§ Order for Second Reading read.
§ 1.17 p.m.
§ The Financial Secretary to the Treasury (Mr. Glenvil Hall)
I beg to move, "That the Bill be now read a Second time." Before the war a Public Works Loans Bill used to be passed annually. During 2298 the war such Bills have been less frequent, but we are now likely to find that the annual Bill will be necessary again. Ordinarily the main purpose of the Bill is to authorise a maximum amount which may be advanced to the Public Works Loans Commissioners for the purpose of local loans until the passing of the next Bill. In the present Bill this is done in Clause 2, which proposes a limit of£150 million. During the war years the amounts so advanced were very much restricted. Now that the war is over we may well expect that very considerable sums may be needed, because as every one knows local authorities are faced with large programmes of capital expenditure for reconstruction, for housing, for education and for services upon which they may embark. In the second place, as a result of the passing of the Local Authorities Loans Act, 1945, local authorities' borrowing has been largely concentrated, as the House knows, in the Local Loans Fund.
It is difficult, of course, to estimate the rate at which local authorities will call upon the Government during the coming year, but it is felt by us that£150 million should be adequate. If, of course, it is found that that amount is not enough, then we shall have to come to the House and ask for an additional sum. This Bill is also normally the occasion upon which, in accordance with the law, loans which are unlikely to be recovered are written off as assets of the Local Loans Fund. Clause 3, as hon. Members will see, writes off certain further loans amounting in total to some£50,000, which were made under the Agricultural Credits Act, 1923. It is a long list, but full details are given in accordance with a promise made to the House very many years ago that such details would be inserted. I think it goes back to 1900, when a late Member of the House, Mr. Tim Healey, asked that it should be done, and ever since then it has been done year by year, or whenever this particular Bill has been introduced. Although such loans are written off so far as this Fund is concerned, they are not written off so far as the Exchequer is concerned. The Exchequer does continue, in so far as it can, to press for liquidation of the debt outstanding. Clause 4 deals with one loan of the kind which it is now felt has finally to be written off, and for which 2299 there is no hope of obtaining any recovery.
To return to Clause I, it deals with the appointment of Public Works Loans Commissioners. An Act of 1875 provided that these Commissioners should hold office for five years. Accordingly, ever since 1875 every fifth year the Commissioners have been appointed by name in the Public Works Loans Acts that have been passed. The present body of Commissioners were appointed by the Act of 1941, and their term of office will expire on 31st March this year. We hope the House will agree this is a very cumbersome, not to say archaic method of appointing these Commissioners. It is felt—as Clause I shows—sthat we ought to lay down. a new method, a method similar to that employed recently in the Bank of England Bill, under which these Commissioners will be appointed by His Majesty. They will hold office for a term and retire in rotation year by year and in Clause I power is taken to provide for this. We hope the House will agree to the change as a reasonable one. These Commissioners receive no remuneration. They are a body of devoted public spirited men, and I think this is an occasion when the House would like to pay tribute to the work that they have done in the years gone by. They play a very valuable part in the financial relations between the Government and the local authorities. Undoubtedly during the coming years they are going to play an even greater part, and have even more work to do. I think it is only right and proper that we should recognise that and pay due tribute to their ability and the devotion with which they have served the State.
§ Mr. R. S. Hudson (Southport)
Could the right hon. Gentleman tell us in respect of these Schedules—because I think it is a matter of considerable interest in connection with agriculture—what was the total amount issued by the Agricultural Credits Act, and what ratio the successive losses each year bear to the original capital advance? It would be of interest, especially with reference to the case of Mr. Thompson.
§ 1.24 p.m.
