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Column 1119because some of those so-called men of substance have only one interest, although not necessarily those in this place. I shall not suggest what that interest may be.
I come from an ordinary background, as did many hon. Members on both sides of House. We do not have to tell the Committee not to probe into our financial affairs. I am prepared to give evidence on anything, which I have not had much occasion to do. But I would not dare threaten the House by saying, "Do not probe too deep, otherwise great people like me may not stand for election to the House." For goodness sake, that is absolute arrogance.
The excuse is that, because of developments at Lloyd's and the difficulty of interpreting information, the latter have not been tested. Time and again, Committee members discussed the matter with Lloyd's representatives, who said that because of the new MAPA rule, complicated as it may be, a member may not at any one time know where his money is.
Members, therefore, cannot declare an interest because of their syndicate numbers. When I asked the representatives from Lloyd's whether it was possible for any member to know at any time where his money was invested, the answer was, "Yes, if they ask." That may be the case, but I still make the point that a Member should be responsible for declaring that to the Committee because that is the rule in the House.
I am not convinced by any stretch of the imagination that the good and great are right on this issue. Some might say that they are the good, the bad and the ugly, but I shall stick with the good and great. That those great people have special rights and special privileges which go beyond the will of the House is unacceptable. Not enough time has been given for the present rules to be tried and tested. They should be given more time to work before the House considers anything else. If we pass the motion, we shall no longer reprimand those people who are in contempt and we shall concede their demands and their threats. No other group of people could get away with that. I beg hon. Members to accept my amendment for the sake of the House and democracy.
Sir Geoffrey Johnson Smith (Wealden) : I am sorry that a member of the Select Committee on Members' Interests should propose an amendment to the motion. The hon. Member for Sheffield, Heeley (Mr. Michie) is an assiduous attender of our meetings and it is a shame that he should find himself at odds with the other members. As I hope to demonstrate, his serious charge should not be supported by hon. Members from whichever party.
If the hon. Member's charges against the Committee's findings are as serious as he claims them to be, why did not the Opposition table an amendment ? I suggest that they did not do so because the findings of the Committee were based on the evidence put before us. As I shall mention later, when we consider proceedings, resolutions and rules involved in the Register of Members' Interests and the
Column 1120manner in which we declare those interests, it is very important that they should be seen to be fair and reasonable.
We have made it clear that the report is divided into two parts. Why publish them separately ? What is wrong with publishing the two separate parts in one report so that hon. Members can ascertain our attitude towards those who did not abide by the obligations that we think were placed on them and, at the same time, see whether there is any justification, as a result of any non-compliance, for changing the rules ? As I said, the changes that we have made stand four-square with the evidence put before us. If that were not the case, we should not have suggested them.
I shall be as brief as I possibly can. I do not want to go into too much detail because everything has been published, and I am sure that any hon. Member who wishes to raise an issue will do so. The hour is late ; it is a short debate ; and I know that other hon. Members wish to speak. We have now had the experience of seeing the printed entries in the register in which many hon. Members have disclosed their syndicate numbers. They are complicated and, in some cases, out of scale with the rest of the register. The introduction of the members' agent pooling arrangements--MAPAs--at Lloyd's at the start of this year was a development not foreseen by the Committee when it made its original recommendation in 1992 and it has greatly increased the potential complications, as I shall show.
The purpose and effect of MAPAs is to enable members of Lloyd's to spread their risk over a much wider range of insurance syndicates without increasing their overall financial commitment, just as an investor in the stock market can spread his risk by investing in a unit trust rather than in a small selection of shares. A member of Lloyd's who joined a MAPA this year will be participating in a minimum of 30 syndicates in that way alone. Next year, he may join another MAPA or the MAPA itself might change its syndicate content, but this year's MAPA will remain open for at least two more years so, under the present rule, the syndicate in it would have to remain in the hon. Member's register entry all that time, along with any new MAPAs or syndicates that he joined subsequently.
The net result was described to the Committee by a witness from Lloyd's, by which I mean an official from Lloyd's. He said that "the entries are likely to get larger and larger as the years go on, as more and more detail may fall to be disclosed . . . becoming more and more full of numbers."
