Clause 1.—(GRANTS FOR PUBLIC WORKS.) (Hansard, 19 November 1952)

§ The Chairman
The Amendment in page 1, line 6, after "Commissioners," to insert: on terms as to rates of interest and otherwise similar to those at present prescribed. in the name of the hon. Member for Islington, East (Mr. E. Fletcher) is out of order. I do not select the second Amendment, in the name of the right hon. Gentleman the Member for Colne Valley (Mr. Glenvil Hall), in line 8, at the end, to insert: and regardless of whether section one of the Local Authorities Loans Act, 1945, is hereafter renewed, all local authorities shall have the same rights of access to the Public Works Loan Commissioners as they have enjoyed since nineteen hundred and forty-five. The third Amendment, in the name of the right hon. Gentleman the Member for Colne Valley, in line 8, at the end, to insert: 1882 Provided that any such loans so issued by the Public Works Loan Commissioners shall be at interest rates not exceeding those prevailing on the twelfth day of November nineteen hundred and fifty-two. is out of order.

§ Mr. Douglas Jay (Battersea, North)
On a point of order, Sir Charles. Might I ask for your guidance on that Ruling? You said that the first Amendment, to which we attach a good deal of importance, is out of order. It is my recollection that a precisely similar Amendment was ruled to be in order last year and was discussed for a considerable time. This Amendment is in exactly similar terms and I wonder whether you would give us your guidance as to how it comes to be out of order.

§ The Chairman
The right hon. Gentleman is correct in saying that it was called last year and discussed, but during the discussion it came to light that the effect was rather different from what had been thought originally by the Chair. The Public Works Loan Commissioners do not pay interest to the National Debt Commissioners.

§ Mr. Jay
Further to that point of order. The Amendment on the Order Paper contains an error, whether a drafting error or a printer's error I am not sure, but I wonder whether I might move a manuscript Amendment to make the Amendment apply to line 7, instead of line 6. The effect would be that the Amendment would refer not to loans by the National Debt Commissioners, concerning which, I agree, the Amendment would be inappropriate, but to loans by the Public Works Loan Commissioners. The Amendment has been attached to the wrong "Commissioners." Since interest rates are paid by the local authorities to the Public Works Loan Commissioners, that ought to meet the difficulty and put the Amendment in order.

§ The Chairman
As far as I can gather, that Amendment is the same in effect as the third Amendment on the Order Paper.

§ Mr. Jay
That is not so, because the third Amendment refers simply to interest rates, while the first contains the words: … on terms as to rates of interest and otherwise. … The words "and otherwise" surely make the first Amendment a good deal wider than the third.

§ The Chairman
I gather that it is still out of order because it deals with rates of interest.

§ Mr. Eric Fletcher (Islington, East)
Further to that point of order, Sir Charles. I am responsible for putting down the first Amendment, and I should like to make this comment on your Ruling. You said that during our debate last year it came to light that there was some defect in the drafting of the Amendment.

§ The Chairman
It was not in the drafting. It was in its effect.

§ Mr. Fletcher
I appreciate that, Sir Charles. You said that it came to light that there was some defect in the effect of the Amendment. That is not quite the case. What happened was that the Financial Secretary took the point that there was some ambiguity about the effect of the Amendment. If I were free to adopt the suggestion made by my right hon. Friend the Member for Battersea, North (Mr. Jay) and to substitute "line 7" for "line 6," I believe the Amendment would be in substantially the same form as it was last year. On that occasion, all that the Financial Secretary said was: … it is far from clear whether the limitation which it is sought to impose upon the rates of interest chargeable on loans relates to moneys issued by the National Debt Commissioners to the Public Works Loan Commissioners or to loans issued by the Public Works Loan Commissioners to the local authorities."—[OFFICIAL REPORT, 28th November. 1951; Vol. 494, c. 1540.]

§ The Chairman
The Financial Secretary then said that it was not very clear, but the position has now been clarified. If I had known as much last year as I know today, I should not have called the Amendment then.

§ Mr. Fletcher
I do not think it would be far from clear to anybody in the amended form.

§ The Chairman
That may be so, but I am the person who has to decide.
Motion made, and Question proposed, "That the Clause stand part of the Bill."

§ Mr. Fletcher
I take it that we are free, on consideration of the question, "That the Clause stand part of the Bill," to put forward at any rate some of the arguments which we should have wished 1884 to put forward in support of the Amendments which are either not selected or are out of order.

§ The Chairman
Perhaps I should make it clear that on the Question, "That the Clause stand part of the Bill," we can discuss only what is in the Clause.

§ Mr. Fletcher
The Clause is in a form which seems very unsatisfactory because it does not deal in any way with either the existing interest rates or charges in interest rates. The Clause says that there may be issued by the National Debt Commissioners for the purpose of local loans by the Public Works Loan Commissioners sums not exceeding £500 million. It seems to me that there is no point in the Committee accepting the Clause as it stands unless the Committee is in a position to consider what the Public Works Loan Commissioners will do with the money which is made available to them by the National Debt Commissioners.
It is well known that the Public Works Loan Commissioners are the channel through which the money they receive from the National Debt Commissioners is passed on to the local authorities. It will illustrate the way in which the procedure works if I remind the Committee that no part of the money remains in the hands of the Commissioners for more than, at the most, 24 hours. They draw the money one day, put it into their account at the bank and pay it out next day to the local authorities. The local authorities and the public are concerned with the rates of interest which local authorities have to pay.

§ The Chairman
That subject is out of order. We cannot deal with the rates of interest on the Question, "That the Clause stand part of the Bill."

§ Mr. Jay
On a point of order, Sir Charles. We accepted your Ruling that the Amendment, as it stood, was out of order, but it has been ruled by Mr. Speaker and, I believe, by you this year, that the question of interest rates is in order on the Bill. We discussed it on Second Reading, and if it is in order on Second Reading I take it that it is in order arising out of some part of the Bill. Particularly in the light of where the Amendment stood last year, I submit that the matter arises on Clause 1. It was always our understanding that it was in 1885 order to discuss the matter on the Question, "That the Clause stand part of the Bill," even if the Amendment which we put down was not strictly in order.

§ The Chairman
It may be that on Second Reading it was suggested that an Amendment should be put down, but I cannot see that in Clause 1 there is anything about interest that can be discussed on the Question, "That the Clause stand part of the Bill."

§ Mr. Fletcher
I wonder whether I could illustrate the way in which I hope I shall be in order in developing my argument. Though the word "interest" does not appear in the Clause and there is no reference to it, it is obvious that loans by the Public Works Loan Commissioners to local authorities must either be made free of interest or be made at some rate of interest. I think that point would be generally acceptable. I wish to put to the Committee not what the precise rate of interest is to be at any given moment, but the machinery for determining what the rate of interest should be and how it should change.
Parliament ought not to pass Clause 1 without understanding and appreciating whether or not the House of Commons will retain control over the methods by which the money is lent to local authorities. We are sanctioning the use by these Commissioners of £500 million for loan to local authorities, and we shall not be doing our duty as a Committee unless we consider the basis on which that very large sum of money is to be spent. It was argued last year, without any demur from the Chair, that one of the factors relevant to Parliament's sanctioning the use of £500 million or of any other sum was some reference to the conditions on which loans were made to local authorities.
One of the most important conditions obviously affecting any borrower of money is the rate of interest he has to pay. Another condition is the terms on which the money is lent. Another is the security given for the loan. I am anxious to put it to the Financial Secretary that, as matters stand at present, unless a new Clause is added to the Bill later on, Parliament will cease to have any control for the next 12 months about, for example, the rate of interest which is 1886 charged to local authorities by the Commission.

§ The Chairman
The argument has been fully presented, and I have said a number of times that this matter cannot be discussed in the debate on this Clause.

§ Mr. Glenvil Hall (Colne Valley)
Might I put a point to you, Sir Charles? We feel that there should be some way out of this difficulty. Interest rates are altered by Treasury Minute. We cannot discuss a Treasury Minute on the Bill. Therefore, the only occasion where we can possibly discuss interest rates—and we should at some time discuss those rates—is on this Bill. Previously, as you are very well aware, either by allowing it although a little outside the rules of order or for some other reason, it was then in order but is not in order now.
I have looked through the Bill, and this seems to be the only Clause on which rates of interest can be discussed. Somewhere in the discussion of the Bill we should be allowed to ventilate what, after all, is a most important side of these loans, namely, the rate of interest at which they are to be advanced to local authorities. I would therefore seek your guidance how we can put ourselves in order on this most important aspect of the Bill.

