HC Deb 18 June 1963 vol 679 cc386-412

11.30 p.m.

The President of the Board of Trade (Mr. F. J. Erroll)

I beg to move, in page 2, to leave out lines 12 and 13 and to insert: and subsection (2) of that section is hereby repealed". The effect of this Amendment is to restore the position as it was on Second Reading. [Hon. Members: "Shame."] I think that when hon. Members have heard what I have to say they will agree that this is the right course and that there is no reason for shame. The Amendment in Committee was carried by seven votes to six. It would require the Board to pay in every case a building grant of 25 per cent., which is the proposal in this Bill, or a grant of the amount resulting from a calculation under the formula of 1960, whichever was the higher.

I would be the first to agree that superficially this proposal is attractive, because it appears to give to industrialists putting up a factory in a development district the benefit of both worlds. If I had been satisfied that it really would further the object of the Act—to relieve unemployment—I would very readily have considered what I could do to meet the idea underlying the Amendment. I will not argue whether the Amendment was in an entirely satisfactory form, because if the principle underlying an Amendment is acceptable, I know the House will always accept a Government Amendment in exchange in order to put the thing in proper form.

But I am convinced—and I hope to convince the House—that to accept the Amendment passed in Committee would be to undertake a laborious piece of administration to no purpose. First, the Amendment in Committee gives the Board no discretion at all. The Board would in every case have to ascertain the amount payable under both methods, the old and the new, and then pay whichever happened to be higher.

We could not, for example, on the one hand pay on Merseyside the standard grant of 25 per cent. without at the same time finding out the alternative figure, while on the other hand operate the old formula exclusively in the Highlands on the hopeful assumption that this formula would be more beneficial than the new.

Mr. William Ross (Kilmarnock)

The old formula has not brought much benefit to the Highlands anyway.

Mr. Errol

I know that the hon. Member does not think much of the Act.

Mr. Ross

I do not think much of the right hon. Member's argument.

Mr. Erroll

The hon. Member does not think much of me either. However, the old formula is one of considerable complexity, and, indeed, has been criticised by hon. Members and by some industrialists on that very account. I should like to remind the House of what the old formula is. It seemed to be a good one at the time, and we have had considerable success with it. But it is complicated. Under the 1960 Act, the amount of any grant has to be 85 per cent.

…of the cost, as estimated by the Board, of providing an adequate building…of the size required by the applicant…and reason- ably suitable for the purposes for which he requires it, over the amount at which in the opinion of the Board such a building might, if completed at the time of applicaton…be expected to be sold on a sale in the open market. This means that in considering a grant we have to get expert advice from two separate Departments.

First, the Ministry of Public Building and Works, through its quantity surveyor's department, has to estimate the cost of a reasonable building of the size required. Secondly, the district valuer, in another department, has to advise on the value of such a building, bearing in mind that the building has not been built. Both expert advisers need plans and specifications, and the valuer has to make an inspection of the site. Even when these operations have been carried out and we have told the applicant the amount of the building grant, he will not know whether it will pay him better than the new formula of 25 per cent., because what the Ministry of Public Building and Works must ascertain is the estimated cost of a hypothetical building.

Under the new formula, what we have to find out is the actual cost, excluding extravagances, of the actual building. So in every case there must be three quite complicated operations instead of one. I am sorry if I have not made myself clear. This would be the position if we were to accept the Amendment that was passed in Committee. That is why I thought it only right to point out the considerable administrative complications involved if we were to accept even the principle underlying the Opposition Amendment passed in Committee.

I would not shrink from this if I thought that it would serve a useful purpose, because I would be the first to agree that administration should be the servant of policy and not its master. I am not making the case on the ground of administrative complication, although I thought it only right to inform the House that the administrative complications would be very severe, but I have had an analysis made of the building grants so far offered and accepted under the existing legislation to see whether any hardship would be caused, and it is clear that none would be caused.

Of the 90 building grants so far agreed upon, only in nine does the amount exceed 25 per cent. of the estimated cost, and in five of these it is 31 per cent. or less. As actual building costs almost invariably turn out to be higher than the estimated cost, so far as we can tell at this stage it is probable that in only about four cases out of the 90 would the grant have turned out to be above 25 per cent. of the actual cost; and there is no reason to think that in any of the four cases that I have mentioned, out of the 90, the project would have been lost to the development district on this account.

Mr. Brewis

Surely, in order to make this point, my right hon. Friend should state in how many cases the building grant has been less than 25 per cent. under the present Act. What he is doing is to remove the preference from remote areas and make all areas absolutely equal. If he says that in only about 10 cases will the grant be over 25 per cent. at present, he should state in how many cases it will be under 25 per cent. and show what the present preference is.

Mr. Erroll

In quite a substantial number of cases a larger grant will be payable in future under the standard grant procedure. It would also be a mistake to asume that a higher grant would always have been payable under the old system in remote areas, because one of the quirks of the district valuers' system is that it does not necessarily follow that the greatest percentage difference would arise in the areas which are most remote.

Mr. Ross

Yet this was the argument used at the time.

Mr. Erroll

I am telling the House how the position works out today. There is no reason to think that any of the four projects that I have mentioned would have been lost to a development district if the applicants had been offered the standard grant.

