HC Deb 09 February 1959 vol 599 cc842-3
17. Mr. Cronin

asked the Paymaster-General if he will make a statement as to the terms on which interest will be charged by him on the proposed loan of £50 million to Messrs. Colvilles Limited, the Scottish steel company, and as to why he has agreed that payment of such interest may be deferred until three years after the investment becomes productive.

Sir I. Horobin

The rate of interest charged will fully cover the cost to Her Majesty's Government of borrowing at the relevant date for a similar period. Provision has been made for postponement of interest payments during the construction period, and optionally during the development period.

Mr. Cronin

Bearing in mind that by commercial standards these terms are exceptionally generous, and that they have become necessary apparently only because Messrs. Colvilles are either unwilling or unable to raise money in the ordinary way, and also that the shareholders are the principal beneficiaries, is it not clear that the obvious solution would have been for Messrs. Colvilles to have remained nationalised?

Sir I. Horobin

The hon. Member has made a number of very confident assertions, but unfortunately, like so many of the assertions of hon. Members opposite, they are not accurate. If he will read the accounts of the shareholders' meeting, he will see that objection was taken the other way round, and that Colvilles could probably have got the money cheaper from the market but for the irresponsible threats of the hon. Member's hon. Friends.

Mr. Strauss

Is not this company borrowing money much cheaper than it could from a bank or some other institution? Is not this cheap money being borrowed in a form which will make it a subsidy to the private investors in the company? If this company is unable to carry out a nationally advantageous expansion on ordinary private enterprise terms, does it not forfeit any justification it may ever have had to remain under private ownership?

Sir I. Horobin

The right hon. Gentleman got a little involved at the end of his question and, I think, asked the opposite of what he intended to ask. The fact remains that the only reason it was necessary to borrow this money from the Government instead of from the market was the threat of renationalisation. If that is causing the difficulty, the fault lies with hon. Members opposite.