§ The Chairman
The first Amendment selected is in page 3, line 4, after "committee)" to insert:or in the case of Scotland, a Scottish advisory committee".420 I think it would be convenient to discuss with this the following Amendments: In page 3, line 4, after "committee)", to insert:or in the case of Wales. a Welsh advisory committee".In page 3, line 22, to leave out, "committee" and insert "committees". In page 3, line 23, after "committee" to insert:and the Scottish advisory committee".In Clause 4, page 3, line 26, to leave out "committee" and insert "committees". In Clause 4, page 3, line 26, after "committee" to insert:or the Scottish advisory committee".
§ Mr. Jay
I beg to move, in page 3, line 9, to leave out subsection (2).
I think that the Committee ought to discuss this Amendment. This subsection of Clause 3 contains the one provision in the Bill which the Government claim is additional to the powers they held under the provisions of the Distribution of Industry Act.
§ The Chairman
I should point out that the following Amendments may be discussed with this Amendment: In page 3, line 9, leave out from "be" to second "of" in line 10 and insert "seventy-five per cent."
In line 13, leave out from "it" to end of subsection. In line 21, at end insert:and shall impose conditions for repayment of grant in the event of a sale, lease or other disposition of the building or extension.
§ Mr. Jay
We are discussing the proposal that the President of the Board of Trade shall have power to pay 85 per cent. of the excess of the cost of building a factory in one of these areas over the market value of the factory. This new device has been very much bruited abroad by the Government as the central additional power, in a Bill supposed to be the major Bill of this Session, which they are taking to reinforce their power of inducing firms to go to Development Areas, or whatever they are to be called under the new dispensation.
Our purpose in moving the Amendment is to ask the Government what they really have in mind with this new power, how they propose to use it and whether they think it will have very much effect in enabling them to carry out this policy.
There were some people during the General Election, when this was first made public, who believed that what the Government were going to do was to make a free grant of 85 per cent. of the value of a new factory. That is clearly not the intention as far as one can judge from the Clause. It is merely 85 per cent. of the excess of the cost over the market value. It should be borne in mind throughout this Bill that this is not outright expenditure by the Government, which is made and lost; it is the creation of an asset which remains in Government ownership, on which the Government draws a rental in interest thereafter.
What evidence is there that, in any significant number of cases where Government-financed factories have been built, the market value of those factories is less than the cost of building? I must admit that I have never seen this point raised in discussion on distribution of industry policy until the 422 Government made this announcement. What is the evidence that it will make much difference? Will the Government tell us why this was made the centrepiece of the Bill?
From the evidence we have we would have supposed that it is only in a minority of cases that there is any significant difference between the cost of building these factories and their market value after they have been built, and if that is so, a grant of only part of that difference is quite a minor addition to the total armoury of powers which we had previously.
§ 1.15 a.m.
§ Mr. Dempsey
The Committee will notice that in the next Amendment, which is in my name, I suggest that the Clause should provide that the Board of Trade should give a 75 per cent. grant for a project approved by it.
The reason I do that is that I earnestly believe that the success or otherwise of this Bill depends on the financial inducement. I do not know whether hon. Members appreciate that or not, but if some had the unemployment we have they might. One wonders whether the Minister and the Government generally appreciate the immensity of the problem which confronts us. If they understood the nature of the problem I think they would make a much more realistic approach to it.
I said before and I repeat that I am not so fortunate as hon. Members opposite. I come from an area where this year we had 12 per cent. of the insurable population unemployed, and 14 per cent. of them were unemployed for periods longer than six months. That is the type of unemployment problem with which we are confronted. How is it possible to overcome that unless we have adequate financial inducement to afford to potential industrialists to enter those areas with a view to providing employment? Hon. Members have quoted tonight a figure of 91,000 unemployed in Scotland as a whole. It may interest hon. Members to know that of that total 37,000 males and 13,000 females have been unemployed for periods longer than six months. That is the extent of the problem which confronts us. In those areas it will take a Herculean effort to try to break the back of the problem. 423 We have heard over the past two or three days about the contraction in the coal industry and in the steel industry and in the railway services—
§ Mr. Dempsey
I respect your correction, Sir Gordon, but I am trying to point out that in tackling a problem of that nature we must have appropriate financial inducement. It is for that reason that I have suggested that a 75 per cent. grant should replace the present proposal in the Clause.
Studying the wording of the Clause one asks oneself two or three pertinent questions. Will the amount be substantial enough to uproot established industry in the congested parts of the country with a view to re-rooting itself north of the Border? That is a question which comes to mind. We must bear in mind the capital cost involved, and also that many of the products have to be marketable in the South, and that involves freightage charges for those industries which wish to uproot themselves and re-root themselves north of the Border. We have to see, therefore, in asking them to do so, that the initial allowance they may receive should be really substantial.
We also ask ourselves whether these financial provisions are adequate to induce new industries to enter those parts of the country? I am convinced they are not. The reason why I arrive at that conclusion is in the wording of the provision:The amount of any grant shall be eighty-five per cent. of any excess of the cost, as estimated by the Board, of providing an adequate building or extension of the size required by the applicant for the grant, and reasonably suitable for the purposes for which he requires it, over the amount at which in the opinion of the Board such a building or extension might, if completed at the time of the application for a grant, be expected to be sold on a sale in the open market.That is an outstanding piece of verbal ambiguity. Anyone who cares to study the end of the paragraph must ask himself what it is about. Being a layman, I have tried to analyse the content of this provision and my view is that the sting is in its tail. It says frankly that speculation could have an influence and that the price at which a building is sold on the 424 market will affect the percentage of grant that the Government give to an industrialist to enter these areas which need employment.
We come from areas which have considerable economic decline. In such areas, it is inadvisable to talk of what a building will earn if it is sold on the market. Because of the decline in these areas, one might have to cut one's losses and not even get one's money back. How 85 per cent. of the difference between the cost and the price at which a building is sold will induce industrialists to enter areas of that nature, I am unable to understand. In one part of Lanarkshire, because of the contraction in coal mining, we are unable even to let houses, and schools are under-occupied. If an industrialist had a building that he wished to sell in that area, I do not think it would have any effect whatever on the grant which he might obtain under this provision.
We should be fair and frank about this. We should face our responsibilities and tell an industrialist that if he is willing to enter the area, the Board of Trade will be willing to give him a 75 per cent. grant on his project subject, of course, to necessary safeguards which the Board will specify against possible abuse. There would be nothing wrong with that. The existing wording is suspicious in every respect and is likely to deter an industrialist from taking the risk of entering these areas to which we are endeavouring to attract additional employment. The paragraph is a little deceptive. I appeal to the Minister to be more perceptive than deceptive and to make an effort to state clearly what type of grant will be afforded to industrialists entering these areas.