I hope, therefore, that the House will agree that we should not be justified in setting in motion complex machinery to do a job which in about 95 per cent of cases will be futile, and will be known to those operating it to be futile.

It was argued in Committee that a higher grant should be payable in remoter districts where it would be most needed. This is the point raised by my hon. Friend the Member for Galloway (Mr. Brewis). I want to deal with it because other hon. Members are also interested in it. The facts do not bear this out. Of the nine cases I have mentioned three occurred in Scotland, three in Wales and three in England. Some were in remote areas and others were not. For example, one of the nine was in the Isle of Wight, which can hardly be regarded as a remote district, being 80 or 90 miles from London. The outcome does not depend on geography but on the judgment of the district valuer concerned in the very nature of the system.

This does not mean that the Government are withdrawing support from projects likely to give employment to the remoter areas. On the contrary, we are anxious to do anything we can to introduce industry to those areas. I have had very much in mind the interesting proposal put to me by the hon. Member for Hamilton (Mr. T. Fraser). I went into it carefully but did not think it was a "runner." The way in which we give help to encourage projects to remoter areas is by running on a cost per job basis.

We have always been prepared to take a more generous view when the project is for a remote area, and this will continue to be our policy. When a firm is considering going to a remote area we can assure it that there will be a more generous assessment of right to receive assistance by a better assessment on a cost per job basis. That probably is a better and more practical way of dealing with the relatively occasional projects we are able to steer to remote areas. I am glad to give the assurance to my hon. Friends and hon. Members opposite, who have properly expressed concern about the remoter areas, that we shall continue to maintain this principle of assisting such projects in the most suitable and practical way.

Another point which has been raised is that industrialists sometimes cannot find in development districts suitable building land and have to build where heavy piling is necessary because of subsidence. This point was raised in the early stages of the Bill by the hon. Member for Rhondda, West (Mr. Iorwerth Thomas). Provision of heavy piling and special support because of subsidence add greatly to the cost of the whole structure. The building grant is payable on site preparation as well as on actual building, so a quarter of the extra cost is carried by the grant. I recognise that the whole cost may be greater and the industrialist may incur greater cost, but we are able to deal with this problem because B.O.T.A.C. is always prepared to consider abnormal initial costs and it is open to any applicant to make a case to B.O.T.A.C. showing that his requirements are greatly increased through the greater initial outlay on site preparation.

Mr. Iorwerth Thomas (Rhondda, West)

Will the right hon. Gentleman make clear whether the additional cost involved for the prospective industrialist will be fully met, or is there merely a grant towards the extra cost? would the full cost be met?

Mr. Erroll

That depends on the circumstances of the individual case. It might, for example, be the case that the industrialist would normally be expected to meet the cost of this particular provision if it were a normal provision. The grant would cover additional provision over and above what one would expect in respect of a factory built on level land with no difficulties of preparation, but B.O.T.A.C. takes a wide and sensible view of these problems. I think this is the way to deal with the problem which the hon. Member raised on Second Reading.

11.45 p.m.

The other point raised in Committee related to advance factories. It was argued with some force that local authorities—and, in particular, new town corporations—building advance factories were at some disadvantage because neither they nor the industrialists acquiring factories from them could get a building grant. Hon. Members will appreciate that this also goes for advance factories built by the Board of Trade in development districts, and we have been considering whether any changes could or should be made in the terms of sale of these advance factories.

Up to now, purchasers have not received building grants. They have been required to pay the full building cost, but have been allowed to pay over a number of years on favourable terms. This has raised certain anomalies in the past, and now that the building grant is raised to a standard 25 per cent. we are taking the opportunity to make a change. In future, any industrialist who buys from the Board of Trade in a development district either a factory built to order or an advance factory will be regarded as eligible for building grant of 25 per cent. of the cost, provided that the agreement with the Board to acquire the factory is entered into before the building is finally completed. This is normal procedure. We do not finally complete a factory until we know the occupier, so that we can make any alterations to suit the individual occupier—

Mr. Jay

But what happens in the normal case where the factory is rented?

Mr. Erroll

I will come to that in a moment.

Where a grant is paid, the exceptionally favourable deferred terms granted in development districts will no longer be available. If deferred payment is allowed on the balance to be paid, commercial rates will be charged. I think that this is reasonable, since the industrialists will now pay only three-quarters of the cost of the building instead of paying the whole.

We are prepared to see the same arrangements operate for factories built in development districts by development corporations or new town corporations, and factories paid for either in cash or on deferred terms will be eligible for building grants. It is particularly important that the purchaser on deferred terms will also be eligible for the building grant. I think that that arrangement goes a long way to meeting the right hon. Member for Battersea, North (Mr. Jay), because purchase on deferred terms is getting very near to renting a factory.

Where a person is only renting, the situation is rather different. We have no power to pay the building grant on rented factories, since clearly the tenant-occupier has not provided them, but I think that what I have said will undoubtedly encourage the new town corporations, in particular, to build factories, in the knowledge that any industrialist wishing to purchase a factory can obtain this very large contribution towards the purchase price.

Mr. Jay

But would it not be logical to give a corresponding reduction in rent, particularly as a reduction in rent was given in earlier years but which, apparently, the Board of Trade is not giving now?