The Committee therefore sought an alternative rule that would provide information about an hon. Member's participation in the Lloyd's market, beyond the mere fact that he is an underwriting member of Lloyd's, but in a way that is more concise and more comprehensible to the layman than a long list of syndicate numbers would be.
Mr. Campbell-Savours : In reality, is a MAPA any different from a syndicate ? A MAPA could have a number in the same way that a syndicate can have a number, but, whereas a syndicate relates to an individual portfolio, a MAPA relates to a portfolio that might include as few as 30 or as many as 60 syndicates. Why reverse the decision ? Why not simply change the registration requirement whereby the MAPA is registered along with any syndicates to which an hon. Member belongs ?
Sir Geoffrey Johnson Smith : That would result in a bunch of numbers from which one would not be able to ascertain anything. I shall explain that as I go along, because it needs to be put clearly to the House.
The purpose of the Committee's proposal is to ensure that hon. Members who underwrite specific categories of insurance business at Lloyd's disclose those categories in their register entries in future. That is what we recommend.
Sir Ralph Howell (Norfolk, North) : Will my hon. Friend now answer two questions that I have asked him in several letters ? The first question is : what was the purpose of the request for members of Lloyd's to give numbers ? What use could his Committee possibly make of those numbers ? The second question is : what possible use can the Committee make of the new headings under which he asks us to record our underwriting ?
Sir Geoffrey Johnson Smith : The purpose is as follows. To say that one is a member of Lloyd's does not reveal whether there is a particular emphasis in the business that one does with Lloyd's. If there were a concentration of a Member's investments in one particular aspect of insurance--aviation, say--it would stand out in the Register of Members' Interests that his principal interest was aviation.
As I explained earlier, after the report was published the unit trust concept, with MAPAs, emerged, and that made the question of registration gobbledegook.
Mr. Bill Michie rose
Sir Geoffrey Johnson Smith : I really must proceed, because I am sure that plenty of other Members on both sides of the House want to catch your eye, Madam Speaker. I want to follow the steps that we took, so that they are clearer not only to my hon. Friend the Member for Norfolk, North (Sir R. Howell) but to other hon. Members who have not followed the subject as closely as others have.
The second point openly acknowledged in the report is that the Committee has listened to the vigorous arguments and objections that have been levelled at the new rule by colleagues who are members of Lloyd's. The hon. Member for Heeley referred to that fact. Some will say that we were wrong to do that, because it sets a bad precedent. They say that in future Members who find a certain rule of registration troublesome will have only to complain loudly enough and the Committee will change it. That anxiety was expressed by members of the Committee when we discussed the issue, and I want hon. Members to know that I understand their fears. However, in this case I prefer the phrase used by my hon. Friend the Member for Torbay (Mr. Allason) in evidence to the Committee when he referred to its willingness to see "sweet reason".
The Committee certainly does not accept all the criticisms levelled both at us personally and at the new rule. In particular, we do not accept the idea that the new rule was to blame for the speculation in the media about the financial losses of individual Members. The financial and legal problems affecting Lloyd's have led to that speculation, and I fear that they will continue to do so, irrespective of any change that we may make tonight. If the rule is to blame for the speculation, why have those who have complied with it also suffered from speculation--even more than some who have not complied, it could be argued ?
Column 1122Nevertheless, the Committee acknowledges that information about syndicate numbers can be misused, because by combining information from the register about a Member's syndicate participation with information available at Lloyd's about the performance of each syndicate, it is possible to speculate about the financial position of individual Members.
Speculation on the basis of that information alone is bound to be wildly inaccurate, because no information is published about a name's financial commitment to any syndicate, or about any stop loss policies that he may have. It is important for us all to remember that we do not want the register to be used as cover for such misuse. It was never intended to provide detailed information about Members' personal wealth or poverty. The rules have always sought to strike a balance between the right of the public to know about the outside financial interests that may influence the conduct of an elected representative and the right of that individual Member of Parliament to a reasonable degree of personal privacy.
I accept what the Lord President of the Council said in opening the debate- -that, although it was not the original intention, in the context of MAPAs the rule has inadvertently upset that balance. That is the other main reason for changing it.