The grant must be sufficiently attractive. The inclusion of this kind of provision in the legislation means that we should be sawing off the branch of the tree on which we climb for portection. That sort of negation should be avoided at all costs. It could mean very little and, possibly, nothing at all. If we intend to eliminate unemployment, we should be more realistic concerning the financial elements of the Bill I hope that the President of the Board of Trade is fully conscious that the amount of grant will be the main determining factor in inducing industry to enter these areas. 425 There should be no great argument about the percentage which I have suggested. The Government are giving grants to other services which are not nearly as important as providing full employment. We have only to look at our public services. Until the introduction of the block grant, there were substantial grants in the region of 60 per cent., for example, for many services, from country dancing to rat-catching. If somebody wanted a fly-fishing class to learn how to fish, he could get a 60 per cent. grant from the education authority. If one wanted a golf class to teach one how to putt, a grant was available. It is not unreasonable therefore to argue that a 75 per cent. grant should be made to provide the main essential of community wellbeing—the right to work. Surely that is a perfectly fair representation to make.
At present it is rather ironic that, throughout the length and breadth of this island, we see youth employment services operating and the Government of the day giving 75 per cent. grants to pay kiddies unemployment allowances when they leave school because they cannot find work. The 75 per cent. grant surely could be given to provide work for these children rather than to pay unemployment allowances. The provision of that employment would relieve the Chancellor of the Exchequer of millions of pounds of expenditure on National Assistance to supplement the unemployed workers' benefit. That is where economies can he made. If I am asked where the money is to come from, I would reply, "Put the people to work and they will create the money." The case is reasonable. The percentage is not unreasonable. It is in line with other grants made by the Government to less important services. If the Government believe in first things first they are bound to agree to an Amendment designed to give potential industrialists this financial inducement to go north of the Border, to the land of opportunity for any industrialist today.
§ Mr. Erroll
I was rather surprised in listening to the speech of the right hon. Member for Battersea, North (Mr. Jay). He has studied the Bill so carefully that I hardly expected him to indicate that he did not fully understand the purpose of subsection (2) and possibly of the whole Clause.
§ Mr. Erroll
But in asking me for that, the right hon. Gentleman undoubtedly conveyed the impression that he had not understood the full importance of the subsection, which does not surprise me. Although I am an equally keen student of the Bill, I have always found this concept not only difficult to understand but even more difficult to explain. If I do not succeed in convincing hon. Members it is because this is difficult to explain, but that does not mean that it is any the less effective in its purpose. It is a particularly useful subsection which we are glad is included in the Bill and which I am sure the Committee will be glad to approve as soon as I have finished my remarks.
§ Mr. Erroll
The hon. Member should give me a chance. I shall do my best. After all, the boss is watching me; so let hon. Members give me a break.
§ Mr. Erroll
He hears too much of me during the daytime.
The substantial point here is that if a firm wishes to rent a Government-built factory in a Development Area it pays not an economic rent based on the cost of that factory but a rent related to the current market value of similar unoccupied premises in the locality, a rent which is assessed by the district valuer. This is and has been always considered a valuable inducement to firms wishing to go to Development Areas and rent Government-built factories.
The purpose of subsection (2) is to provide a roughly comparable inducement to those industrialists who would prefer owning their own factories in Development Areas to renting Government-built factories. We believe that that will be a substantial inducement, particularly as nowadays so many firms have somewhat specialised factories which they would wish to own. It makes it easier for a firm owning a factory in 427 a Development Area to finance extensions or make alterations without having to refer to the landlord, and there are other reasons.
The basis of the inducement is to assess the difference between the cost of the factory and its current market value as an unoccupied factory with "To let" signs on the outside. We propose to give to a firm which is prepared to go to the Development Area and build its own factory an amount equal to 85 per cent. of the difference between the current market value of empty similar premises and the actual cost of building the factory which it will own. We believe that that will be a substantial inducement.
Some hon. Members may ask why it should be 85 per cent. and not 100 per cent. They might equally well ask why it should not be less than 85 per cent. We fixed on the figure of 85 per cent. because we thought that the difference of 15 per cent.—between 85 per cent, and 100 per cent.—was a rough approximation of two factors. First, there was the additional advantage which would go to the firm through owning its factory rather than being merely the tenant, the additional flexibility which it would have in maintaining the premises and making small extensions and doing the hundred and one small jobs which the keen factory owner wants to do for his own premises.
Secondly, it takes into account the fact that the area into which the firm goes will, we hope, become more prosperous as a result of our policy, so that over the years the current market value will rise, so that if for any reason the owner wishes to sell the premises, he will find that they are worth more at the then current market value than they were when they were built. That 15 per cent. represents the additional value which we think will accrue to the owner and which we think should accrue to him through his going to the area and building his own factory and becoming the landlord and not merely the tenant.
That is a brief and, I hope, an adequate explanation of the purpose behind subsection (2). We have reason to believe that it will be a substantial inducement. It is a new power and we believe that it strikes the right balance between ex- 428 cessive Government generosity and the need to make a substantial inducement to firms which are willing to build their own factories in unemployment localities.
§ Mr. Jay
If that is true, how is this a new power over and above the power which the President of the Board of Trade already had under Section 4 of the 1945 Act, which he is proposing to repeal? Section 4 of the 1945 Act already gives the right hon. Gentleman power through D.A.T.A.C. to make annual grants to firms either towards paying interest, or generally for the purpose of the undertaking. There is no limit on the grant and it might be 100 per cent., or any other figure that the Government chose.
I agree that that provision includes the word "annual" and that the grants would have to be paid annually and that there might be some slight, but not substantial, difference. But is the difference worth all the fuss which the Government are making about it? Is there such a difference between giving a firm a grant for, say, three years with no limit on the amount and giving it in the form of a once-and-for-all grant of 85 per cent. of the difference between those two amounts? Is there any substantial difference, seeing that there is no limit on the amount in the first case and a limit of 85 per cent. in the second?
§ Mr. Erroll
As the right hon. Gentleman was at the Treasury for a number of years, he will know that annual grants attract Income Tax because they are treated as profits. That has always been one of the inhibiting features of the 1945 Act. An annual grant is not much use to a firm except by way of a contribution towards interest, because of the Income Tax it attracts.
Since this is a capital grant, it would not attract Income Tax. Furthermore, the original power in the 1945 Act was always intended to be used for interest payments for certain very specialised purposes, and it was hardly used at all by the right hon. Gentleman's Administration. Nor was it used by ours, because of the practical difficulties.
That is why this is a new power. We believe that it will be effective because it is specifically tied to the building of a new factory by the firm going into the employment locality.
§ Mr. Manuel
I want to raise a point on Clause 3 (2). The right hon. Gentleman is aware that in certain areas where unemployment is high and firms in the area are moving out, local authorities are taking over factory sites with the intention of letting them to industrialists. Would a local authority which attracted an industrialist into a factory on its estate get the benefits of subsection (2)?
§ Mr. Ross
The new power under Clause 3 has been held to be something worth while. I am not convinced by the arguments that have been put forward by the Minister of State that that is so. He said that he was satisfied that there were many firms who would be prepared to go into Development Areas if these facilities were available. He did not produce any evidence to support that contention. Can the Minister give us evidence of a firm that has gone into the Development Area that I represent, where I presume the market value of the factory that the Government built would not be below the actual cost of building?