§ The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter)
I do not think that the right hon. Gentleman is quite right, even if his argument is logically sound, in suggesting that there are no other opportunities of discussing the system of Treasury Minute under which, as he rightly says, these rates of interest are regulated. The argument "It is quite out of order, but it would be rather nice to have a discussion on the subject and therefore it ought to be in order" is not a very respectable one Secondly, the Treasury Minute regulating rates of interest is an administrative Act, which is capable of being raised in this House in the normal way.

§ Mr. Jay
In view of what the Financial Secretary has said, may I remind you, Sir Charles, that he said last year that the two subjects, loans and interest rates, were so interlocked and interlinked—those were his exact words—that it was 1887 impossible to discuss one without the other? That was the basis on which we have discussed them previously.

§ Mr. Boyd-Carpenter
The interlocking was not said of interest rates but upon another matter extraneous to the Bill. Secondly, it is you, Sir Charles, and not I who rule what is in order.

§ The Chairman
I hope the Committee will not pursue this point any further. I am quite clear in my mind about it. Last year there was much more uncertainty about the intention of the Amendment than there is now, and to discuss rates of interest on the discussion of the Clause is out of order. I do not think there is anything more to be said about it.

§ Mr. R. T. Paget (Northampton)
We had a debate yesterday on the Second Reading of the Expiring Laws Continuance Bill, another of these annual Bills. The Chair then ruled that the practice with annual Bills was the rule of the House. The practice, what has happened in a previous year, the precedents, becomes the rule of the House.
We are now dealing with another annual Bill which, last year and this year, is the occasion when we hope to be allowed to discuss interest rates. We had a discussion on a similar Clause in the Committee last year, and I am told that interest rates were then ruled to be in order. I therefore put it to you, Sir Charles, that here we have an annual Bill, and a practice which has been established, and that that practice ought not to be departed from.
Even if it were not so and we were starting de novo, the Clause is an empowering Clause. It empowers the Government to do certain things. When the Government ask for power we have to decide whether to give them that power or not, and we are entitled to ask them how they will use it and what principles they will bear in mind in utilising it. We are entitled to say: "If we allow you to lend this money, will you use that power to lend it interest-free or at a rate of interest; and at what rate of interest?" Surely it would be absolutely contrary to every Ruling from the Chair to say that when a Government propose an empowering Bill it is out of order, when discussing the Clause that gives them the power, to ask them how they are going to utilise it.

§ The Chairman
I do not think so. Interest rates are dealt with under the Act of 1887, and there is no need to deal with that now.

§ Mr. Roy Jenkins (Birmingham, Stechford)
I wonder whether I might put a new point to you, Sir Charles. I think that to some extent you appreciate our difficulties, and it is extremely unfortunate if there is no place in this Bill at which we can discuss interest rates which, as the Financial Secretary said last year, is clearly a matter closely bound up with the whole principle of the Bill. However, there is on the Order Paper a new Clause in the name of my right hon. Friend the Member for Battersea, North (Mr. Jay) and others of my hon. Friends, which deals with this point, under which we could discuss the question of interest rates without coming up against the difficulty that they are not specifically mentioned in Clause 1. If, therefore, you could give us some indication that you will call that new Clause, perhaps that might meet the difficulty.

§ The Chairman
Is that the first new Clause?

§ Mr. Jenkins
No, Sir, the second new Clause—"Procedure for increasing interest rates."

§ The Chairman
That refers to the same point. That is out of order, and I was not going to call it.

§ Mr. Jenkins
As I understand it, why you did not call the Amendment put down by my hon. Friends, and why my hon. Friend the Member for Islington, (Mr. E. Fletcher) was not able to develop his argument, was that there was no mention of interest rates in Clause 1. I do not quite understand how that applies to a new Clause.

§ The Chairman
It increases the charge.

§ Mr. Austen Albu (Edmonton)
Would you not consider that the situation has been altered to some extent by the passage, not yet complete, of the Expiring Laws Continuance Bill, which is intended to allow local authorities to borrow otherwise than through the Public Works Loan Board, but which may, as many speeches made during the debate the other day made quite clear, involved the Government in using the rates of interest in order to establish a balance between the 1889 borrowing of local authorities from the Public Works Loan Board and their borrowing on the open market? One would have thought that this new feature introduced by the change in policy does make the question of interest rates of the Public Works Loan Board this year of very considerable importance, whereas it might not otherwise have been so if there had been no change of that policy.

§ The Chairman
I said that interest rates were not in order on Clause 1. That is really the point.

§ Mr. Albu
I was not referring to Clause 1.

§ The Chairman
We are dealing with Clause 1 now, and the hon. Gentleman ought to refer to it.

§ Mr. Glenvil Hall
Does not this put the Committee in a very awkward situation, and the Government, as a Government, in an extremely strong one? If on a Bill of this kind we are not allowed to move to insert certain words simply because it has been ruled that rates of interest must not come into the Bill, and must not be touched by the Bill, it means that we shall never be able to discuss them, except as and when the Government in their wisdom, or lack of it, issue a fresh Treasury Minute. I do not deny that administratively these matters can, on occasion, be discussed, but this is the time and place to discuss them. The point was very well taken last year by the Financial Secretary when he said: the two matters are so closely interlinked and interlocked that it would be somewhat artificial to try and discuss the one while completely ignoring the other."—[OFFICIAL REPORT, 23rd November, 1951; Vol. 494, c. 741.] That being so, as the discussion was allowed last year, and as it is a most important part of this business, surely there is some way out, either on the new Clause or on this Clause, whereby this Committee can discuss this very important issue.

§ Mr. G. R. Mitchison (Kettering)
Subsection (2) of Clause 1 says that sums to be issued are to be issued in accordance with the provisions of the National Debt and Local Loans Act, 1887. We are, therefore, I submit, clearly entitled to look at that Act to see what its provisions are as to interest, which is the 1890 matter we are considering at the present time. When I look at the National Debt and Local Loans Act, 1887, I find the provisions in Section 7 (2), omitting the irrelevant words, are: there shall be paid to the National Debt Commissioners … and carried to the Local Loans Fund, all sums paid or applicable in or towards the discharge of the principal or interest of any Local Loan granted either before or after the passing of this Act, or of any other sum due in respect of such loan, except as otherwise in the Second Schedule to this Act specified. Being a very cautions person I looked to see what was excluded. Of course, we could not raise these matters, because they refer to Any sums received in respect of—

(a) Suez Canal Shares, or,

(b) Any loan for a railway at the Cape of Good Hope under the Cape of Good Hope (Advance) Act, 1885, or,

(c) Any loan made out of moneys advanced on the security of the Irish Church Fund. …"

They are not applicable to the Local Loans Fund. At the moment it would be out of order to pursue the very interesting subject of the loan for a railway at the Cape of Good Hope under the Cape of Good Hope (Advance) Act, 1885.

§ The Chairman
I quite agree. It is out of order to discuss the 1887 Act.

§ Lieut.-Colonel Marcus Lipton (Brixton)
I am in the happy position of not being, in any sense of the word, constricted by your Ruling in what I hope to be able to say on Clause 1—

§ Mr. E. Fletcher
I understood my hon. and gallant Friend was rising to a point of order. I had not quite finished.

§ The Chairman
I really think that I must call the hon. and gallant Gentleman if he is going to speak on the Question, "That the Clause stand part of the Bill." I have given a Ruling to the best of my ability. I am sorry if it does not please, but that is not my fault.

§ Mr. Fletcher
With great respect, I was in the middle of a speech on the Question, "That the Clause stand part of the Bill."

§ The Chairman
I thought the hon. Gentleman was on a point of order.

§ Mr. Fletcher
No, Sir Charles. I did not continue when my hon. and gallant 1891 Friend rose because I naturally assumed that he was rising to continue the interesting discussion we were having on the point of order and on your Ruling. It would now appear that he rose to resume the debate on the Question, "That the Clause stand part of the Bill."

