain in anything but the long-term future will be less than 85p. In many quarters people are suggesting that they will be lucky if it is 65p. I want to take a figure between those two and to suggest that the Government consider an advance to the liquidator for immediate payment to Nation Life policyholders of the difference between 41½p and 75p. If the total amount eventually recovered turns out to be 75p, the Government would indeed have loaned the money and will ultimately have lost nothing for the taxpayers.

If I am asked "Why, now, 75p?" and why I am scaling it down, I reply that I am looking for an avenue through which to escape the difficulty of retrospective legislation and through which I hope I can pull the Minister in a spirit of compromise. The difference between 75p and l00p—25p—is a large amount in any circumstances and should be the amount that the Nation Life policyholders would expect to pay for having been pulled into the reality of a situation that they did not realise they were entering.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

Does the hon. Gentleman additionally propose another compromise—to use his term—that would bring in the victims of the failures of Vehicle and General and some other companies, who are still awaiting their money?

Photo of Mr Robert McCrindle Mr Robert McCrindle , Brentwood and Ongar

I do not think that the Minister has been listening half as well as I hoped he would listen. I quite deliberately said that the reason why I think that Nation Life is a separate case is that the most recent failures where similar policies and contracts have been involved included the Welfare Insurance Company and the London Indemnity. One needs to go back only that far to understand why the people with Nation Life, realising that those companies failed at approximately the same time but that they have been bailed out, do not understand why Nation Life policyholders should not be helped.

I do not suggest we turn back the clock as far as the Minister suggests. I suggest that the real comparison is between Nation Life on the one hand, and the London Indemnity and Welfare companies, on the other hand. I ask the Minister to contemplate that before he replies.

I have taken long enough of the time of the House, but I want to make it quite clear that it is because I feel that a compromise must be reached to assist 32,000 policyholders who have been suffering through the uncertainty of the situation for a long time, who have clearly made manifest their extreme distress in letters to hon. Members on both sides of the House, that I heartily commend the compromise I propose to the Minister.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

I have listened with great attention to my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) because of his profound knowledge and experience of the insurance industry. I am afraid, however, that he cannot escape from the reality from which he has told us he wants to escape, because this is the moment of decision. He must know as well as everyone else in the House that the Minister has no power to come to the Dispatch Box and say "Yes, I shall do what the hon. Member asks." It would take a decision of Cabinet to authorise the legislation for which my hon. Friend asks. If anyone follows him into his attempt to escape from the dilemma, what they will escape from is the last moment when they can take a decision, which is this moment. Once this moment has passed, my hon. Friend will be in pawn to the Minister knowing perfectly well that the Minister's considerations will end with a tear of sympathy and nothing more.

I should be the last to say either that other businesses in general have an obligation to rescue customers of an imprudent business or that the taxpayer has an obligation to come to the rescue of imprudent investors. Why should we distinguish this case? I will not repeat the reasons which have already been given, but some reasons have not been given.

After the collapse of Vehicle and General there was an inquiry, from which it transpired that there was a considerable element of slackness within the Department charged with enforcing the regulations designed to protect the public from incompetent, or worse, insurance companies. Various excuses about shortages of staff were given. As a result, the public, and indeed Parliament, assumed that the shortcomings revealed by the inquiry had been rectified and that there is a difference between the caveat emptor attached to going to a car dealer under a railway arch and buying an astonishingly cheap car and asking a senior official of the Bank of Scotland what the bank recommends as an insurance company and, when the reply is "Nation Life", investing therein. There is the world of difference between trying to get an improbable bargain under railway arches and investing in what purports to be a guaranteed bond after the Government of the day have announced that they have remedied the shortcomings in the Department.

What distinguishes the two cases is the legislation which has been passed to date to protect people and which has given people the impression that when they contract a certain type of business with an insurance company they are not speculating but are contracting to receive warranted returns in a way which they would not expect if they were going in for the highest returns they could find in the speculative market.

I do not like retrospection as a general principle. It is most reprehensible when it relates to criminal law. There is then a unanimity of opinion that it should not be used when events are termed criminal which were not criminal when they happened. We are not talking here about such a matter.