If the market value was equal to the cost of building, or above the cost of building, that in itself would be an inducement for people to go in and take a chance. The Minister has said that there had been cases in the past—and he envisaged it happening again in the future—where industrialists had been offered the facilities under Clause 3, namely, that a factory would be built for them according to their needs and their wants and then let to them at a rather helpful subsidised rent lower than one would expect in the circumstances, but they had turned the offer down. They would not go into the area specified because they preferred to own their own factories. What evidence has the Minister to persuade us that that has happened? One can benefit under the Clause only if, when the factory is completed, one gets less for it when it is sold. That is the moment of assessment. The provision refers to the excess it would cost to build such a building or extension as mightif completed at the time of the application for a grant, be expected to be sold on a sale in the open market.If he wants it plainer than that the Minister can look at the Explanatory and Financial Memorandum which says: 430The grant is to be at a flat rate of 85 per cent. of the difference between the estimated cost of a suitable building and the estimated value of such a building when completed.In other words, more money will have to be paid for the building than it will be valued at in the open market. This provision will provide no attraction to Mr. Clore.
Why does the Minister consider that it will be an inducement to offer people 85 per cent. of a loss? Or is it that the 85 per cent. will be paid as a capital grant? It may well be that the persons concerned borrow the money to build the factory, and so will be able to get immediate use of the capital grant.
This is said to be a powerful addition to the powers of the Board of Trade. but it can be attractive only in very isolated areas, where there is no demand for factories. That is why we were so concerned about the question of expenditure in relation to subsection (3, a). In the case of the very isolated area the 85 per cent. grant will be very much bigger than in a place like Kilmarnock. I want to know to which areas in Scotland the Minister expects this provision to apply, so that the industrialists will insist on coming in, at a loss to themselves of 15 per cent., rather than take advantage of the much more beneficial provisions of Clause 2.
I know that this is an alternative, but it has been held out as one which will prove attractive to industrialists. I do not see why. What is behind this assurance of the Minister of State that so many people will be prepared to take advantage of this provision in Scotland and other areas of high unemployment?
§ Mr. T. Fraser
I wonder whether the Minister of State was on a sound point when he was making the case for subsection (2) as it stands. First, he made an assumption that the district valuer will be able to make this calculation with some kind of precision, but valuers tell me that that is quite impossible—it is just a stab in the dark.
The Minister of State also related it to the grant which he said was being paid for these factories, but he did not state the facts about the rents charged for these factories at present. He said the rent was determined by the district valuer. I think that he is wrong in that. I think the present position—which was 431 determined only last year—is that the district value determines the new rents of the factories. As a result of pressure brought to bear by some of us upon the former President of the Board of Trade the right hon. Gentleman said that where rents were fixed by district valuers in the course of the year 1959 they would be reduced by 25 per cent., and would be increased by 5 per cent. per year, so that in five years' time they would reach the point where the rents fixed by the district valuers were charged. That would be the rent that was considered by the district valuer to be the market rent: not the economic rent, it has nothing to do with the cost of building the factory. The Minister of State will agree that what I have said is true.
§ 1.45 a.m.
§ Mr. Fraser
From the time these factories were built in difficult areas, under the 1934 Act, until this year we have never worked on a market rent at all. Only this year the President of the Board of Trade decided that he would depart from the previous system of determining rents in the different needy areas according to what it was thought reasonable to ask of the industrialists coming in to relieve unemployment. It was decided to depart from the procedure which had been followed for twenty-five years and to go over to a market rent determined by the district valuer. Almost at once the right hon. Gentleman had to depart from that.
This is not a principle we should stand by when writing this provision into a Measure because there is nothing in the Measure about the district valuer determining the market rent to which this thing is related. Here we are proposing to write in a grant provision relating to a rent provision which does not exist. The Minister increased the rents and doubled and trebled them in some areas by taking the market value and—after being subjected to a good deal of pressure—he again made a concession, which meant that he would not charge the same high rent. I suggest that in some parts of the country he will have to be more generous than that.
432 The Minister will know that the organisations in Scotland concerned with taking such steps as are mentioned in the Bill to deal with the scourge of unemployment have suggested that the existing rent provision of the Board of Trade is unrealistic. They have suggested that the existing rents are too high. If the right hon. Gentleman has to deal with problems in some of the difficult areas he should remember that the Scottish Council (Development and Industry)—Lord Polwarth and company—has said that the rents should be reduced. If they have to be reduced from the present level, from the market value reduced by 25 per cent. from those determined or fixed this year, how unrealistic it is to write this provision about grants into Clause 3 (2).
The President of the Board of Trade has provided in Clause 4 for the payment of grants. He does not ask Parliament to decide on the limit to be imposed. Why should Parliament decide the limit to the grants referred to in Clause 3? The Minister does not ask Parliament to decide the limit of the rents to be charged for factories built by Government finance and let on a rental basis. I am glad that that is so, because those are not matters on which Parliament ought to decide. I am sure that they have to be adjusted from time to time and from area to area as they are at present.
The hon. Member for Caithness and Sutherland (Sir D. Robertson) talked a lot about Northern Ireland. In Northern Ireland it has been found necessary to allow factories to be made available to industrialists at a rental of 9d. a square foot. Influential organs such as the Financial Times have said that Scotland needs exactly the same treatment as Northern Ireland, but while the Financial Times was urging that, rentals in Scotland were being raised from 1s. 3d. to 3s. 9d. a square foot in some of our industrial estates. That was happening at the same time as the Financial Times was urging that the rents should be reduced to 9d. a square foot.
In the seven years for which the Act operate, if the Clause is not amended, the Minister will have to adjust the rents in different areas. According to the Government, the provision for capital grants is the important power in the Bill 433 additional to those of the Distribution of Industry Acts. The right hon. Gentleman has asked for flexibility elsewhere in the Bill. I ask him to take some flexibility here and some room to move. We see the point of taking power to make capital grants, but he should not ask us to decide at present that the capital grant will be 85 per cent. of the difference between what it costs to build a factory and the lesser sum at which the factory could have been bought in the open market at the time the application for grant was made.
It is not very complicated to get out approximate figures after having approached the valuation officer in the area, although the Minister tells us that in any case he makes a guess at it. The case for the inclusion of subsection (2) is that this is the closest he can get to giving the industrialist who builds a factory equal treatment with the industrialist who rents a factory. This was to be done on the assumption that the rent paid for the factory was the market value rent as determined by the district valuer, but the Minister has now admitted that it is not the rent being charged to the person who gets a factory to rent at present.
This method was introduced only a year ago and was a departure from the principle adopted for the previous twenty-five years. There is no reason to think that what was decided a year ago will endure for the seven years of the currency of the Bill. In the circumstances, I ask the Minister seriously to consider giving himself room to manoeuvre by taking this limiting provision of subsection (2) out of the Bill.
