The two debates in the house about the issue can be found online for those curious.
http://hansard.millbanksystems.com/commons/1956/mar/28/malta-legislation
http://hansard.millbanksystems.com/commons/1958/apr/01/malta
And here's a quote by a historian on it
'The first concern was defense policy. The War Office had long considered Malta an important source of power projection in the Mediterranean and they were leery of relinquishing control. In the last war, the island had been christened "Fortress Malta" and the British used the colony to torment the Axis in both Italy and North Africa. The War Office was also loathe to give up Malta because of other regional concerns: Gibraltar was the gateway to the Mediterranean, but far from flashpoints. Cyprus could provide coverage, but the Greeks had long clamored for
enosis. Malta would offer the best chance for comprehensive defense.
The second concern was economic policy. While Malta was reasonably prosperous, it had been unable to cover its own costs for centuries. The island had long relied on aid from foreign powers since its demise as a serious trading outpost, resulting in a population tethered to the defense industry. The incompetent actions of the Maltese Government were also of some concern. Despite having inherited a budget with no debt and a £20,000,000+ surplus from the Colonial Office in 1950, the local authorities consistently overspent a great deal of money in order to ensure popularity with voters. When the island wasn't teetering on the brink of bankruptcy, it was begging Whitehall for aid, leading the Home Office to ultimately conclude that dominion status was impossible.
Dom Mintoff was the first politician to seriously advocate for an integrationalist option. Earlier discussions had toyed with the idea of Malta joining the United Kingdom, but with a status akin to a crown dependency like Jersey or Man. This solution pleased no one. The 1955 Round Table Talks changed that by introducing a novel concept: a full integration into the United Kingdom. Malta would have home rule but, uniquely, would also return a Member of Parliament to the House of Commons in Westminster. In this respect, Malta would resemble Northern Ireland which had both a local legislative assembly and national representation.
Various members of HM Government had a split reaction to Mintoff's proposal. Macmillan was elated. Lennox-Boyd was not. The Round Table Talks certainly appealed to British patriotism but at a cost: the United Kingdom would, in essence, be spending even more in Malta than it had already once the island joined the nation's social welfare schemes. Mintoff's overture was therefore not one of loyalty to the Crown but of very clever financial pragmatism. Negotiations lasted until 1958, but the £5,000,000 debt ceiling ultimately skewered the deal. By 1960, the defense landscape had changed and the British simply found no benefit in going into debt over Malta.'