New Clause.—(REMOVAL OF DOUBTS AS TO DURATION OF LOANS.) (Hansard, 19 November 1952)

The Deputy-Chairman (Mr. Hopkin Morris)
The first new Clause does not appear to me to be necessary, but I will 1944 hear the hon. Member for Islington, East (Mr. E. Fletcher) if he wishes to address any arguments to me.

§ Mr. E. Fletcher
I should like, Mr. Hopkin Morris, to explain why I think the Clause is necessary. In so far as you or anybody else may have any doubts about its necessity, it will be appreciated that it begins with the words For the removal of doubts… Therefore, in a sense it may be arguable whether it is necessary, but in so far as the matter with which the Clause attempts to deal has given rise to doubts in the past, it seemed to me to be necessary to put this matter beyond all doubt.
It arises out of something that took place on the Second Reading of the Bill. During that debate, my hon. Friend the Member for Leeds, West (Mr. Pannell) and myself pointed out the inconvenience and hardship which at present exist to local authorities in that, when they borrow money from the Public Works Loan Board, they have to borrow for the full term of years for which loan sanction has been granted by the Treasury.
When the Financial Secretary to the Treasury dealt with this point in replying to the debate a moment or two before 10 o'clock—it is only fair to say that the hon. Gentleman's time was rather abbreviated, otherwise he might have been able to deal with the matter at greater length—he said that he was interested in the arguments that had been put forward and that in some degree—

The Deputy-Chairman
I am listening with care, but the sole issue at the moment is that, in my view, the Clause is already provided for under the Act of 1875 and is not necessary. If the hon. Member has any argument to address to me on that point, I shall, of course, hear it.

§ Mr. Pannell
Further to this point, so far as we know, and we have had no other statement from the Financial Secretary—

The Deputy-Chairman
I have ruled that the Act of 1875 makes the Clause unnecessary. I am prepared to listen to the hon. Member with regard to that. No point of order arises.

§ Mr. Fletcher
Since it is necessary to go into the Act of 1875, which I had hoped 1945 would be unnecessary, perhaps I may indicate the point with regard to that. I take it, Mr. Hopkin Morris, that the Section of the Act of 1875 which you have particularly in mind is Section 11. If there are any other Sections on which you would wish me to address you, I will do so, but, as far as I can see, Section 11 is the only relevant Section as to whether the Clause is necessary.
Section 11 of the Public Works Loans Act, 1875, says: Every loan granted under this Act shall be made repayable by instalments (in the form of an annuity or otherwise) within a period from the date of the actual advance of such loan, not exceeding the period authorised by a special Act relating to such loan, or if no period be so authorised not exceeding twenty years. Where a loan has been granted repayable within a period less than the full period allowed by the foregoing provisions of this section, the Loan Commissioners, if the repayment of the loan with interest is in their opinion sufficiently secured by such security as is required by this Act, and if they think fit, may extend the period for the repayment of such loan to a period not exceeding the said full period from the date of the advance of such loan. Without further research that, I believe, is the only Section of the 1875 Act which deals with this matter.
That does not in any way deal with the point that was raised on Second Reading and with which the new Clause seeks to deal: namely, the current practice, following Treasury directions, of the Public Works Loan Board of not being able to grant any loan for a shorter period of years than that for which loan sanction has been given.
The doubt which, I submit, it is necessary to remove arises in this way. The Act of 1875 was passed over 75 years ago. Since then there has been a considerable change in the size, nature, scope and practice of loans by the Public Works Loan Board to local authorities. In particular, noticeable changes were introduced by the Act of 1945, which made the Board the sole source of borrowing, and the Control of Borrowing Order, which flowed from the financial regulations of the late war.
The position is now different in this sense. The Act of 1875 was passed to 1946 deal with a set of circumstances very different from those which existed at the later date. Since then, we have had subsequent Acts dealing with local authority borrowing. Today, the position is that under the 1945 Act the Commissioners are much more circumscribed by Treasury direction than was contemplated when the 1875 Act was passed.
On any reading of the 1875 Act, of the Act of 1925 or of the Control of Borrowing Regulations, it is today quite impossible to know to what extent the old discretion of the Commissioners still obtains or whether that discretion was—I was going to say removed, which, I think, is the right word to use—at any rate, very greatly curtailed, by the legislation that has been passed since. That is the doubt which exists and there is no question that it is a doubt which is very widespread.
The Financial Secretary to the Treasury knows perfectly well that that is a matter which has been the subject of discussion between the local authority associations and the Treasury and it is very important that this doubt should be removed once and for all. I think that it is the duty of this Committee to deal with it. Having, as I hope, made a prima facie case, I hope that I may continue to say a few words in support of the Clause.

The Deputy-Chairman
I have listened very carefully to the argument of the hon. Gentleman, but it does not alter my view that the powers in this new Clause are already covered by Section 11 of the Act of 1875. Whatever the intentions of the hon. Member, they are not achieved by this new Clause and therefore I cannot select this new Clause.

§ Mr. Fletcher
rose—

The Deputy-Chairman
I have listened with great care to the hon. Member's argument and given full consideration to, it, but it does not affect my mind and does not alter it. The next new Clause—"Procedure for increasing interest rates"—is out of order.