The Court Line case has been mentioned as a precedent. I do not want this to be a precedent for people in future to imagine that they need not exercise due prudence. However, if this series of amendments were to be passed, the penalty upon the unfortunate people who entrusted their life savings to Nation Life would still be a desperate and heavy one. They have been without income for some time. Inflation has rushed on. They will lose approximately one-quarter of their total capital, anyway. I should have thought that that was quite enough suffering to discourage people from being light-hearted in their approach to insurance companies in future.

I do not claim that this is an ideal solution. I do not believe that there is an ideal solution. I regard this as the best alternative that is available to us. Tonight, in the debate on this amendment, we must either grasp this alternative or allow it to pass for all time. I do not think that we should be right to allow it to pass. That is why I feel obliged to give the matter my support in the Lobby.

7.15 p.m.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

My hon. Friend the Member for Croydon, North-West (Mr. Taylor) moved the amendment compassionately. We are all well aware of the seriousness of the points he raised.

Like many other hon. Members, I have received a considerable mail from comstituents about the problems arising from the failure of Nation Life. In my constituency there are probably more elderly people who invested in Nation Life policies than there are in other constituencies. I do not think that any hon. Member will treat this as a light matter. It is a human problem and one which the House is right to view sympathetically.

The question is whether it is right none the less to show our sympathy in the way my hon. Friend suggested by accepting the amendment. There are powerful arguments against supporting the amendment. It has received a great deal of Press coverage. As my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) said, a number of those who purchased policies in Nation Life did so on the advice of their bank, their solicitor, or their insurance broker, or perhaps on the advice of all three and other expert advice. Many of our constituents invested on the basis of advice they received and which they had reason to believe was sound. Some of those investing in those policies were not in the category I have described, though they would benefit from the amendment.

The crucial point is that of retrospection. It is true that the selected date is the date of the Government's announcement of their proposals, but that is not an unusual form. As I understand the position, it would be exactly the same if the operative date of the Bill were the date of Royal Assent. There is no difference as to the practical effect. My hon. Friend argued particularly on the point of retrospection that the Bill should be made retrospective because the fact that the Government had created uncertainty at the time that his Early-Day Motion was tabled meant that the industry did not intervene. Despite the Bill and despite the fact that Nation Life is not included, the industry has given considerable support to a number of policyholders of Nation Life and there is no reason to suppose that that support would have been any different if the situation my hon. Friend described had not existed when the matter first came to public notice.

I believe that the House is right always to regard with considerable reserve any proposal to introduce retrospective legislation. A number of my hon. Friends feel strongly about this.

The next point arises particularly from the speech of the hon. Member for Glasgow, Garscadden (Mr. Small). There is no question of taxpayers' money being involved. There is a levy on other policyholders. Not only are we being asked to act retrospectively as regards other policyholders in Nation Life. It is also proposed by the amendment to take retrospective action which would impose a charge on other policyholders many of whom—perhaps most of whom—have taken out policies on far less favourable terms than those which were taken out by holders of Nation Life policies. The retrospection therefore cuts both ways—on the levy as well as on the benefits which would accrue if the amendment were to be accepted.

Hon. Members would do well to recall the precise circumstances with regard to Court Line. This is a very convoluted story. The Government took the view that the Court Line proposals should be retrospective and they believe that these proposals should not be retrospective. In my view, neither should be retrospective. The Court Line proposals were made retrospective because the Government felt that these holidaymakers should be covered because they, the House and the country were misled by statements made by the present Secretary of State for Energy. That is why the House decided that retrospection was the answer at that time. We only assented to that procedure while expressing our view that the right action was for the Government to accept responsibility, to pay the required amount out of taxpayers' money, not to introduce retrospective legislation, and for the Secretary of State to resign. The situation was confused by some trouble about the Ombudsman and the Secretary of State did not resign. To this day, I find it incomprehensible that he has not resigned. The circumstances surrounding the Court Line affair were very different from those surrounding Nation Life.

Photo of Mr Keith Stainton Mr Keith Stainton , Sudbury and Woodbridge

The Court Line undertakings were given in the run-up to a General Election and there was some electoral mileage in them. There is no electoral mileage for either side in the current situation from the 32,000 policy-holders in Nation Life.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

My hon. Friend's first point reinforces what I have been saying and his second point is also true. We must seek to reach the right decision in this matter and that is why it is right to spell out the complex arguments involved. The Court Line analogy does not stand up.

