HC Deb 22 April 1937 vol 322 cc2050-81

11.0 p.m.

Mr. Harold Macmillan

; I beg to move, in page 2, line 4, to leave out "reasonable."

This is the Clause that under the Special Areas Act lays dawn the power to the Commissioners to do what they have not been able to do under the preceding form of administration. The Clause provides that it will be the duty of the Commissioners to arrange that any leave granted under the Section shall produce a return as nearly as may be equivalent to a reasonable rate of interest. I put down this Amendment for the purpose of ascertaining if I can from the Minister concerned what he regards as a reasonable rate of interest. The Minister among his very various qualifications is an authority upon labour, an authority upon rating, and I hope in his reply to-night he will show that he is an authority on monetary policy. But this expression, "a reasonable rate of interest" appears to be a very vague one. We have just been listening to the Debate on the Finance Bill, and I have no doubt we have in the course of that Debate heard what in certain circumstances is a reasonable rate of interest on capital, and I only want to know how this is intended to operate?

It would be interesting to know what is the meaning of this term. It seems to me that if it is put forth as it stands now it is a very vague expression capable of great discussion and great definition, and therefore I think we should have some explanation from the Minister as to what he means by this expression. How does he interpret it? I take it that it can only be related in some way to the principal value of money. We shall have a great discussion upon what might be regarded as a reasonable return on speculative money, but here we are dealing with what might be called gilt edged money borrowed on Government account and with Government security. Therefore, in a reasonable return we are not entitled to take into account the speculative character of the investment but merely the money rate ruling at the time. They may be a period of low money value or there may be a period of high money value. We have passed in the last 10 years from a high money to a low money period, and I wish to try out the experience by what is the current monetary policy as expressed by the Bank of England. The normal banking method, the normal charges made by joint stock banks upon overdrafts and upon loans has been from time immemorial tied up to the Bank of England re-discount rate for the time being, and I hope that either the Minister will see his way to accept the Amendment or to give some explanation of this term "reasonable rate of interest."

It is one of those terms which sound well, but it seems to me that if tested at the courts it would present very great difficulties to those who had to interpret it, and it would be much wiser if it were the rate of money at which the Government can borrow, or the rate on which the joint stock banks are prepared to lend on the best possible security. We ought to say what we mean. The Bill already has a great deal of obscurity in it and a number of rather vague terms are to be found in the later Clauses. I put forward the Amendment in order that we may have, what I have no doubt the Minister is prepared to give, namely an explanation of what the term means and how it may be expressed in the fluctuating values of money and also whether there is to be some definite relation between the monetary policy of the Government from time to time and the rents to be charged to the undertakings covered by this Clause.

11.6 p.m.

The Minister of Labour (Mr. Ernest Brown)

I think my lion. Friend has read more into this proviso in the Clause than it contains. What it seeks to do is to secure that, in the operation of the new powers of the Commissioner under this Clause, there shall be no subsidy given to any of the undertakings. The answer to my hon. Friend, with regard to the method which the Commissioner will adopt, is that he will in assessing the rent have regard to the rents charged by the trading estates or by other owners for factories of similar types in the areas concerned. My hon. Friend's two Amendments seek to define the rate of interest on which the Commissioner is to base the rent. Two questions are involved in that proposal. The first is whether it is desirable or practicable to provide a maximum rate of interest or whether it is better to leave the matter as it is in the proviso. The second question is whether, if it is desirable to fix a rate, the rate which my hon. Friend proposes would be the appropriate rate. Let me state the considerations which I would urge on the Committee in asking them not to accept the Amendments but to abide by the proviso as it is. The Committee will agree that it would be impracticable to prescribe a maximum rate of interest in connection with a process of this kind. The rate will be bound to vary according to a number of circumstances, such as the type of factory, the period of the lease, the allowances to be made for "voids" or empties and repairs and the actual expenditure incurred in setting up the factory. There will be, of course, many types and grades of factories to be provided for the purpose of getting new industries in the area by the new and unorthodox power given under this Clause to the Commissioner. Therefore it would scarcely be practicable to deal with a variety of conditions of that kind in the fixed, rigid and arbitrary way which my hon. Friend proposes.

With regard to the second point, surely my hon. Friend will agree that it would be inappropriate in a case of this kind to prescribe a maximum in terms of the bank rate. It is a method which would be appropriate in cases where the rate is wanted for short terms, but in an operation of this kind the capital is locked up in factories and immobilised for a term of years and possibly for a very long term. I would suggest to him for his consideration that a far better comparison as regards rate of interest would be that obtainable from investments at a long-term rate. We wish to give the Commissioner a free hand in this matter so that the best results can be obtained in the promotion of industry in those new areas. I would ask the Committee not to accept the Amendment but to retain the proviso as it is.

11.11 p.m.

Mr. H. Macmillan

The arguments my right hon. Friend the Minister of Labour has put forward are not applicable to the terms of the Proviso. He says that all sorts of things are to be taken into account such as the kind of factory, the length of the term of the lease and long or short-term interest. But the words stated in the proviso are "a reasonable rate of interest on the sums expended." That has nothing to do with the length of the lease. It does not relate to any of those considerations which the Minister has mentioned. There is nothing in the proviso about long or short-term credit or all those interesting monetary considerations which my right hon. Friend has advanced with his usual force. I want to make sure that it is the intention that the rent charged shall be a rent in conformity with the lowest rate at the time.

11.13 p.m.

Sir Stafford Cripps

This illustrates the dangers of rushing ill-considered legislation through this House without any proper opportunity for consideration or amendment. From what the right hon. Gentleman the Minister of Labour has said he does not appear to have the least appreciation of what is contained in the Clause and the hon. Gentleman who proposed the Amendment equally seems to have misunderstood. There are really two matters in this proviso. The rent reserved by any lease granted has got to be such as will produce a return. There is the rent reserve and the return. In arriving at the return, one would no doubt take into account and deduct from the return such things as the right hon. Gentleman suggested—allowances for empties, the amount to be spent on repairs and various things of that sort; but having deducted them, the Commissioner then has to say—and he must do it, because the word in the Clause is "shall"—whether that return which he so calculates will be as nearly as may be equivalent to—what? To a reasonable rate of interest on the sums expended by him in providing the factory. The reasonable rate of interest has regard to the money expended by him in providing the factory. What we naturally want to know is what is to be considered as a reasonable return upon the money expended by him in providing the factory. Of course, the word "reasonable" does not mean anything. It merely means that the Commissioner may charge whatever he likes. The Commissioner is the sole judge, and whatever he likes to say is reasonable, is reasonable.

I suggest to the right hon. Gentleman that there should be some much closer definition than that when one is dealing with the proper rate of return upon money provided by the Commissioner. It is that which, in fact, is being dealt with here. Clearly it should be dealt with in terms which will define it by the rate of interest above that which is paid by the Government upon the money supplied to the Commissioner—how much more interest he may charge than they are paying. That is a reasonable criterion, because it would then measure the amount that he would be able to make by interest on this investment, having already, before arriving at that rate of interest, made all the proper allowances from the rent merely to reduce it to a rate of interest on the money to be invested. I hope the hon. Member will not withdraw his Amendment unless a satisfactory answer is given by the right hon. Gentleman.

