HC Deb 07 November 1958 vol 594 cc1231-7

11.2 a.m.

The Financial Secretary to the Treasury (Mr. J. E. S. Simon)

I beg to move, That it is expedient to authorise any increase in the sums which,

  1. (a) may be issued out of the Consolidated Fund to be applied as appropriations in aid of moneys provided by Parliament for the provision of housing accommodation for persons serving in, or employed in connection with, the armed forces of the Crown,
  2. (b) may be raised by the Treasury in manner authorised under the National Loans Act, 1939,
  3. (c) are to be repaid into the Exchequer out of moneys provided by Parliament for the defence services, and
  4. (d) are to be issued out of the Consolidated Fund and applied in redemption or repayment of debt or payment of interest,
being an increase attributable to amending the Armed Forces (Housing Loans) Act, 1949,—
  1. (i) by extending the period during which sums may be issued out of the Consolidated Fund to be applied as appropriations in aid as aforesaid until the end of the financial year ending on the thirty-first day of March, nineteen hundred and sixty-five;
  2. (ii) by increasing the aggregate amount of the sums which may be so issued to ninety-five million pounds; and
  3. (iii) by enabling the Treasury to authorise the repayment of sums so issued by sums 1232 paid into the Exchequer in addition to the annual instalments provided for by the said Act of 1949 and the redemption or repayment of debt out of sums otherwise applicable to the payment of interest.
 As the Committee knows, Section 1 of the Armed Forces (Housing Loans) Act, 1949, authorised the Treasury, during the period ending 31st March, 1955, to issue from time to time out of the Consolidated Fund sums not exceeding £40 million for the provision of approved housing accommodation for married persons serving in or employed in connection with the Armed Forces of the Crown. Section 1 of the Armed Forces (Housing Loans) Act, 1953, extended the period to 31st March, 1960, and the total aggregate to £75 million. The proposed Bill further extends the period to 31st March, 1965, and the aggregate to £95 million. It will also make provision for the repayment of sums borrowed, together with interest, to be accelerated in any financial year by the proceeds from the sale during that year of any houses which were approved for loan financing.

This Resolution is a necessary preliminary to the introduction of the Bill. Like its predecessors, it is a Ways and Means Bill. An Explanatory Memorandum to the Resolution has been published as a White Paper, and I hope that the Committee will feel that this contains an adequate explanation of what is proposed. The Bill will be debated in the ordinary way, and I do not think that the Committee would want me at this stage to enter into the merits of the matter.

My right hon. Friend the Secretary of State for War, when the Bill is introduced in the usual way, will offer certain observations in the course of Second Reading, but I thought that I ought to give an explanation to the Committee why it is that we are asking for an extra £20 million to raise the total from £75 million to £95 million when, as the Committee will hear, in fact not more than £68 million will be spent of that sum. In other words, on the face of it the existing legislation is sufficient to provide the funds that are available. This position arises out of an understanding which has been come to between the Treasury and the Public Accounts Committee which has resulted in a restriction on the issue of the sums authorised by the Acts.

Provision is made for the cost of approved houses as defined by the Treasury, that is to say, houses which will fulfil a civilian housing need when no longer required by the Services, in the Special Votes for Additional Married Quarters. Provision is made for other houses in the ordinary Works Votes of the Departments. From time to time surpluses arise on the ordinary Works Votes which are not required to meet deficits arising on other Votes. The Public Accounts Committee of 1950—agreed that such savings in future years might be applied by the use of virement, that is the use of surpluses arising from one Vote in the Service Departments, with the consent of the Treasury, to meet excess expenditure on another Vote. That is reported subsequently to the House on the Monk Resolutions and authorised finally by the Appropriation Acts.

Mr. R. J. Mellish (Bermondsey)

Does this mean that any money accruing from the sale of houses built can go to other subheads and does not necessarily have to go back to the Treasury?

Mr. Simon

No, as regards the sale of the houses, we propose for the first time in the ensuing Bill to permit the premature repayment of the loans which are raised under the Acts in question. Apart from that, any sums which arise from the sale of a house would have to be surrendered to the Exchequer in the normal way. It is because special power is needed that the Motion is couched in this form.