I now refer to section 1 of the report and to the 11 hon. Members who have not complied with the existing rule. Paragraph 7 makes clear the Committee's view of their conduct. In recommending the change of rule, the Committee is not condoning that conduct. Speaking personally, I think that I was more influenced by the reasoned letters and representations I received from members of Lloyd's who had complied with the recommendations of the Committee.
The arguments in favour of changing the rule outweigh the danger that we may be represented as having given in to a campaign of non-compliance. There is another important reason. We who serve on the Committee recognise that our prime duty is to uphold the integrity of the Committee so that it may continue to enjoy the confidence of the House. That confidence depends on our being fair and reasonable. I hope that the House will accept that we have been both and will approve the motion.
Mr. Peter Hain (Neath) : In supporting the amendment, I must tell the House that I believe that the Committee was, unfortunately, sold a pup by Lloyd's in the representations that were made to it. I say that with no lack of respect for the Committee members and certainly I have considerable respect for the hon. Member for Wealden (Sir G. Johnson Smith). It is simply a fact that Lloyd's, with a great deal of sophistry and a great deal of self-interest within the House, persuaded the Committee to adopt a course that was fundamentally wrong.
It is appropriate to note that Lloyd's has been aptly described as the home of unfettered insider dealing. It is unfettered by the House ; it is unfettered by the Department of Trade and Industry ; it is unfettered by the Financial Services Act 1986 ; and it is unfettered by effective rules of its own. It is effectively a law unto itself. It is important that, as hon. Members have discretion to choose which syndicates they belong to or leave, their membership of syndicates should be disclosed. If they are members of unit trust arrangements, called the members'
Column 1123agent pooling arrangements--MAPA--those should be named as well. Disclosure provides a natural deterrent to any allegations of insider trading. It is particularly important that that membership is publicly known because that deterrent can then be exercised. That point is especially important against the background of the recent controversy within Lloyd's. It has been alleged that hon. Members and others who have been insider traders with Lloyd's have been given preferential treatment while other external names, who have often been driven to destitution, bankruptcy or even suicide, have had all the losses from the catastrophic syndicates dumped on them, often as a result of certain members being taken off duff syndicates and other more gullible members being pushed on to them, or as a result of the losses being paid or credited in return for improper secret political influence.
The knowledge that such transactions show up because syndicate members have to be revealed in the Register of Members' Interests is a deterrent to that -- [Interruption.] Hon. Members may scoff. There is a central contradiction that they cannot duck. Of the 51 Conservative Members who are Lloyd's names and who, I believe, have cumulative losses totalling £22 million, none has suffered destitution, bankruptcy or the tremendous losses that other external names on exactly the same syndicates with exactly the same lines in them have suffered. The Committee should have brought its attention to bear on that contradiction by maintaining syndicate registration. The argument has been made that it is somehow an intrusion of privacy to disclose such information. If one has a copy of the Lloyd's blue book--it is not too difficult to obtain and every insider in the market has access to it--it is easy to determine on which syndicates hon. Members or any other Lloyd's names are placed. It is quite easy to determine that from inside the market. The question that the House must answer is why it is being denied that knowledge. Why are the public, through the House, being denied that knowledge because of the way in which the Committee is taking those rights to knowledge away from them ?
It has been suggested by Lloyd's--the Committee has bought the argument-- that it would convey sufficient information to satisfy the principles of disclosing hon. Members' pecuniary interests if they declared to the register the various types of insurance business that their syndicates wrote in that name.
That might seem reasonable at first glance, were it not for the fact that the ability of Lloyd's to categorise insurance business--I refer to the businesses listed in the annexe to the report--is notoriously unreliable, as well as being uninformative ; it is recognised as such in the market. Lloyd's in fact ceased allocating the main categories of insurance for each syndicate in 1991. The traditional allocation of the four categories of marine, aviation, motor and non-marine has broken down. Lloyd's realised that so many supposedly marine syndicates were, in fact, writing non-marine and aviation business, often at crazy rates half the size of those quoted by the normal aviation syndicates. As it had less and less true marine premiums coming in, Lloyd's realised that its categories were becoming a total farce. Lloyd's has
Column 1124apparently sought to re-present that worn out farce in this context and it is regrettable that the Committee has accepted its argument. It is also important that we recognise that it does not necessarily matter which syndicate an hon. Member has been in in any one year. It is equally important to be able to identify whether an hon. Member has been removed from a particular syndicate, perhaps just before a year in which it incurred particular losses. I shall return to that point.