§ Mr. Assheton (City of London)
Whilst the hon. Gentleman the Financial Secretary has an opportunity of collect- 2300 ing from his officials the detailed information for which my right hon. Friend the Member for Southport (Mr. R. S. Hudson) -has asked, and which naturally he has not immediately at hand, there are one or two observations which I should like to make on this Bill from the point of view of hon. Members on this side of the House. We do not intend to oppose the Second Reading of the Bill, but I am bound to tell the Financial Secretary that we are not altogether happy about Clause I. As he explained clearly, this Clause brings about a very considerable alteration in the method of appointment of the Public Works Loan Commissioners. I was always brought up to believe that the present method of appointment by Parliament was a "very desirable one, and only last year the then Chancellor of the Exchequer, my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson), said:For over 100 years, the Commissioners who are appointed by Statute and are, therefore, independent of the Executive of the day, have been charged with the function of making loans to local authorities, and their primary duty has been to see that the security for such loans has been adequate to ensure public funds against losses on the loans."—[OFFICIAL REPORT 24th January. 1945; Vol. 407:c. 911-12.] In the past these gentlemen have been directly responsible to Parliament and not to the Executive. Clause 1 of this Bill proposes that in future they should be appointed by His Majesty. Hon. Members will be aware, of course, that appointment by His Majesty means, in fact, appointment by the Government of the day. It was suggested by the Financial Secretary that the present method of appointment is cumbersome and archaic. I do not know what there is cumbersome or archaic about appointments being made by the House of Commons. For over 100 years these appointments have been made by the House of Commons. The arrangement may be an ancient, as it is a respected, one, but I do not think the Financial Secretary showed us that it is in any way cumbersome and archaic. Nor did he suggest that the gentlemen who had been appointed had not proved to be fully equal to the tasks they had to perform; indeed, he paid a great tribute to the devoted work which they had done, a tribute in which I and my hon. Friends would like to join. I warn the Financial Secretary, however, that, although we do not intend to oppose the 2301 Second Reading of the Bill, we shall consider the matter carefully before the Committee stage, and we may well ask for some amendment to be made in Clause 1.
As to Clause 2, the sum of money mentioned in it is, of course, very much greater than the sum mentioned in any previous Bill of this sort that I can recollect. I understand the reason is that, since most local government borrowing will now be canalised through this channel, the sum involved is naturally likely to be very much larger than it has been in the past. That is the explanation which the Financial Secretary gave, and it gives all the more weight to the argument I am putting forward concerning the Public Works Loan Commissioners. There is all the more need for them to be entirely independent of the Executive and to be able to exercise, on behalf of the House, that care and judgment in the scrutiny of these proposals which we all agree they have exercised in the past.
Clause 3 deals with the question of agricultural credits, and possibly, before the end of the Debate, there may be some reply to the points raised by my right hon.. Friend the Member for Southport; if not, I have no doubt the Financial Secretary will be good enough to give us the information at some later stage. It is interesting to see, from the long schedule of loans which have, unfortunately, gone wrong, into what a sad state our agriculture fell in the years gone by. We are all gratified to know that the prospects of agriculture are brighter than they were then. There are no other points that I want to make on the Second Reading of the Bill. but I would remind the Financial Secretary that he must come to the House prepared to give very good arguments to convince us that what he calls the present procedure in the appointment of the Public Works Loans Commissioners is cumbersome and archaic and that there is reason to change a system which has been really satisfactory in its operation for over 1oo years.
§ 1.31 p.m.
§ Mr. Ronald Chamberlain (Norwood)
There is one minor but important angle of the policy of the Public Works Loans Commissioners to which I wish to call attention, and I think this is the appro- 2302 priate moment. I wish to refer to the extreme difficulty which certain very valuable bodies have had over many years, and are still experiencing, in connection with securing loans. I refer to housing societies and housing associations, with which I have been connected for a number of years, and in which I am still interested. I know from my own experience that there has been extreme difficulty in securing a reasonable amount of loans for associations which are essentially non-profit making associations working for the good of housing and playing a very important part in the national interest. There was never in Old Jewry the kind of atmosphere of help and encouragement which these associations deserve. I know that from my own experience in going there. It was virtually a matter of going there cap in hand, as if one had to pray for some benefits instead of being in the position of asking for assistance for organisations doing something very much in the public good.