The Early-Day Motion which a number of my hon. Friends supported was put down in January and there have been a number of significant changes since then. It does not follow that any hon. Friends who signed the motion should therefore automatically support the amendment.

A high percentage of the letters that I have received have been from people who claim to have lost all their money. It is important to convey to constituents that the liquidator has been proceeding with his work—and I have been urging the Government to see that he proceeds with all possible haste—and an interim distribution of 41½ pence in the pound is expected to be paid today. The liquidator is also making every effort to arrange for further dividends. That is the first change in the situation.

In addition, under a scheme announced on 25th May, the insurance industry itself has offered ordinary policyholders, without any evidence of health, a guaranteed 90 per cent. of the sum secured by premiums paid before liquidation. Ordinary policyholders in Nation Life have been helped effectively by this scheme. In the case of claims arising since the date of liquidation, the life offices have offered 90 per cent. of the admissible death claim, even if the claim in liquidation would only have been limited to the surrender value.

In the case of regular premium unit-linked policyholders, a number of unit-linked offices offered replacement policies, again without evidence of health, with a rebate of 50 per cent. of the first year's premium. The policyholders will continue to hold their claim against Nation Life. This is another change in the situation since the Early-Day Motion was tabled. We are really concerned with those people who have had exceptional kinds of policies.

If there are so-called excessive benefits, the amount which a policyholder would receive under the Bill, if the amendment was made retrospective, is not 90 per cent., but an amount scaled down in respect of excessive benefits. It is those policies which have excessive benefits that have not yet been covered. It is important to put over these facts.

One of the aspects of this problem which I find distasteful is the revelation of the cost of liquidation, which will reduce the amount available to policy-holders who have suffered as a result of the company's collapse. I understand the legal fees to date amount to £500,000 and the liquidator's expenses £700,000. No doubt the Under-Secretary will confirm or correct these figures. The Department of Trade's audit fee, which was originally expected to be £282,000, has been increased to £350,000 under an order recently passed by the House. Given the general feeling about the Department's actions in this case, it is curious that it should now levy an additional amount by way of audit fee. This is one of the matters causing us concern. Fees charged on a pro-rata basis might be appropriate for medium-sized companies, but they are inappropriate for small companies and amount to very large sums indeed where the assets of the company concerned are extremely large. This is a problem we should look at again. I do not wish to rest too heavily on the technical problems, because this is an emotional issue as well as a technical one. However, the difficulties in unscrambling the situation if one accepted the amendment would be very great indeed. It may be that some policyholders would be worse off. It would take a long time to try to unscramble this situation.

Photo of Dr Alan Glyn Dr Alan Glyn , Windsor and Maidenhead

Am I correct in saying that if the Government waived the audit fee, this money could be distributed among policyholders?

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

That is the position if a report in yesterday's Daily Express is correct. In the past, the Department has given this service free of charge, but it is now charging a percentage of the money invested. If it has been a free service in the past, it is certainly a matter for consideration as to whether it should be so in the future.

All the ordinary policyholders in Nation Life and some other categories have been covered. Even if the amendment was accepted, the so-called excessive benefits would be very considerably reduced.

The House should not, however, lightly brush aside the main point, which is that retrospective legislation is being made which will impose a levy on other policy-holders in other companies. Many of them may well have taken out policies on less favourable terms than those by which they would be compensated under the amendment. On balance, while recognising the very human problems involved here, I think that it would wrong to support my hon. Friend's amendment.

7.30 p.m.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

I am no more immune than are other hon. Members from recognising, by the amount of correspondence I have received from constituents, that a great deal of anxiety and hardship has been occasioned by the collapse of Nation Life. It would be easy for me simply to say, as did the hon. Member for Worthing (Mr. Higgins), "Let the policyholders of these other companies bear the burden". I do not think that that would be fair, in the circumstances. I do not think, either, that it is a burden which, in all the circumstances should fall on the taxpayer at large. I understand the motives which caused a large number of hon. Members to sign the Early-Day Motion. I have no doubt that they were all under considerable pressure from people who suffered as a result of the collapse.

