HC Deb 25 February 1964 vol 690 cc305-31
Mr. Darling

I beg to move, in page 8, line 15, to leave out from "make" to the end of line 20 and to insert: grants to the Agricultural Credit Corporation Limited, the Agricultural Finance Federation Limited, and any other institution properly constituted to provide credit facilities for agricultural and horticultural businesses, in respect of expenditure incurred by them in fulfilling guarantees given by them as securities for loans made in the course of banking transactions to persons requiring loans for the purpose of horticultural businesses carried on by them".

Mr. Speaker

I think we can take with this Amendment the next one, also in the name of the hon. Member for Workington (Mr. Peart), in page 8, line 21, to leave out "grant" and insert "grants".

6.45 p.m.

Mr. Darling

We now come to a rather difficult part of the Bill and I regret to say that I shall have to detain the House for a little longer than is customary on Report. I shall try to be as brief as I can, although this is a very important matter.

I know that the Joint Parliamentary Secretary, if I may put it colloquially, is "carrying the can" today because of the Minister's unfortunate illness—"carrying the can" on a very difficult question. I therefore intend to be far more gentle than would have been the case if his right hon. Friend had been here, for I think that the Parliamentary Secretary is the innocent victim of what I will politely call on this occasion a confusion of circumstances.

In Committee, we put forward this Amendment and withdrew it, as we explained at the time, so that we could more fully consider the reply which had been given to us by the Parliamentary Secretary; and that was generally agreed. We have to pursue the matter again, because there were contradictory statements, as I think the Parliamentary Secretary will agree, in the Committee proceedings. We have been left in a state of confusion which I think the House would agree should be cleared up.

In the Second Reading debate the Minister gave us an assurance that the provision of Treasury guarantees under this Clause 8 would not be confined or restricted to one credit institution but would be available to other appropriate institutions, and he said he was using the Agricultural Credit Corporation only as an example of the type of institution which would qualify for Treasury backing.

We had some doubts about this apparently straightforward assurance, and the Minister therefore asked my hon. Friend the Member for East Ham, South (Mr. Oram) to put a question during the Second Reading debate, and we put Amendments down in Committee, to try to clear the matter up. In Committee, however, the Parliamentary Secretary confirmed our suspicions, and categorically said, despite the Minister's assurance, that Treasury backing would be confined and restricted to one selected credit institution. Then he gave a sop of saying that this monopoly arrangement would apply only for five years, but he, gave no guarantee that it would not be continued after the five years.

The task of the House on this matter today is to examine the reasons which the Parliamentary Secretary gave to us, without any warning, for this extraordinary arrangement. I would suggest that we also have the duty to examine as best we can the body which has been selected for the Minister's favours. To get the whole business in perspective, I think that I shall have to take up more time than I really would like to do.

To clear this matter up and to get it into perspective we should be clear about what we mean by credit backing to fruit and vegetable growers and their co-operatives. I should explain that they require loans and that those loans must be backed by a credit institution of one kind or another. Briefly, the grower needs financial help from time to time. Unless he is well-established with glasshouses and can gather different crops all the year round, his income is seasonal, depending on the crops he can harvest. He also has to have help if he wants to extend or modernise his holding or to obtain new machinery and equipment. In the nature of his occupation he has to borrow money, usually, for these various purposes, but his income, although it ought to improve as a result of the infusion of capital, is always a chancy business, since he is the victim of climatic conditions and the victim of market fluctuations.

In fact, he is in the unique position that his loan, expressed in material terms, in machinery, equipment, buildings, seeds and fertilisers, is the only security he can offer to an institution, and it loses in value as time goes on or it disappears into the soil. He cannot guarantee that his crops will produce year by year a sufficient income which will allow him to pay off the loan. He has to live on hope, and unfortunately, the banks do not put a heavy premium on hopes; they ask for something more substantial.

This is where credit institutions come in; they base their activities on the very good co-operative principle that if one man loses another will gain and so they can be worked collectively together and they can balance their gains and losses. There is nothing new in this. Other countries have had agricultural credit institutions and banks for this service for a century or more, and if we had adopted this system in years gone by we would not now be discussing this Clause or this Amendment because there would be no need for it.

Indeed, there have been for some years now informal arrangements between several well-established growers' co-operatives and the C.W.S. Bank to finance the purchase of seeds, fertilisers, and so on, on what may be called mortgage terms or, if hon. Members like, hire purchase. This informal arrangement was put into a formal, organised form five years ago when the partners—this group of quite well-established and flourishing co-operatives and the C.W.S. Bank—set up the Agricultural Finance Federation. The Federation is now a firmly established, perfectly sound and solvent and expanding institution. According to the last published balance sheet, for March, 1963, its financial operations amounted in that year to about £200,000, of which about £180,000 was from mortgage credit, or, if one prefers it, hire purchase.