§ The Chairman
I will call the hon. and gallant Gentleman next. I hope the hon. Member's speech will not have anything to do with interest rates.

§ Mr. Fletcher
No, Sir Charles. It is quite clear from your Ruling that any reference to interest rates is quite out of order on the Question, "That the Clause stand part of the Bill."

§ Mr. Glenvil Hall
May I pursue this a little further? Do I understand from your Ruling just now that it would be out of order for us to discuss the provisions of the National Debt and Local Loans Act, 1887? If so, if we are not allowed to refer to them or to discuss them, it means that we cannot discuss what is actually in the Clause, in addition to not being able to discuss something because you have ruled it is not in the Clause.

§ The Chairman
To go into the details of the 1887 Act would, I think, be out of order. The hon. and learned Member for Kettering (Mr. Mitchison) went into matters which I thought could not possibly apply here.

§ Mr. Hall
Surely this subsection hinges on the words in accordance with the provisions of the National Debt and Local Loans Act, 1887. Therefore, subject to anything you may say, I take it that we are entitled to discuss the provisions of that Act. Otherwise we can discuss neither something which is referred to in the subsection nor, according to your earlier Ruling, something which we wanted to put in but which is not there at the moment.

§ The Chairman
I think the provisions of that Act which are applicable to this Clause can be discussed, but not rates of interest.

§ Mr. Fletcher
Perhaps I could now forget altogether about rates of interest and make a few observations about the general effect of Clause 1 in so far as it affects, in general, facilities for borrowing by the local authorities. That was one of 1892 the questions which concerned us most on Second Reading.
4.30 p.m.
On the Second Reading debate we were in the difficult position that we did not know at that time whether the House would give a Second Reading to the Expiring Laws Continuance Bill, which normally is taken before the Public Works Loans Bill, but which this year—for some reason we have not yet been able to discover—came subsequently to that Bill. It was due to the general muddle which characterises so many actions of Her Majesty's Government. We are now in a different position, although I do not think it is by any means free from the muddle we expect from the arrangements of the Government.
We are in the position that the House has given a Second Reading to the Expiring Laws Continuance Bill. That was given last night and the Amendment which was down on the Order Paper was not called. The present form of the Expiring Laws Continuance Bill omits Section 1 of the Act of 1945, which made it obligatory on local authorities to borrow from the Public Works Loan Board. We still do not know whether the Expiring Laws Continuance Bill will emerge from this House in that form, or whether in the course of debate in Committee that Section will be reinserted.

§ The Chairman
I think the hon. Member is getting away from the Clause.

§ Mr. Fletcher
I want to get this clear, Sir Charles. We must assume for the moment that Section 1 is not to be reviewed and, therefore, in future local authorities will not merely be able to borrow from the Public Works Loan Board but also from other sources. You will, I think, recollect that in the Second Reading debate the Financial Secretary was asked a number of questions as to what assurances had been given by the Treasury to local authorities in the changed situation. I called upon the Financial Secretary to produce the circular which he said had been sent to the local authority associations. The Financial Secretary was good enough to circulate that communication in the OFFICIAL REPORT on Friday last. That circular, which we did not have before us on the Second Reading of the Bill, is now in the possession of hon. Members. 1893 It has a very considerable bearing on Clause 1.
What local authorities want to know now is whether in the new situation whereby they are not restricted in their borrowings to the Public Works Loan Board they will nevertheless have the same freedom and the same rights to borrow money from the Public Works Loan Board if they so wish as they have enjoyed during the last six years when they have had no other source whatever from which to borrow money for capital purposes. That is the crucial matter which arises on the Bill this year.
The memorandum to the local authority associations is far from being the satisfactory assurance which local authorities are entitled to expect. I hope that we shall hear in the course of debate on Clause 1 that there is a much more definite and positive assurance than is contained in the circular. For the benefit of hon. Members who have not read last Friday's OFFICIAL REPORT, I will quote the relevant passage. It says: It is therefore intended that the authorities should continue to be given full access to the sources of finance for meeting approved commitments."—[OFFICIAL REPORT, 14th November, 1952; Vol. 507, c. 104.] We want to know what is meant by "full access." Hitherto the amount voted by this House—£500 million this year, which is the same figure as it was last year—was automatically available to local authorities for the simple reason that they had no other source from which to borrow. Now they are free to go to the market if they can or to borrow from private mortgagees if they can find them, but in addition they are told that they have full access to the Public Works Loan Board. We want to know whether that means that, if they. choose to get their money from the Public Works Loan Board, at whatever rate of interest is prevailing at the time, they will be able to get it as of right in the same way as they have obtained it during the last five years.
Or is it the intention of the Government, as has been widely supposed by those who have commented on this Bill in the financial Press, that this new procedure, giving local authorities what the Financial Secretary called freedom from the restrictions of the 1945 Act, will also be used to make it more difficult, not for all, but for some, local authorities to borrow when they want to do so? That 1894 is the fear that has been very widely expressed in a great many quarters. One of the newspapers said that this new method was intended to discipline local authorities, to make them curtail their capital commitments and have regard to their other liabilities, and so forth.
I think the Committee are entitled to view with very great suspicion the use of the phrase that local authorities should continue to be given full access to the sources of finance for meeting approved commitments. I hope we shall hear from the Financial Secretary that that means nothing less than that if they make application to the Public Works Loan Board to borrow some part of this £500 million that has been authorised, they will be able to get it, provided, of course, that they have loan sanction and that their scheme of capital expenditure has been approved by the appropriate Government Department concerned; and that they will be able to get it regardless of extraneous considerations, such as, for example, what other debt commitments they may have, whatever is their rateable value, whatever is the rate prevailing in the district concerned.
You will appreciate, Sir Charles—and I hope I am in order—that it is necessary for us to draw attention to a change that has come over borrowing by local authorities in recent years. That is what we are concerned with here. It is all very well to go on year by year making provision for vast sums like the £1,000 million as we do this year without reminding ourselves of the rather significant fact that, whereas in the past local authority borrowings were largely secured on their rates, because that was the chief security they could give, the matter has become rather different nowadays as most local authorities, as part of the housing programme, have built a great many houses—

§ The Chairman
I think the hon. Member has gone far beyond Clause 1.

§ Mr. Fletcher
The last thing I want to do is to expand the ambit of this debate, but I think I have made clear the central point I want to put to the Financial Secretary and on which I hope we shall have a clear and categorical assurance before we part with Clause 1.

§ Mr. Boyd-Carpenter
On a point of order. May I have your guidance, Sir Charles, in view of the closing words of the hon. Member? As I understand, he asked me to make a statement on the future access of local authorities to the Public Works Loan Board. I do not know whether I shall be in order in so doing. I understood from some observation which fell from you a moment ago that I should not be in order, as we had a wide and full discussion of this issue on Second Reading. I do not want to press this point, but I would be grateful for your guidance for my future information. I do not wish to deny information to the Committee, but, at the same time, I do not wish to get out of order.

§ The Chairman
The Financial Secretary would, in my opinion, be out of order. I have made the position as clear as I possibly can, that on the Question, "That the Clause stand part of the Bill" we can only discuss what is in the Clause, and that to range wider is, in my view, out of order.

§ Mr. Jay
I hope that we may reach agreement on this point, but I do submit that there must be something which we can discuss on this Clause.
What the Clause does is to allocate the sum of £500 million which may be issued by the Public Works Loan Commissioners. I most earnestly suggest to you, Sir Charles, that it must be possible for us, even under a somewhat strict rule, on a Clause of this kind, to discuss the way in which such a sum should be issued; otherwise, there is almost nothing which we can discuss on this Clause, which, in fact, authorises the issue of £500 million of public money. I therefore respectfully suggest that it cannot be out of order, at least to touch on the important provision which has, in many places, given rise to anxiety about the facilities for the issue of this money.

§ Mr. Paget
Further to that point of order. On the Second Reading, the question of the access of local authorities to this Fund was discussed, and, therefore, to suggest that it was out of order would be a reflection on the Chair.

§ The Chairman
Second Reading and Committee stage are rather different, and we are now in Committee. The practice of the House is quite well-established. It 1896 is that we can only discuss what is in the Clause on the Question, "That the Clause stand part of the Bill." I think we have had a long time on this point, and I have made it as clear as I possibly can. I hope that the Committee will now abide by my Ruling.