§ Mr. Willis
My hon. Friend the Member for Hamilton (Mr. T. Fraser) has made a reasonable request to the Government. [HON. MEMBERS: "No".] He presented the facts as they are known. He suggested that the Government should look at this provision again with a view to taking it out of the Bill. Surely the Government have not reached so high and mighty a position that they cannot look at a provision a second time. Surely they are not so inflexible when they come to the Committee that they are unable to say now and then, "We will look at this again". What is the point of all this discussion—[HON. 434 MEMBERS: "Hear, Hear".]—if they cannot do that?
§ Mr. Willis
The Tory Party has already increased unemployment there by 100 per cent. That is why we want to find out something about the Bill. I am interested in the problem of unemployment. I do not suppose that hon. Members opposite are interested in it.
§ Mr. Willis
The hon. Gentleman has just come in. Had he been here earlier he would have heard some of tile arguments. We are concerned about Scotland—and he should remember that the Tories did not do so well there—and we are trying to find out something about the Bill. We are anxious to get something done, at least for Scotland, so we want to improve the Bill.
My hon. Friend made a very leasonable speech, and corrected the Minister of State on matters which he did not seem to know existed. If we are to benefit from discussions in this Chamber the Government should be rather more reasonable, and either reply to my hon. Friend or say that, having heard the arguments, they will give further thought to the subject. This is a disgraceful way in which to treat the Committee. My hon. Friend's speech merits a reply. It contained points not previously made. Had it been a wild speech, with little or no relevance to the Amendment, I could understand the Government's not replying, but their present attitude is discourteous. If the Government are to persist in it we shall have to take steps to try to get a better answer from them.
§ Mr. Erroll
I intended, of course, no discourtesy to hon. Gentlemen opposite. I thought that there might be further debate, and I can assure the hon. Member for Hamilton (Mr. T. Fraser) that I meant no discourtesy. I am glad to see that he nods in agreement.
The first of the two main points relates to market values. The hon. Member for Hamilton said that market values had been used for twenty-five years but 435 that last year there had been a change. Market values have, in fact, been used in assessing rents, and the change to which the hon. Gentleman referred represented an amelioration of a difficulty that arose through raising rents in renegotiating the tenancy of sitting tenants. The arrangements made by my right hon. Friend the then President of the Board of Trade were designed to spread over a number of years the increased rents that tenants were being asked to pay when their tenancy agreements were being renegotiated after a period of years. Some arrangements were also made in respect of certain vacant factory premises that it was then desired to fill. A purely temporary concession on rents below market value was made, and that fact was made public.
In general, however, the district valuer's assessment is the basis for negotiation, and I would say to the hon. Member for Hamilton that the district valuer's method is not a hit-and-miss method. These are very skilled and experienced men, practising a difficult and important art—the assessing of properties of all kinds for many purposes, and not just for this purpose. Surely that is the right basis to use, and it is a basis that has been recommended to us by the Select Committee.
I can inform the hon. Member for Kilmarnock (Mr. Ross) that we have a good deal of evidence of this having been an inducement to firms, particularly with the coming into effect of the 1958 Act. Firms said, "Thank you very much for offering us a loan, but we do not really need one as we have plenty of money of our own. What we would like is an inducement, by way of a grant, for the purpose for which we will be going to the employment locality. Can you not give us a contribution towards the cost of the factory we should have to put up?".
Under the 1958 Act and, indeed, under the 1945 Act, we could not make those grants. As I have said before, we have good evidence in the Board of Trade to show that there are several what one might describe as well-to-do firms which do not want loans, which do not need them and do not wish to be saddled with loan money, but which, nevertheless, would regard a contribution towards the 436 cost of building their own factories as a very substantial inducement. We should remember that they want to own their own premises, and that is all to the good, because that means that, when they have moved to an area, they will stay.
Because of the accumulated evidence we had in the Board of Trade of the attitude of the type of industrialist we want to persuade to go to these localities, we decided to put this in the Bill and to make it a cardinal and central feature of it. I hope, therefore, that the Committee will give us the Clause, which we regard as particularly important.
§ 2.0 a.m.
§ Mr. Dempsey
Will the hon. Gentleman give some reasons for saying that a flat rate of 75 per cent. as suggested in the Amendment standing in my name is not acceptable?
§ Mr. Dempsey
Will the hon. Gentleman give some reasons why my Amendment, which asks for a flat rate of 75 per cent. of the approved project, is not acceptable?
§ Mr. Erroll
The short point is that it would be, of course, far more expensive than we believe would be necessary to provide a sufficient inducement.
§ Mr. Malcolm MacMillan (Western Isles)
It will require at least the inducement mentioned in the Amendment to which my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) referred to get factories to go on any basis into certain areas which are still, I hope, to be covered by the Bill.
Applying the Minister of State's general criterion of value on a sale in the open market, how does one apply that locally in an area where there are no comparable properties? I take it that the district valuer must have some local basis as a general criterion under the subsection. What is his guide? Does he have regard to existing comparable properties in a particular area? I will take the example of my own constituency. I see a broad smile expanding on the face of the hon. Gentleman, and I agree that it would be a miracle if anything happened under the Bill there, and, indeed, it is almost 437 humorous to suggest it. But I must remind him that he meitnoned my constituency by name not so long ago as one of the very places where the previous Act would have a particularly useful application. It has not applied there, and it has not had any effect. There has been no impact there, and I expect even less, if less is possible, now that the right hon. Gentleman has almost by name excluded vast areas of Scotland, including the Highlands. He was given every opportunity to get up and deny that the other night, but he made no attempt to do so.
Let us suppose that, by a miracle—the miracle which amuses the hon. Gentleman and his right hon. Friend—somebody, as a result of this inducement, thought of going to my constituency. Does the hon. Gentleman really think that this is a sufficient inducement? What basis are we to apply? What is the criterion? How on earth will one value a factory as on a sale? The district valuer is asked to come in. Usually, a valuer will look at other properties, even, I suppose, in a remote neighbourhood, but when one is 40 or 60 miles across the Atlantic, or up in certain parts of Caithness or Sutherland, what is the basis or criterion to be then? In the absence of comparable local criteria, what on earth is it all to mean? There is nothing on which to base any sort of assessment of value at all. I have given an extreme example, and no wonder the hon. Gentleman smiles, but there are other places.
Again, the Minister of State mentioned specialised factories built for some highly specialised function. Surely the more highly specialised a factory is, the more unlikely it is that there will be any comparable local premises on which to base a valuation, and the more difficult it will be to sell it.
If one builds a highly specialised factory nobody except the particular manufacturer concerned is likely to want it. I should like to know how the Minister manages to bring any sort of reality into this local application of the general principle he has been ennunciating. These are the areas to which it is most difficult to attract industrialists and, therefore, it is most important that additional attention should be paid to this problem.
§ Mr. W. Baxter
If a factory is to be built in a particular location and the people concerned come to the Board of Trade for a grant, do they get a grant on the estimated valuation of the factory and the estimated cost of the production of the factory, or do they have to wait until it is built and the district valuer comes in?
§ Mr. Erroll
I hope the Committee will forgive me for intervening for a third time, but these are important points which interest many hon. Members.