Despite what the Parliamentary Secretary said in Committee, the Federation does not aim at making a profit. If it has a good year, it uses its profit to reduce its loan charges in the following year, a very good arrangement. I will not go into further details about it. I think that the Parliamentary Secretary now has the kind of information that he needs about it. It is this highly successful institution which the Minister wishes to exclude from the Treasury guarantees.

The Federation confines its services more or less to agricultural and horticultural co-operatives, but this scope is important because under the Bill we are bringing into the field of credit operation a new consideration. Under the 1960 Act we said, in effect, to the growers "We want to help you modernise and re-equip your holdings, to expand and develop. If you produce acceptable development schemes, the State will give you one-third of the cost. You must raise the other two-thirds yourself." That means that the growers must in most cases get loans to cover their two-thirds' contribution.

These admirable arrangements, as I think the Parliamentary Secretary will agree, have not worked out quite as well as or on the scale that was expected. That is one reason why we have the new Bill three years after the first one. I imagine that one obstacle to the expansion that we expected was the difficulty of getting guarantees to back the loans from the banks. I know there has been some difficulty about this. So the National Farmers' Union set up its Agricultural Credit Corporation to help, but I do not think that up to now it has been very successful.

Therefore, we have, in Clauses 4 and 5, an extension of the Government's grants to co-operatives, which we were discussing a moment or two ago, and in Clause 8 we bring in the Treasury as a second guarantor to cover, within limits, the guarantees given by the credit institutions. That is the background, and it is necessary to make it perfectly clear. I do not think that up to now I have said anything with which the Parliamentary Secretary would disagree.

We now come to the Minister's extraordinary decision to provide Treasury backing only to the N.F.U. Corporation and to exclude the co-operatives' Finance Federation. The Parliamentary Secretary tried desperately hard in Committee to make out some case for this favouring of one body against another. I must take the House through the Parliamentary Secretary's statements to show how shallow his case was.

First of all, the Parliamentary Secretary gave the Committee a completely wrong interpretation of our case, which was to ask that both organisations should get the same Treasury backing. The hon. Gentleman said that we were concerned about extending the business of the C.W.S. Bank. That is not correct. We do not want any special considerations for the C.W.S. Bank, even though, I would remind him, it has a very long and honourable record of helping agricultural and horticultural co-operatives. In fact, if it had not been for the help that the C.W.S. gave to the co-operatives in the 'twenties and 'thirties, and even earlier, many of them would have gone out of business.

If we could chart the losses and gains of the C.W.S. Bank over the years—it has now had 50 years' experience of this business—I think that we should find that on the whole the C.W.S. Bank had lost money, and it has lost it willingly because it really believes that agricultural co-operatives should be supported, and especially supported in difficult times. We do not ask for any special consideration for the C.W.S. Bank in spite of that record, which might have earned special consideration. We ask only for fair and equal treatment.

The Parliamentary Secretary gave three reasons for selecting the Corporation and excluding the Federation. First, he said that the Corporation was set up in conjunction with a consortium of merchant bankers. I do not know why that makes it any different from the C.W.S. arrangement with the agricultural co-operatives. But can the hon. Gentleman tell us who the bankers are and whether they are still supporting the Agricultural Credit Corporation, because in the Corporation's balance sheet that I have, there is no mention of the merchant bankers who are supposed to have provided the overdrafts.

Secondly, the Joint Parliamentary Secretary said that the Corporation is the only body which offers guarantees to banks to indemnify growers' loans against bad debts. This is not entirely correct. Hon. Members will notice how gentle I am. The Federation also covers bad debts, not so much of growers' operations but of the co-operatives which use its services. Fortunately, there are very few bad debts, and, therefore, it is a very small sum that it puts aside each year in the balance sheet for this purpose. It was only £2,000 in the balance sheet for March, 1963. In fact, the Federation is in a far stronger position to cover bad debts than is the Corporation.

The third argument that the Parliamentary Secretary put forward was that the Corporation fits easily into the Horticulture Improvement Scheme. But so does the Federation. In fact, the Federation itself is making loans for improvements, but, of course, mainly to co-operatives, which are now brought into the Bill for this purpose.

The Parliamentary Secretary said: … the … Federation is operating solely as a finance agency which assists co-operatives in the provision of hire purchase and trade credit to farmers and growers for the purchase of machinery and other equipment, and, to some extent, mortgage credit for buildings. That is perfectly true. The hon. Gentleman went on: Of course, I agree that these are in themselves admirable purposes. But there is very little resemblance to the sort of job which is being undertaken by the Agricultural Credit Corporation."—[OFFICIAL REPORT, Standing Committee B, 4th February, 1964; c. 282.] This is where we part company, because the Federation does cover, and makes advances for, development loans. In fact, one direct advance to an agricultural co-operative last year was for £40,000—one operation alone—which is far more, I imagine, than the Corporation has lent to anybody.