§ Mr. Paget
With great respect, Sir Charles, I think you misunderstood what I was saying. I was merely reminding you that it was in order to discuss the question of access on Second Reading. It can only be in order on Second Reading if it is relevant to the Bill, and it can only be relevant to the Bill if it is relevant to some Clause or Clauses in it. If it be not relevant to Clause 1 of the Bill, then, for the guidance of the Committee, could you tell us to which Clause it is relevant, because, if it was relevant to the Bill on Second Reading, it must be relevant to some particular Clause of the Bill?

§ The Chairman
It need not be relevant to anything in the Bill at all on Second Reading.

§ Mr. Glenvil Hall
May I make this point? The Financial Secretary appealed to you, Sir Charles, as I understood him, on the ground that anything he might say at that Box might be ruled by you to be out of order. We had a discussion last night, not as long as it should have been, on several points involved in the Expiring Laws Continuance Bill, and, as far as my recollection goes—it was in the early hours of the morning, in fact—we did not have one single word from the Front Bench opposite.
This afternoon, on this Bill, in which we are dealing with something like £1,050 million, the Financial Secretary, who is usually very courteous, is trying to hide himself behind a mythical rule of order on the ground that it might be used against him. I am asking the Front Bench, if I may—

§ The Chairman
Is this a point of order?

§ Mr. Hall
Well, no. I am trying to ascertain whether it is any use our discussing this Clause, whether we are to have a reply from the Front Bench opposite or whether what the hon. Gentleman said a few moments ago is his last word on this Clause, because, if so, quite frankly, our proceedings are being reduced to a farce.

§ The Chairman
I am sorry if that is the view taken by the right hon. Gentleman of my conduct in the Chair. There is no farce as far as I am concerned. I try to do my best to carry out the practice of the House. The Financial Secretary raised a point of order to ask me if he could range wider than the terms of this Clause, and my answer was "No." I have been trying to prevent that happening for the last hour or so.

§ Mr. Jay
If I may return, with great respect, to the point which I tried to make, I was suggesting that we should bring ourselves back to this Clause, and I submit to you, Sir Charles, in all earnestness that, since the substance of the Clause is that £500 million should be issued, we must be able to discuss the issue of that sum of £500 million by the Public Works Loan Commissioners and the basis and fashion upon which it can be done. We do suggest, and I hope that you will agree, that it must at least be possible to do that, or it would not be possible to discuss anything on this Clause, which is, in my view, the most substantial part of the Bill. Would it not be possible to proceed on that basis?

§ The Chairman
I have made the point as clearly as I can. I do not rule unfairly, and, when hon. Members stray a little wide, I do not stop them instantly; in fact, I am rather lenient. I think I have made the point perfectly clear. I think the Committee knows quite well what is the rule. It is no personal interest to me whether the matter is discussed or not. I am simply trying to carry out my duty, and it is being made very difficult for me.

§ Mr. Sydney Silverman (Nelson and Colne)
Has it not always been held to be not very useful for hon. and right hon Gentlemen to ask the Chair to give rulings on hypothetical points of order? Would it not have been more useful on his part, and more helpful to you, Sir Charles, as well as to us, if the Financial Secretary had endeavoured to reply to the discussion which has so far proceeded, relying upon you to stop him if he strayed beyond the bounds of order, instead of putting to you a hypothetical question which could only result in a hypothetical answer?

§ The Chairman
The hon. Gentleman knows that I can only call hon. Members who rise to their feet, and that I have very little power to make them sit down again.

§ Mr. Silverman
I am not quite sure whether I follow the full import of all of that, but the Financial Secretary did, as far as I remember, rise to his feet and ask you whether he would be in order if he did so-and-so. It was on that basis that I suggested that what he was doing was to appeal to you for a hypothetical ruling upon a hypothetical event which so far had not occurred.

§ Mr. Boyd-Carpenter
Perhaps I may save time if I am allowed to make two submissions. The first is that I asked specifically whether I could reply to a question which an hon. Member had put to me, which, in my submission, is not hypothetical but practical; and, secondly, it may relieve the anxieties of the right hon. Gentleman the Member for Colne Valley (Mr. Glenvil Hall), whose enthusiasm to hear from me is most touching, if I say that I am most anxious to catch your eye, Sir Charles, to reply to the debate.

§ Mr. S. Silverman
May not hon. Members normally assume that, if a question put in debate is in order—and it must be in order unless the occupant of the Chair stops the hon. Member from putting it—if that question is in order, normally, the reply will be in order, too? The right hon. Gentleman would surely have been of greater assistance if he had endeavoured to give the answer, which he says he was most anxious to give and which I am sure he is still most anxious to give, relying on you, Sir Charles, to stop him.

§ The Chairman
I quite agree that, if a question is in order, the answer to it must be, but, if the question is not in order, the answer is also out of order.

§ Lieut.-Colonel Lipton
It is a long time, Sir Charles, since you called on me to speak on this Clause, but, fortunately, I still recollect what it was I intended to say.
What I want to say, in the first instance, is to express my appreciation to the Financial Secretary. It will be recalled that in Committee on Clause 1 of 1899 last year's Bill I complained that we were handicapped because the annual Report of the Public Works Loan Board for the current year was not available at that time. I am happy to be able to pay tribute to the Financial Secretary. He gave an undertaking last year that he would see what could be done to remedy the position this year. On this occasion, for the first time, the annual Report of the Board was available to hon. Members before this Bill was presented to the House.
That is as far as I can go in congratulating the hon. Gentleman. One or two points which I made about Clause 1 of last year's Bill have, so far as I can judge, not yet received adequate attention. The Financial Secretary said last year that he would give these matters his attention and that I could not fairly expect him to give an answer about them there and then. He has now had 12 months in which to meditate upon the points I made, which are just as relevant now as them were when they were made on the last occasion.

§ The Chairman
That is not quite accurate. Last year undue latitude was allowed.

§ Lieut.-Colonel Lipton
I had no difficulty with the Chair last year when I was dealing with the activities of the Public Works Loan Commissioners who are referred to in Clause 1. I want to direct a few remarks to the question of the existence of this body. They appear to be in the key position in reference to the whole Bill and especially to this Clause.
The Public Works Loan Board consists of a number of eminent gentlemen, including my hon. Friend the Member for Islington, East (Mr. E. Fletcher). I have the highest regard for my hon. Friend, but I wish that he could, in the course of his remarks on Clause 1, have told us what it is exactly that the Commissioners do. How often, if ever, do they meet? What do they do when they do meet?

§ Sir William Darling (Edinburgh. South)
Make bad debts.

§ Lieut.-Colonel Lipton
That may well be.

§ Mr. Ede (South Shields)
So do some drapers.

§ Lieut.-Colonel Lipton
It seems to me that the activities of this Commission merit a somewhat closer scrutiny. There are on it a number of eminent gentlemen, including my hon. Friend the Member for Islington, East, and we should like to know what they are doing. I should like my hon. Friend to tell us what has been happening during the period while he has been a member of this Board. I should like him to tell us to what extent the continued existence of the Commission is justified.
The Civil Estimates show that the Commission costs in the form of salaries, travelling expenses and legal charges no less a sum than £53,000 a year. That is more, by £4,300, than it was in the previous year. That figure is all the more significant when it is remembered that the staff has been reduced from 93 to 88.

§ Mr. Douglas Houghton (Sowerby)
Wages have gone up.

§ Lieut.-Colonel Lipton
That may well be. In achieving this result the services of two messengers and three typists have been dispensed with, but the higher ranges have been left intact.
It strikes me as very odd that, at a time when we have a Government pledged to ruthless measures of economy, no attempt has been made to examine whether or not the continued existence of this Commission is justified. It is distressing to find—

The Deputy-Chairman (Mr. Hopkin Morris)
The continuation of the existence of the Commission is determined by another Act of Parliament and not by Clause 1 of this Bill.

§ Lieut.-Colonel Lipton
The Public Works Loan Commissioners are empowered by the Clause under discussion to issue a sum not exceeding £500 million. To discharge their duties under this Clause it appears to me that £53,000 is to be spent in the form of salaries, and that a staff of 88 people—

The Deputy-Chairman
That is out of order. The only question before us is that of the money issued to the Commissioners.