The Public Accounts Committee agreed that the savings I mentioned before might in future years be applied by the use of virement to meet expenditure provided for under the Additional Married Quarters Votes, and so reduce the borrowings that would otherwise be necessary, provided that Parliament was given an explanation in the Estimates. As hon. Members know, there is always a provision in the Estimates drawing attention to what is proposed to be done. The Public Accounts Committee was given to understand that the total amount of money available for borrowing would be reduced by the amount of the surpluses transferred in that way. Unless that were done, more money would be spent on married quarters housing by way of loans plus virement from the works Votes than Parliament had authorised.

As a result, only £34 million has so far been issued from the Consolidated Fund out of the £75 million which is available for issue under the terms of the Act, and actual issues up to the end of March, 1960, when the Act runs out, are unlikely to exceed £40 million. It is estimated that a further £28 million will be required for the period 1960–1965 with which we are concerned today, in other words making a total of £68 million in all, which is within the existing total of £75 million authorised by the Acts already in force.

Of course, it would be a breach of the convention between the Treasury and the Public Accounts Committee if we merely went on now to draw the full amount of £75 million without coming to Parliament for authorisation. In fact, to frame the proposals in any other way would be to present the Committee and the House with an incomplete picture of the total cost of houses approved, or likely to be approved, under the provisions of the 1949 Act.

I hope the Committee will feel that the form which this legislation takes is entirely consistent with the arrangements which have been made with a Committee of this House. Indeed, the Constitution is full of powers vested in the Executive which are not exercised in full, but which are restricted by constitutional convention in exactly the same way as the power which this Motion and the ensuing Bill are designed to give the Executive will be restricted; namely, that the power to draw £95 million will be restricted to £68 million or thereabouts—at any rate restricted by the arrangement between the Treasury and the Public Accounts Committee.

There is one other matter I should mention. Hon. Members will remember that in its Second Report, 1957–1958, the Public Accounts Committee has drawn attention to the extent to which the Treasury has authorised virement to vary the allocation between voted and borrowed money, particularly with reference to the Married Quarters Votes. It recommended that the issues involved should be considered further if the method of financing married quarters by loan is to be continued beyond the terms of the present Acts, as in fact is being done by this Motion and the ensuing Bill. Hon. Members will recall that we debated that point on the Monk Resolution during the summer. As I explained then, these issues have been further considered by the Treasury in consultation with the Service Departments.

In view of the outstanding report of the outgoing Public Accounts Committee, we have felt it right not to wait for the usual time to make the Treasury observation on the report of the Public Accounts Committee. As hon. Members know, that normally takes place in January or early February. We are not ready to make observations on the whole of that report but, in view of the fact that this Motion is being moved today and legislation is coming forward, we thought it right as a matter of courtesy to the new Public Accounts Committee, which will shortly be set up, to reply by Treasury minute to the particular observations which were directed to virement between the loans Vote and the works Vote.

I hope the Committee will feel that this is the proper course for us to take. Nothing in the Motion today, or in the Bill to be presented, is in any way prejudicial to the further investigation of this matter by the Public Accounts Committee, and in those circumstances I commend the Motion to this Committee.

11.17 a.m.

Mr. R. J. Mellish (Bermondsey)

I am sure the Committee will be indebted to the Financial Secretary for the full explanation he has given on this Motion. This is not the first time we have had such a Motion before us. Of course, we on this side will support it, and next Friday we shall have a full debate during the Second Reading of the Bill on the question how this money has been spent in the past and how it is to be spent in the future.

There is one important fact I want to put on record. The original Act of 1949 was unanimously approved and a subsequent Resolution in 1953 was also unanimously approved. It should be made clear that the purpose of the original Act was to enable the Service Departments to obtain money for the purpose of building married quarters without having to rely upon their yearly Estimates or to carry the burden of capital expenditure on those yearly Estimates. This put the Service Departments in a position of parity with the local authorities, in that they borrowed money direct from the Treasury and the burden was not to be found on their annual Estimates.