Referring to the principal point raised by the hon. Member for the Western Isles (Mr. M. MacMillan), I would say that the problem of the district valuer in an extreme locality such as the one the hon. Gentleman represents is a difficult one, but the more difficult it is the more it will favour the firm proposing to go to the Western Isles and build its factory premises there. The question the district valuer has to answer is what would be the value of empty premises in the Western Isles, and the likelihood is that the answer would be a very small value; therefore, the grant would be correspondingly greater for a firm prepared to go there.
This is a matter on which the district valuer must use his own specialised knowledge. He has to value all kinds of property in all parts of Great Britain and he has a wide experience in these matters. It is his particular skill that he is able to assess the value of empty factory premises when hitherto there have not been other factories like it in the area. He is, therefore, likely to put a low valuation on such premises, which will make the value of the grant all the greater, and thus the help to the more remote localities will be correspondingly bigger, although the percentage is the same throughout the country.
§ Mr. Erroll
I do not need to tell the hon. Gentleman that 85 is greater than 15, and 85 per cent. is more of an inducement than 15 per cent. of a corresponding sum.
§ Dr. Dickson Mabon rose—439
§ Mr. Erroll
No, I cannot give way because it is only fair to refer to the point raised by the hon. Member for West Stirlingshire (Mr. Baxter). This is one of the features of the Bill which we think will be particularly attractive to industrialists. The computations will be on the basis of the estimated cost of a suitable building, and the estimated value of such a building when completed. That is clearly stated in the Explanatory and Financial Memorandum as well as in the context of the Bill. The purpose of putting in the word "estimated" in both cases is to enable figures to be worked out as soon as an industrialist is interested. We can work out the figures and tell him what he will get by way of grant at the outset, so that he knows quite clearly what he is going to get.
Let me give the Committee an example briefly. The cost of building, shall we say, is roughly the same anywhere in Great Britain at the present time. [HON. MEMBERS: "Not in the Western Isles."] Very broadly it is, for the purpose of this simple example. I must keep it simple, otherwise it gets too complicated. Let us take a typical figure of £100,000 as the cost of building. Let us say the estimated value is £60,000. The difference is £40,000, 85 per cent. of which is £34,000. Thus we are able to show to a firm contemplating going to such a place where the market value is only £60,000 that it will have to find only £66,000 worth of the bill, instead of £100,000, namely, the total cost. So it would be a direct inducement of £34,000 to persuade it to go, and it would know about it right at the beginning. Before it actually had to make up its mind it would know the amount of the Government grant. We believe, from conversations we have had with industrialists, that that is the figure which they would like to know right at the beginning of their consideration whether they should move or not.
§ Mr. Erroll
Having said what they would get, they would get it. That is what they would get. It is very important they should know they will get 440 this money so that they can make their plans with full knowledge of what contribution the Government will make to their enterprise.
§ Mr. Baxter
Estimations are very difficult things to try to define and accurately to calculate grant towards. Suppose perchance we estimate the building of a factory in an area at £100,000, and that, at the end of the day, owing to rising costs and rising costs of labour, that factory costs £150,000, £125,000, or £110,000. I have just built a factory at Kirkintilloch, the first overspill factory outside Glasgow. It is well within the ground of possibility that the estimate could be well out, and it could be £125,000. If we go up to the North of Scotland the cost of transportation can vary so much that it may be a very costly business over and above the estimate. So it may cost £125,000. The estimate contained in this Bill which will ultimately become an Act and on which the Government base their calculation will not be found accurate in fact, and in my contention they will have to give extra money to the person building the factory. Is not that so?
§ Mr. G. M. Thomson
If the Chief Patronage Secretary had not wakened up on Clause 1, I should have attempted to describe how disreputable I thought that Clause was, but I must say on this Clause that I start with a natural predisposition in favour of any Government who are prepared to make any sort of grant to build a factory in any of the Development Areas such as Dundee. However, I was considerably set back in my favourable response to the Government's attitude on this by the explanation which the Minister has just given. By the figures he gave he showed that any firm wishing to meet the capital cost of building a factory in a Development Area and wishing to take advantage of the Government's grant would out of its own resources have to pay a bigger sum than the actual district valuer's valuation of that factory. I hardly feel that this is likely to be a very great incentive towards a firm's going into a Development Area. Indeed, I do not see that the Government are doing anything new. 441 2.15 a.m.
The Minister will recall that in my constituency in Dundee, a number of foundries were forced to close a year or so ago and the premises were thus vacated. After representations were made, the predecessor of the President of the Board of Trade was good enough to say that if another tenant could be found for these empty premises, the Government would make financial help available to a firm coming to take them over. As I understood the proposition, the help to be given would be of such an order that it would compensate the firm for the financial disadvantage of coming in and taking over the empty premises. The existing enactments are very similar to the machinery provided by the Clause. I cannot see, therefore, that the Clause, so far as it goes, provides anything worth while or new.
I do not see what positive incentive is being given under the Clause to firms to come to the Development Areas. It would have been a great help had the Minister been able to give an indication of the kind of financial resources that are to be made available by the Government to attract firms to come and build their own factories under the provisions of the Clause. No such information is given in the Explanatory Memorandum. We ought to have more information on this from the Minister before we are asked to accept the Clause.
§ Amendment negatived.
§ Mr. Dempsey rose—
§ Mr. Willis
On a point of order. Are you not putting the Amendments in lines 9 and 13, which stand in the name of my hon. Friend the Member for West Stirlingshire (Mr. W. Baxter)? I understood that the three Amendments were discussed together. Are they not to be put separately?
§ The Deputy-Chairman
No. They were to be discussed together and the token vote, I understand, was to be taken on the first of the three Amendments.
§ Mr. Dempsey
I beg to move, in page 3, line 21, at the end, to insert:(4) Among the members of the advisory committee there shall be included a person 442 or persons who appear to the Board to have had experience of local government and a person or persons who appear to the Board to have had experience in the organisation of workers.I will be brief. The Amendment deals with two factors. To take the second one first, it proposes that provision should be made to include in the advisory committee.a person or persons who…have had experience in the organisation of workers".The simple reason is that labour is an important element in industrial development and has an excellent contribution to make in dealing with the problem in general. It is felt, therefore, that provision should be made whereby a representative or representatives of organised labour are included in the committee. The composition of D.A.T.A.C. includes representatives from the T.U.C. and I would like an assurance from the Minister that the practice of having trade union representation will be continued in the Bill.
The second aspect is local authority representation. I come from a local authority. Most people realise that local authorities are becoming more and more involved in industrial development. Indeed, when the Bill becomes law, the Board of Trade will require local authorities to find sites, to service them with gas, electricity, roads, water and so on, and even to look after safety conditions in the factories and workshops. Indeed, included in the Bill is a provision which invokes the local authorities on a greater scale than ever to assist in industrial development projects all over the country.
For these reasons the Amendment should be accepted. By including a local authority representative we should be including a person who has considerable administrative experience in the provision of social services in general. I am convinced that that would be an asset in working the Bill when it is enacted.