§ Lieut.-Colonel Lipton
As it is likely that the amount of money to be distributed through the Commissioners will be 1901 less this year than in previous years, because local authorities will be able to go into the open market to raise money instead of to the Public Works Loan Board, the volume of requests or demands for loans is likely to go down at a time when the cost of administering this service is going up. That seems to me to call for some explanation.
The Report of the Public Works Loan Board for 1951–52 indicates that 19,336 applications were made for loans amounting to £475 million.

The Deputy-Chairman
That is a point that may well be raised on a Supply Day, but it does not arise on this Clause.

§ Lieut.-Colonel Lipton
If you will be good enough to refer to the OFFICIAL REPORT for 28th November, 1951, Vol. 494, columns 1581–2 onwards, you will see that it was with the distinct approval of the then occupant of the Chair that I was permitted to deal with all the points with which I am trying to deal now. If it was in order last year may I ask why it is not in order this year?

The Deputy-Chairman
That question has already been dealt with by the Chairman of Ways and Means when he was in the Chair. He has already said that greater latitude was allowed last year and that the debate is narrower this year.

§ Mr. S. Silverman
Further to that point. Surely, the rules of order do not change from year to year.

The Deputy-Chairman
I agree. The rules of order do not change, but the rules of order were allowed too wide a latitude last year.

§ Mr. S. Silverman
I do not know where that takes us. Do we understand now that the occupant of the Chair today is reflecting upon the conduct of the occupant of the Chair a year ago? It seems to me that a useful discussion was had last year and that it drew from the Government representative in the course of the debate an undertaking with regard to what was being raised. It really would be extremely surprising if requests were made, arguments advanced and the Government of the day gave an undertaking in respect of them and then, a year later, it was out of order to inquire about the effect of the undertaking.

The Deputy-Chairman
A Ruling has already been given this afternoon, and I am bound by that.

§ Lieut.-Colonel Lipton
I am not disputing the Ruling. If I interpret it aright the discussion on Clause 1 is restricted as compared with last year, in that any discussion as to interest rate is not permitted. What I am seeking to do is not to discuss in the slightest degree the interest rate, but the machinery which the Committee has been asked to accept.

The Deputy-Chairman
It goes further than that. It is not merely the interest rates which are excluded. The discussion is restricted to what is in the Clause.

§ Lieut.-Colonel Lipton
As the Clause refers to the existence of the Public Works Loan Commissioners, may I take it that any reference or discussion about the duties of the Public Works Loan Commissioners, or the manner in which they discharge their duties under this Clause, will be ruled out of order? That was certainly not the impression given to the Committee when an exactly similar point was raised last year. It is definitely mentioned in the Clause that the Public -Works Loan Commissioners are given certain powers. I am not disputing the necessity for giving these people certain powers. What I am seeking to do is to examine the way in which they are exercising those powers to which this Committee is now being asked to agree.

The Deputy-Chairman
There is nothing about powers in this Clause. The Commissioners derive their powers under different statutes. There is nothing about their powers at all in this Clause.

§ Mr. Jay
I do hope that we may have some discussion on matters of substance here, and not entirely on points of order, of which we have had enough. Therefore, in the hope of achieving that, and in the spirit of what was said by your predecessor in the Chair, Mr. Hopkin Morris, I submit to you that this Clause does say, and I am sorry to have to repeat it: There may be issued by the National Debt Commissioners for the purpose of local loans by the Public Works Loan Commissioners… these large sums of money. Therefore, we are concerned with local loans by the Public Works Loan Commissioners. It 1903 must therefore be in order to discuss the manner in which those loans are made by the Public Works Loan Commissioners. That is all we are asking for, and I am sure that you will agree with that.

The Deputy-Chairman
What is in this Clause can certainly be discussed, and the substance of the Clause can be discussed. But not the powers or the appointment of the Commissioners.

§ Lieut.-Colonel Lipton
I am very happy to hear you say that, because there is set up machinery which enables the Public Works Loan Commissioners to exercise such powers as they possess. I am not arguing as to the nature of their powers or the morality or validity of the work they do. I seek to direct the attention of the Committee to the machinery by virtue of which this Clause is enabled to operate when it gets on to the Statute Book.
The machine consists of a staff, of a Public Works Loan Board composed of some 88 civil servants, involving the expenditure of £53,000 in salaries and expenses. What I am doubtful about is this. The report of the Public Works Loan Board makes it quite clear that the applications for loans were mostly from local authorities which is quite understandable. These applications are from public works, and here I quote from the actual Report of the Public Works Loan Board which, before they could be carried out, needed the approval of a Government Department and Departmental consents to the borrowing of the money. In many cases the consent of the Treasury under the Control of Borrowing Order, 1947, was also required. With so many consents having to be obtained from rival Government Departments it is difficult for me to understand what it is that the Public Works Loan Board does do, except to be a fifth, or, indeed, a sixth wheel in this cumbrous conveyance, as a result of which, this Public Works Loans Bill, is to be put into effect. I would ask the Financial Secretary whether he has investigated the position since last year—

§ Mr. Houghton
Has my hon. and gallant Friend joined the "hatchet group"?

§ Lieut.-Colonel Lipton
I am suggesting that, if there is any axeing to be done, it 1904 should be done where it is not likely to do anybody any harm. And it seems to me that one of the bodies which might easily be dispensed with is the Public Works Loan Board itself. Because all the work, all the decisions of policy have to be taken by someone else.

The Deputy-Chairman
The hon. and gallant Member is getting back again to the powers and constitution of the Public Works Loan Commissioners.

§ Lieut.-Colonel Lipton
I am sorry. I was carried away by the interruption of my hon. Friend the Member for Sowerby (Mr. Houghton). I hope he will let me conclude the argument I am trying to address to the Committee. I hope the Financial Secretary will be able to tell the Committee whether this cumbrous machinery is not a little out of date by now, and whether a useful saving could be made without detriment to the applications of local authorities.
It is a regrettable thing that when an opportunity presents itself of introducing some change such as this, so few hon. Members are present on the Government benches to support the kind of proposal or attitude which I am asking the Committee to accept. I therefore hope that we may be vouchsafed some information by the Financial Secretary relating to the points I have tried to raise.

§ Mr. G. Lindgren (Wellingborough)
I only recently came into the Chamber—

§ Mr. George Brown (Belper)
Very sensible, too.

§ Mr. Lindgren
—and I hesitate therefore to enter into the debate, and particularly to come to the rescue of the Financial Secretary to the Treasury. There are a number of hon. Gentlemen opposite to whose rescue I would come, but the Financial Secretary is not high up on the list.
I was surprised to hear that part of the speech which I did hear from my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton). Let me say, from a fairly extensive experience of local government, that the Public Works Loan Board has functioned effectively and efficiently for local authorities. There have not been the problems to which my hon. and gallant Friend referred. If a project has received the sanction of the appropriate Government Department 1905 the services of the Public Works Loan Board have been available to the local authority freely and easily.
I am concerned that there should be sufficient funds available to local authorities if they require moneys for various projects. They have the opportunity of going into the open market, of which advantage has been taken by many local authorities in Private Bills. It is equally true that there are many local authorities who like the opportunity of going into the open market if they think that market is favourable to them. Local authorities are not the only people in this world who want the best of both worlds—

§ Mr. G. Brown
I do, too.

§ Mr. Lindgren
So far as local authorities are concerned they want to be able to go into the open market if they think it will be beneficial to them. But they fear that if there is a restriction on the availability of money through the Public Works Loan Board the market will harden against them, and they will have to pay higher prices in the open market than they otherwise would do. Therefore, local authorities want to be assured—and I hope the Financial Secretary will be able to assure them during this debate—that there will always be available, in the light of the Government investment programme, sufficient moneys for the local authorities to take up through the Public Works Loan Board as they receive sanction from various Government Departments for work to be carried out.
I would like the Financial Secretary to give that assurance, which I am certain would allay the fears of many local authorities. They are afraid that under the restrictions of this Bill they are likely to be forced on to the open market and made to pay a higher rate of interest. To put it bluntly, they want the Public Works Loan Board available to them to hold the market at a favourable rate of interest.