Finally, the Parliamentary Secretary accused me of having a bias against the N.F.U. Corporation. He strongly denied—amid, I would say, some rather sardonic laughter—that he had any bias against the Federation. I will deal with the accusation of bias because this is the central point that we must clear up. The Parliamentary Secretary made several statements—I have not quoted them all—about the Federation during the debate on our Amendment in Committee, and these were clearly based—at least, this is what I think—on information given to him by the National Farmers' Union, which is not exactly an unbiased and unprejudiced body in this business. Did he check at any point with the Federation whether the statements he was making were correct or not?

7.0 p.m.

In this, of course, I do not mean the hon. Gentleman himself alone, but his office. Did it at any point get in touch with the Federation to find out whether the statements he was making were correct or not? Or did the hon. Gentleman merely rely on the information given to him by the N.F.U. and make no attempt to check it? If no attempt was made—and I think my allegation is correct—to check his statements with the Federation, he must not talk to me about bias.

I ask hon. Members opposite who served on the Committee whether they did not think it rather strange that, throughout the proceedings—we had quite a long discussion on this matter and our Amendment was on the Notice Paper for some time before that—we had no facts, no figures, no documents, no information of any kind given to us about the Corporation's activities?

This is a body of the N.F.U. and hon. Members who have served on Standing Committees dealing with agriculture know that we are inundated with memoranda from the union on every conceivable subject. In fact, the Committees are littered with green paper during their discussions. The union's memoranda are always on green paper and hon. Members on both sides of the House use it.

Yet we got no memoranda or information of any kind on this issue in Standing Committee. Why were we given no information about this body? Why did the hon. Gentleman say nothing about it? In contrast, as soon as this issue was raised, the Federation sent us its balance sheet. I was inundated with balance sheets and reports from the Federation, which was eager to provide all the information it could about its activities. From the Government, in dealing with the Corporation, however, all we had was a pool of silence.

We are asked to provide Treasury guarantees to an organisation shrouded, as far as we are concerned, in mystery. No information was given in Committee about the Corporation. Indeed, we had to go to the Board of Trade registry to get hold of its last published balance sheet, which I have here. It is dated September, 1962.

Can the hon. Gentleman tell us why no balance sheet has been published for the last 18 months? That is the first of four questions I have to put to him on the subject. The House should know that I have not suddenly sprung them on him. I telephoned his office yesterday morning to tell him that we would be putting these questions. My hon. Friend the Member for Workington (Mr. Peart) and I discussed the matter and thought it only fair to let the hon. Gentleman have notice of our intention. I am only sorry that we did not get the same consideration from the Government during the Committee stage; however, we need not go into that for the moment.

My first question is, I repeat, why has no balance sheet been issued by the Federation for the last 18 months? Secondly, what is the Corporation's financial position? The balance sheet does not tell us a great deal and I do not want to say anything which would cast an unfair or undeserved criticism upon the Corporation's position. But the balance sheet shows that in September, 1962, it did not appear to be conducting a great deal of business and, indeed, was over £14,000 in debt.

Thirdly, I ask him to give us, for the first time, an account of the Corporation's activities, because we would like to know to what extent the Corporation in the past year, for instance, was giving backing to growers bank loans.

Finally, is the Corporation still "in the red"? We ask this because we are becoming a little suspicious about the real purpose of this operation, the favouring of one organisation as against another. During the Committee stage, hon. Gentlemen said: … the Agricultural Credit Corporation has indicated its agreement that, apart from some building up of reserves to meet contingencies, it will work on a non-profit basis"— that is what the Federation does— and will not pay any dividend to its shareholders."—[OFFICIAL REPORT. Standing Committee B: 4th February, 1964, c. 280.] Seeing that, in 1962 at any rate, the Corporation was in debt, could we be assured that, under these "favoured nation" terms, the Treasury guarantees will not be used to wipe off the Corporation's debt? I hope that is not the purpose of the exercise but we want an assurance. In any case, the House should be rather careful about accepting the proposition, which the Parliamentary Secretary gave us in Committee, that the Corporation alone should be in the position of having the Treasury guarantees because, on the face of it, if we were to compare the two institutions on grounds of success and solvency, obviously one would choose the Federation.

However, we do not want any special consideration for the Federation. We merely want both these organisations to be treated alike. There is a solution to the problem which I hope the Government will now accept. I have no personal bias in this. I would like to see the Corporation put in a position to conduct what is a much-needed credit service for growers. We do need, however, to have better assurances than we have so far had about the strength of the Corporation and far more information about its activities before we can agree to its being accepted for Treasury guarantees.

I hope that the Corporation will be put in a position where it can compare favourably with the Federation for this purpose. The obvious solution is to let the Federation continue to be the credit institution for the co-operatives and with Treasury backing of the kind provided in the Bill. I assure the hon. Gentleman that not only here but in another place this battle will be fought until we have won because there is no case for excluding the Federation.

We could allow the reorganisation and strengthening of the Corporation to go on so that if could serve as the credit institution to back loans to individual growers and let the Federation look after the co-operatives. After all, they occupy the same building. They are separated by only two floors and it is really fantastic that we cannot persuade them to work together. I think that we may have to force them to do so. This is the situation we want to achieve by our Amendment and I hope that the hon. Gentleman will now accept it.