11.18 p.m.

Mr. James Griffiths

The right hon. Gentleman spoke very quickly, and I think the Committee would find it convenient if he would speak more slowly when explaining these matters. I wish to put a question to him in an attempt to bring some order into this matter. I presume that among the factories so to be let by the Commissioner will be the factories set up in trading estates, and that therefore the term "voids" which he used may refer to a trading estate in which there is a number of factories. I gather that, taking a trading estate where there is a number of factories, if some of the factories are let, the charge is to be passed on as part of the rent for the factories that are left, and that there is no possibility of one factory being let in a trading estate, and the man who takes that factory having to bear as part of his rent the charge for two or three others that may be empty. The rent is to be limited to the money expended by the Commissioner in providing the factory. He provides the trading estate. If he provides four factories and one is let, the amount of money expended in providing that factory includes money spent in providing the whole of the estate and the whole of the services of the estate. The right hon. Gentleman should state more clearly what is meant by "empties" and "voids" in regard to passing on that charge to the factories that are left.

11.21 p.m.

Mr. Shinwell

May I draw the right hon. Gentleman's attention to the several operations contained in this Clause? It is intended that the Commissioner should expend sums in providing factories. That is the first transaction. He then has to fix a rent. Following on that, he has to anticipate a return on the money expended, and he fixes a reasonable rate of interest. That being so, it having a simple operation, is there any reason why the right hon. Gentleman should demur from fixing an arbitrary rate? If he refuses that proposition it is clearly left to the Commissioner in his own discretion to fix what interest rate he pleases. The transaction must be the same in every case, irrespective of the size of the factory, its location, the rent to be charged and the amount to be expended. These factories do not affect the amount of interest to be charged. Why should there be any vagueness? Why should the matter be left in the discretion of the Commissioner? The intention behind this Clause, as it is the intention behind several other Clauses, is to provide a sufficient inducement to manufacturers to occupy factories on these estates. Is it a sufficient inducement to manufacturers if they have to take account of varying rates of interest. Surely it is a much better inducement if they know the rate of interest and the rent they are called upon to pay having regard to the amounts spent by the Commissioner in the first instance. The intention of the hon. Member for Stockton-on-Tees (Mr. H. Macmillan) is that the rate should not be fixed in a reasonable sense, which means that it will be within the discretion of the Commissioner and may be subject to many con- siderations which are entirely irrelevant to the main purpose of the Clause, but to fix a rate which is not too high to deter manufacturers from occupying these factories. In these circumstances, because the Clause is badly worded, because too much discretion is left to the Commissioner, and because it is desirable that manufacturers should have some definite knowledge of the rates of interest, the Amendment is a reasonable one.

11.25 p.m.

Mr. E. Brown

Surely the arguments of the hon. Member are contrary to the whole of the arguments which have been put forward by hon. Members opposite for the last two years. The argument has been that the powers of the Commissioner were too circumscribed and limited, that he had to go to this, that and the other Government Department—to the Ministry of Transport, to the Ministry of Labour and to the Treasury—and in consequence was not able to get on with the work. It is to meet that case that this Clause has been drafted—and not only this Clause, though I must not widen the scope of the discussion, because I do not wish to obstruct the passage of my own Bill, having had too much practice in that as a private Member. The hon. and learned Member for East Bristol (Sir S. Cripps) was well aware of the force of my contention, because he not only said in his cheery way that the Minister did not understand the proviso but that the Mover of the Amendment did not either. The whole purpose of drafting the Bill in this way is to do the very thing which the House has asked for over and over again, to make quite sure that the Commissioner has discretion, as he has under some Clauses about the rates and taxes, to use his judgment in a reasonable form to get the best results. It might be that the judgment of the Commissioner as to what is necessary to attract an industry in one place would be quite different from what it would be in another place within the same part of the Special Area. I have already pointed out with regard to the Commissioner getting a reasonable rent, what the hon. and learned Member admitted by implication to be accurate, that he would have to have regard to the varying factors which I mentioned in my reply. I would say in reply to the hon. Member for Llanelly (Mr. j. Griffiths) that this Clause does not affect or control the rent charged on the trading estates, be- cause it applies only to factories let direct by the Commissioner. It gives him a power which he has not had under the existing law. To arrive at what is a reasonable rate of interest on the sums expended regard must be had to the considerations which I have mentioned, and the Government came to the conclusion that the best way to exercise this unorthodox method of inducing industries to go to individual factories outside the trading estates was to give the Commissioner discretion to act. As the courts have been able to construe the word "reasonable" in hundreds of Acts of Parliament it can also be construed in this case and the Commissioner will be able to use the proviso wisely to get the best results.

Mr. Attlee

The right hon. Gentleman has proved too much. He has now shown that the proviso is unnecessary and if he wishes to give a free hand to the Commissioner he had better leave it out altogether.

11.30 p.m.

Mr. Maxwell Fyfe

The problem with which the proviso deals is not unanalagous to the problem which the hon. and learned Member for East Bristol (Sir S. Cripps) must have had to consider many times—the problem in an ordinary rating case of defining annual value where, because there is difficulty in getting comparisons of premises, one has to deal with it by substituted premises or the contractor's test. There one finds the figure, as the hon. and learned Gentleman knows, of the value of premises equivalent to those which have been considered. The problem before the Commissioners is to find the rent reserved, and they have to consider other premises. They have to consider the sum to be expended to provide factories. In order to get a return they have to consider what is a reasonable rate of interest on that sum.

I cannot agree with the arguments of the hon. Member for Stockton-on-Tees (Mr. H. Macmillan). In considering the ordinary rating problem, when you have found the value of the equivalent

premises, you then have to consider what would be the rate of interest on the value of these substituted premises. That is an every-day calculation which is done by the rating committee of the court of sessions. They arrive at that rate of interest by considering what sum a person who was putting up the money to pay for the substituted premises would have in mind. The factors which we have in mind are exactly those which have been mentioned—length of lease, chances of the place by occupied and the like.

If, instead of reasonable interest, one were to put it the other way, as to how many years' purchase anyone who was making this investment would want for his money, the problem becomes an easy one. When you have found the number of years' purchase, divide 100 by it and get your rate of percentage. Doing that is merely a short way of saying that you have considered all the relevant factors which I have already mentioned, and the general chance of the investment being a success. The Commissioner, taking the sum advanced as that with which he starts, arrives at what he considers a reasonable sum. I must respectfully point out the difficulty which the hon. Member for Stockton-on-Tees has introduced into the word "reasonable". In the view of members of the public, lawyers create difficulties, but "reasonable" is not a difficulty; it is their sheet anchor. But for the reasonable man, our Common law would have come to an untimely end years ago. The whole conception of English liberty depends upon what the view of the reasonable man would be. I ask the hon. Member to consider this Amendment either from the point of view of the practical problem dealt with in the day-to-day work in the courts, or from the point of view of the word which we lawyers hold in the very greatest respect.