Mr. Erroll

In respect of Board of Trade factories, of course, the rents are ixed by the Board, and it really makes no sense to give a grant back to ourselves in respect of factories we have already built, but in the case of local authority factories—

Several Hon. Members


Mr. Erroll

One intervention at a time. The right hon. Gentleman has already intervened twice, and, to be fair, I think that I should now try to deal with the hon. Member for Glasgow, Craigton (Mr. Millan)—unless the right hon. Gentleman wishes to hog the lot, as he sometimes tries to do.

Mr. Millan

What about local authority factories let out to rent? Why should not the grant be paid to the local authorities?

Mr. Erroll

For the reason I have already given. The grant can be paid only to the person providing the employment, and the local authority is not providing the employment. I believe that the introduction of the much more generous terms in respect of obtaining the grant when one is buying on mortgage terms will mean that most providers of employment will prefer to purchase the factories rather than to rent them. That is a very desirable development that we want to encourage, because it means that the provider of employment will be putting down his roots in the locality, and becoming the owner of a factory instead of merely renting one. I think, therefore, that it is reasonable that we should stick to the line which I have proposed. It would not be possible under the parent Act or under the proposed amending Bill to make the grant payable to the very few local authorities which are at present contemplating building factories to rent. Where they are building them to sell as advance factories or for particular tenants, by the procedure which I have announced the occupier will be able to get the grant, which in turn will be reflected in the purchase price which will be payable to the local authority.

Mr. Jay

If the President of the Board of Trade would answer a point satisfactorily, it would not have to be raised again. What is his argument about the ordinary case of the factory which is built by the Board of Trade, remains in its ownership, and is let to a firm? If there is to be a 25 per cent. grant where the firm buys the factory, is it not logical that there should be a corresponding grant where the factory is let? I realise that that would not be possible under the Section we are discussing now, but as the Board of Trade has done this in the past it clearly has power to do it under the legislation generally.

Mr. Speaker

Perhaps the two right hon. Gentlemen would assist me. I do not for the moment follow—it may be my ignorance of the Statute in question—why the matter is affected by the Amendment to which our discussion is confined. If it is not, it is out of order.

Mr. Erroll

I have to admit, Mr. Speaker, that we are all somewhat out of order. I hope that nobody in the House will think that I am trying to escape from answering the very interesting point put by the right hon. Gentleman.

Mr. Speaker

I must accept the onus, because I have no power to allow discussion which is out of order on the Amendment.

Mr. Erroll

Then perhaps, Mr. Speaker, I might sum up the argument I have made in favour of the Amendment, namely that the standard grant which we are introducing of 25 per cent. of the actual cost has several positive advantages. It is certain, whereas the outcome of the old formula has proved very variable. We thought that it was a sound concept at the time. It has been quite successful, but its variability has been a handicap.

The new formula is predictable. Although obviously the actual cost of a factory is not known till the end when everything has been built, the industrialist can go ahead in the knowledge that he will get one-quarter of the total actual cost, subject only to the elimination of any luxuries.

Finally, the standard grant is substantial. It is more than 50 per cent. higher than the average of the building grants so far given, and I hope that that will answer the point raised by my hon. Friend the Member for Galloway and will encourage firms to build for themselves and so put down their roots in a locality in a way which will give every confidence of their staying and expanding there. I have tried to give a full and reasoned explanation as to why I would like the House to accept the Amendment, and I hope that in a spirit of co-operation it will agree to do so.

Mr. Tam Dalyell (West Lothian)

Can the right hon. Gentleman give us the date-line of the new formula, when it conies into operation? Is this to be retrospective?

Mr. Erroll

That was all explained on Second Reading. The intention is that it will apply from the date of the announcement of the new provisions, but there are certain points regarding applications in the mill, so to speak.

Mr. Prentice

The latter part of the right hon. Gentleman's speech is one which afforded some satisfaction to hon. Members on this side, but only partially. No doubt some of my hon. Friends will want to pursue it on Third Reading, when they will be more in order than the right hon. Gentleman was when he was making that part of his speech. I shall deal now with the part of his speech which was in order, namely, that on the Amendment. I think that he was trying to extricate himself from a rather embarrassing position. It is almost unkind to remind him after all the embarrassments the Government have had recently that one of them was their defeat in Standing Committee on this point. I do not want to rub it in too much, but there were 12 hon. Members of the Standing Committee from the benches opposite and eight hon. Members from this side. Nevertheless, we won the vote by seven votes to six because at that moment only one of my hon. Friends was away while six hon. Members opposite were away, including the President of the Board of Trade. This, perhaps, is a commentary on the relative diligence of the two sides in approaching this matter. Now, however, with the juggernaut of their majority, the Government are attempting to overthrow the decision of the Committee.

This whole matter may not concern a great many grants, but my hon. Friends and I are still in favour of the decision of the Standing Committee. We are in favour of the 25 per cent. formula in the majority of cases as opposed to the old formula. It is simpler and more predictable and will enable occupiers to get a quick conversion of what they are entitled to instead of the long delays. It will also be higher on average, because previously it was 17 per cent. and now it will be 25 per cent. However, there is still a case for saying that in exceptional circumstances the respective occupier should have a choice. Under the old formula, grants in some cases went above 25per cent. The highest on record is 41 per cent. of the building costs. That will no longer be possible under the new formula.