Mr. Scott-Hopkins

This is the same Amendment as that which the hon. Member for Sheffield, Hillsborough (Mr. Darling) tabled during the Committee stage and then withdrew. He has moved it, as he always does, in a most reasonable manner and I am most grateful to him for doing so.

The House will not expect me to go through all the arguments again, although the hon. Gentleman covered the ground quite considerably, but I must repeat the very substantial reasons for our decision to confine these grants, for some years at any rate, to the Agricultural Credit Corporation.

I should like to clear up the points which the hon. Gentleman made against my right hon. Friend. On Second Reading, my right hon. Friend explained the idea inherent in the Clause and in giving an example of the type of organisation which could be used for this purpose he mentioned the A.C.C. Between Second Reading and Committee, my right hon. Friend had carefully to consider how to apply the provisions of the Clause, and it is right that in taking a decision on this he should weigh all the factors relevant to the case. This is what he did, as I announced in Committee. I am sure that the hon. Member for Hillsborough will accept that that is the way it happened.

There are three main points. First, the Agricultural Credit Corporation is at present the only body in existence which is operating and capable of operating in the manner needed to implement the Clause.

Mr. Darling

indicated dissent

Mr. Scott-Hopkins

The hon. Member is shaking his head. In his argument as to why that is not so, he has covered the kind of operations undertaken by the Federation. But, in fact, the Federation does a different class of business. There is no question but that it is extremely useful, but it does not offer guarantees to the banks. We do not know whether it would be able to make arrangements with the banks for this purpose, and that is something which must be borne in mind. It would have to alter not only the scale, but the type of its business very considerably. I accept what the hon. Gentleman said about the business it is doing for co-operatives in the one or two instances which he mentioned.

Secondly, unlike the Corporation, the Federation has had no experience to date in the practical work of receiving and vetting applications from individual growers, which is terribly important for the proper implementation of these provisions.

Mr. A. E. Oram (East Ham, South)

Would the hon. Gentleman say what practical experience in these matters the Corporation has?

Mr. Scott-Hopkins

I shall come to that. The Corporation has outstanding to growers at the moment about £4.6 million and it deals with the receiving and vetting of applications from growers. It has experience of this practical work and, to tie in with the Horticulture Improvement Scheme, it is necessary that loans should be guaranteed only when the applicant is able to produce an acceptable business plan consistent with that scheme. I am sure that the House will agree that that is practical common sense.

Mr. Darling

I do not entirely accept what the Parliamentary Secretary is saying, but let us assume that it is correct. Under the 1960 legislation, there were grants to growers and they borrowed money while having to find two thirds themselves. In this Bill we give the same sort of facilities to co-operatives. What arguments can the Parliamentary Secretary bring forward for excluding the Federation from doing this job for co-operatives? The Corporation did not have any experience when the 1960 legislation began to operate.

7.15 p.m.

Mr. Scott-Hopkins

I agree that when there are two bodies within two floors of each other in the same building, it becomes rather farcical if they cannot work more closely together. I hope that I shall shortly be able to bring a ray of sunshine to the hon. Gentleman. At this stage, however, I must differentiate between the two bodies. It is true that in 1960 the experience of the Corporation was limited, but it now has that experience. We are now dealing with a wide range of provisions and it would be nonsense not to call on the experience which has already been built up.

The third important reason is that my right hon. Friend is most reluctant to set aside a sum of money for future possible applicants, which would have to be a substantial one. He could do this only at the expense of the money to be made available to the Corporation. I am sure that the hon. Member for Hillsborough accepts this and accepts that it should be a limited sum.

The sum might be divided once or twice, or as often as needed; but if my right hon. Friend took the view that there might be future applicants who could fulfil the conditions of this provision, in all fairness he would have to keep part of the sum available in case such an applicant came forward during the coming few years. That would obviously diminish the amount of money available for growers at the moment.

What my right hon. Friend is trying to do is to get the maximum amount of credit to the horticultural grower and the horticultural co-operative as quickly and as speedily as possible to the advantage of both of them. It is no purpose of my right hon. Friend to bolster up a finance corporation or affect it in any other way.

However, the words of the hon. Gentleman have had an effect. In Committee, we heard of the desirability of some collaboration between the two bodies and this need has now become obvious, particularly as they are within two floors of each other in the same building. I understand that these organisations now see excellent prospects of being able to work out an arrangement. The following are the points which they are discussing: where a co-operative is a member or regular customer of the Federation, it could be encouraged, though not required, to make its application for a loan of a type expected to attract a guarantee under the Clause to the Federation in the first instance. The Federation could then vet and process the application before forwarding it to the Corporation. In this way the Federation would be getting the experience which it lacks at the moment. At all subsequent stages the Federation could be brought into play as a useful instrument in the implementation of this Clause, where the applicant is one of its own members or regular customers.