Question put, "That the word 'reasonable' stand part of the Clause."

The Committee divided: Ayes, 179; Noes, 89.

Division No. 148.] AYES. [11.34 p.m.
Adams, S. V. T. (Leeds, W.) Baldwin-Webb, Col. J. Bower, Comdr. R. T.
Agnew, Lieut.-Comdr. P. G. Balfour, G. (Hampstead) Bowyer, Capt. Sir G. E. W.
Albery, Sir Irving Balfour, Capt. H. H. (Isle of Thanet) Boyce, H. Leslie
Allen, Lt.-Col. J. Sandeman (B'kn'hd) Barclay-Harvey, Sir C. M, Bracken, B.
Allen, Lt.-Col. Sir W. J. (Armagh) Baxter, A. Beverley Braithwaite, Major A. N,
Anstruther-Gray, W. J. Beaumont, Hon. R. E. B. (Portsm'h) Brass, Sir W.
Apsley, Lord Bird, Sir R. B. Brown, Rt. Hon. E. (Leith)
Aske, Sir R. W. Bossom, A. C. Bullock, Capt. M.
Assheton, R. Boulton, W. W. Campbell, Sir E. T.
Astor, Major Hon. J. J. (Dover) Bowater, Col. Sir T. Vansittart Gary, R. A.
Castlereagh, Viscount Haslam, H. C. (Horncastle) Ramsbotham, H.
Cazalet, Thelma (Islington, E.) Haslam, Sir J. (Bolton) Rankin, Sir R.
Cazalet, Capt. V. A. (Chippenham) Heilgers, Captain F. F. A. Rathbone, J. R. (Bodmin)
Chamberlain, Rt. Hn. N. (Edgb't'n) Hepburn, P. G. T. Buchan- Reid, W. Allan (Derby)
Chorlton, A. E. L. Herbert, A. P. (Oxford U.) Remer, J. R.
Churchill, Rt. Hon. Winston S. Herbert, Major J. A. (Monmouth) Rickards, G. W. (Skipton)
Clarke, Lt.-Col. R. S. (E. Grinstead) Holmes, J. S. Robinson, J. R. (Blackpool)
Cobb, Captain E. C. (Preston) Hope, Captain Hon. A. O. J. Ropner, Colonel L.
Colville, Lt.-Col. Rt. Hon. D. J. Hopkinson, A. Ross Taylor, W. (Woodbridge)
Craven-Ellis, W. Home, Rt. Hon. Sir R. S. Russell, A. West (Tynemouth)
Crookshank, Capt. H. F. C. Hudson, Capt. A. U. M. (Hack., N.) Russell, S. H. M. (Darwen)
Crowder, J. F. E. James, Wing-Commander A. W. H. Salmon, Sir I.
Davidson, Rt. Hon. Sir J. C. C. Joel, D. J. B. Salt, E. W.
Davies, G. (Montgomery) Keeling, E. H. Samuel, M. R. A.
Davies, Major Sir G. F. (Yeovil) Kerr, J. Graham (Scottish Univs.) Sanderson, Sir F. B.
Dawson, Sir P. Keyes, Admiral of the Fleet Sir R. Sassoon, Rt. Hon. Sir P.
Doland, G. F. Lamb, Sir J. Q. Scott, Lard William
Donner, P. W. Law, R. K. (Hull, S.W.) Shakespeare, G. H.
Dorman-Smith, Major R. H. Leckie, J. A. Shaw, Major P. S. (Wavertree)
Duckworth, Arthur (Shrewsbury) Leighton, Major B. E. P. Smiles, Lieut.-Colonel Sir W. D.
Dugdale, Major T. L. Lennox-Boyd, A. T. L. Smith, Bracewell (Dulwich)
Duggan, H. J. Levy, T. Smith, Sir R. W. (Aberdeen)
Duncan, J. A. L. Liddall, W. S. Spens, W. P.
Dunglass, Lord Llewellin, Lieut.-Col. J. J. Stanley, Rt. Hon. Lord (Fylde)
Eastwood, J. F. Locker-Lampson, Comdr. O. S. Stourton, Major Hon. J. J.
Eckersley, P. T. Loftus, P. C. Strauss, E. A. (Southwark, N.)
Elliot, Rt. Hon. W. E. Lyons, A. M. Strauss, H. G. (Norwich)
Ellis, Sir G. Mabane, W. (Huddersfield) Strickland, Captain W. F.
Elliston, Capt. G. S. McCorquodale, M. S. Sueter, Rear-Admiral Sir M. F.
Emery, J. F. MacDonald, Rt. Hon. M. (Ross) Sutcliffe, H.
Entwistle, Sir C. F. Macdonald, Capt. P. (Isle of Wight) Taylor, Vice-Adm. E. A. (Padd., S.)
Errington, E. McEwen, Capt. J. H. F. Thomas, J. P. L.
Evans, Capt. A. (Cardiff, S.) McKie, J. H. Thomson, Sir J. D. W.
Findlay, Sir E. Macnamara, Capt. J. R. J. Touche, G. C.
Furness, S. N. Manningham-Buller, Sir M. Tryon, Major Rt. Hon. G. C.
Fyfe, D. P. M. Margesson, Capt. Rt. Hon. H. D. R. Tufnell, Lieut.-Commander R. L.
Gibson, C. G. (Pudsey and Otley) Markham, S. F. Turton, R. H.
Gilmour, Lt.-Col. Rt. Hon. Sir J. Maxwell, Hon. S. A. Wakefield, W. W.
Goldie, N. B. Mayhew, Lt.-Col. J. Walker-Smith, Sir J.
Gower, Sir R. V. Mellor, Sir J. S. P. (Tamworth) Ward, Lieut.-Col. Sir A. L. (Hull)
Graham, Captain A. C. (Wirral) Mills, Major J. D. (New Forest) Ward, Irene M. B. (Wallsend)
Grant-Ferris, R. Morris-Jones, Sir Henry Waterhouse, Captain C.
Gridley, Sir A. B. Nicolson, Hon. H. G. Watt, G. S. H.
Grimston, R. V. Patrick, C. M. Wedderburn, H. J. S.
Guest, Maj. Hon. O. (C'mb'rw'll, N.W.) Peake, O. Williams, H. G. (Croydon, S.)
Guinness, T. L. E. B. Peat, C. U. Wise, A. R.
Hamilton, Sir G. C. Peters, Dr. S. J. Wragg, H.
Hannah, I. C. Petherick, M.
Hannon, Sir P. J. H. Plugge, Capt. L. F. TELLERS FOR THE AYES.
Harbord, A. Ponsonby, Col. C. E. Mr. James Stewart and Commander Southby
Hartington, Marquess of Raikes, H. V. A. M.
Acland, Rt. Hon. Sir F. Dyke George, Major G. Lloyd (Pembroke) Noel-Baker, P. J.
Acland, R. T. D. (Barnstaple) George, Megan Lloyd (Anglesey) Parkinson, J. A.
Adams, D. (Consett) Grenfell, D. R. Potts, J.
Adams, D. M. (Poplar, S.) Griffith, F. Kingsley (M'ddl'sbro, W.) Price, M. P.
Adamson, W. M. Griffiths, G. A. (Hemsworth) Pritt, D. N.
Alexander, Rt. Hon. A. V. (H'lsbr.) Griffiths, J. (Llanelly) Ritson, J.
Attlee, Rt. Hon. C. R. Groves, T. E. Roberts, W. (Cumberland, N.)
Banfield, J. W. Hall, J. H. (Whitechapel) Rothschild, J. A. de
Barnes, A. J. Harris, Sir P. A. Rowson, G.
Barr, J. Hayday, A. Selley, H. R.
Batey, J. Henderson, J. (Ardwick) Sexton, T. M.
Bellenger, F. J. Holdsworth, H. Shinwell, E.
Bevan, A. Hopkin, D. Simpson, F. B.
Brooke, W. Jagger, J. Smith, Ben (Rotherhithe)
Buchanan, G. Jenkins, A. (Pontypool) Smith, E. (Stake)
Burke, W. A. Jenkins, Sir W. (Neath) Smith, T, (Normanton)
Cassells, T. Jones, A. C. (Shipley) Stephen, C.
Charleton, H. C. Jones, Morgan (Caerphilly) Stewart, W. J. (H'ght'n-le-Sp'ng)
Cocks, F. S. Kelly, W. T. Strauss, G. R. (Lambeth, N.)
Cripps, Hon. Sir Stafford Kirby, B. V. Taylor, R. J. (Morpeth)
Daggar, G. Lawson, J. J. Tinker, J. J.
Dalton, H. Lee, F. Watson, W. McL.
Davidson, J. J. (Maryhill) Leslie, J. R. White, H. Graham
Davies, R. J. (Westhoughton) Lunn, W. Whiteley, W.
Dobbie, W. Macdonald, G. (Ince) Williams, E. J. (Ogmore)
Dunn, E. (Rother Valley) McEntee, V. La T. Windsor, W. (Hull, C.)
Ede, J. C. MacLaren, A. Woods, G. S. (Finsbury)
Edwards, Sir C. (Bedwellty) MacMillan, M. (Western Isles)
Foot, D. M. Mathers, G. TELLERS FOR THE NOES.
Frankel, D. Maxton, J. Mr. Harold Macmillan and Mr. A.
Garro Jones, G. M. Milner, Major J Edwards.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