The President of the Board of Trade said that of about 90 grants made under the 1960 Act, only nine qualified under the old formula for more than 25 per cent. I was rather shocked to learn that since the passage of the 1960 Act only 90 grants had been made under the Section with which we are concerned. Considering the persistent unemployment in certain parts of the country and the districts which qualify under the Act, I should have thought that the number would have been greater. But if only such a small number was involved, the argument about administrative difficulties cannot be substantiated. A lot of administration cannot be involved and there should be a choice for the occupier.

I acknowledge that the wording of our Amendment would mean that the Board of Trade would have to work out both bits of arithmetic in every case. I agree, therefore, that the wording was not satisfactory; but only a drafting Amendment would have put the matter right. What we have in mind for the generality of cases is that there should be a grant of 25 per cent. but that in special cases the occupier might apply for the other formula if he thought that to do so would be more beneficial to him—his getting the 25 per cent. and some extra if it was found later to be justified.

There might be special circumstances either because his building costs would be higher or because the value of the premises, once built, would be lower. There might be local reasons, in some cases it being the remoteness of the area, not remote in the ordinary sense but in the sense of an area to which building materials had to be transported. Such a place might be the Isle of Wight. There might be other cases where the geology of the area required special arrangements, such as foundation work. There might be areas where mining subsidence required alternativee arrangements, or an unattractive area which lowered the value of the premises. To qualify at all, whatever the area, it must be a place of high and persistent unemployment. In other words, we are discussing cases where there is high and persistent unemployment and about which there is, for some reason, a difference between the cost of building the plant and its value. In such circumstances there is something to be said for giving a choice to the occupier concerned.

The right hon. Gentleman said that these special circumstances might be taken care of in other ways. I would like him to clarify this point because Clause 2 states that the grant will be 25 per cent. It would seem to be a fixed figure and to limit the grant under the main Act in regard to the cost of the building. Will he clarify that? It seems to rule out special grants being made in the circumstances which he mentioned. He said that the Government would try to help in remote areas where for some reason there were specially high costs.

With unemployment as high as it is, and with all the Government's policies having failed in recent years to counteract the results of their other policies which make for high unemployment, they ought not to throw away anything which might make the difference between even one enterprise establishing itself in an area of unemployment and its not doing so. Even if there are only a few cases over a number of years in which the old formula would help, we ought not to throw away the chance of these enterprises being establishd in the areas concerned.

We feel that on balance we won the argument in Committee, just as we won the vote in Committee, and we feel that no case has been made out for the Amendment.

12 m.

Mr. T. Fraser

I hope that we shall have a reply to the point made by my hon. Friend the Member for East Ham, North (Mr. Prentice). The President of the Board of Trade, trying to be helpful, said that he would ensure that industrialists establishing factories in remote areas would be generously treated. My hon. Friend the Member for Rhondda, West (Mr. Iorwerth Thomas) pointed to considerable additional work, for example, in piling, to provide a factory, and the right hon. Gentleman said that in such a case there would be generous examination of the assistance to be given to the industrialist.

Let us not confuse ourselves. The Board of Trade may accept application for grant or loan under the 1960 Act, but in the assistance towards the provision of a building, the extent of the right hon. Gentleman's generosity will be governed by Clause 2 of the Bill. An application for a building grant under the Bill will still be sent to B.O.T.A.C. That is quite unlike the machinery grant. If B.O.T.A.C. recommends to the President that a building grant shall be made, under the Clause the building grant shall be 25 per cent.—or, if the Clause remains as left by the Committee, the higher figure which would have resulted from the calculation made under the 1960 Act. But if the Minister's Amendment is accepted, and we restore the Bill to its Second Reading form, it will be a flat rate of 25 per cent., no more and no less.

Where will the Minister get the power to deal generously with a development district in a remote area in respect of the cost of providing the building? How is he to be generous to the developer in South Wales or anywhere else where the cost of building is exceptionally high because of the difficult building conditions? I submit to him that he has no power to exercise any discretion if his Amendment is carried. He will not be able to give any grant in addition to this one in respect of the provision of the building.

The next thing that we have been discussing, and which the Minister had in mind, was whether additional costs are involved by the developer in respect of the provision of the building either because of the remoteness or because of the exceptional cost of the building. I do not doubt the right hon. Gentleman's good faith in the intentions which he has expressed in putting the Amendment before the House, but I doubt very much his ability to do anything to honour the promises he has made if the Amendment is carried. In all the circumstances, I hope that he will consider this now and say something about it before the House finally reaches a decision.

Mr. Erroll

I should like to try to deal with the important point put by the hon. Member for Hamilton (Mr. T. Fraser). Amending legislation is governed by the parent Act. The important thing to look at is Section 1(3) of that Act where it is stated that In determining whether and in what manner to exercise their powers under this Part of this Act for the benefit of any development district the Board shall have regard—

  • (a) to the relationship between the expenditure involved and the employment likely to be provided…"
That still applies in spite of the amending legislation.

Mr. T. Fraser


Mr. Erroll

Yes, it does.

Mr. Ross

What does it mean?