The ability to compare one year's membership of a syndicate with the next year's is absolutely essential if we are to see whether any insider trading is going on and whether hon. Members are being treated in a preferential way as compared with other Lloyd's names. That is essential because there have been thousands upon thousands of huge claims from all over the world in connection with asbestos and pollution against some Lloyd's syndicates, which have been concealed from Lloyd's insiders and from ordinary investors since 1981. Those claims have not been settled ; nor have they been withdrawn. In many instances, the original syndicate members, sometimes true insiders on so-called baby syndicates, to which I shall refer in a minute, have managed to pass the liability on to new names who are not, as it were, as in on the game as those insiders who have rigged it for themselves.
Some hon. Members--not necessarily with their knowledge--have been removed from a particular syndicate the year before part of a large liability has been unveiled. There are at least three hon. Members of this House--I have notified them in the proper way, as required by the protocol of the House, that I shall refer to them in the debate--who are on preferred or so-called baby syndicates.
Mr. Roger Knapman (Stroud) rose
Mr. Hain : A baby syndicate-- [Hon. Members :-- "Give way."] A baby syndicate-- [Hon. Members :-- "Give way."] No, I am not giving way at this point. A baby syndicate has been likened to a baby kangaroo. The insiders involved in running a larger syndicate often set up a small one out of the profits of the larger syndicate.
Mr. Knapman : On a point of order, Madam Speaker. Half the hon. Gentleman's speech seems to have suggested that we have received preferential treatment and the other half that we have lost £22 million. Is it possible that the hon. Gentleman is not making any sense at all ?
Sir Gerard Vaughan (Reading, East) : Further to that point of order, Madam Speaker. Is it in order for the hon. Member for Neath (Mr. Hain) to imply that a number of us have been engaged in some kind of insider dealing ? If that is so, it is a very great reflection on some of us.
Madam Speaker : The hon. Member for Neath said that he would mention names, but that he had already let the Members concerned know that he was going to raise the matter. Is that quite clear ? I have already been deceived once today in this House on that matter. Do I understand that the hon. Gentleman has informed Members ?
As I was saying, a baby syndicate has been likened to a baby kangaroo. The insiders involved in running the larger syndicate often set up a smaller one that is run out of the pocket of the larger one.
There are many who have been badly hit by the shenanigans within the Lloyd's market. It has been difficult to expose that, not least because of the vested interests in the House. Those interests have prevented disclosure of what has been going on. Typically, there have been over 1,000 ordinary investors on the large syndicate and only the main underwriters, fellow directors and their families and friends on the preference baby syndicate. They have relied on the large syndicate being run by the same underwriter to cream off profits properly due to the members of the larger syndicate and divert them to the baby syndicate. That is important in the context of the debate.
Three Members were on three separate preference baby syndicates over the past seven years. One such was on syndicate 728, which was preferenced out of the coffers of syndicate 658. The best business was channelled into the preference syndicate, the baby, which made £1.5 million for every £1 million channelled into it in 1982. Both the hon. Members for Erith and Crayford (Mr. Evennett) and for Lincoln (Mr. Carlisle) were favoured in the preference syndicate over a number of years. I do not say that that was with their knowledge. I do not say that they were consulted about it. I am making no allegation to that effect.
Mr. David Evennett (Erith and Crayford) : On a point of order, Madam Speaker. I was not advised by the hon. Gentleman that he would mention my situation. I think that he has breached the protocol of the House.
Madam Speaker : The hon. Member knew precisely that the debate would take place today. He knows also that the board closes at 10 o'clock. He might have made better endeavours than he has to inform the Members that he is now naming. I would suggest that he proceeds with great caution and care because he has not taken care to inform the Members that he is about to name.