11.43 P.m.

Sir S. Cripps

I cannot refuse the invitation of the hon. and learned Gentleman who spoke last to say a word on the form of this proviso. He sought to liken it to an assessment from rateable value and, of course, it is an absolutely and completely different proposition. Anyone who wished to make the task of the Commissioner similar to that of fixing the rateable value could quite easily have done it but he would have done it in different words. The right hon. Gentleman misrepresented what was my intention and what I thought I said, and what I think will appear in the OFFICIAL REPORT. What the Commissioner has to do primarily is to see that the rent reserved by any lease that he grants is of such a size as in his opinion to produce a return that is equivalent to something. It is obviously the intention of the Clause that the final equivalent of the return shall be something which is a standard, because that is the only standard by which the Commissioner can operate, and presumably it is the intention that a similar standard shall be utilised by Commissioners over the whole country. That is to say, it is not desirable that one Commissioner should consider 5 per cent. a reasonable rate and another 3 per cent. as a reasonable rate in England or Scotland, but that they should both consider the same figure to be a reasonable rate.

It is not really a matter which is intended to be determined by the discretion of the Commissioners as the Clause stands, nor is there any criterion laid down by which one can judge "reasonable." Generally, where you have "reasonable" used there is some criterion by which you are able to judge "reasonable." Looking at this Clause, how is anybody to know what is to be taken into account as regards the rate of interest so as to ascertain whether it is reasonable? Is Mr. Montague Norman to be the test of reasonableness, or is a joint stock bank to be the test, or is the current rate of industrial equity to be the rate of reasonableness? What is intended? If the right hon. Gentleman were giving instructions to the Commissioners what would he tell them as regards judging the rate of interest, which is to be some figure at which they are to arrive? What would he tell them that they are to regard as rent likely to produce a return as nearly as may be equivalent to a reasonable rate of interest on the sums expended by him in providing the factory. First, you have your gross rent and your return is to be equivalent to the reasonable rate of interest. What is it that the Commissioner must have regard to in advising himself whether he is to fix the figure at 5, 4 or some other per cent? He has to fix ft at an actual arithmetical figure. So far as I can see, this proviso is not giving him any assistance in arriving at such arithmetical figure. The suggestion made in the Amendment, if it had been taken into account with the other Amendment, was that the arithmetical figure should be put in at one per cent- over the bank rate. That would have given the Commissioner some test by which always he could judge, but as the proviso reads at present it does not give either the Commissioner or anybody else any assistance whatsoever in judging of the rate of interest in regard to which he is to fix the rent.

11.49 p.m.

Mr. Bevan

In resisting the Amendment the right hon. Gentleman said that my hon. Friends were departing from the position we have taken up for two years in demanding as much elasticity as possible for the Commissioners. He desired the language of the Clause to go through unamended because he said the Commissioners would be given wide discretionary powers. It is precisely because this language does give to the Commissioners too wide discretionary powers that we are anxious to get some sort of interpretation. If the Clause was so drawn and if those powers were being conferred on the Commissioners in order that they might establish factories in the distressed areas, then we should be only too ready to allow the powers to go through, but, to be quite frank, our experience has taught us that those powers are never properly used. As a matter of fact, they are simply put before Parliament as a sort of red herring to persuade us that something is to be done. When in fact nothing is to be done. He said that if we put a figure in of 1 per cent, above the Bank of England rate, that would impose a limitation on the discretion of the Commissioner. There is nothing to prevent him making that a maximum figure.

Mr. J. Griffiths

Not more.

Mr. Bevan

Not more than 1 per cent. It would be possible for him to charge less than 1 per cent. So that the right hon. Gentleman resisted the Amendment on entirely false grounds. There is a further point which I should like to make. I should think that the assessment committees would find themselves in great difficulties in assessing the rateable values of these factories. Are they to base the assessment on the rent actually charged by the Commissioner or what they themselves consider to be reasonable in the circumstances? But that is a refinement of the position, and I will not press it.