Mr. Erroll

It means, to express it colloquially, a cost per job basis. We expect that on the normal operation of the cost per job basis a 25 per cent. building grant will be payable, but if the cost per job basis is so unfavourable, as in the case of the oil refinery referred to earlier, no grant will be paid. If a building grant is to be payable it must be a 25 per cent. grant. That is clear and it is assessed on a cost per job basis. We expect that in certain cases the cost per job formula will allow more to be paid out than a 25 per cent. building grant and that will provide what I might call a certain amount of elbow room for B.O.T.A.C. to make loans and grants under that machinery, which of course it would not be able to do if the building grant of 25 per cent. had absorbed the whole of the amount of assistance which the application of the cost per job formula had deemed to be right.

Mr. Ross

This is nonsense.

Mr. Erroll

When the hon. Member comes to listen more closely he will understand that it is not nonsense. I am anxious to explain what is a rather intricate administrative matter. The cost per job basis may show that the firm will be eligible for assistance of a certain amount and the 25 per cent. grant would absorb less than that amount. If the firm wished to obtain assistance for special sewerage or piling or any other purpose connected with the undertaking it could apply to B.O.T.A.C. which, other things being equal, would be able to make a grant towards the special needs up to a total limit of the cost per job ceiling, because it had not been wholly absorbed by the 25 per cent. building grant. Therefore, I should have legislative authority to make the grant which the hon. Member for Hamilton suggested I did not possess.

That deals with the building grant. As for the remote areas, there again the same procedure applies, because on a higher cost per job basis it is possible for the ceiling of total assistance to be made available to be higher and therefore for special arrangements to be made available for firms in remote areas which might wish to have additional assistance.

Mr. Millan

Surely the difficulty will arise not where the cost per job basis would give a grant above 25 per cent. but where it would give a grant less than 25 per cent. Under the old position, if the formula worked out that the grant was 15 per cent. or even in some cases 10 per cent., this might be well within the cost per job formula and, therefore, the grant would be payable. But under the new provisions no grant at all would be payable. It is not a question of the industrialist getting 25 per cent. instead of 10 or 15 per cent. The point is that under this formula the industrialist would not get any grant at all because the 25 per cent. would be beyond the cost per job formula. That is the point which the President of the Board of Trade has to answer.

Mr. Erroll

That is a quite different point, but I am glad to answer it. In our calculations we are confident, with our experience of the cost per job calculations, that the vast majority of straightforward industrial enterprises will be more than covered by the 25 per cent. building grant and that it will be only the exceptional capital-intensive cases, such as the oil refinery, which will not be eligible for the 25 per cent. building grant and the 10 per cent. machinery grant. It would be ridiculous in the case of a refinery costing £15 million to grant £3 million or £4 million to provide 100 jobs. Only the odd case will be caught by the application of the principles which I have been outlining.

So I can assure the hon. Member for Hamilton that I shall be able to do as has been explained—with B.O.T.A.C. providing assistance for the general purposes of the business, in order to top up, so to speak, the requirements of the firm above the 25 per cent. building grant where appropriate.

Mr. T. Fraser

I would again ask the President of the Board of Trade to have another look at this before the Bill becomes law. As I understand the principal Act, the Board of Trade may give grants or loans which would be related to the employment to be provided, but, as I understand it, the Bill will limit the President's ability to give assistance in respect of the cost arising out of building. Therefore, though he can still give grants towards the cost of transferring plant and machinery from one part of the country to another, and even for the training of workers, and certainly for putting in a sewerage scheme and so on, he will not, if the Bill becomes law, be able, without acting illegally, to give a grant in respect of the provision of the building beyond 25 per cent. Will he look at this before the Bill goes to another place?

Mr. Millan

May I again put the point I made in an intervention, because it is a valid one? While it may not affect a large number of cases, there may be a marginal number of cases where the criterion that the President of the Board of Trade has laid down about the cost per job coupled with the inflexible provision of the 25 per cent. grant may prevent certain firms, which under the existing legislation would get smaller grants than 25 per cent., from getting any grants at all.

If the President is right in saying that the cost per job criterion will be maintained, there may be a case where the 25 per cent. building grant will be too high to meet that criterion. As far as I can see, he doss not have powers to make a grant of less than 25 per cent. In other words, unless one is entitled to 25 per cent., one gets nothing at all. What the right hon. Gentleman is doing is an improvement—I am not trying to suggest otherwise. However, under the old system the grant, as calculated, might have been less than 25 per cent., perhaps 15 per cent., and that might have met the cost per job criterion and, therefore, the grant would have been payable, but under the proposed system the grant will not be payable. The right hon. Gentleman has said—

Mr. Speaker

Order. This seems to be a second intervention by the hon. Gentleman, and, in that case, it is the second intervention in the speech of the President of the Board of Trade, as I see it. We must have some regard to procedure.

12.15 a.m.

Mr. Millan

With respect, Mr. Speaker, I understood that the President of the Board of Trade had finished,

Mr. Speaker

I should have called the hon. Member, and I now so call him.

Mr. Millan

Actually, I had made my comments. I understood that I had been called and that I was not intervening in the speech of the President of the Board of Trade.