But I must make it quite clear that for the time being the Government's grant will go to the Corporation only and that the Corporation must have final responsibility for the liabilities it incurs to the banks.

Mr. Darling

The hon. Gentleman spoke about discusisons, but there have been no discussions. As far as I know, there are not likely to be any. All that has happened is that the Corporation has sent a letter to the Federation. I asked the Parliamentary Secretary earlier whether he had been in touch with the Federation to get its point of view. Has he been in touch with the Federation to ask it if it will accept the situation, because if it will not, he cannot talk about discussions and the rest of his statement is misleading the House.

Mr. Scott-Hopkins

I am not misleading the House. We have been in touch with the Federation. We have had contact with it through the other organisation, the A.C.C., and at no stage did the Corporation give us information about the Federation. The information which I was using during the Committee stage did not come from the Corporation. That is what the hon. Member for Hillsborough feared might be the case and I hope that I have put his fears at rest.

I hope that the hon. Gentleman will not persist in this business. I under- stand that discussions are taking place. The tone of the letter which I have before me—

Mr. Darling

I have a copy, too.

Mr. Scott-Hopkins

I know that the hon. Gentleman has a copy and I am grateful to him for drawing my attention to it earlier.

It shows how a way could be paved towards an understanding after discussions between the two bodies. We hope that that will be so; indeed, it has to happen. The hon. Gentleman was concerned whether the Corporation might be in a position to seduce co-operatives from their allegiance to the Federation. But if they were encouraged to participate in the benefits provided by this Clause through the Federation, that, I think, would not happen. The guarantees which the Corporation has given to the banks will extend to the C.W.S. Bank and I am glad to give the hon. Gentleman confirmation of that. He asked questions about the Corporation and I thank him for his courtesy in giving me advance notice of his questions.

Mr. Thorpe

I was not present during the discussions in Committee so I hope that the Parliamentary Secretary will bear with me. Did I hear him right? Did he say that it was not known whether the Federation would be prepared to have financial dealings with the banks and enter into such arrangements? Do we deduce from this that no inquiries have been made to see whether it is possible?

Mr. Scott.-Hopkins

What I said earlier was that it was not known. I could not have given an undertaking whether the Federation could come to an arrangement with the joint banks in this capacity. The Federation has no experience of doing that and I have no knowledge whether it could or not.

Mr. Thorpe

May I repeat what I asked? Perhaps I did not make it plain. Are we to deduce from this that attempts have not been made to find out whether the Federation would be prepared to enter into such arrangements with the banks?

Mr. Scott-Hopkins

The hon. Gentleman has not got it quite right. It is not for us to make attempts to find out whether it would or not. I assume that the Federation would. But I do not know whether the banks would be prepared to do so. It would be a matter between the Federation and the banks concerned.

The hon. Member for Hillsborough asked questions about the Corporation. He thought that it was in rather a mess. He asked about the balance sheet which was issued on 30th September, 1963. As the Corporation is a private company it does not have to publish its balance sheet, as the hon. Gentleman will be aware. In the last two years the Corporation has made a small profit. At present, it has given bank guarantees totalling £4.6 million which as the hon. Gentleman will agree is a sizeable sum. This covers 1,084 cases relating to both horticulture and agriculture.

Mr. Oram

The Minister says that recently the Corporation has made a small profit. Can he say whether that profit has been enough to wipe out the £14,000 loss which my hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) indicated was revealed in the last published balance sheet?

Mr. Scott-Hopkins

Unless I went into details of the balance sheet, which I am not prepared to do, and explained each item, which would be a tedious business, it would be of no value to answer the hon. Gentleman's question. I do not think that it would be right, nor do I intend to debate the significance of each item. The hon. Gentleman has seen the balance sheet and he knows to what I am referring.

No concern such as this has assets to cover all its liabilities. Theoretically, every debt which is guaranteed can go bad, but, in fact, only a proportion do. It is necessary only for the Corporation to have a revenue and reserves to cover what experience shows to be a likely percentage of bad debts, and that is how the Corporation proposes to operate in future. It is no secret that the Corporation will benefit from an enlargement of business. But that is not the object of the provisions in Clause 8. The purpose of that Clause is to provide to growers and co-operatives the benefits of enlarging their business through the pro- vision of Government money which the Corporation will be handling.

I hope that the hon. Member will not press his Amendment. I understand his disquiet. But I truly believe that the two bodies can, as they should, work out a modus vivendi. My right hon. Friend is right in saying that the money must go through the one body qualified to deal with this matter. That body will co-operate with the Federation to the full in assisting co-operatives to get the benefit of the money which the Government are making available through the provisions in this Clause. We do not want to squabble about who is to handle what. The important thing is to get the money to the growers.

Mr. Oram

I support the formidable case advanced by my hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) in support of this Amendment. The reply of the Parliamentary Secretary was most inadequate, just as, in my judgment, was his statement in Committee. I was a member of that Standing Committee but, to my regret, I was called away from the sitting at which this matter was discussed. I have read the debate carefully and it is obvious from that, as it was today, that the Parliamentary Secretary finds himself hard put to reply to the case put forward in support of this Amendment.