In his speech on the Second Reading of the Bill the Minister said that he had received telegrams from many parts of the country expressing concern that inducements offered to private enterprise to establish factories in the distressed areas would operate unfairly against similar enterprises in other parts of the country, and we suspect that the reason why the powers of the Commissioner are not more narrowly drawn in the clause is in order to expose the Commissioner to the pressure of rival interests in other parts of the country. For example, let us suppose that a factory has been let by the Commissioner in South Wales and the factory can be used to produce biscuits, tyres, artificial silks or any commodity of that sort which is being produced in some other part of the country. Now there is no hon. Member who would suggest that in addition to the ordinary task of establishing light industries in the distressed areas we are to have the task of providing industries, which do not already exist, in any other part of the country. In the ordinary course of events the industry that would be established in a distressed area would be an industry in competition with an industry already existing in another part of the country, and we suspect that we should be in this dilemma, that if the inducements offered by the Government prove sufficiently substantial as to attract industries to the distressed areas they will be sufficiently successful as to excite strong opposition from their rivals in other parts of the country. If they are not sufficiently successful as to induce the establishment of industries in the distressed areas the purpose of the Bill is defeated.

Therefore, if we are to assume that the right hon. Gentleman is serious in his desire to use this Bill for the establishment of factories in the distressed areas, we have to make the further assumption that the inducements under this Clause are sufficiently successful as to attract industries there in competition with industries in other parts of the country and to excite the opposition of rivals in other parts of the country. If these are the circumstances ought not the Commissioner to be protected from the importunities of manufacturers in other areas? If you say "No," then obviously, you are not going to have factories established in the distressed areas. The reason why factories are not being established in distressed areas is because it is not economically attractive.

Commander Bower

For once I find myself in complete agreement with the hon. Member.

Mr. Bevan

I hope to carry the hon. and gallant Member with me a little further, although I admit that I may be taking on a parliamentary Old Man of the Sea. If it is intended that the Clause is to afford sufficient financial inducement to persuade employers to erect factories in distressed areas, then it will be so substantial as to excite the opposition of manufacturers producing the same class of goods elsewhere, and therefore the Commissioner should be protected against the pressure of these rival interests. How will that pressure be exercised? If the Clause is unamended, and if the Commissioner is to be allowed elastic powers in determining the rent of a factory, then he will be subject to the pressure of these rival interests, and we know how powerful and influential these commercial interests are from the speech which the Chancellor of the Exchequer in winding up the previous Debate. These rival interests will cause the Commissioner to put the rent so high as to reduce the inducement which he desires to give to factories to establish themselves in distressed areas.

This legislation justifies all our suspicions. Considerable powers are vested in the Commissioner and they have never been exercised to any considerable extent. Unfortunately we are in this difficulty that unless we can find new industries for the distressed areas we are merely trying to attract industries which would otherwise be established elsewhere. Surely we should do what we can to protect the Commissioner against any private, subterranean and clandestine pressure by rival interests. I have heard various expressions by people outside. They say that they never know what rent the Commissioner is going to charge, and in considering what is a reasonable rent he will find himself in this dilemma that in many of the distressed areas there are no factories which will enable him to make a comparison.

I know of no artificial silk factory or tyre factory in South Wales, so that the Commissioner, in arriving at a criterion of a fair rent, will have to leave the distressed areas and take the rent charged for other factories of a similar kind in some other part of the country. What is to be a reasonable rent in such circumstances? If it is proposed to set up factories for the production of wireless cabinets, for instance, in the Rhondda there are no similar factories there to form a criterion. Will he have to take as a reasonable rent the rent charged for a wireless cabinet factory in the Great West Road? If not, how can he arrive at a reasonable rent? The Minister has told us that the rent must be fixed according to the rents of similar factories in the neighbourhood. In these circumstances, the term neighbourhood must extend to the whole country and the Great West Road.

It therefore follows that the Commissioner will let factories in the Rhondda on the conditions governing those in the Great West Road. It is unreasonable to expect factories to be taken in these circumstances unless he imposes a lower rent. If he does that, the manufacturer in the Great West Road will ask the Government "What right have you to use my money as a taxpayer to subsidise my rivals in the Rhondda?" The mind of the Government being what it is, that is the sort of argument to which they will succumb, and there will be no factory in the Rhondda. The Government should, therefore, embody in the Clause some language which will protect the Commissioner against the importunities of private enterprise. Unless they do that the Clause will be valueless, and like all the other Special Area schemes of the Government, will prove of no value.

12.5 a.m.

Mr. E. Brown

The hon. Member for Ebbw Vale (Mr. Bevan) makes assumptions to suit himself and then, with the gift of rhetoric, proceeds to make a case to his own satisfaction. He has entirely overlooked the fact that, in addition to this provision, which gives the Commissioner power to let a factory at an economic rent to persons carrying on a business for private gain, he has another power. He can, under another part of the Bill, make a contribution towards the rent where it will be to the advantage of a necessitous district for him to do so. The Bill gives the Commissioner a discretion to act in the light of his own experience, and knowing the desires of this House to induce manufacturers to go into those parts of the Special Areas which are most badly in need of new industries. It is interesting to observe the complete change of attitude of the hon. Member for Ebbw Vale. He said previously that the Government's proposals were negligible and niggardly. He now says we are giving the Commissioner considerable powers and that he may be subject to pressure from outside. We know they are considerable powers, and we know that he is a reasonable man, that he will do his best for the Special Powers concerned, and that he is not likely to yield to outside interests. The proviso in this Clause is in terms which are well known in law and in practice. The Clause is one which the House will wish to pass to give the Commissioner this power, and the hon. Member for Ebbw Vale should consider the other provisions contained in the Bill.

12.8 a.m.

Mr. Shinwell

When we were discussing Clause I it was indicated that we had no right to consider the Bill as a whole. It was pointed out that we had to consider each Clause as presented to the Committee. That is what we are doing. The right hon. Member the Minister of Labour has apparently overlooked that fact. He has used as his principal argument against my hon. Friend the Member for Ebbw Vale (Mr. Bevan) the fact that there are other provisions in the Bill. When we come to those provisions we shall have something to say. But, for the moment, we are concerned with the simple proposition that the Com- missioner may let factories to manufacturers and make arrangements with regard to rents to be paid and the interest to be paid on the moneys expended. Having regard to that, I wish to address one question to the right hon. Gentleman the Minister of Labour: Where are the factories which the Commissioner proposes to let? Are these factories already in existence or has the right hon. Gentleman in mind the factories intended to be erected at some time, no time being specified, perhaps in the dim and distant future, on the trading estates. If, having regard to the determination of the Government to press the Measure through the House, we are expected to assist in making it a workable measure, then clearly we ought to be satisfied as to the precise meaning of the provisions now before the Committee.