§ Mr. Maudling
I can certainly give the hon. Member the assurance he asked for about a trade unionist member of the committee. I hope that I shall be able to obtain a representative of the trade unions who will serve on it. The previous trade union member felt that he could not continue because of the 443 volume of work involved. While I am prepared to give an assurance, I would not be inclined to accept the Amendment. It would be a mistake to provide in the Bill for the actual composition of the committee. I think that I am right in saying that no provision was made in the original Act in 1945. The matter was then left to the Treasury and I think it wise to continue that precedent. If we made a provision in the Bill it would have to be different from the provision made in the Amendment. We might want an accountant, for example, for the purpose of the committee is to advise not on local problems but on the financial soundness of any given project. The committee examines the project that comes before it and advises the Government whether it is sound in itself and is likely to continue as a viable business providing employment for a considerable period ahead.
The Government should be free to choose the people they feel best technically qualified for this purpose. The Amendment would not assist the administration of the Bill, but I am happy to give the hon. Member the assurance he seeks about a trade union member of the committee.
§ Mr. Willis
I do not know whether the right hon. Gentleman has consulted the Secretary of State for Scotland about this. If so, he will realise that the question of the advisory committee has caused some concern to Scottish local authorities. I think that the County Councils Association and certainly one of the local authorities in my area has made representations to the right hon. Gentleman about it. It is indicative of the outlook in Scotland that they do not seem to trust the Bill. Neither do they seem to trust the Government very much. They feel that it would give them some greater assurance if the constitutional functions of this committee were embodied in a Schedule to the Bill.
I can appreciate some of the right hon. Gentleman's arguments for not doing this, but I cannot see why their embodiment in the Bill would prevent his getting the best people obtainable. The right hon. Gentleman argued that we should not do anything that would prevent our getting the best people obtainable to do 444 this job. Why should the insertion of these functions in the Schedule prevent that? The right hon. Gentleman would be still free to select the people who were considered to be best. There is nothing here that would tie the right hon. Gentleman down to men representing certain sections of the community. At least he could state the numbers and to whom the committee was responsible, and so on, so that the local authorities could know something about the committee.
In Scotland there is the fear that the right hon. Gentleman will hide behind the committee. Nobody knows the members of the committee or what its functions will be. The fear is that the right hon. Gentleman will come along and say that his advisory committee has said that a grant should not be given, or that some place in the Western Isles or on the Border should not be assisted. No one will know anything about the committee, its composition, or the abilities and qualifications of the members.
Will the right hon. Gentleman consult the Secretary of State for Scotland, who should at least have made these represtations to him?
§ Mr. Willis
Oh. That is not good enough. I asked the right hon. Gentleman whether he had had any consultations about this subject and he has ignored my question. We are not keeping ourselves out of bed for fun. I have been asked, as have other hon. Members, to make representations to the right hon. Gentleman and I have no doubt that if the right hon. Gentleman does not want to reply to those representations, my colleagues will carry on the debate until we get a reply from the right hon. Gentleman. Surely the right hon. Gentleman can reply.
§ Mr. Maudling
I have found on previous occasions that the hon. Gentleman has not listened to what I have said. He said that the composition of the committee was unknown. I said on Second Reading:I am glad to say that Mr. Slimmings, the present chairman of D.A.T.A.C., has accepted my invitation to continue as chairman of the advisory committee. I hope that his colleagues will be able to do the same…"—[OFFICIAL REPORT. 9th November, 1959; Vol.613, c.44–5.]445 If the hon. Gentleman had listened to what I said on Second Reading, he would not now be taking up time asking questions to which he should know the answers.
§ Mr. Willis
I do not know anything about the colleagues of the chairman. I do not know who they are or what they represent. Since the right hon. Gentleman is becoming a little more forthcoming, perhaps he will tell us who they are.
§ Mr. Willis
And if they have accepted his invitation, so that we know something about this committee. Now that the right hon. Gentleman is trying to assist us, can be say whether he has consulted the Secretary of State about any representations which have been made by the county councils of Scotland?
§ Mr. Ross
I hope that the President of the Board of Trade will address himself to the questions which have been asked. He told us on Second Reading, and he has now repeated it, that the chairman of the present committee was to continue, and he hoped that the other members of the committee would, too. Are the other members going to continue? If not, if there is a vacancy—
§ The Chairman
Order. The Amendment is to include a person with local government experience. It does not mention a vacancy.
§ Mr. Ross
Exactly. I was coming to that. If there is a vacancy, would it not be a good idea to fill it with someone who has local government experience? Is not that the Amendment? We are declaring in no uncertain terms the desirability of having on the committee someone with trade union experience and someone with local government experience. That is a good idea. So far as I can see, the right hon. Gentleman is more or less pledged to the continuance of the present committee and the present personnel.
We are giving additional powers that will vary in different parts of the country, both in importance to the areas and in the cost to the Treasury. It 446 might, therefore, be better to depart from the original committee. There is nothing in the Clause which says that it should be the same committee. If the right hon. Gentleman wants to continue the work that the present members are doing there is nothing to prevent him increasing the membership by one. That is a reasonable suggestion.
In view of the interest that has been shown from both sides of the Committee by hon. Members representing Scottish constituencies, it would not be a bad idea if the additional member was a person who had experience of local government in Scotland. If the Government want to think about this. we can leave the matter to be considered further on Report and perhaps my hon. Friend would withdraw his Amendment. Such a step would enable the right hon. Gentleman to have discussions with his right hon. Friend the Secretary of State for Scotland. The Amendment was not tabled, and has not been discussed, in a capricious mood. We believe that the committee can do good work. If we cannot get a Scottish committee—and we hope to pursue that argument on Report—at least let us have on the committee, which we propose should be increased by one member, a person with experience of local government in Scotland.
I hope that the President of the Board of Trade will agree to consider this suggestion. The work of the committee will obviously become more concentrated. It will have greater powers—or at any rate the right hon. Gentleman thinks it will have greater powers—and it would not be a bad idea to include on the committee the kind of person that we have suggested.
§ Miss Herbison
Has the Secretary of State for Scotland made any representations to his right hon. Friend the President of the Board of Trade about this matter? I have in my hand a letter, a copy of which I expect all hon. Members who represent Scottish constituencies have received. It is a letter that was sent by the Association of County Councils to the Secretary of State for Scotland.
The Amendment deals with the constitution of this advisory committee. My hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) asked that there should be a representative both of 447 the trade unions and of the local authorities. The right hon. Gentleman was forthcoming about the representative of the trade unions, but he did not mention the representative of the local authorities.
Lest the Secretary of State for Scotland did not tell the President of the Board of Trade about this letter from this very important Scottish body, I will read it.
§ Miss Herbison
The right hon. Gentleman says that he has discussed this letter with his right hon. Friend, but I propose to read part of the letter because of the President of the Board of Trade's unsatisfactory reply to my hon. Friend. The letter says:The constitution"—and that applies to the Amendment that we are discussing—and functions of the advisory committee are not provided in the Bill in such a way as has been done in respect of the Industrial Estates Management Corporations and the Industrial Estates Co-ordinating Committee.That could be done at a later stage, but I mention it now because the Association has strong feelings about the constitution of the committee. Such an alteration would create greater confidence in the operation of the Bill. It is not only hon. Members on this side who have grave doubts about what the Bill will achieve for places like Scotland. The Scottish County Councils Association also has grave doubts about it. The right hon. Gentleman ought to tell us more about the constitution of the advisory committee, and whether he has any intention of meeting the points made by the Association.