I think I have made my point. The President of the Board of Trade has dealt with the case where there might be a necessity to pay more than a 25 per cent. grant and he has said that there is discretion under the ordinary B.O.T.A.C. arrangements for that to be done. But these other marginal cases below 25 per cent., which may be very few in number, certainly merit investigation.

Mr. Erroll

If I may, with the leave of the House, reply, I should make it clear to the hon. Member for Hamilton (Mr. T. Fraser) that the building grant and the Section 4 assistance are not alternatives. A firm may apply for both a building grant and Section 4 assistance. Therefore, it is possible to have general Section 4 assistance. As regards the building grant, take the piling or special foundation arrangements as an example; that is not just part of the building. That is in the form of special site preparation in order to make the site suitable for the erection of a building, in the same way as the special enlargement of a sewer to carry away effluent, which is done because the general sewer in the neighbourhood is not big enough for the purpose, is not regarded as part of the building but is eligible for a special grant under B.O.T.A.C. because it is necessary in order to enable the factory to function. So with some of these special features. They do not interfere with the legality of the 25 per cent. building grant.

I readily accept the hon. Gentleman's suggestion that I should look at the matter more closely, and I shall be the first to come back to the House and offer an explanation if I am wrong in what I have been saying. These are intricate and involved matters, and I shall, of course, look carefully at what has been put to me in this debate.

As to the point which was made by the hon. Member for Glasgow, Craigton (Mr. Millan), we think that the way in which we have devised the figures will cover virtually all cases. That is on the basis of our experience so far. But, as with the intervention of the hon. Member for Hamilton, I will consider the point and I undertake to look carefully at it, and I shall not hesitate to come back here if I have anything further to add to my remarks.

Amendment agreed to.

Motion made, and Question proposed, That the Bill be now read the Third time.

12.18 a.m.

Mr. Jay

Since the President of the Board of Trade is so modest in recommending the Bill to the House on Third Reading, I will make just a few short observations. First, I hope the President of the Board of Trade will answer the question which he was unable to answer earlier because it was out of order; that is, why he should not give a similar concession on the rented Board of Trade factories as well as granting assistance to the extent of 25 per cent. in the case of a Board of Trade-owned factory which is sold to a firm.

If we are to have a situation in which this grant is available for a factory which is sold and not for a factory which is rented, there will be a certain pressure for firms to buy rather than to rent factories. I am doubtful whether that would be a good thing in the long run, because when a factory goes out of the possession of the Board of Trade in these areas it is no longer in so strong a position to see that it is used to give employment, which is, after all, the whole purpose of spending public money in the first instance.

As to the Bill in general, I think we ought to remember before parting with it that the whole of this legislation, and the Bill as it now stands, is to expire in 1967. It may be said that this does not matter very much because the whole of this Government will expire long before 1967 and, therefore, it may be an academic matter. Nevertheless, I think it is rather typical of the somewhat light-hearted attitude of the Government to this problem that, whereas the previous legislation in 1945 was permanent, we now have legislation which has only another four years to run.

I still find a little curious the explanation given by the Parliamentary Secretary of the reason why, in spite of these allegedly new powers, the Government are proposing to spend under this legislation only about two-thirds as much in this coming year as last year. We pressed the Parliamentary Secretary about that, and he told us that the reason was that there were some major motor car schemes which came into the previous year. I am sure that is the reason; but, of course, it does not alter the fact. The fact is that in the coming year a good deal less is going to be spent, despite all these debates, than in the previous financial year.

It is also worth observing that the figures of unemployment in all these areas are still very high, and have remained high during the period when we have been debating this Bill. Unemployment in the United Kingdom in May, on the latest figures, was 592,000, just under 600,000. This is as high as it was last December, actually 130,000 higher than it was in May a year ago and ¼ million higher than it was in May two years ago. That shows that there is nothing to be complacent about in the unemployment figures at the present time. Indeed, when we find that they are as high in May as in December, almost in mid-winter, I think it shows that the situation is very far from being a satisfactory one.

I do not think we had a full and satisfactory explanation on this issue of the treatment of public enterprises as compared with private enterprises. I am not going into the detail of this again, but I would just ask the President of the Board of Trade why he cannot say that he is going to treat both public and private enterprise for the purposes of this Bill on exactly the same basis. I should have thought that the right thing to do—not to have any distinction at all. It should be perfectly possible to leave it like that.

We have had since the previous debates on this Bill a Report from the Select Committee on this legislation, and I should like to draw attention to the fact that that non-party or all-party Select Committee repeats many of the criticisms of Government policy we have for a long time been advancing from this side of the House. For instance, it asks the Government to take some steps to speed up and streamline the procedure under B.O.T.A.C. The right hon. Gentleman has agreed, as these debates have gone on, that what he calls Section 4 assistance under B.O.T.A.C., the previous forms of B.O.T.A.C. loans and grants, is still going to be important in future, only we have never felt fully satisfied that what action the President of the Board of Trade proposes to take under this legislation could not have been taken under that Section. However that may be, since B.O.T.A.C. is going to remain in existence, and since the Select Committee reinforces the criticisms we have made here, I hope the right hon. Gentleman is going to tell us tonight that he is going to do something to see that these delays are less troublesome in future.