I am glad that the Under-Secretary of State and Financial Secretary to the War Office is here, because I want to give the hon. Gentleman notice now that we shall want to know how it is, particularly in view of the tremendous need for new married quarters, that the amount of money which Parliament has allowed the Armed Forces to borrow has not been spent. We shall also want to know the details of what has been spent on new quarters. We shall also want to know how much has been spent on modernisation. There is one new aspect of this matter which bothers some of us. It seems ironic that the Armed Forces are asking to borrow more money for building married quarters when they have not spent to date the total amount of money allowed. Also, any income they may receive from the sale of existing married quarters cannot be used by them for any new quarters they may want to build, because they have to return it direct to the Treasury. It is an extremely complicated position.

We should like to know something about the interest charges which have to be paid by the Armed Forces on money which has already been borrowed. I gather that the interest charges, which are repayable over sixty years, are borne on the annual Estimates. What was the rate of interest? When the Bank Rate was at 7 per cent., were the Armed Forces obliged at that time to meet higher interest charges?

The debate on the whole question will take place next Friday on Second Reading of the Bill. We on this side of the Committee will put no obstruction in the way of this Motion, and we shall debate the Bill fully next Friday.

11.21 a.m.

Mr. B. T. Parkin (Paddington, North)

There is one point which I should like to raise on this Motion, because I think it will be too late to try to raise it next Friday. It arises from the last sentence in the White Paper explaining the Motion, which reads: In cases of repayment at a premium, the excess will he used by the Treasury towards the payment of interest on the National Debt. That is an amplification of the point which my hon. Friend the Member for Bermondsey (Mr. Mellish) has just sketched in outline to the Financial Secretary. The previous sentence very magnanimously says that if the repayments are evaluated at a discount the Treasury will allow part of the receipts which would otherwise be applicable to the payment of interest on the National Debt to be used instead for the repayment or redemption of debt up to the amount of the discount allowed. The Treasury therefore has it both ways. Any possible profit on the sale, at a later date, of a house built under this scheme—which may have increased in value during the years—goes to the Treasury.

This may be a small point, and I have no doubt that it is general Treasury policy about all kinds of Government property, but it seems a shame that the Forces can obtain no advantage in this matter and that they would have to return to Parliament again to ask for fresh loans at the current rate of interest when they might have been able to sell some of the houses, perhaps to people retiring from the Forces or in respect of units which have moved, at market rates, possibly better than those prevailing at the time of construction. By this Motion the Armed Forces will be deprived of any opportunity of using that profit to subsidise new houses which at the time they might be building in other parts of the country.

Question put and agreed to.

Resolved,

That it is expedient to authorise any increase in the sums which,
  1. (a) may be issued out of the Consolidated Fund to be applied as appropriations in aid of moneys provided by Parliament for the provision of housing accommodation for persons serving in, or employed in connection with, the armed forces of the Crown,
  2. (b) may he raised by the Treasury in manner authorised under the National Loans Act, 1939,
  3. (c) are to be repaid into the Exchequer out of moneys provided by Parliament for the defence services, and
  4. (d) are to be issued out of the Consolidated Fund and applied in redemption or repayment of debt or payment of interest.
 being an increase attributable to amending the Armed Forces (Housing Loans) Act, 1949,—
  1. (i) by extending the period during which sums may be issued out of the Consolidated Fund to be applied as appropriations in aid as aforesaid until the end of the financial year ending on the thirty-first day of March nineteen hundred and sixty-five:
    2. 1238
  2. (ii) by increasing the aggregate amount of the sums which may be so issued to ninety-five million pounds; and
  3. (iii) by enabling the Treasury to authorise the repayment of sums so issued by sums paid into the Exchequer in addition to the annual instalments provided for by the said Act of 1949 and the redemption or repayment of debt out of sums otherwise applicable to the payment of interest.

Resolution to be reported.

Report to be received upon Monday nex; Committee to sit again upon Monday next.