§ Dr. Dickson Mabon
There is another aspect of this matter to which the right hon. Gentleman should address himself. There is a complete change in the 448 management corporations and their administration, in the sense that—
§ Dr. Dickson Mabon
No, Sir Gordon, but I submit that I can mention it for the purpose of advancing my argument that there should be an extension of the advisory committee. We are repealing an Act which laid down the membership of the industrial estates corporations throughout the country, comprised of
§ The Chairman
There is no reference to that in the Amendment.
various members, mostly part-time, drawn from various aspects of administration and business. Now, under the Bill, they will become purely administrative. In fact, in later Clauses there are references to accountancy, estate management, and so on.
§ Mr. Maudling
The Amendment deals with the advisory committee, and the provisions about its composition are exactly the same as under existing legislation.
§ Dr. Dickson Mabon
The President of the Board of Trade has run ahead of me. I know that he is anxious to get home, and I can appreciate why, but he has forced the Committee into this position tonight; we have not. He has been so inflexible that hon. Members on this side of the Committee, who—unlike the majority of hon. Members opposite—have been very interested in the Bill, have had to stay to fight against some of its provisions.
I accept that the continuation of the present advisory committee, under D.A.T.A.C., is what will emerge from the Bill, but that is not my point. The Bill also changes other committees, namely, those which run the industrial estates, and the Amendment is very relevant to that fact, as hon. Members opposite would appreciate if they would listen. The Bill changes the make-up of industrial estates corporations. It takes away part-time representation from many local authorities and persons such as were mentioned by my hon. Friend in connection with the County Councils Association.
We say that if there is to be a change in one part of the administration of Board of Trade responsibilities in this matter there ought to be a compensating 449 change in the composition of the advisory committee, so as to allow of this kind of representation at that level. Like my hon. Friend the Member for Kilmarnock (Mr. Ross), I hone that later, on Report, we shall be able to discuss the question of advisory committees not only in the United Kingdom but in Scotland and Wales, separately. At the moment, within the strict context of the Amendment, we are discussing simply the construction of the advisory committee, and the question whether there shall be one for the United Kingdom or one each for England. Wales and Scotland is irrelevant.
Representations have been made to me by persons who have been and still are active in the work of industrial estates corporations. They are asking, "Where is our part in the Bill? Is it true that the accountants and estate agents take over, and we move out, and there is no representation for us at the higher levels?" We would like to know whether that is the Government's intention. We should like to know whether the right hon. Member cavils at the idea of having one or more such persons, or any members of trade unions, on the committee. We know that he welcomes representatives of big business. Perhaps he does not welcome local authority representation. Must he refuse to have or the central advisory body a representative from one side or the other of local government or from the trade unions?
§ Mrs. Judith Hart (Lanark)
I should like to add my voice to those of my hon. Friends who have asked what is the objection of the President of the Board of Trade to including a member or members of the local authorities on the advisory committee. It seems to me that it is important that there should be such representation, as local authorities are given considerable responsibilities in later Clauses. In Clause 5 there is a reference to their responsibilities and they have work to do in connection with fulfilling the provisions of the Bill regarding the preparation and taking over of sites. It is difficult to discover any other cases where local authorities have similar responsibilities and are not brought into consultation.
450 It seems to me that the President of the Board of Trade must have some very unreasonable objection to accepting this Amendment. He has already said that he has no objection to including representatives of the trade unions. We cannot believe that his reason for refusing the Amendment can be logical. He seems to have some some secret determination to exclude representatives of local authorities.
§ Mr. Maudling
I do not think the hon. Lady can have heard what I said earlier when I gave a clear reason. It seems to me logical to say that the composition of an advisory committee should depend on the sort of thing on which it is asked to advise. This committee is to be asked to advise solely on the financial soundness of business propositions put forward. Local authority representatives have good advice to give on a variety of subjects, but I do not think that they are peculiarly qualified to advise on the commercial prospects of particular business propositions. That seems to me a clear and sensible reason for my attitude.
§ Mrs. Hart
I understand the Minister to be referring to the duties of the advisory committee in connection with valuation and the grants to be paid to industrialists coming into an area. I put it to the right hon. Gentleman that there could be no one more experienced in the variations between areas regarding the valuations to be placed on buildings than representatives of the local authorities. I do not think that the right hon. Gentleman has understood my point. It is essential that we should have local authority representation.
§ Mr. W. Baxter
As one of the few representatives of the local authorities in the Committee—I am the vice-convener of the Stirling County Council and a member of the Scottish County Councils Association—I wish to take the President of the Board of Trade to task on the question whether or not it is wise to have a representative of the local authorities on the committee. 451 There is a wealth of experience in the membership of the County Councils Association and were it asked to nominate someone to serve on the committee it would do so with the greatest degree of care. If it were necessary to have a person with financial knowledge, such a person could be selected and would probably be a Conservative member. The representative selected would have financial knowledge and even business experience if that were considered necessary. If it were for other purposes, connected with the siting of factories throughout Scotland, the Government could easily find a suitable person from the County Councils Association of Scotland.
It is very wrong for the Minister more or less to decry the virtues of members of local authorities. With great respect to him, I suggest that they are well able to serve on a Committee such as this and to do great service for the benefit not only of the Government but also of the country.
§ 2.45 a.m.
§ Mr. Manuel
I want to press the Minister further on this point. I do not want to stress my own experience of local government, but I suggest that it would be an excellent thing if there were on the advisory committee active, informed persons, recruited from each of the local authority associations in Scotland. The first things that an industrialist wants to know when coming into an area are the local rate contribution, the volume of the water supply and the sufficiency of the local services, which are controlled by the local authority. An informed member of the local authority would be invaluable to his colleagues on the advisory committee in giving them details on these points, bearing in mind that they are not always available in the Board of Trade Statistics.
The President of the Board of Trade will offend many people if he says bluntly that local authority personnel in Scotland, as it is represented in such associations as the County Councils Association, the Convention of Royal Burghs and the Association of Councils of Counties and Cities, could not be helpful on the advisory committee. I ask him to recognise that local authority 452 services have an impact on the problem and must contribute to the general wellbeing of an area before an industrialist, or group of industrialists, would go into factories sited in various areas in Scotland.
§ Mr. E. Fernyhough (Jarrow)
Would the point be met if, instead of having on the advisory committee a representative of Scottish local government only, the Minister agreed also to have representatives of English boroughs and one of the Welsh boroughs?
§ Mr. Manuel
I should strongly press for the same provision for England and Wales as we are seeking for Scotland, and I hope that my hon. Friend will be as active about it as Scottish Members have been in pressing for representation by local authority nominees. I hope that the right hon. Gentleman will look at the question again. We do not want to be difficult about it. [HON. MEMBERS: "Oh."] I object to hon. Members opposite jeering. I am usually easy to get on with.
