§ I have another statement to make that is a little more interesting to the Committee than some of those I have had to make. As it is not quite so relevant to the Budget, I ought to ask permission, which I know will be readily given, to deal with it very shortly. It is a matter in connection with the Special Areas. There have been suggestions frequently made, particularly in the Report of the Commissioner for the Special Areas, that the development or the establishment of small businesses there was being hampered for the lack of the necessary finance. It was suggested that the difficulties in this connection ought to be surmounted by some special remedies or devices. On the other hand, it has been argued on good authority that if there is any difficulty about financing small businesses, it is not due to any backwardness on the part of financial interests, but rather to the difficulties that are inherent in the situation. It is said that there would be ample financial backing for any promising industrial enterprise even if it were situated in the most severely depressed area, and that if that financial assistance had not been forthcoming it was not because people were exaggerating the financial risks but because in fact the risk was greater than would be accepted in the ordinary course of business by financial concerns.
§ Where there is such a conflict of opinion as that, it is not necessary for me to express my own view except to say that I think this is eminently a case where it is desirable to experiment. Accordingly, arrangements are being made for the formation of a company called the Special Areas Reconstruction Association, Limited, with a nominal capital of £1,000,000 and with the special function of financing small businesses, either existing or to be formed hereafter, in the Special Areas. It is intended that 52 the company shall work in the fullest co-operation with local and other authorities or institutions like development councils, banks, and insurance and finance companies. There will be in each area a local board and an office for the purpose of collecting applications and assisting in their examination. As the company is to be experimental in character, its life will be limited to 10 years, and as it is intended that it shall deal with small businesses, it is proposed that as a general rule advances will be limited to a maximum of £10,000 in the case of any one loan. No capital will be subscribed by the State, but State assistance will be given in the form of a contribution towards management expenses and of a guarantee against losses amounting roughly to 25 per cent. of the total loans which have been issued. Provision will be made for relending the capital over and over again so long as time permits and as long as there is a supply of suitable cases, so that it is not possible at this stage to estimate the total loss that might be sustained by the State, but in any case it cannot exceed £1,000,000.
§ The purpose of this company will be to finance businesses where the risk is such as would not be undertaken at this stage by ordinary financial concerns, but, in spite of that, the profits of the company are to be limited. I hope that we may be allowed to submit a Resolution on this matter on Thursday after the Budget Resolutions have been dealt with. When the Resolution has been obtained, a separate Bill will have to be introduced to regulate the necessary relations between the Treasury and the new company, and if the Measure has, as I hope it will have, the good will of all parties in the House, it should be possible for it to be passed into law by Whitsuntide.