We are, therefore, entitled to inquire where those factories are. It may be the right hon. Gentleman has in mind—and if so, he ought to be specific in his utterances—existing factories in the Special Areas which are not at present being utilised. Are those the factories he has in mind, or are we to discover several months after this legislation has been placed on the Statute Book that the Commissioner is to be engaged scouring the Special Areas searching for the factories provided for in this Bill? We are entitled, having regard to the special difficulties of the areas with which we are concerned, to have definite information on that point. The right hon. Gentleman the Minister of Labour seemed to make light of the argument presented by my hon. Friend the Member for Ebbw Vale, and, I submit with respect, did not seem fully to appreciate the point of substance contained in my hon. Friend's speech. Let me, therefore, draw his attention to the Third Report of the Commissioner for the Special Areas. On pages 10 and 11, under the heading of "State-provided Inducements"—more particularly on page 11—the Commissioner directed attention to the need for providing various inducements in order to attract industry to the Special Areas, but he had in mind this possibility, that new industries might be attracted to those areas and enter into competition with existing industries of a similar character, and he was anxious to prevent such competition. The Commissioner said on page 11: If it could be demonstrated to the satisfaction of some impartial tribunal that a new industry attracted thereby to one of the Areas would seriously prejudice the prospects of an industry already there established and producing the same type of goods, equivalent concessions should be applied to the existing industry. I am not certain that that is the intention of the right hon. Gentleman.

I will give an illustration, referring particularly to an area with which I happen to be acquainted, Durham County. Let us assume that there is in the area of Sunderland an industry, covering perhaps two or three factories and two or three separate concerns, which is relatively flourishing, has no need of special assistance and requires no special inducement to carry on. Let us assume that a manufacturing concern producing the same kind of article decides, because of the inducements offered, to take advantage of the provisions contained in this Clause, namely, to occupy a factory provided by the Commissioner either on the trading estate—I am not clear as to whether the factories are to be on the trading estates—or elsewhere. Supposing that such an industry is attracted to the Team Valley Trading Estate, is it not likely that the business concerns in the Sunderland area, having regard to the inducements offered, will transfer their undertakings to the Team Valley Trading Estate?

What is to be the effect of that transference? I had understood that it was the intention of the right hon. Gentleman to provide relief not for one part of a Special Area, but for all parts. What is to be the effect on the Sunderland area if existing business concerns leave that area and go to the Team Valley Trading Estate? It would be advantageous to the Team Valley area, but certainly it would not produce benefits to the Sunderland area. I ask the right hon. Gentleman to express his views on this matter, as I think possibly it is a dilemma. He may have some simple device to remove the difficulty which I can foresee, but unless he has, there are grounds for perturbation with regard to the possible effects of this provision, if it is not amended, on the Special Areas.

12.19 a.m.

Mr. E. Brown

With regard to the hon. Member's first question, this Clause has nothing to do with trading estates, but with factories elsewhere than on trading estates. The answer to his question is that the Commissioner is given power if he decides that he desires to induce industry to go to a certain place where there is, for instance, an empty factory, to acquire that factory, to repair it, if need be, and to let it to a firm. Or, if there is no factory, he is given the power to provide one in that particular place. It is because the Special Commissioner, in his Report, pointed out that there was a need, not only for trading estates of a large nature, but for more individual industries which might help smaller towns, that the Bill was drawn in that way.

Mr. Shinwell

The right hon. Gentleman said the Commissioner had power, not only to let a factory but to provide a factory if there was not one there already—to clear a site and build a factory. Where is the provision to that effect in this Clause?

Mr. Brown

The provision is not merely in this Clause. This Clause must be read with all his other powers—with Clause and with the Act of 1934. The hon. Member is making a mythical dilemma. He is trying to establish that the Commissioner will not have these powers but the Commissioner will have them. That is the intention. Further, there is the issue which has been raised by several hon. Members from other parts of the Special Areas and from districts like Tees side. The difficulty which they have brought forward is, I am afraid, inherent in the policy which we have accepted. We have accepted a policy of deliberately weighting the balance in favour of particular areas. In doing so, as this Debate has proved, we seem to have been very successful. Now it appears to the hon. Member for Seaham (Mr. Shinwell) is only afraid lest we may have made the magnet so powerful that it may be unfair to other areas. We are prepared to take the risk.

Sir S. Cripps

Will the right hon. Gentleman answer, if he can, the question which I put to him. What is the criterion of reasonableness as regards the rate of interest which the Commissioner is to take into account.

Mr. Brown

I have already given the answer on the Amendment which the Committee has just rejected. It is de- fined here, as what is reasonable in the Commissioner's opinion and I can add nothing to that definition.

12.23 a.m.

Mr. J. Griffiths

I have already asked whether the conditions which the right hon. Gentleman enumerated applied to trading estates and I gathered from the reply that the trading estate was a separate thing altogether, dealt with in the principal Act. My recollection is that the Commissioner's only power under the principal Act was that of establishing trading estates. There was nothing in that Act to enable him to provide single factories. This Clause refers to the Commissioner letting factories and the Minister has said that the Commissioner may take an empty factory and let it on the conditions already indicated. But we know that there never have been any factories worth speaking of in the Special Areas. They are largely coalmining areas. In South Wales, apart from the towns and districts where there are tinplate mills which might be converted into factories, where is there a factory? Inside the Special Area as now defined, I do not know one and I know those valleys pretty well. Therefore I ask what is the position if the Commissioner is, say, desirous of attracting some manufacturer to establish a factory in the Rhondda or in Merthyr? If hon. Members opposite have been to Merthyr have they seen an empty factory? There is only the disused Dowlais steel works, and it cannot be suggested that even the £2,000,000, the total amount the Commissioner will have, would be sufficient to convert those works into a factory. If the Commissioner is to attract industries there he must build factories and that only makes the financial provisions of the Bill look more absurdly inadequate than ever.

Mr. E. Brown

The hon. Member is wrong. The £2,000,000 has no relation to this purpose. The Commissioner is unlimited as to the amount he can spend for this purpose. I will answer the first part of the question by calling attention to the definition of a factory in Clause 7 the interpretation Clause, which makes it plain that what I said just now was strictly accurate: 'Factory' means premises suitable for occupation as a factory or workshop as defined by the Factory and Workshop Acts, 1901 to 1920, and means also a site for such premises. If there is a suitable factory he can acquire it, and if there is not he can build one.

12.29 a.m.

Mr. H. Macmillan

The position seems to me as it did to Alice in Wonderland, to become "curiouser and curiouser." The Minister justifies his objection to an Amendment limiting the rate of interest by pointing to Clause 3. I understand him to say the position is that the Commissioner can either acquire a factory or build one—that there are powers to build in the original Act, though I confess that I cannot find them there, and should be glad if the right hon. Gentleman would point them out. Having done that it is the duty of the Commissioner under this proviso to let it at a rent which provides a reasonable rate of interest, but then, says my right hon. Friend, the Commissioner can, under Clause 3, make a contribution towards that rent. The Commissioner is to fix the rent under Clause 2 and then can say under Clause 3 "I will let you off half the rent."

Mr. E. Brown

He has complete power to vary the inducements according to the particular needs, as he conceives them, of that section of the area.