The Amendment arises out of a question which I asked of the Minister during the Second Reading debate. I had noticed that Clause 8 made no reference to a specific body, any specific credit institution. I had also noticed that in the Press release accompanying the Bill, and in the Minister's Second Reading speech, there was a specific reference to the Agricultural Credit Corporation. That is why I asked the perfectly straightforward question: were other suitable organisations to be included?

I received what at the time seemed to be a perfectly straightforward answer from the Minister. He said that there was nothing to exclude other bodies. But, as things have transpired since, it is very clear—indeed, the Parliamentary Secretary has repeated it—that the intention of the Government is to do just that, to give a monopoly to the one organisation and to exclude another highly suitable organisation from the operations under this Clause.

7.30 p.m.

In my judgment this Clause was drafted with the Corporation in mind—and only the Corporation in mind—and with the intention of by-passing the Agricultural Credit Federation. As was suggested by my hon. Friend the Member for Hillsborough and underlined by the hon. Member for Devon, North (Mr. Thorpe), there was no approach to the A.C.C. during the drafting of the Bill to see whether it would be interested in the operation of the scheme under Clause 8. I have little doubt that there was considerable consultation with the Corporation. I also know that there was an approach by the Federation indicating that it was interested. It took the initiative in expressing its interest in this matter.

Before the Minister answered my question, there had already been an indication that the Federation would be squeezed out. It is evident that the Minister was not carefully and judiciously weighing up this, that and the other, but that it had been decided beforehand that the Corporation would get the benefit and the Federation would be excluded. Merely because the Minister had not been sufficiently and adequately briefed, he fell into a trap on Second Reading and said there was no reason why another organisation should he excluded.

In the wording of Clause 8 there is nothing which specifically includes or excludes any organisation, but it is clear from the evidence that has been put forward that in practice a very effective exclusion was being prepared. My hon. Friend the Member for Hillsborough pointed to the nature of the organisation to which it is proposed to give this monopoly. I have with me the membership clause of that organisation. I shall not read it in full. The A.C.C. is a controlling body of seven members, one of whom is to be the National Farmers' Union Development Council, and the six others are to be nominal members. In plain language, that means that there is one member, the National Farmers' Union Development Council, and six "stooges". That, in effect, is the structure of this organisation.

Mr. Scott-Hopkins

If the hon. Member is to regale the House with these things he should get it right. In point of fact, there are four directors from the development companies, the fifth is from the N.F.U., the sixth is an accountant, the seventh is a representative of an insurance company, and there are two vacancies. The chairman is a merchant banker, acting in his private capacity.

Mr. Oram

That clearly shows that this is very much an exclusive body controlled by the N.F.U. and all its members are nominated. The National Farmers' Union Development Council is also the effective member of an organisation called Agricultural Central Trading Ltd., which is in competition throughout the country with agricultural co-operative societies. So we are getting into a situation in which agricultural co-operative societies which wish to promote schemes will have to reveal what plans they are making to an organisation which in effect controls one of their chief competitors throughout the country.

My hon. Friend mentioned the dubious backing of this organisation. In Committee, the Parliamentary Secretary referred to the merchant bankers who heped in its establishment. I wonder whether he has information, which I have not got and which I invite from him, as to why the N.F.U. Mutual Insurance Company withdrew its backing from the organisation. There must be an interesting story which the House would find useful in reaching a conclusion on this matter.

I do not think the A.C.C. is the wonderful organisation which the Minister has pretended it is. It would not be a viable organisation without the backing it is seeking from this Bill. The Parliamentary Secretary has boasted again today that it is to work on a non-profit-making basis. My hon. Friend the Member for Hillsborough pointed out that it was a loss-making organisation until quite recently. I invited the Minister to say to what extent it was now getting out of the "red", but he was not very forthcoming about that. It is not my idea of a non-profit-making organisation. My idea is an organisation which is economically viable and makes a surplus, but distributes that surplus and makes sure that it goes back to those from whom it is made. That is the basis on which co-operative organisations work.

In accordance with that principle, the Federation would work. It has as members co-operative societies. It should have every right to service co-operative societies in this matter. It has been established by the C.W.S. Bank and agricultural co-operative societies. It is designed to work, and could work, for their mutual benefit. It has very practical experience in working with those co-operative societies. That, I think, answers the point the Minister made about its not having sufficient practical experience.

On Second Reading, and on other occasions, the Government have been pretending that they are helping co-operative societies to develop. This Amendment is a good test of how genuine they are in backing up co-operative organisations. Instead of giving these facilities to an existing co-operative finance organisation, the Government are giving them to a non-co-operative monopoly organisation. That does not show the right sort of spirit in a Government who pretend they are backing up co-operative organisations.