§ Mr. Manuel
I hope that I shall be protected from the rather uninformed jibes of hon. Members opposite, who have not even got copies of the Bill or of the Amendment—
§ Mr. Manuel
I would have finished by now had it not been for the encouragement of hon. Members opposite. If the right hon. Gentleman would look at this matter again, we would not be difficult. We would be prepared to take his answer, at a later stage, if he would give some assurance that he would go into the matter.
§ Amendment negatived.
§ Motion made, and Question proposed, That the Clause stand part of the Bill.
§ Mr. Fernyhough
I have no wish to detain the Commitee, but I should like to comment on subsection (4):The Board may pay to the Members of the advisory committee such allowances as the Board may, with the consent of the Treasury, determine.453 How are these gentlemen to be paid? What kind of value does the right hon. Gentleman place on their services? Are they to he paid on a production basis, as it were—paid more, the more successful they are in solving unemployment in the areas concerned? Or is it to be on a time basis? On just what basis will they be paid—and how much? I am as anxious as is the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke)—who is not now with us—to protect "State lolly", as he calls it. How much "State lolly" is to be paid to members of the advisory committee? If the right hon. Gentleman will tell me that, I will be glad to let him get away with his Clause.
§ Miss Herbison
Subsection (3) states:The Board in making a grant under this section may impose such conditions as they think fit for securing that the building or extension will continue to serve the purposes of this Part of this Act…I agree with that. It is the wording that follows about which I am concerned:including conditions for repayment of grant in specified circumstances.What will those specified circumstances be? I think it is important, if we wish to attract industrialists to our areas in Scotland, or to some parts of England and Wales, that no conditions should be laid down that might, in the first instance, prevent these people coming to the areas. Therefore, I should like further information about the phrase:…including conditions for repayment of grant in specified circumstances.
§ Mr. Ross
I hope that the Government will answer my hon. Friend the Member for Jarrow (Mr. Fernyhough). When we discussed the Money Resolution, I pointed out that in relation to the members of the other committee—that concerned with estate management—there was not only the matter of allowances but the question of remuneration, too. There is also involved a report to the House. We are entitled to know what is meant byThe Board may pay to the members of the advisory committee such allowances as the Board may, with the consent of the Treasury, determine.May we be told what that really means? Is there any remuneration in it? Are they all part time? Is this just allow- 454 ances, travelling allowances, subsistence, and what-not?
There is another important point which arises from the fact that the building grants relate not only to new factories but to extensions. I presume that a firm can get a capital grant in respect of the building of a factory. No doubt, there is an element of chance in it, but, once the firm is there, it settles down. and, presumably, it makes a profit. It then decides to extend. Is it right that exactly the same kind of condition should apply in relation to the grant then as applied to the building of the original factory? Has any thought been given to this at all, or is it just a phrase which has been incorporated unthinkingly? Will it apply only to extensions of buildings which are erected under the grants provided for by Clause 3?
Several questions arise on subsection (3), which provides:The Board in making a grant under this section may impose such conditions as they think fit for securing that the building or extension will continue to serve the purposes of this Part of this Act.As far as I understand it, this Part of the Bill relates to the provision of appropriate employment. But we were told by the Minister of State, when we discussed a previous Amendment, that the whole purpose of this part of the Bill is fortified by the fact that firms like owning their own factories. If they like to own their own factories, they probably like, also, to get out of them when they want to and to dispose of them when they want to. Can the hon. Gentleman tell me how, in the conditions he claims are the conditions in which a firm will make use of the Clause, he can apply this provision about imposing conditions which the Board thinks fit, not which the Board thinks practical,for securing that the building or extension will continue to serve the purposes of this Part of this Act"?It is just as well we have the word "may" here, because that is a get-out. In fact, it is just a piece of padding—[Interruption.]—I hope that hon. Members opposite appreciate how much State money is involved here. Although it is three o'clock in the morning, we are still entitled to pursue these points in relation to the money which is to be spent under the working of the Clause, and in 455 relation to the question whether it will serve the purposes for which it is designed.
What does it mean? How is it to be applied? How is it effectively to apply to the firm which comes but which wants freedom and insists upon the freedom it gets by owning its own factory? To what extent will such a firm own its own factory? It may think that it owns its own factory, but exactly what will the situation be under the Bill? That is the first point.
Then we have the words:…including conditions for repayment of grant in specified circumstances.I would have thought that if we have the phrase "in specified circumstances" we might have got the specification. The last time we had a similar phrase was in Clause 1, line 10, where there are the words:…as is specified in the following subsection,and there follows the specification. There is no indication here what the specified circumstances are. I would hope that if the President of the Board of Trade uses this word "specified", he will go a little further and enlighten us in a Schedule or a new subsection what it is that he proposes to specify. Or does he mean "specify"? If he does not, the word should not be there. I think that obviously it should not be there. It may be in particular circumstances, but let him be accurate. After all, we have to put up with enough in this Bill, with its looseness of language. The localities referred to are "any locality". That takes a bit of swallowing. And now we get this one.
I hope that the right hon. Gentleman will answer these three points. The first is related to allowances, the second to extensions and the third, to the question of the "specified circumstances".
§ Mr. Maudling
Regarding the first point raised by the hon. Member for Jarrow (Mr. Fernyhough) about allowances, these are what they say they are: they are allowances. I am happy to tell the Committee the present composition. The chairman is a member of a professional firm. He devotes a great deal of his time to the committee. He receives nothing himself, but his firm is paid 456 £2,000 a year for his services. Of the other members, one receives some expense allowance, but the others, nothing whatsoever. The country as a whole is getting an extremely good bargain out of that.
The second point was made by the hon. Lady the Member for Lanarkshire, North (Miss Herbison) and it was referred to subsequently by the hon. Member for Kilmarnock (Mr. Ross). I am sure that this subsection is doing something they would like to see us do. We want to get firms into these areas and get them to stay there. It would be no good if they went in and then disappeared or turned their factory into a warehouse. Therefore we say that, in making the grant, we should impose conditions to secure that the building or extension will continue to serve the purpose of the Act, and thus will continue to provide a substantial amount of employment. In these conditions we specify circumstances in which they would have to repay the grant. To take an example, we could say that if they stopped using a building as a factory and turned it into a warehouse, or sold it, they would have to pay the grant back. That is a precaution against abuse of the Act.
The other point raised was what was meant by the word "extension." I think that is made clear by lines 7 and 8, which talk about the cost of providing extensions or buildings. It seems logical to deal with extensions as with new buildings, because a large part of the new employment will come from extensions to existing buildings.
§ Mr. Maudling
I think "specified" is the word required. Perhaps I could explain it carefully to the hon. Gentleman. We will make conditions for the 457 repayment of grants, and in those conditions we will specify the circumstances in which they will be repaid. I cannot think I can put it more clearly or more accurately than that.
§ Question put and agreed to.
§ Clause ordered to stand part of the Bill.