The Select Committee also, incidentally, supported the criticisms we have made of the way in which the Government in the last two years have been restraining the estate management corporations from taking as active part as they would wish in helping to get industry into these areas. I will not quote what the Committee said because it is now somewhat late, but I hope that the right hon. Gentleman has studied the Report and that he will take notice of what it said on this subject.

It seems absurd to have these organisations in existence ready and able to do this job and yet inhibit them from doing it. I hope that even at this late stage he will be able to tell us that he is taking notice of the Select Committee's criticisms and will do something about them.

Perhaps the most important point of all is to realise that it is no good granting these powers, however new or not new they may be, to the Government if they do not use them. The trouble has not been lack of powers to discharge. It has been that over and over again they have not been used resolutely enough. If they were used vigorously enough, I do not believe that it would be all that difficult to surmount these problems. But if we had a repetition of the House granting powers to a Government who almost totally fail to use them, or use them only in an inert or ineffective fashion, then I am afraid that as soon as we get past the summer months there will be the danger of unemployment rising again.

12.27 a.m.

Mr. William Hannan (Glasgow, Maryhill)

I shall be very brief. I want to refer to the proposal which the right hon. Gentleman mentioned in respect of the 25 per cent. grant for buildings. He made it clear that this grant would be in respect of factories which were sold and not let. He spoke of the advantage this would be to new town corporations and others.

Local authorities which have big central area development schemes are in great difficulty. I ask him to reconsider this. These local authorities have no land and, if industrial undertakers insist on having land and digging their roots in as he mentioned, then, of course, it means that the local authorities will turn to providing factories for rent.

The right hon. Gentleman will find that in a short space of time representations will be coming to him from local authorities on this. It is a most important point that, because of the lack of land in central areas, local authorities in development districts will not be able to help industrialists to provide factories.

The Bill does not take account of this difficulty. It is true, however, that many of the proposals in it are to be welcomed because they go some way to meeting some of the difficulties. But what is the sense of going some way to meeting problems in the development districts while, within the cities, the very core of the problem, there is the difficulty of finding land on which industrialists can develop? If the local authorities, in order to keep industrialists instead of over spilling them and denuding themselves of rateable value, are to be able to provide rented factories to retain such industrialists, then this indeed will be a great advantage. I hope these points will have further consideration from the right hon. Gentleman.

12.30 a.m.

Mr. Millan

As my right hon. Friend the Member for Battersea, North (Mr. Jay) said, hon. Members on this side of the House have been a little sceptical of the Bill, not because we have not welcomed its provisions generally, but because we have felt that the powers have already been available under existing legislation if only the Government had been willing to use them. But the new Bill having been introduced, it seems a pity that the Government have not used the opportunity it afforded to tidy up the legislation a great deal more than they have done. A number of defects in the present legislation have been referred to earlier this evening, and there are a number of quite indefensible gaps in the provisions which are now being made.

My right hon. Friend also mentioned the discrepancy between the treatment of private enterprise on the one hand and nationalised industries on the other. My hon. Friend the Member for Glasgow, Maryhill (Mr. Hannan). has just drawn attention to the fact that it seems that local authorities who build factories to rent are not going to get the benefit of the 25 per cent. building grant. I ask the right hon. Gentleman to look at some of these matters yet again. He said earlier that it was desirable that factories should be sold rather than rented. I am not going to argue this as a matter of principle, but as a matter of pure practice there are many instances in which it is not going to be possible for a local authority to sell a factory rather than rent it.

There is an interesting example in Glasgow at present, in connection with one of the central redevelopment areas— the Anderson Cross Redevelopment Area—in which the local authority is providing factory space, in a very restricted area of only a few acres, for no less than 269 existing industrialists. In that situation it is quite unrealistic of the right hon. Gentleman to talk about the local authority selling factories. It is not possible to put up 269 separate factories; in this instance only small industrialists are concerned, and multi-storeyed factories will be built. Many industrialists are not in a financial position to afford to buy the factory accommodation which will be provided for them, and therefore it must be rented.

Yet we have this quite ridiculous discrepancy against this kind of local authority enterprise which in every other respect the Government say they are only too willing to encourage. Local authorities are being encouraged to get ahead with central redevelopment to provide advance factories and factory space for industrialists, and the rest. But in these circumstances—which I suggest will become more common as central redevelopment and other localauthority development takes place—there will be discrimination against local authorities. I seriously ask the right hon. Gentleman to look at the position again. It is a pity that, having the opportunity provided by the Bill, the Government have not gone a good deal further in dealing with points like that.

We have the impression that the Bill was not terribly well thought out. We had the right hon. Gentleman's announcement of quite substantial concessions only this evening. One feels that if proper thought had been given to the matter before the Bill was published some of these things might well have been incorporated in the Bill when it was in Committee.

Generally speaking, we welcome the Bill with these various qualifications, but in welcoming it we nevertheless hope that the President of the Board of Trade will not close his mind to many of the points we made in Committee and here tonight.

12.35 a.m.

Mr. Erroll

I appreciate the remarks of those who have spoken on Third Reading, even though they may have been somewhat modified by some sourness towards the Government and the handling of administration under the parent Act—which, of course, I completely refute, but at this time of night I will not be drawn into an argument on the matter.