A number of misconceptions were entertained by people who had sustained these anxieties and hardships, and a number of them, in the earlier days, were certainly saying that they had lost all. The hon. Member for Worthing put the situation in true perspective. They have not lost all, and only today has come the announcement of the substantial payment by the liquidator which indicates the amount to be 41·5p in the pound on assessed claims. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) thinks that there is something sinister in this. I have said that there is not. Of course, we wanted the liquidator to make payment at the earliest possible opportunity, but neither I nor the Secretary of State told the liquidator to conform to the Government's wishes on this. That would be improper. If the hon. Member reflected on the matter he would see that we have not been guilty of that sort of turpitude.

The hon. Member for Croydon, Northwest (Mr. Taylor) made a measured and short speech. I apologise to him now, as I was unable to on the last occasion, for not having given way to him several months ago, but I had only about a minute in which to speak and I had no time to give way. I still think that he was standing on his head. The Government never gave any undertakings about rescueing Nation Life. There is not a scintilla of truth in that allegation. Simply to pray in aid a speech by one of my hon. Friends in the debate is not good enough, and my hon. Friend would be the first to agree that nothing was said by any Minister or official in my Department to justify that assertion.

The hon. Member for Worthing covered many points that I would have covered, and I agree with him in virtually everything he said, with the exception of what he said about holidaymakers. This subject was debated at significant length just before the Summer Recess. The hon. Member uttered a number of strictures about the rectitude of providing retrospective legislation, but he did not vote then against the Government on the principle.

If I speak at greater length than I would normally, it is because a number of important points have been made, and the House and the country are entitled to know where the Government stand. It gives me an opportunity, tonight, to refute some of the bogus claims which have been made, not by hon. Members but by one particular newspaper—the Daily Express.

My right hon. Friend announced his intention to establish the protection scheme on 29th October 1974. Before that date, policyholders had no reason to expect protection from a statutory scheme if their company went into liquidation. No insurance companies had any reason to expect that they would be levied to provide that sort of protection. It would therefore be wholly unreasonable to expect insurers to pay out for policies in respect of companies that failed before it was known that the statutory scheme was to be introduced.

Even if the principle of retrospection were to be accepted—and I do not accept it in this context—I would not agree with the contention of the hon. Member for Brentwood and Ongar (Mr. McCrindle), who has adopted a very objective view in the debates both in the House and in Committee, that one could simply justify not going back much further than the National Life situation. He asked about the Welfare and the London Indemnity situation. It was in these circumstances that the industry thought it appropriate, for a whole variety of circumstances then prevailing—circumstances which did not prevail in the Nation Life situation—to mount a rescue operation. The Government were not called upon to do so. Allegations were made about the appropriateness of the procedures which were adopted by the previous Government and the Department of Trade and Industry at the time, and about the degree of vigilance it showed on Vehicle and General, and Fire, Auto and Marine. However, the previous Government rightly thought it inappropriate to accept those allegations and step in and offer compensation to people who in many instances were desperately affected by the collapse of those companies, and who have still received no compensation, or not the full compensation to which they were entitled.

Where does one stop when one introduces this degree of retrospection to ensure an equitable solution to the problem? The date which has been chosen, therefore, is arbitrary, and retrospection is bound to be arbitrary, too. I have referred to the payment made by the liquidator today, and no doubt when further assets are realised the liquidator will find it appropriate to make further payments. That is a matter for him. Of course, one will want to see that happen if it is possible.

I want to say something about the holidaymaker situation. I do not believe that the circumstances of the failures of 1974 are in the least comparable, because there was a scheme operated by the Civil Aviation Authority and the industry, designed to provide protection against failures. The public had a reasonable expectation that they were adequately covered against loss. In the event the system did not prove adequate to meet the calls made upon it. Therefore, the Government considered it right, in view of the exceptional circumstances of that year, to provide for compensation not simply to the Court Line victims but to the others.

There is an amalgam of reasons for the failure of Nation Life, and I shall refer to the basic ones. There was clearly a fall in the value of assets. The company had largely involved itself in property development, and there had been a collapse of the property market. There was an inadequate matching of assets to meet liabilities at a time when a run of surrenders might have taken place. There was the inability of the parent company to provide fresh capital, and with no sign of a rescue forthcoming the company announced the invocation of the clause in its property bonds allowing payments on surrender to be deferred by six months. That was in anticipation of a rush of surrenders on the announcement of a major reduction in unit values. The company ceased writing new business and eventually applied to the court, on 2nd July 1974, to petition for its winding up.