As I was saying, I am not alleging that any individual Member knowingly found himself or deliberately placed himself on preferential baby syndicates. I believe that those responsible in the Lloyd's market-- members' agents and others responsible for running the market--have deliberately ensured that no Member was bankrupted or suffered the enormous losses that other external names suffered. Therefore, they were put on preferential baby syndicates and given preferential treatment in other ways. There are a number of examples.
Mr. David Ashby (Leicestershire, North-West) : On a point of order, Madam Speaker. The hon. Gentleman has said that no Member, as a member of Lloyd's, has not been put in a baby syndicate. I have no knowledge of baby syndicates and I have never been in a baby syndicate.
Let us take the case of Lord and Lady Archer. They were on syndicate 162 and the Sturge syndicates, 206 and 209, which had concealed asbestosis claims for several years until eventually the claims and the resulting losses were disclosed in 1990. However, both Lord and Lady Archer came off syndicates 206 and 209 before the worst happened. Had they remained on them, along with all the uniformed members, they would have been asked to pay £63,116 with an expected further deterioration of £206,750. That is calculated from the Chatset guide to syndicate run-offs
Sir Anthony Durant (Reading, West) : On a point of order, Madam Speaker. This is not a debate about Lloyd's ; it is a debate about the Register of Members' Interests. We are wandering far from the register. It is not for me to offer guidance, but I believe that we are now a long way from the register.
Madam Speaker : I take the hon. Gentleman's point, which I believe is genuine. I cautioned the hon. Member for Neath about what he has to say. He might look at the motion on the Order Paper and refer to it rather more often than he is doing.
The right hon. Member for Old Bexley and Sidcup (Sir. E. Heath) has been on syndicate 573. Had he remained on that syndicate, he would have suffered a further loss of £20,652 with an additional deterioration, as estimated under the Chatset league tables, of £37, 500. Most fortunately for him, he was advised to come off in time. If we consider the case of the hon. Member for Colne Valley (Mr. Riddick)
Mr. Nigel Evans (Ribble Valley) : On a point of order, Madam Speaker. I thought that you had ruled that, because the hon. Member for Neath (Mr. Hain) had put the notices on the board after 10 pm, he should proceed with caution. He has just mentioned another Member of this House.
Column 1127time. He has mentioned another Member who has not presumably been informed because the Members concerned have received no information from the hon. Member for Neath that he was to raise these matters. If the hon. Member for Neath has not informed those Members, he is in breach of our procedures. I ask the hon. Gentleman to refer to the motion, which refers to the Register of Members' Interests, and not to individual cases.
Mr. Hain : You will advise me if my interpretation is incorrect, Madam Speaker, but I think that the amendment, which I support, moved by my hon. Friend the Member for Sheffield, Heeley (Mr. Michie), refers to the fact that syndicate details should still be declared in the register. If it is no longer possible to list the syndicate numbers, all sorts of problems will arise, not least the failure to address exactly what has been happening in the Lloyd's market. That is why I am giving examples to support my case and to show why that is so important.
Madam Speaker : Order. The hon. Member for Neath is moving very far from the point that he is really making. I hope that he will come to order and make his points correctly for the remainder of his address.
Mr. John Marshall (Hendon, South) : On a point of order, Madam Speaker. This debate is meant to deal with the Register of Members' Interests. Are Mr. David Rowland and Lord Archer Members of this House ?
Madam Speaker : I am sure that the hon. Member for Neath has now strayed very wide of the motion. He has taken a great deal of interest in the subject over many months and I am therefore sure that he is quite capable of speaking to the motion before the House. I ask him to do that now or I shall have to take action against him. I am giving the hon. Gentleman every opportunity. As I have said, the hon. Gentleman has been interested in the subject for many months. He should now be quite capable of speaking to the motion and the amendment on the Order Paper.
Mr. Hain : If you will forgive me and advise me, Madam Speaker, I will continue, if you will allow me, to address the House. Whether or not I have presented the case as adequately as I could have is a matter of judgment, but the House is refusing to face up to the fact that out there, in the Lloyd's market and among the public, is a well-founded suspicion that Members of the House and their friends in the Lloyd's markets have protected themselves against incurring the huge losses that would have resulted in bankruptcy and, in the case of hon. Members, their removal from the House. That is my central charge.