As all three speakers on Third Reading referred to the question of rented factories, I should attempt an explanation. Local authorities are not prevented from building factories for renting. They are still able to do so as they have been doing, so they are no worse off than before. The amount of local authority factory building for rent is on a very small scale, apart from the specialised cases to which the hon. Member for Glasgow, Maryhill (Mr. Hannan) and the hon. Member for Glasgow, Craigton (Mr. Millan)referred. Those specialised cases will, I think, continue to develop satisfactorily without the added stimulus of a 25 per cent. grant, which could not be brought within the compass of this Bill because the parent Act has nothing whatever to say on the subject of renting and additional legislation would be required to deal with the small point which, in our experience of the working of the parent Act, is not one which has occasioned any difficulty.

There is a further complication. In making the building grant available, one must take into account the amount of employment provided and when one is building a factory to rent one cannot know whether employment will be created as a result. It may be that the builder is unable to find a manufacturing tenant and has to let the factory for storage purposes, in which case the grant would not be available. So it is not practicable to introduce this small but important point—I accept that it is important in its way—into the legislation.

There is no question, as the hon. Member for Craigton suggested, that we have not thought this legislation out properly. We have indeed. I am sorry that he should have thought the explanations I made earlier this evening represented inadequate thought having been given to the Bill. We have not made any Amendments except to remove Opposition Amendments. I am very glad that for once the Opposition was able to appreciate the reasonableness of the arguments we put forward and accepted the strength of them without forcing a Division. They were very good arguments. I am glad to see this growing sense of intelligence on the part of hon. Members opposite. It is a very welcome development.

What the hon. Member for Craigton suggested were concessions were in fact explanations of the way in which we intend to operate the powers administratively under the parent Act and this amending Bill, bearing in mind that all the important provisions of the Bill and the Act are quite permissive. There is great responsibility on the Board of Trade. I regard it as one of my most serious responsibilities to carry out the administration of the Act. I give a great deal of time to ensuring that it is administered wisely and sensibly. This power given by Parliament to the Board of Trade confers great administrative discretion. It is essential that that should be so and we do our best to operate it wisely and sensibly. That is why I welcome the Report of the Select Committee on Estimates, and I gladly give the right hon. Gentleman the assurance that I will most carefully study the Select Committee's recommendations. I will be prepared to say more about that on another occasion, as the right hon. Gentleman suggested I should, rather than tonight, and, of course, the formal reply to the Select Committee's recommendations will be made in due course. But I can assure the right hon. Gentleman that I am already studying them most carefully.

The date of expiry was mentioned on Second Reading. I think that the right hon. Gentleman will remember that the whole idea of having a fixed expiry date was to ensure that Parliament did rethink its whole philosophy towards development districts and the concept of steering industry to them, and decide whether development districts were right or wrong at a given point of time and not be able to let the matter drift because of lack of a terminal date.

It is not intended to put an end to everything, but to force Parliament and the Government of the day—which is un doubtedly bound to be a Conservative Government—[Interruption.] In fact, I am already contemplating the improvements in the legislation that may be necessary in 1967. This is a very good way of ensuring that Parliament devotes time to this matter after a period of some seven or eight years—

Mr. Jay

If the right hon. Gentleman really believes all that, why do not the Government make all their legislation expire in 1967?

Mr. Erroll

Because we do not want to keep the House up too late every night.

To conclude on a point about which I feel strongly, I know that it is part of the stock-in-trade of hon. and right hon. Members opposite to say that we are not doing anything under the parent Act. I am sure they talk a lot of humbug, because they know what a lot is being done under it. In the Second Reading debate on Wednesday, 1st May, the right hon. Gentleman made exactly the same charge as he has made tonight, but where was he on Thursday, 2nd May? He was up in Scotland attending the opening of the Rootes factory, which was brought about entirely through the operation of the parent Act—

Mr. T. Fraser


Mr. Erroll

It certainly was. That is where the right hon. Gentleman was, and I am quite sure that he is much too much of a gentleman to have gone round that factory saying that the Government were not doing anything to bring industry to Scotland—

Mr. Fraser

I hope the right hon. Gentleman will consider what he has said, and appreciate that Rootes' decision to go to Linwood took place long before the 1960 Act was passed.

Mr. Erroll

As I was at the Board of Trade at the time, I am quite certain that the firm would not have gone there but for the assistance given under the Act. I am quite certain of that. Rootes decided in principle. I know in the course of my negotiations with many industrialists that they have agreed in many ways in principle to do this or that, but ideas lie fallow for a very long time. What really moved the motor industry to go to Scotland were the provisions of the parent Act. In any case, I hope that the right hon. Gentleman had a good day at Linwood on Thursday, 2nd May. I had a very good day in the North-East on Friday, the 24th May, visiting no less than five factory extensions, or new factories being started under the existing legislation.

That is a measure of what is going on. I believe that we are doing a good job and succeeding in our work, but we want these additional powers to do even better. I therefore very much hope that the House will give this Measure its Third Reading.

Mr. Jay

If the right hon. Gentleman wants to be so controversial at this time of night, is he aware that the real reason why Rootes went to Lynwood was that Pressed Steel was induced to go to Scotland in 1945, long before this Government or the I960 Act were born or thought of?

Question put and agreed to.

Bill accordingly read the Third time and passed.