The hon. Member for Sudbury and Woodbridge (Mr. Stainton) said that the difference between the holidaymaker and Nation Life situation was that the Government could derive some electoral benefit from one and not from the other. I point out that the date of the Nation Life petition was 2nd July 1974. That is a relevant date.

Many allegations have been made, without evidence, that the Department failed to act diligently and in good time. But the Department placed on the company its standard requirements under Section 12(5) and Section 12(6) of the 1973 Act, including a requirement to place its assets in trust. In addition, strengthening requirements were placed on the company as the situation developed. The Department attempted to isolate the funds and assets from the parent group, but this did not stop certain of the company's assets being devalued in the conditions prevailing.

Attempts by the Department to find a rescuer were unsuccessful. Many attempts were made. The hon. Member for Windsor and Maidenhead (Dr. Glyn) asked me to say something about the 32,000 policy-holders. There are 3,000 ordinary life and endowment policyholders with claims averaging about £300; 8,000 single-premium property bondholders, with claims averaging about £600; 11,500 regular premium property bondholders, with claims averaging about £70; and 8,000 guaranteed-income bondholders, with claims averaging about £2,400.

It is very unsafe to talk just of averages, because there are the very ordinary, elderly, humble people, who may have a certain amount of money which they were advised to place in a certain way, and others who do not fall into that category. It is tempting to think that all the people involved were humble and poor, and perhaps ill-advised, but it did not happen quite in that way, though a high proportion of the policyholders are elderly and have small investments. That is a factor that hon. Members were right to dwell upon.

7.45 p.m.

The action that we took before liquidation has been much criticised, as have the liquidator's fees. I hope that what I have said about the action before the liquidation will give an indication of the care and diligence of my officials in this matter. I am sure that the whole House will think it appropriate that those officials should not be constantly pilloried in the difficult and complex task that they have to carry out. Based on my knowledge in the past 18 months as a Minister in the Department, I have nothing but praise for the work of those civil servants. I am sure that those who preceded me in my office also regard the work that they have done as very skilful.

I have been asked about the liquidator's costs and the Department's fees. It is true that the estimates of the legal costs are £500,000, and that the liquidator's and special manager's remuneration is estimated to be £700,000, and that the Department's fees are estimated to be £282,000. [Interruption.] The matter should be seen in its true context. It is easy to get it out of perspective.

A special manager's remuneration falls to be fixed by the court, which takes into account the circumstances of the particular case. They include the time that must be spent by the special manager, and the basis of his professional fees. The manager charges his professional time, as one would expect. He will not do it for nothing. He is a professional adviser.

The special manager was appointed by the court on 25th July 1974, and was appointed liquidator in September 1974. Unless the court otherwise orders, a liquidator's remuneration is fixed by the committee of inspection appointed by the court to act with the liquidator. It must be calculated partly on realisations and partly on the amount distributed in dividend. There is nothing unusual about the fees reserved for the liquidator in this instance as against those in other liquidations. It is a very big and complex liquidation. I cannot foresee what amount the committee of inspection may fix for the liquidator's remuneration, but if the Department is of the opinion that the remuneration fixed by the committee is unnecessarily large it may apply to the court, which can fix the amount.

I turn to the legal costs. I declare my interest only as one who was a practitioner in a firm of solicitors, but with no interest in this case. The legal costs are reserved under the terms of the court order, which has been fixed at the sum of £500,000 in this case. The actual fees will be taxed following the purposes for which those fees are reserved.

We know that there has already been immensely complex litigation over this matter. Perhaps it has not been as lengthy as we feared at one time. The court has to fix a fee in regard to costs which will take into account not only current litigation but future litigation as well, but at the end of the day the court is able to tax the professional fees of the solicitors and counsel involved, and in that way the public interest is maintained. It is not just a reckless amount dreamed up by somebody, as was implied in some of the comments today.

The Department of Trade fixed fees not simply for Nation Life in isolation. These fees are fixed under the Department of Trade Fees Order, and they go towards the cost of the insolvency service, which is a vital one. These include the costs of the Official Receiver and of the Department in dealing with a variety of matters entailed in the liquidation. This is vital work, undertaken for the protection of creditors at large. It is very important to take account of that factor.