It is important that syndicate membership should still be required to be stated under the rules of the House--a
Column 1128requirement that my hon. Friend's amendment seeks to restore. If that information is not available for public inspection and the House's policing, all sorts of insider trading and deals whereby Members and others are placed on baby syndicates and given preferential treatment will become the norm. The House will be unable properly to scrutinise the matter because it will be shrouded in the mystique and mystery and the complications and complexity that surround the Lloyd's market. That is my central charge.
As you, Madam Speaker, have rightly said, I have sought diligently and honestly to address the issue over a number of years. In a number of ways my attempts have been thwarted. Tonight I have sought to draw the attention of the House to the fact that a number of Members have been preferentially treated. I have mentioned some of them. If I am to be prevented from mentioning others, I accept your guidance and ruling on that, Madam Speaker. I certainly do not wish to be ruled out of order.
There are still a large number of Members who are Lloyd's names and who have been given preferential treatment-- [Hon. Members :-- "Name them."] I would have preferred to carry on and give the details, but it has not been possible for me to do so. The House does itself no credit by introducing--through the Select Committee's procedures and under the rules of the register--new requirements for disclosure, then when it becomes clear that those requirements for disclosing syndicate membership are revealing to the public all the insider trading that has been going on
Mr. Campbell-Savours : On a point of order, Madam Speaker. May we have a ruling on something which is quite significant ? You ruled that my hon. Friend the Member for Neath (Mr. Hain) cannot proceed in the way that he wishes. Are we to presume that in future debates we can no longer refer to the personal circumstances of individuals when we are advocating a general case, in principle, on an issue ? Are we now to be precluded from that
Mr. Campbell-Savours rose
Madam Speaker : Order. Sit down. The hon. Gentleman must resume his seat. I can answer him. No, that was not my ruling. My ruling was that an hon. Member should inform another hon. Member when he or she is to be mentioned. In this case, the information was placed on the letter board at about the time that it was to close. That is why I said that it was not just to refer to individual Members because they had not been informed. That was the ruling that I gave.
Mr. Campbell-Savours : Further to that point of order, Madam Speaker. Are we to presume that this is now to be a rule ? Are we to presume that unless an hon. Member has placed notice of reference on the board an hon. Member cannot make a reference ? I understand that that is a new movement--previously, it was custom and courtesy to do so. Is it now a rule ?
Madam Speaker : I believe that it is the custom and courtesy of the House, particularly when a motion on the Order Paper has been there for some time and an hon. Member knows that he or she wishes to speak, for that hon. Member to give ample warning to those hon. Members to
Column 1129whom reference is to be made. That is common courtesy. It is because that courtesy has obviously not been shown today that I believe that it is correct, right and in accord with natural justice--which is what I am concerned about--that those hon. Members should not be mentioned.
Mr. Campbell-Savours : Further to that point of order, Madam Speaker. The ruling that we are given now is very important. A precedent is being set tonight-- [Interruption.] It is--a precedent is being set because a rule is being defined. I do not object to the point that you make, Madam Speaker. I understand precisely what you are saying. My point is that you are now saying that in future, if we do not comply with the custom, practice and courtesy, we will not be able to raise matters. That is a rule.
Madam Speaker : I have not said that at all. If the hon. Gentleman will look at Hansard tomorrow, he will see clearly what I have said. I hate repeating myself, but I have said that it is the custom and courtesy of this House for an hon. Member, when referring to other Members, to let those Members know. In this case, the motion was on the Order Paper some time ahead. The hon. Member for Neath knew that he wished to speak on this matter. Therefore, it was incumbent upon him, in all natural justice, to inform those Members. The hon. Member for Neath
Mr. Hain rose
Madam Speaker : Order. I am on my feet. The hon. Member for Neath waited until almost 10 o'clock, as he said himself-- [Hon. Members :-- "After."] Order--when the letter board was about to close before he did that. Therefore, in natural justice it is correct that those hon. Members who have not been informed that they would be referred to should not be referred to.