I am well aware that the public interest has been served in regard to these loans, and I am well aware, also, that there must be adequate security in connection with them. The associations for which I am speaking have always had the greatest difficulty in regard to the valuation of their new work or properties. Although the schedule of loans available provided 75 per cent. up to 90 per cent., in actual fact the associations secured a valuation which was very much below that valuation, if one takes into consideration the actual cost. By securing local authority guarantee for principal and interest it was, and still is, possible on paper to secure 90 per cent. of the valuation of the properties of these. housing associations. That is all very. well on paper. The valuation, however, has been so very difficult and so very conservative that, in actual practice, the associations have found that it was something in the region of 70 per cent. or 75 per cent. of the actual cost of their schemes. In that way they were entirely hamstrung and were generally unable to proceed with their schemes unless they went elsewhere for their loans. I think that is very wrong, because the Public Works Loans Commissioners should see to it that such organisations have a square deal and every help and encouragement. 2303 To bring the matter up to date, one of these excellent organisations, the Gloucester Garden Village, Ltd., has just received a letter from the Public Works Loans Board which appears to be perpetuating this attitude towards these associations. This particular Association, incidentally, is already building houses and has been granted loans in the Gloucester area. The paragraph reads:I am, however, to point out that the Board's loans are based on value and the valuation for the long term loan would presumably be considerably less than present day costs—I repeat those words—considerably less than present day costs, so that it would probably be necessary for the Society, in the event of the Board agreeing to make a loan, to provide a considerable amount of the capital themselves.Although I realise the necessity for conserving public interests, I think that that is a most unhelpful attitude, and I definitely dispute the principle of assessing the percentage of the loan on a valuation of something considerably less than present day costs. The Government should take their courage in both hands and work on the valuation of present day costs. It is all very well to think of the future when valuation may drop steeply, but I have never heard of the reverse process operating. I have never heard of a loans board suggesting going higher than 90 per cent. when there were low building costs and the possibility of their appreciation in the future. I regard this attitude of parsimony as wrong and regrettable in the present circumstances of housing. I do not want to labour the point but I feel that it is one which should not be overlooked, and I would point out that the Gloucester Garden Village, Ltd., has at least got going on housing and is actually now producing, and has been producing for some time, at the rate of two houses a week. That may sound very little, but the Gloucester Corporation has not produced any. The Association wants and is able to go ahead increasing the supply of houses, but it is being cramped and held back by this policy, which I consider to be very wrong. I hope that when we have a reply from the Minister he will give some kind of assurance that non-profit organisations of this kind, doing a public service by helping in the housing problem of this country, will be treated in a much better way by the.Public Works Loans Com- 2304 missioners than seems to be indicated by what I have said and by the letter to which I have referred.
It is not only this one association that is affected. There are many others already at work producing houses in various parts of the country. Many are going to the Public Works Loans Board and others want to do so, but if this strange theory of pegging down the loans because of the present high housing costs continues, I think the public interest in the matter of housing is being seriously jeopardised and negatived.
§ 1.40 p.m.
§ Mr. Glenvil Hall
If I may speak again by the leave of the House I will reply to the few questions that have been raised. I am grateful that the House has accepted this Bill as being on the whole a reasonable one, although I fully understand that right hon. and hon. Gentlemen opposite may feel that some Amendments are necessary on Committee, and that they will do their best to press them. Briefly the answer to the right hon. Gentleman, the ex-Minister— I will not say the late Minister—for Agriculture is that the total loans made under the Agricultural Credits Act, 1923, amount to£4,700,000. Of that sum£2,500,000 approximately has been repaid. The amount in arrears and outstanding at the moment is v170,000. With regard to the point made by the right hon. Gentleman the Member for the City of London (Mr. Assheton), it is felt that a change to the new method of appointing the Commissioners is desirable in spite of what he had to say. Parliament will still have as much control as formerly over the work of the Commissioners, but the old method of naming these gentlemen once every five years in an Act of Parliament is, in my view, and I hope in the view of the House generally, rather archaic. They will be none the less independent because of these new methods of appointment than they were in the past.
In these days when there are enormous calls for men of this calibre to serve on boards of one kind or another, it is essential that we should have a more flexible system than has obtained in the past. Now and again Commissioners leave the board and others have to be appointed in their place, and it is much better that the newer methods should be used rather than the old one, which, I agree, has 2305 obtained over many years. The new procedure does help us to get the right men for the right job, and as the Commissioners pass on to other work or feel that their work as Commissioners has come to an end, it makes it possible to fill vacancies in a simple manner. However, it will be for the right hon. Gentleman, if he feels strongly on the matter, to argue it out in greater detail on the Committee stage.
The reply to my hon. Friend who sits below the gangway is that these housing associations who seek loans usually desire—and I am not blaming them since it is perhaps natural and human—to raise a higher percentage of the value of the property than the Government think is reasonable. We have to see to it that we do not create a loss on loans that are made because that would mean that the taxpayer would have to bear it. In fact, the Inland Revenue Department are consulted in these matters. I agree that, as the hon. Member said, many of these associations quarrel with the valuation which is placed by the Inland Revenue on the properties upon which they seek a loan. I am afraid that I cannot hold out to him any hope that the procedure will not continue to be followed in the future because it strikes us as the commonsense one and as the one which the taxpayers generally would want us to adopt. We do not want heavy losses. As the House has seen some now and again are inevitable, but we have, if we can, to proceed with a proper regard to the fact that we have to safeguard the taxpayer's interests. Short of that, I think the hon. Member will find that in the future the Commissioners will be anxious to help housing associations such as he has mentioned in their efforts to build what are after all the houses which the people need so badly and which they should have in the coming decade.
§ Question put, and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the Whole House for Wednesday next.—[Mr.Mathers]