The whole of this business is most unsavoury. I was expecting to get from the Parliamentary Secretary a better reply than he gave in Committee, but I found his reply today just as unsatisfactory. I am sure that whatever decision the House reaches today the matter will not be allowed to rest there. It will not last for five years because something else will happen in those five years. The decision taken today could easily be reversed by a Government when they come to office, a Government who know what co-operative development means and which will legislate in its support.

Mr. Thorpe

I support the Amendment for the same reason that I opposed the previous one, namely, that I should like to see legislation clearly setting out the wishes of this House and not left to the arbitrary discrimination of the Minister. This Clause gives a power of monopoly. I am quite certain that a Government and party who believe passionately in free enterprise would consider very carefully before granting any monopolistic powers to any financial organisation. I am sure that at any rate the Government will be very cautious and will listen to the Minister with great care and be utterly convinced before they grant a monopolistic power which in many other cases they have seen fit to oppose. That is the first principle, and I am sure that the House can rely upon the Government's enthusiastic support of that principle.

The second point arises out of the reply of the Parliamentary Secretary. He was courteous enough to give way on two occasions, but, as I have learned from the short time I have been practising at the Bar, two questions are often inadequate when a witness is under cross-examination. I asked the Parliamentary Secretary this question: from the fact that he stated that he had no idea whether the Federation would be prepared to associate itself with the banks in the manner suggested in the Clause—

Mr. Scott-Hopkins

The hon. Gentleman must get it right. I said, "would be able", not "would be prepared".

Mr. Thorpe

I am grateful for that intervention. It strengthens my case. It is not merely whether the Federation would wish to but whether it would have the capability. I take the point and I am grateful to the Parliamentary Secretary. The point is whether it would be capable of entering into these financial arrangements. I asked him whether one could deduce from that the fact that the Government had not taken steps to find out whether the Federation was so capable. The Parliamentary Secretary said that it was not the job of the Government to find out whether the Federation was capable.

If it is not the Government's job to find out whether an organisation is capable, how do they know that the A.C.C. can associate itself with the banks? Is the Minister seriously saying that the A.C.C. has not yet been asked whether it will be prepared to shoulder this extra responsibility under the Clause and add to its existing obligations? Of course there have been discussions. Of course the Minister satisfied himself that the A.C.C. was capable of discharging these obligations before he dreamed of asking the House to accept the proposition that the Corporation is so capable.

If the Minister is able to satisfy himself that the A.C.C. is perfectly willing and capable, because both those things obtain, to associate itself with the banks and discharge this provision, why have not the Government taken measures to see if the Federation is so capable? If the Government have not taken measures to discover that, is it not somewhat premature to grant a monopoly on the basis that nobody else is capable?

I should have thought that the Government, because of their passionate belief in free enterprise, would like to see the maximum amount of co-operation between a quasi-official corporation and co-operative movements and, indeed, as the Amendment suggests— any other institution properly constituted to provide credit facilities for agricultural and horticultural businesses". Many of us hope that within the next five years, the duration of the operation of this Clause, we shall see created a land bank and various other credit facilities. Is the Minister seriously suggesting that there will be no new development in agricultural credit?

I thought that this Government, who profess to be looking to the future, who desire to bring Britain up to date, and who believe in free enterprise, would have accepted the Amendment with alacrity. If any further word is to be heard from the Government on this subject, I hope that we shall be told that, in the interests of free enterprise, in the hope that we shall expand credit facilities and pump credit into the agricultural areas, because they are a Government who are empirical, who are not rigid, who do not believe in monopoly, and have the interests of free enterprise at heart, they accept the Amendment with the greatest happiness and pleasure.

7.45 p.m.

Mr. Peart

It is obvious that the Government will not accept the Amendment. I merely want to conclude the discussion by re-emphasising some of the main principles which guided my hon. Friends in tabling the Amendment. I am glad the hon. Member for Devon, North (Mr. Thorpe) spoke in the way that he did. On a previous occasion I began to be suspicious of him; I thought that he was beginning to collaborate with the Government. However, he stated the main issue. In this very important Measure, under which Treasury aid is to be given to producers and to co-operatives, the Government are giving a monopoly to one organisation. That is the argument.

I remind hon. Members that originally the Minister himself made a specific promise. There is no doubt about this. The Minister cannot get away with it. I feel sorry for the Parliamentary Secretary, because the Minister himself has some responsibility here. On Second Reading my hon. Friend the Member for East Ham, South (Mr. Oram) intervened in the Minister's speech and said: The Minister has referred, as did the Press release in connection with the Bill, to one organisation, the Agricultural Credit Corporation. Are we to understand that the Clause is intended to benefit only that corporation, or would other suitable credit institutions similarly benefit? The Minister said: There is no reason why this provision should not be applied to other institutions if so required. It will be seen that the Clause does not specify the Agricultural Credit Corporation. I was merely giving it as the example of what we had in mind."—[OFFICIAL REPORT, 12th Decemter, 1963; Vol. 685, c. 591.] I tell the Parliamentary Secretary and the Secretary of State for Scotland, who must accept responsibility for the Bill, that this is a question of faith. This boils down to whether we believe what a Minister has said. The whole House accepted what the Minister said. It was always thought that the A.C.C. was given as an example. Does the hon. Member for Rugby (Mr. Wise) wish to intervene, because I see him fidgeting? I will gladly give way. Does he accept what the Minister said, or does he know what is happening?