I was disappointed that the hon. Member for Worthing should have, in a sense, joined with those who have been deeply critical of the amount charged by the Department. The insolvency service must be conducted for the benefit of the country as a whole, because it must represent the interests of the creditors, but we do not have a discretion to waive or reduce fees if there is hardship. We have no discretion in that matter at all. There is hardship in every litigation.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

The hon. Gentleman quoted a figure of £280,000 a few moments ago. The Press reports say that the amount is to be increased to £355,000. Is that true or not? If it is true, it was very deceptive to give a figure of £280,000. It is also asserted in Press reports that the Department is to levy a new cash management charge, which has previously been a service rendered free. Is that true?

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

I do not know the exact amount and cannot specify that. The figure I had was £282,000. I think that that includes the new provision, but I may be wrong about that. While I am making my speech there will be an opportunity for correct information to be provided if my figure is wrong. If hon. Gentlemen want to intervene, I am prepared to give way, within reason. Now that I notice the hon. Member for Chingford (Mr. Tebbit) wishing to intervene, I am not sure that I should have made that suggestion. I fear that he will raise a point about Spain.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I was merely seeking to help the hon. Gentleman by giving him a few moments seated while his advisers, on whom he has heaped so much praise, could do this £280,000 worth of work and get the right figures to the Box, so that he would not have such trouble in deciding whether he is giving us good or bad figures.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

I am grateful to the hon. Member for Chingford. It is perfectly true that a new order has been made. It does not relate, however, to Nation Life itself. This is a matter which is before Parliament. Parliament has the opportunity to take a view about these matters.

The insolvency service, like other Government services, ought not to be subsidised by the taxpayer at large. It ought to be self-sufficient. It is for this reason that these additional provisions have had to be made. I understand that this will involve an additional liability in regard to Nation Life. That is difficult to predict at this moment.

I was wrong in giving the figure of £282,000. That was the figure up to 1st October. It will probably be in the region of £350,000.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

Is it not really deceptive for the hon. Gentleman's officials to have provided him initially with a figure of £282,000, which hon. Members will have taken to be the actual figure? He now says that the figure is in the region of £350,000. He is not sure of the exact figure. It is not good enough for him to give the House out-of-date figures. May we please have an answer with regard to the extra new charge to which I have referred?

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

The figure I have just given is only an estimate. Clearly, it was my fault and not that of my officials when I referred to the first pre-October figures. The situation has been altered by the fact that the new order will take effect. Without being absolutely precise, I can say that the figure is about £350,000.

Photo of Mr Robert Taylor Mr Robert Taylor , Croydon North West

Will the Undersecretary confirm, then, that the new scale of fees is retroactive and is to go back to the commencement of the liquidation of Nation Life, which was in July? What is the difference between approving this amendment, and making it retroactive for Nation Life, and the measures that the Under-Secretary is taking?

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

That is not my understanding of the position. I shall advise the hon. Gentleman, as far as we can estimate it, of the position in regard to Nation Life, but I cannot give an exact estimate at this time.

I should like to deal now with some of the allegations that have been made in the Press and repeated in the House tonight. The Daily Express printed two articles, and it seemed that a number of hon. Members have relied enormously on the information provided in those articles. I suggest that, in unravelling this piece of old rope from the Daily Express, it is right that we should have regard to the nature of the newspaper itself, particularly in the context of the last few days.

Only the other day the Daily Express indulged in some highly misleading and irresponsible journalism which was the subject of a perfectly appropriate attack by my right hon. Friend the Home Secretary and by the Solicitor-General. The Daily Express has indulged in a misleading and highly irresponsible campaign, also, in relation to this issue. It has deliberately manipulated the truth and distorted the facts in a number of material particulars.

Let me deal with these allegations. Mr. Roberts, the City Editor, stated, in an article of 21st July, 1975, that my right hon. Friend the Secretary of State for Trade has labelled Nation Life's victims as wealthy speculators". We heard that repeated in the House tonight.

8.0 p.m.