§ Mr. Roy Jenkins
Perhaps in view of the great vigilance of the Chair this afternoon, and the great vigilance of the Financial Secretary, who has been more anxious than the Chair to confine the debate within very narrow limits—

The Deputy-Chairman
The Chair was not concerned to confine the debate 1906 within narrow limits, but within the limits of the Clause.

§ Mr. Jenkins
I can understand the position of the Chair, and I would not dispute that for one moment. But I think while your predecessor was in the Chair, Mr. Hopkin Morris, the Financial Secretary was extremely vigilant in the interests of the Chair, and seemed to wish to go beyond confining the discussion within the limits of the Clause.
My right hon. Friend the Member for Battersea, North (Mr. Jay) recently read Clause 1 (1), and perhaps, in order that it may be obvious how directly my remarks are related to it, I may recall to the Committee what the words are: There may be issued by the National Debt Commissioners for the purpose of local loans by the Public Works Loan Commissioners any sum or sums not exceeding in the whole the sum of five hundred million pounds. One of the points which, I think, was not discussed and about which we should get some more information today is whether that phrase, "for the purpose of local loans" is now going to include all local loans, as it has done in the past, or whether it is merely now going to be a certain number of local loans.
The Financial Secretary gave us some help on Second Reading. I know that he is always as lucid as Government policy enables him to be. If there is any lack of lucidity in his speeches to the Committee or to the House, it is because he has got a confused brief, and not because his own mind is confused. On this occasion he appeared rather confused, and the reason is that Government policy on this matter is in a state of great confusion.
Obviously, there is a change envisaged which will affect the phrase "for the purpose of local loans," and subsection (1) is not going to mean exactly the same thing this year as it meant in past years. That is clear from the statement we have had. What the Financial Secretary was asked to explain was whether all the local authorities who wanted to come could still come under this umbrella, as has been the case in the past, and that local authorities could choose freely whether or not to exercise the option of going to the market, or whether any pressure would be applied to them to go to the open market.
1907 I do not think he succeeded in clearing the matter up satisfactorily, because there seems to be in the minds of the Government and of supporters of the Government a number of confused ideas as to exactly what may be achieved by this change. It is suggested in some quarters of the Press that the object may be to have a general disinflationary effect by forcing some local authorities to go to the market and pay higher rates of interest, thereby squeezing out certain loans. That would be one possibility, and that is in the minds of some supporters of the Government who want a harder money policy.
What also seems to be in the minds of supporters of the Government is that by this new means of finance some additional finance will be available for local authorities, who will still get money from the Public Works Loan Board, but in addition some of the big local authorities who might wish to go to the market would be able to get some additional finance over and above that which the Public Works Loan Board would make available.

§ Mr. Charles Pannell (Leeds, West)
It is for all local authorities.

§ Mr. Jenkins
The right is there for all local authorities to go to the market, but I am sure that my hon. Friend would agree that, in practice, if any local authority preferred to exercise the option it would be the larger authorities who would prefer to go to the market in this way. That idea may be in the mind of the Government, but it is quite a contradictory view to the first one that I put forward.
There is a third point which seems to me to be in the minds of some of the Government supporters, if not in the minds of the Government themselves, and that is the view that by making this change of policy and allowing possibly some local authorities to go to the markets for loans they would be able to do away with the large Budget surplus and make very substantial remissions in taxation. That was the point put on Second Reading by the hon. Member for Kidderminster (Mr. Nabarro), who I am sorry is not in his place this afternoon. He called in aid of this view the opinion expressed by the right hon. Member for Blackburn, 1908 West (Mr. Assheton), and the right hon. Gentleman the Member for Haltemprice (Mr. Law).
For the benefit of the right hon. Gentleman the Member for Blackburn, West, who has suddenly joined our debate, I will repeat what I was saying, that there is a view among certain Government supporters that if local authorities went to the open market for their loans that would enable the Government to manage with a much smaller Budget surplus, thereby enabling substantial remissions of taxation.

§ Mr. Ralph Assheton (Blackburn, West)
My own view is that it would enable us to, have a smaller Budget surplus than otherwise would be the case, but how much smaller during the first year of the operation of this new scheme I cannot say. I should myself not expect it to be a very high figure in the first year.

§ Mr. Jenkins
I am very glad to have some guidance from the right hon. Gentleman as to his own views on that point. I think the view which was taken by the hon. Member for Kidderminster was that to the extent that local authorities went to the market rather than to the Public Works Loan Board would be the amount by which a smaller Budget surplus could be allowed. I think that is a very fallacious view, and the "Economist" this week takes the view that it is also a very fallacious argument. I am afraid that it uses rather harsh language about the right hon. Gentleman and his hon. Friends who take that view. It talks about "misplaced Budgetary hopes among the economically illiterate." That is the language of the "Economist," I myself would not use such strong arguments about the right hon. Gentleman and his Friends, but while I do not approve of the language, I think the idea behind it is certainly one which we must accept.
We on this side of the House realise that the Financial Secretary has to deal delicately with his right hon. Friends the Members for Blackburn, West and Haltemprice in present circumstances, but I do not think that that view is really one which the Financial Secretary shares, and I hope he will make his position clear. Their view may be that to push these local loans into the open market would generally lead to a new series of private 1909 savings, or to a smaller total of local authority borrowing, but there is no reason to suppose that those results would automatically follow. I have no doubt that if neither of these results accrued there would be no less need for a Budget surplus above the line than is now the case.
I hope very much that the Financial Secretary, without confining his intervention merely to points of order, will lucidly explain the matter further to us. He should not try to use the protection of the Chair to avoid speaking again, and we regret the fact that—

The Deputy-Chairman
The Financial Secretary is certainly not protected by the Chair. All that the Chair is seeking to do is to keep this discussion within the limits of the Clause.

§ Mr. Jenkins
We, of course, completely understand that hon. Members on either side of the House or the Financial Secretary, would be out of order in going beyond the Clause, and that they would then be pulled up by the Chair, but the position which arose before you, Mr. Hopkin Morris, assumed the Chair was that the Financial Secretary got up and almost asked in advance to be called to order, which did not point to the fact that he was very eager to take part in our debate. I almost felt that it was a matter of regret that he and not the Minister of State for Economic Affairs is in charge of the Bill, because I am sure the Minister of State for Economic Affairs would never try to use the rules of order in order not to make an intervention in the House.
I hope the Financial Secretary will not do so either, but that he will come to the Box and give us a lucid and forthright explanation as to what is in his mind and in the mind of the Government about the change which may come in the meaning of this phrase "for the purpose of local loans" during the ensuing year. Is the Board to continue to supply all local loans? If not, is the object to be that of getting a smaller Budget surplus, to make a larger total of funds available to local authorities, or, by using the pressure of high interest rates, to squeeze certain local authorities out of the market?

§ Mr. James McInnes (Glasgow, Central)
I rise to deal with the question of charges which borrowers have to pay to the Public Works Loan Board. I know 1910 that a Ruling has been given that we cannot deal with the question of interest charges, so I must confine myself to the question of the fees and Stamp Duty which these borrowers have to pay.
My hon. Friend the Member for Wellingborough (Mr. Lindgren) indicated that, in his opinion, the Public Works Loan Board was a most respected and efficient instrument of considerable value to local authorities. That I accept to the full, but I believe, as I hope to show in the next moment or two, that the Public Works Loan Board is an unnecessarily expensive instrument for local authorities, If we take the question of the fees every borrower has to pay, 4s. per cent. in respect of fees and 5s. per cent. in respect of—

The Deputy-Chairman
This Clause deals only with the issuing of money to the Public Works Loan Board, and it will not be in order, therefore, on this Clause, to discuss payments by the Board.

§ Mr. McInnes
I understood that fees are payments to the Board, although Stamp Duty is not; but as far as fees are concerned, they are payments to the Public Works Loan Board. Indeed, I have been in communication with the right hon. Gentleman, and I am informed that the operational costs of the Public Works Loan Board, which my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton) referred to—

The Deputy-Chairman
There may be an appropriate time to raise this issue, but it does not arise on this Clause, which provides for payment by the National Debt Commissioners to the Public Works Loan Board, that is all.