Mr. Macmillan

That is a very helpful statement, because if that be so it seems to me the proviso is wholly unnecessary. Why should we tie a man down to exact a certain rent and in the next Clause say "Oh, but you need not do that if you don't want to. It is entirely in your discretion"? First you give a discretion to rack rent and then a discretion to lower the rent. First he is ordered to get all he can and then told not to take more than is reasonable. I still wish that my right hon. Friend had given us what he conceives to be a criterion of reasonableness in this matter. I know that we are left here to discuss these important matters at a late hour when all the more important colleagues of the right hon. Gentleman have gone away. That always happens to private Members who have to carry on these proceedings; but I should have thought that on this particular day, after all the questions of high finance which we have been considering, we should have had some guidance on what is regarded as a reasonable rate of interest. Whose view is taken? We have had a series of Commissioners—some have been City men—and perhaps the present Commissioner has his own view. I quite understand that allowance is made for repairs, and so on, but I want to know upon what criterion this proviso presumes that what is fixed is reasonable. Does a reasonable rate mean that he should fix it according to what any landlord would be likely to fix for any comparable property? Or does it mean at a rate of interest which takes into account the fact that he is using Government money raised on the market at a lower rate? We have had many of these cases. We have had great funds to support such works by using the power of the Government to borrow at a lower rate of interest than the market rate. We have used it to build the "Queen Mary" and all kinds of extensions of great undertakings. Is this power to be taken into account in fixing what is a reasonable rate? In comparison with what is the Commissioner to fix it? What the right hon. Gentleman tells us is that he is first to have regard to this proviso and then, if he wishes, he is to have no regard to it under Clause 3. It would be much better drafting to leave out the proviso altogether and to deal with it under Clause 3.

I would still like a further explanation from the right hon. Gentleman as to why it is necessary to have this proviso in the Bill at all. If he has power to buy, to build or to let a factory and to let it at any rent he likes, why have this proviso as to reasonable terms? It is a vague and uncertain phrase, not necessarily related to the ordinary competitive market rate which any landlord might fix, and one which is wholly invalidated by the operation of Clause 3. Therefore I Would again suggest it would be much better drafting to omit the proviso and to go on either to-morrow or some other day with the consideration of Clause 3, when the Committee would be in a position to pay more acute attention to it than we can do after an exhausting day on the Budget.

12.33 a.m.

Mr. MacLaren

I intervene for a few moments because the discussion has really landed the Committee into a hopeless position. I heard the right hon. Gentleman say a minute or two ago that land was going to be leased at an economic rent. [HON. MEMBERS: "No!] I am within the recollection of the Committee. The right hon. Gentleman said distinctly that a factory was to be let at an economic rent. I will give way if he wants to correct that.

Mr. E. Brown

Clause 2 enables me to do that.

Mr. MacLaren

The right hon. Gentleman says the Clause enables him to charge an economic rent for the factory. Let us look at the proposition in terms of economics. In this debate so far we have had, first of all, something about the economic rent and something was said about the next Clause which would make it possible for the owner of a factory to let it at an economic rent. It is really a waste of time to talk about rates of interest. The question concerns the use of a site and the building on it and what rent is chargeable for the use of that property. That is the question, and I notice the Minister fell hopelessly into a trap and said "Oh, yes, but the rent is one thing and the rate of interest will be quite another because that is within the discretion of the Commissioner". First there is the economic rent and then the rate of interest, but let us look at the Clause, which says: Provided that the rent reserved by any lease granted under this Section shall be such as, in the opinion of the Commissioner, will produce a return as nearly as may be equivalent to a reasonable rate of interest", I hope the Committee will take note of that. It is not even to be a reasonable rate, but as nearly as may be. That means, think of a number and take away the number you first thought of, and the answer is a lemon. It is not even a reasonable rent, but as near to it as you can get. That is the meaning of this nonsensical language in the Bill, so you can see how the Minister is hopelessly in a fog. He says "We are not giving factories away; we are going to give them at a reasonable rent," and, sotto voce, he says "We will help you to pay it." And then he says "This provision is in the discretion of the Commissioner." It is to be reasonable but not too near reasonable.

Then the Minister says that they are to give a grant to pay the money. That brings us to another point, the suggestion that the economic rent is to be subsidised; it is, that the rate of interest, according to the proviso, shall be in the discretion of the Commissioner. Looking at it as an economic proposition here is a site with a factory on it. We will not discuss for the moment where it is situated—whether in the north, south, east or west. This site will have what is termed by the Minister an economic rent, that is, some sum which is an annual charge placed against the person who uses the site. I should like to put to the Minister and to the Committee certain considerations that must affect the rental procurable from that site. First of all, you will ask yourselves: Is this site adjacent to certain facilities? Is it near the river and has it good transport services and good roads? This is not a joking matter; I am putting it forward quite seriously. The whole Committee will agree that certain considerations govern any person who enters in upon a site—its suitability as to public services and whether it is contiguous to full facilities. Suppose I go into a distressed area and, according to the Minister's statement to-night, there is a factory standing there. What will I have to put on the board above the factory, assuming it is vacant? "Factory to be let" and then "You nominally have charged an economic rent but you do not pay it." There is a nominal rate of interest at the discretion of a gentleman, and then the words "Thank God you have got the Commissioner." In fact, anyone who applies for the use of this building will pay no rent, no rates and indeed he will pay no Income Tax. That is the position. If you look at Clause 3—

The Deputy-Chairman

We are discussing Clause 2.

Mr. MacLaren

I am very serious about this; I am not in the least being frivolous. It is a serious matter, when the Government offer such a Bill to this House, and seek its vote and challenges the country to judge as to its wisdom and statesmanship, that they should utter such nonsense as is in this Bill. What is the economic value of the site—

The Deputy-Chairman

The Minister only raised the question of rate. If the hon. Member starts a discussion under Clause 3 we shall not be able to re-raise it on the Question, "That Clause 3 stand part of the Bill."

Mr. MacLaren

The question on the proviso is that the rate of interest shall bear some resemblance to the rent, or the rent some resemblance to the rate of interest, as nearly as may be. That is what we are discussing. I cannot see how it is possible to discuss it. How can I possibly discuss the economic value of the economic rent of a site unless I discuss what advantages attach to that site? That is why I am forced to bring into the discussion what are the advantages attaching to the site offered under this Bill? I say that the advantages attaching to a site in the distressed areas under the Bill are such that the economic rent would be 100 per cent. more than you would get for any other site in the country. There is no site outside the distressed areas, once this Bill is in operation, in which a man entering into it will not have his Income Tax paid. He will have his rates and rent paid, and I suggest that the economic value of that site is enormous, considering the advantages that will attach to the site under the Bill. It is sheer, fatuous nonsense. Why not be plain and blunt and take this proviso out, for really it means nothing at all. What is the good of saying to me: "You come to the distressed areas and we will give you a factory at an economic rent which you do not need to pay?".

Further, I hope that those who are supporting this Bill, and some of those who are protesting against it will remember some of the Debates that gave rise to the wording of this Clause. I never knew of such nonsense as that to which I had to listen from time to time in this House—attracting industries here, and putting them there. Protests are going on as to why enterprises are centring around London and not in the distressed areas. The facts are staring everybody in the eyes, including the Commissioners who went there. They are that the rates, and the disadvantages of old roads and such matters were causing these factories to go elsewhere. In order to circumvent a vicious rating system that is making the industry of the country impossible you come to a proviso of this kind: that if you come to the distressed areas we agree to give you certain advantages, which on the very face of it makes a contradiction.