I am entitled to rebut that allegation, because it is a serious allegation. It is totally without foundation. It was never said. My right hon. Friend said quite clearly during the Second Reading debate on 18th July, three days before the article was published: …it is wrong to assume that, because a company proves to be unsound or because some of its policies…can be seen in retrospect as over-generous, its policy holders must be imprudent speculators rather than ordinary savers. Indeed, a noticeable feature in these cases is the considerable number of old people affected—motivated not by greed but by the impact of inflation".—[Official Report, 18th July 1975; Vol. 895, c. 1953.] In a more recent article on 27th October, Mr. Roberts retracted his ground. He wrote that a letter from the Secretary of State caused my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) to write to a policyholder: …the greater part of the money in Nation Life did not come from people like yourself but from what might be called professional investors looking for relief from tax liability. There is not a word of truth in that, either.

Photo of Mr Robert Taylor Mr Robert Taylor , Croydon North West

On a point of order. I have a copy of that letter in my possession.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

It was not in fact a statement that my right hon. Friend the Secretary of State made. There was not a tittle of truth in that allegation.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. The hon. Member for Croydon, North-West (Mr. Taylor) will understand that it is not a point of order for me if he disagrees with the contents of or challenges what the Minister says. He moved the amendment. He will have an opportunity to make his point in a moment.

Photo of Mr Michael McNair-Wilson Mr Michael McNair-Wilson , Newbury

Perhaps my hon. Friend the Member for Croydon, North-West (Mr. Taylor) might be allowed to read the letter so that we could understand its contents.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Not in the middle of the Minister's speech.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

I am saying that my right hon. Friend the Secretary of State did not write a letter saying: …the greater part of the money in Nation Life did not come from people like yourself but from what might be called professional investors looking for relief from tax liability. I have not seen the letter from which the hon. Member for Croydon, Northwest quoted, but I understand from my hon. Friend the Member for Bethnal Green and Bow that he has never suggested that my right hon. Friend wrote such a letter.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

Yes. Perhaps this might be the moment for the hon. Member for Croydon, North-West to read the letter.

Photo of Mr Robert Taylor Mr Robert Taylor , Croydon North West

It is a letter from the hon. Member for Bethnal Green and Bow (Mr. Mikardo) to one of his constituents, Mrs. A. Hart, of 66A, Medway Road, London, E.3. It is dated 17th April 1975. Referring to his right hon. Friend the Secretary of State he wrote: But I dare say that he will be taking into account the fact that the greater part of the money in Nation life did not come from people like yourself but from what might

Division No. 379.]AYES[8.08 p.m.
Aitken, JonathanBanks, RobertBraine, Sir Bernard
Arnold, TomBell, RonaldDouglas-Hamilton, Lord James
Bain, Mrs MargaretBottomley, PeterDykes, Hugh

be called professional investors looking for relief from tax liability."

Those are the exact words quoted in the Daily Express, and they are the exact words that the Minister has read.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

The words have been attributed to my right hon. Friend the Secretary of State, and I refute that he ever wrote such a letter. I deny the allegations of Mr. Roberts about the lack of action by the Department of Trade. I say that he has dwelt upon untruth after untruth and that it is particularly reprehensible when we are dealing with the anxieties of ordinary humble people. The hon. Member for Croydon, North-West should not seek to suggest that those words were ever used by my right hon. Friend the Secretary of State. They never were.

Photo of Mr Robert Taylor Mr Robert Taylor , Croydon North West

It may help the House if I read the entire paragraph of the letter from the hon. Member for Bethnal Green and Bow. He wrote: The Secretary of State told me he is considering carefully whether to make the Bill retroactive, and in his consideration he is bearing very much in mind the position of people like yourself and some of his own constituents who put relatively small amounts of personal savings into Nation Life. But I dare say that he will also be taking into account the fact that the greater part of the money in Nation Life did not come from people like your self but from what might be called professional investors looking for relief from tax liability.

Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central

The hon. Gentleman has taken up the time of the House unnecessarily in making a totally bogus accusation against my right hon. Friend the Secretary of State, and what the Daily Express has done is to dwell upon one unthruth after another and to act as the wholesalers of the mendacious in this matter.

I believe that the policy adumbrated by the hon. Member for Croydon, North-West would not be in the interest of policyholders, and I ask the House to reject it.

Question put. That the amendment be made:—

The House divided: Ayes 48, Noes 117.