§ Mr. James MacColl (Widnes)
I want only to raise a point on which the Financial Secretary may be able to assist, and that is the adequacy of the sum of £500 million, and how it is arrived at, particularly in view of the remarks, with which, in general, I agree, my hon. Friend the Member for Stechford (Mr. Roy Jenkins) made. It seems to me that there are very considerable dangers, as he said, in discouraging the local authorities from the use of the facilities of the Public Works Loan Board and putting them on to the open market. Some authorities will normally have grown accustomed to using the facilities provided out of this sum.
1911 We remember that before the war local authorities—some local authorities—could get very badly stung through Mr. Hatry and rather fraudulent conduct in making local loans under private enterprise, and I think it would be a very great pity if the attitude which the hon. Gentleman the Member for Kidderminster (Mr. Nabarro) appeared to have—

§ Mr. Pannell
I do not want to hold up my hon. Friend, but he mentioned Mr. Hatry. I thought that, generally, those charges were disproved, but in so far as my hon. Friend is bandying names about the Chamber it seems to me he ought to offer some evidence—

The Deputy-Chairman
We cannot go on discussing Mr. Hatry.

§ Mr. MacColl
I am sorry. I was referring in general terms to the Hatry incident. I have not refreshed my memory of the exact details of the various charges that led to Mr. Hatry's disappearance from public life for a fairly protracted period, but I do know that some did suffer—

The Deputy-Chairman
I hope that the hon. Gentleman will leave that point now and come back to the Clause.

§ Mr. MacColl
I gladly will come back to the Clause, Mr. Hopkin Morris, but I think it is relevant to the question of what are to be the indirect effects of the fixing of this global figure to £500 million. I fear that one of the effects may be to push on to the open market local authorities who would be better advised and would, in normal circumstances, want to use the skilled services of my hon. Friend the Member for Islington, East (Mr. E. Fletcher) and have at their disposal his wisdom and advice as a colleague of the Commissioners.
I was particularly interested in the other point my hon. Friend the Member for Stechford made when he quoted the "Economist" and the rather severe comments which it made on the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton) and, by implication, on the hon. Gentleman the Member for Kidderminster, and as to what they thought would be the effect on the Government account of directing local authorities into the open market. I understood my hon. Friend to say we could not 1912 expect to have good results from a policy of this sort unless some further vehicle in the local setting were available—some other means of obtaining funds which the local authorities could use.
Then my hon. Friend, to my very great surprise, sat down—because of all people in this Chamber at the moment I should have thought that my hon. Friend would have been the very first person to draw attention to the achievements of his own local authority in attracting savings through a municipal bank.
I hope that the Financial Secretary will help us here. If it is possible to attract local savings by means of encouraging the local authorities to establish municipal banks and in that way to attract and to rely on the local enthusiasm and patriotism of the local citizens, and draw in local savings through municipal banks for the services of local authorities, and make them a reservoir of credit on which they can draw and thus meet the criticism the "Economist" made, that will be a really creative and constructive piece of policy—the first creative, constructive piece of policy I have seen the Financial Secretary put forward. If that is what he is going to do I hope he will tell us so, to enable us to make a further estimate of the adequacy of this Bill. Unless he is going to do something of the sort it does not seem very adequate.
In the case of rating and valuation we have had a kind of preliminary dance before a fundamental change of policy is made in the methods of valuation. It may be that this is a preliminary dance before there is to be an epoch-making change in the attitude of the Government towards savings, particularly in establishing municipal banks. I hope that that is what is behind it. I hope we shall be told so, because I think that that would make it much easier for us to accept this figure which, in the absence of these assurances, causes me some disquiet as to what effect it will have on local borrowing.

§ Mr. Jay
I think we have now, happily, reached clarity about what we can properly discuss on this Clause. I shall, therefore, confine myself most strictly to the local loans made by the Public Works Loan Commissioners up to the sum of £500 million. We have, after all, a duty to examine the use of public money of 1913 this kind, particularly when large sums are involved, and although we must keep, of course, within the proper confines of the Clause, we ought not either to neglect that duty.
Indeed, I am rather surprised that there is not here a larger number of those hon. Members opposite whom my hon. Friend the Member for Sowerby (Mr. Houghton) calls the "hatchet group" who are devoted, so they say, to the cause of economy. I can only suppose that the Minister of State of Economic Affairs has been ruled out of order this afternoon—by the Government Chief Whip, of course, Mr. Hopkin Morris, and not by yourself.
5.30 p.m.
I wanted to ask the Financial Secretary two questions. The first refers to the sums included within this £500 million, and it follows on from an argument I had with the Financial Secretary on this point during the Second Reading. The Financial Secretary may recall that I pointed out to him the figure of £360 million in the Financial Statement for the year 1952–53, which is, of course, the year with which we are now concerned, as being the total of the loans to local authorities.
I pointed out that that was a figure slightly less than in the previous year, and I asked him how that coincided with the statements we had from the Minister of Housing and Local Government, who was responsible for the biggest element in the £500 million, that a larger number of local authority houses are being built this year, and also from the Minister of Education, who was concerned with the next biggest element in the total, that the school building programme has also risen.
The hon. Gentleman gave an answer to that question on the Second Reading which did not actually meet the point. That was, I think, due to a misunderstanding. I am sure he thought it did meet the point, but what he said was this. He said that I had referred to the figure of £360 million in the Financial Statement, and he asked how it could be reconciled with the £399 million lent by the Public Works Loan Board since last year. He explained that that was due to the technical presentation of the figures.
If I may put the point to the hon. Gentleman again, that was not the ques- 1914 tion that was puzzling me, and I think this is very relevant to the use of these moneys. What I wondered was whether or not the total being actually spent this year out of this £500 million on housing, education and other purposes, is less than last year, as the Financial Statement would appear to suggest, or whether it is more, as the statements of the Minister of Housing and Local Government and the Minister of Education appear to suggest. That is my first question to the hon. Gentleman, and it comes of course very strictly within the ambit of this £500 million this year.
My second question concerns the problem of the facilities given by the Board in issuing these loans, which has already been touched on by my hon. Friends the Members for Wellingborough (Mr. Lindgren) and Stechford (Mr. Roy Jenkins). This, I think, is the most serious point before us on this Clause. Anxieties have been raised in our minds and in the minds of local authorities which have not been entirely allayed by what the Financial Secretary has already been able to say to us.
Though the Financial Secretary tells us this year that these loans are going to be issued in exactly the same way by the Public Works Loan Commissioners as previously, and that all that is happening under the Expiring Laws Continuance Act—and I think our difficulty arose from the reversal of the order of these Acts—is that greater freedom is being given, there are some people who fear that though that may be true at the moment, this is the prelude—one writer on this subject has said that this is paving the way—to a different arrangement in which the local authorities would be forced into the outside market by variation of the methods, terms and conditions on which these loans are issued.
On the Second Reading the Financial Secretary, in replying to that question, said that that suggestion had been made, and then he went on to deny it but he denied it, in my opinion, in a not exceedingly convincing manner. He said: The whole intention behind this is that we should proceed by agreement in financing work which I stress—and this is very material to this matter—is work undertaken subsequent to the loan approval having been given by the proper central department. Therefore, I think that hon. Members need not be unduly dis- 1915 turbed at that aspect of the matter."—[OFFICIAL REPORT, 12th November, 1952; Vol. 507, c. 1077.] No doubt that is satisfactory so far as it goes, but it does not go so far as to say that there is going to be no worsening of the terms and conditions and no change in the method by which these local loans will in the present year be issued by the Local Loans Commissioners.
There are two reasons why these anxieties about the issue of loans under this Clause remain in our minds. The first consists of the arguments advanced by hon. Members belonging to the "hatchet school," or whatever the Financial Secretary likes to call his controversialists behind him, as to the possibility of reducing taxation by taking these loans out of the Budget altogether. My hon. Friend the Member for Wellingborough has already referred to that, and I am not going into that argument because I think it has already been quite convincingly shown that it is only among what the "Economist" calls the illiterates—that is not my phrase but the "Economist's "that it is supposed that any smaller budget surplus would be required, simply because these loans were made not through the Public Works Loan Commissioners but in some other way.
The other cause of our anxieties, and the reason why I am repeating this question to the Financial Secretary, is that there have been repeated statements in the Press that, in fact, there is going to be a change in the general method of making these loans. I read some quotations to the hon. Gentleman last week, and he replied that he was not responsible for what was written in the financial Press. Nevertheless, we have in this matter, and in some other matters, found before that Government policy is foreshadowed in the columns of certain newspapers and subsequently confirmed by hon. Members opposite.
Therefore, I am only going to draw the attention of the hon. Gentleman to some further statements on this subject which actually appeared in the "Daily Express" on the day after we had our debate. This was a direct report of the proceedings on the Bill and referred to the point which is, in fact, the substance of this Clause. It mentioned that hon. Members opposite were hoping to get very large economies in the 1916 Budget by switching these loans from the Public Works Loan Commissioners to the City of London.
It then quoted the hon. Gentleman as having said that all these sinister designs were very far from his thoughts, and then it went on to say this. I only propose to quote two sentences, Mr. Hopkin Morris, which it seems to me are relevant, and I am sure that when you have heard them you will agree that they are relevant.