I heard the Chancellor of the Exchequer say earlier to-night that he did not think there would be profiteering in armaments because of competition. I should like to know from the industrialists who may vote for this what are their competitive chances against a gentleman who is competing with them in your industry under this Clause and succeeding Clauses? To raise this whole discussion about a rate of interest which must be related to the rent is a sheer waste of time, and I consider it would be well worth the Governments time taking this proviso out entirely and saying quite bluntly, as they say in the succeeding Clause, that anyone who will come and confer upon the people in the distressed areas work—and why working men want work, I never could understand. This idea that working men want work—

The Deputy-Chairman

I really do not think that arises on this Clause.

Mr. MacLaren

It is very necessary in winding up my remarks to bring them to a close upon this theme, that anyone who confers upon the distressed areas work, labour, will get everything he wants for nothing at the expense of the other taxpayers and his other competitors in industry in the country. However, I suppose it is all part of a piece, and I hope, Captain Bourne, that having remained strictly in order, you will allow me to say something on Clause 3.

Mr. Lennox-Boyd

I will not keep the Committee a moment, but I would like to ask the Minister one question. By what clause in the principal act has the Commissioner power to build a factory?

12.44 a.m.

Mr. E. Brown

The question of Trading Estates was raised. Under the principal Act the Commissioner has power to initiate measures for the economic development of the Special Areas. This covers the provision of factories. Hitherto factories have been provided on Trading Estates by Trading Estate Companies to which the Commissioner has given financial assistance. The new Clause will enable the Commissioner himself to let factories to undertakings carried on for gain.

Mr. Kingsley Griffith

I do not quite understand the last reply of the Minister, because some of us have been trying to compare these two Acts and to find out where this power is. I cannot find any power in the words which the Minister used quite recently when he told us that the Commissioner had power to build factories and then let them. That does not seem to me the same answer as the Minister has just given to the hon. Gentlemen opposite. That point perhaps will be answered more fully to the hon. Gentleman who asked it. I only rise to ask one other question because it is very late and I am very muddled by the whole of this Debate. If a landlord charges a rent and that rent has got to be a reasonable rent, and then if under another clause he has got power to pay the tenant the money to pay himself rent, then who has the rent in that property in the end? Can you be said to charge a rent, half of which you pay to yourself?

12.47 a.m.

Mr. R. Assheton

This seems a very simple point which it appear to me does not need much elucidation. I note that the hon. and learned Member for East Bristol (Sir S. Cripps) and the hon. Member for Stockton (Mr. Macmillan) and various other Members, have great difficulty in understanding the Clause, but it seems to me that it is very well drafted indeed. The proviso is quite clear. It provides that the Commissioner shall let the factory at a reasonable rent. The next Clause, which allows a rebate of rent only, allows that rebate to run for five years, and therefore it is quite clear that unless the rent is fixed in the first instance it will be impossible for the prospective manufacturer to know what his position will be in five years.

Mr. MacLaren

There are remissions provided for. Would you add the capital value of the remissions under the letting of this factory to your economic rent?

Mr. Assheton

No, I should not.

Mr. Cartland

I have one question about this power to build factories. I am sorry if I am dense about this, but am I right in supposing that the Commissioner has no powers to build a factory except on a trading estate?

Mr. E. Brown

The answer is, of course as I said, that having regard to Section 1 of that principal Act, in conjunction with this Bill, he has that power. He has power—if my hon. Friend will turn to Section 1 of that principal Act—to carry out a scheme of economic development and under that he could build a factory.

Mr. Gartland


Mr. Brown

In conjunction with this power given under Clause 2.

12.50 a.m.

Mr. Shinwell

May I ask whether the provisions which he has just read out refer to the acquisition of sites and the building of factories as something quite distinct from the trading estate?

Mr. Brown

The point is that the Commissioner has never had the power under the original Act to assist undertakings carried on for profit. This Bill gives him that. Reading the principal Act with this one he has the power.

Mr. Dalton

I want to give a practical illustration. We are told that so far as South West Durham is concerned, it has been said by Sir George Gillett that there is no intention of making an estate there. Do I understand the right hon. Gentleman to say that there is power for the Commissioner to build a factory in some part of this area?

Mr. Brown

Most certainly, under the general powers of Section 1 of that Act, read in conjunction with the increased power under this Bill.

12.52 a.m.

Mr. Furness

The right hon. Gentleman has told the hon. Member for Seaham (Mr. Shinwell) that the Commissioner has power to build a factory in my constituency.

I wish to ask whether the Commissioner will have power to build such a factory in advance of requirements so that a factory is there ready when somebody comes along, or will he have to wait until a specific inquiry is made? We have in fact, to my knowledge, lost certain industries because there were no factories waiting. We feel that if factories could be built beforehand we might get industries.

Mr. Brown

That is entirely in the discretion of the Commissioner, who is empowered to carry out the economic development of the area. He has power under Section 1 of the original Act and increased power is given to him now.

Mr. Daggar

May I ask whether the Commissioner will have power under this Bill to build a factory? I came on a deputation to the Commissioner, previous to the introduction of this Bill, and sought him to build a factory for a person anxious. to develop an industry in my division. Previous to the introduction of this Bill, this person was informed by the Commissioner he could only expect to occupy a factory on a trading estate.

Mr. Brown

If he reads, in connection with the principal Act, Clause 2 of this Bill, he will find The Commissioners may, notwithstanding that the undertaking will be carried on for the purpose of gain, let a factory in such an area. There has been doubt about that up to now.

Mr. Daggar

In the Bill it says he has power to let a factory. It will be observed that the power is to let a factory and it does not provide for the building of a factory before letting it. In specified areas you may let a factory, but does that imply building a factory as well?

Mr. Brown

In Clause 7, the interpretation Clause, it says that a factory means also a site for such premises. It says a factory includes not only that factory but also the site.

Mr. A. Jenkins

The right hon. Gentleman says that the Bill gives power to build a factory. The only thing provided under that Bill is that the Commissioner may let a factory. I have been through

the principal Act and I cannot find power which will enable the Commisisoner to build a factory. If that exists will he give me the particular place where that occurs?

Mr. Brown

Clause 1 of the original Act says that there shall be two Commissioners for the initiation, organisation, prosecution and assistance of measures designed to facilitate the economic development and social improvement of the areas. The doubt has been as to what he was entitled to do by way of providing factories, since in part of the Act he was forbidden to assist undertakings carried on for gain. Reading the original Act with this Bill he has the power.

Mr. Shinwell

There was some doubt as to the power under the Act and it was necessary to provide additional powers. The right hon. Gentleman states that these are provided in the Clause under review. Would it not have been better if specific words had been introduced to give the Commissioner power not only to acquire sites but to provide factories?

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 150; Noes, 53.