Fookes, Miss JanetMcAdden, Sir StephenReid, George
Freud, ClementMacfarlane, NeilRifkind, Malcolm
Gardner, Edward (S Fylde)McNair-Wilson, M. (Newbury)Ross, Stephen (Isle of Wight)
Grist, IanMather, CarolShepherd, Colin
Hannam, JohnMaxwell-Hyslop, RobinSmith, Cyril (Rochdale)
Hawkins, PaulMayhew, PatrickSpicer, Jim (W Dorset)
Hordern, PeterMeyer, Sir AnthonyThompson, George
Howells, Geraint (Cardigan)Miller, Hal (Bromsgrove)Warren, Kenneth
Hurd, DouglasMolyneaux, JamesWelsh, Andrew
Hutchison, Michael ClarkMorgan, GeraintYoung, Sir G. (Ealing, Acton)
James, DavidMudd, David
Jessel, TobyNewton, TonyTELLERS FOR THE AYES:
Knight, Mrs JillPage, Rt Hon R. Graham (Crosby)Mr. Robert Taylor and
Knox, DavidPenhaligon, DavidDr. Alan Glyn.
Lane, David
Archer, PeterGould, BryanMorris, Charles R. (Openshaw)
Ashley, JackGraham, TedMoyle, Roland
Atkinson, NormanGrant, John (Islington C)Newens, Stanley
Barnett, Guy (Greenwich)Hamilton, W. W. (Central Fife)Noble, Mike
Bates, AlfHarper, JosephO'Malley, Rt Hon Brian
Bean, R. E.Harrison, Walter (Wakefield)Ovenden, John
Benn, Rt Hon Anthony WedgwoodHart, Rt Hon JudithPark, George
Booth, AlbertHatton, FrankParry, Robert
Bradley, TomHeffer, Eric S.Radice, Giles
Canavan, DennisHooley, FrankRees, Rt Hon Merlyn (Leeds S)
Cartwright, JohnHoram, JohnRobertson, John (Paisley)
Clemitson, IvorHowell, Denis (B'ham, Sm H)Roderick, Caerwyn
Cocks, Michael (Bristol S)Huckfield, LesRooker, J. W.
Coleman, DonaldIrving, Rt Hon S. (Dartford)Roper, John
Cook, Robin F. (Edin C)John, BrynmorSheldon, Robert (Ashton-u-Lyne)
Cox, Thomas (Tooting)Jones, Barry (East Flint)Short, Rt. Hon E. (Newcastle C)
Craigen, J. M. (Maryhill)Kilroy-Silk, RobertShort, Mrs Renée (Wolv NE)
Crawshaw, RichardLambie, DavidSkinner, Dennis
Cryer, BobLamborn, HarrySmall, William
Dalyell, TamLamond, JamesSmith, John (N Lanarkshire)
Davidson, ArthurLatham, Arthur (Paddington)Snape, Peter
Davies, Bryan (Enfield N)Leadbitter, TedSpearing, Nigel
Davis, Clinton (Hackney C)Lestor, Miss Joan (Eton & Slough)Stallard, A. W.
Deakins, EricLitterick, TomStott, Roger
Dean, Joseph (Leeds West)Lyon Alexander (York)Taylor, Mrs Ann (Bolton W)
Delargy, HughLyons, Edward (Bradford W)Tebbit, Norman
Dormand, J. D.MacFarquhar, RoderickThomas, Ron (Bristol NW)
Douglas-Mann, BruceMcGuire, Michael (Ince)Wainwright, Richard (Colne V)
Duffy, A. E. P.Mackintosh, John P.Walker, Terry (Kingswood)
Eadie, AlexMaclennan, RobertWhite, Frank R. (Bury)
Ellis, Tom (Wrexham)Madden, MaxWilley, Rt Hon Frederick
Ennals, DavidMarks, KennethWilliams, Alan (Swansea W)
Evans, Ioan (Aberdare)Marquand DavidWilliams, W. T. (Warrington)
Evans, John (Newton)Maynard, Miss JoanWise, Mrs Audrey
Ewing, Harry (Stirling)Meacher, MichaelWoodall, Alec
Faulds, AndrewMellish, Rt Hon RobertYoung, David (Bolton E)
Fernyhough, Rt Hon E.Mendelson, John
Forrester, JohnMillan, BruceTELLERS FOR THE NOES:
Freeson, ReginaldMiller, Dr M. S. (E Kilbride)Mr. James Hamilton and
George, BruceMorris, Alfred (Wythenshawe)Miss Margaret Jackson.
Gilbert, Dr John

Amendment accordingly negatived.