The Deputy-Chairman
I am very doubtful at the moment. I am willing to hear them, but I am doubtful whether this is relevant at all.

§ Mr. Jay
I think so, because this is the main anxiety we have about the way in which these loans are issued. I will only read two sentences, and I am sure that you will agree with me, Mr. Hopkin Morris. The "Daily Express" said: A powerful group of Tory back benchers who are urging the economy drive regard the Bill"— that is, this Bill— as the first measure to effect major economies by returning more power and responsibility to local authorities. The second sentence is this: The key point in the Tories' 2s. off the Income Tax plan is to slash Government spending by cutting loans to local authorities for house building. In view of the last words, I submit that that is relevant, and it has reawakened in my mind the anxieties which we felt. I hope that the hon. Gentleman, with his usual skill of remaining within the bounds of order, will be able to give us a rather more satisfactory assurance this afternoon.

§ Mr. Boyd-Carpenter
I must say that I was most touched by the solicitude of the right hon. Member for Colne Valley (Mr. Glenvil Hall) that I should intervene in this debate, and perhaps a little disappointed by the fact that, now I have your permission so to do, Mr. Hopkin Morris, the right hon. Gentleman has not found it possible to be present. But life is full of disappointments.
The right hon. Member for Battersea, North (Mr. Jay) reverted, in a most skilful promenade around the perimeter of the rules of order, to quoting newspaper articles. I should have thought that a 1917 right hon. Gentleman who himself contributed a column would appreciate that the views expressed in those columns are the views of the very distinguished persons who so contribute, and that it is not reasonable to expect Her Majesty's Government to comment in detail or in general upon the various expressions of opinion which those distinguished people, including the right hon. Gentleman himself, ventilate in the public Press.
This Clause—and as I understand it this is its only point—makes provision for £500 million in respect of loans to be issued from the Public Works Loan Board during the period, whatever it may be, that will elapse between the coming into force of this Bill as an Act of Parliament and the coming into force of the next Bill of this type. The real issue which arises here is in connection with the provision of £500 million for this purpose.
On Second Reading I ventured to suggest to the House one or two considerations which I thought were material to that figure. I think the House was in general agreement that we had to attain a balance between two conflicting considerations. There was the consideration that adequate funds should be provided—and let me say at once that it is certainly not the intention of the present Government, which is proud of the success of its housing drive, to cripple the finances of the local authorities who Play so major a part in that highly successful housing drive—and equally that it would be wrong to make provision for too high a figure, because that would result in the control and discussion of this matter being taken away from the House for too long a period.
If I may adopt once more the term which has been used several times in this debate, the procedure is happily flexible. It is not, as the hon. and learned Member for Northampton (Mr. Paget) seemed to think, an annual Bill, and it does not run for any specific period. It runs only until the next Bill, and therefore if we misjudge the adequacy of the figure we provide in this Clause the consequences are not so disastrous as they would be if this were an annual Bill. All it would mean would be that the day on which it would be necessary to come forward with another Bill might be affected.
Various comments were made with respect to the Board. It is not for me to 1918 comment upon the Board, and I am in some degree grateful for that fact because it relieves me from the necessity of justifying to this Committee what was said by the hon. Member for Islington, East (Mr. E. Fletcher), whom I have always thought was capable of doing his own justification. He is, as he was able to disclose to us, quite a distinguished member of the Board, and we are all grateful to him and his colleagues for their public service.

§ Mr. E. Fletcher
I do not think the hon. Gentleman meant to say that I said that I was a very distinguished member of the Board.

§ Mr. Boyd-Carpenter
No. Whatever the hon. Gentleman may think, I doubt if he would think I meant to say that.
I hope I may be allowed to pass to the remarks of the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) and say that all the matters which were referred to last year have been carefully considered and that the general view is that in present circumstances—as has been suggested from his own side of the House—the Board serves a valuable purpose.
The hon. Member for Wellingborough (Mr. Lindgren) indicated his unwillingness to come to my rescue. I might reply to him: Non tali auxilio, nec defensoribus istis, which I am sure would be appreciated on the Liberal benches were they occupied at this moment.

§ Mr. Paget
Translate.

§ Mr. Boyd-Carpenter
I am sure no hon. Member on the Opposition benches requires a translation. I would not be so discourteous as to proffer it. I am sure that all hon. Members opposite would translate it with such felicity and skill that it would be an impertinence on my part so to do.
The point which was stressed in several speeches—and here again I appreciate that in view of a ruling from the Chair I cannot go very far—really amounted to suggestions that we were not providing enough money in this Clause because we intended to deprive the local authorities of use of the Public Works Loan Board. There are two sufficient answers to that. In the first place, we are providing this sum of £500 million in this very Clause. 1919 It is the sum which was provided last year and which, as I told the House on Second Reading, will not be exhausted until about the end of January.
That is a perfectly solid indication that we intend to see to it that the activities of local authorities are not handicapped in the way which has been suggested. I might avoid getting into difficulties on this question by reminding the Committee that this matter was raised on Second Reading and was very fully discussed, and that in the course of that debate I made a very clear statement of our intentions. I think that that statement has been generally understood, and I hope it has relieved any anxieties.
There may well have been some anxieties; people sometimes have anxieties on most unsubstantial ground; but I think the Committee can be assured above all by these two facts. First, this Clause provides the massive sum of £500 million. Secondly, it would be so contrary to the whole policy of this Government—which I am sure all hon. Members are glad in their hearts is having such a success with its housing programme—that it is really quite fantastic to suggest that what the Government and my right hon. Friend the Minister of Housing and Local Government are doing in this connection should for some odd schizophrenic reason be interfered with in the way that has been suggested.
Now that the matter has been discussed, I cannot feel that any such apprehensions are reasonable. Equally, I cannot attempt to catch up with every suggestion that might be made from any quarter. The views of the Government on this matter have been stated very clearly and at length—indeed, some hon. Members may think perhaps at inordinate length—and I hope that in those circumstances the Committee will indicate their agreement with the view of the Government that adequate funds will be made available by giving us this Clause.

§ Mr. Jay
Could the hon. Gentleman add two points to his assurances? First, does he disown the doctrine of certain hon. Gentlemen behind him that large economies in the Budget and a reduction in taxation could be secured merely by switching these loans from the Public Works Loan Board into the open market? 1920 I do not think that he does accept that doctrine, but if he would disown it it would allay our anxieties. Could he also deal with the discrepancy between the £360 million in the Financial Memorandum and the claims which the Ministry of Housing were making?

§ Mr. Boyd-Carpenter
On the first question, I do not propose to state policy by disowning the statements of other people; but the right hon. Gentleman will recall that in my winding-up speech on Second Reading I said—and I am speaking from memory—that the expectations of improved budgetary consequences which some hon. Members on both sides of the House had indulged in were not sound.
On the second question, I tried to explain to the right hon. Gentleman that the figure in the Financial Memorandum is the figure of issues to the Public Works Loan Board, and of course the material figure for local authority activity is the figure of the issues from it. The two figures are not the same, because the Board is not only lending money but receiving repayments.
In general, I can assure the right hon. Gentleman, and indeed it is one of the reasons for the urgency of this Bill, as I explained on Second Reading, that the whole level of local authority capital expenditure is curving rapidly upwards. I indicated that on Second Reading, with particular reference to the provision of the figure in Clause 2.