The Minister definitely made this statement, and throughout the Committee stage we pressed the Parliamentary Secretary over and over again. It was reasonably argued, not in any dogmatic way, that there should be flexibility; that we should not give the power to one credit organisation; that Agricultural Finance Ltd., which has been mentioned, is a reputable body. The figures are there to be seen. It has a membership of 25 agricultural and horticultural societies. With total assets of nearly £¼ million, it is soundly based to conduct the business in question. Already this admirable body has made direct advances to agricultural and horticultural societies, in one instance to the tune of £40,000. It is a reputable organisation.

As in the Bill we are extending the scope of grants, not merely to individual purchasers, but also to co-operative societies, we believe that a body of this type, which has the interests of producer co-operation at heart, should be given the opportunity. It is a scandal that this body has to wait for another five years.

The Parliamentary Secretary's reply was not satisfactory. The Minister should have had consultations with the Federation. I go further: he should have explored all organisations which could have given credit. The hon. Member for Devon, North was right. We are engaged on a major Bill which seeks to revitalise horticulture. Credit arrangements are of great importance. I should like to see them extended. I should like to see a new credit organisation backed by the Treasury. I hope that this will come one day. Perhaps it will be done if the Liberals get into power. It will certainly be done if we get into power. No doubt the Liberals will support us when that time comes.

However, the extension of credit is of great concern. My hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) stated the case for the Amendment excellently, and there is no need for me to repeat his remarks which have been reinforced by other hon. Members. The reply of the Parliamentary Secretary was unsatisfactory, and I must advise my hon. Friends to press the matter to a Division.

Sir P. Agnew

I am not altogether happy about the position which has been reached on this Amendment. I have read carefully the OFFICIAL REPORT of what was said originally by my right hon. Friend. He is not able to be here today, and that is a great disadvantage to us all. The burden of the debate has fallen on his able Joint Parliamentary Secretary. I approach the issue with which the House is confronted in this way. It appears that the position is in contradistinction to what my right hon. Friend said—and I am sure that he meant it when he said it—that is, that there would be no exclusion in favour of any one particular institution in arranging these credit arrangements.

Everybody recognises the appropriateness of having one of the financial institutions associated with the N.F.U. playing a large and prominent part in this work. However, I feel that it is nothing less than common sense that in the case of the rural co-operatives the financial institution with which they are well linked should be allowed—indeed invited—to play its part in arranging for their finances.

Could an assurance be given, even at this late stage, that before the Bill reaches another place steps will be taken so that the Minister in charge of the Bill in another place will report, favourably we trust, on the results of conversations, the object of which was to seek the means by which the Federation could be allowed to play its part? If such an assurance could be given I hope that the hon. Member for Workington (Mr. Peart) would be willing to withdraw the Amendment, which is really not necessary in itself. There is present with the Parliamentary Secretary on the Front Bench a Minister representing Scotland, who is himself closely concerned with the Bill. Is it not possible, even at this late stage, for some such arrangement to be arrived at?

Mr. E. G. Willis (Edinburgh, East)

A reasonable appeal has just been made to the Parliamentary Secretary and, even as a matter of courtesy to his own side of the House, he should be prepared to reply to it.

Mr. Scott-Hopkins

I am reluctant to weary the House by repeating what I said earlier. That is why I did not rise to the point made by my hon. Friend the Member for Worcestershire, South (Sir P. Agnew). I cannot give him the assurance he wants. I can assure him that I hope that the two bodies will manage to co-operate and that the small rural co-operatives to which my right hon. Friend referred will be covered by finance from the A.C.C. It is our view that it is right to use the A.C.C. as the sole funnel in this period for the funds which are at our disposal under Clause 8.

Mr. Peart

Most unsatisfactory.

Question put, That the words proposed to be left out stand part of the Bill:—

The House divided: Ayes 168, Noes 149.

Division No. 31.] AYES [7.55 p.m.
Allan, Robert (Paddington, S.) Harris, Reader (Heston) Page, Graham (Crosby)
Allason, James Harrison, Brian (Maldon) Pannell, Norman (Kirkdale)
Anderson, D. C. Harrison, Col. Sir Harwood (Eye) Partridge, E.
Ashton, Sir Hubert Harvey, Sir Arthur Vere (Macclesf'd) Pearson, Frank (Clitheroe)
Atkins, Humphrey Hastings, Stephen Peel, John
Awdry, Daniel (Chippenham) Heald, Rt. Hon. Sir Lionel Pickthorn, Sir Kenneth
Barlow, Sir John Hendry, Forbes Pitt, Dame Edith
Barter, John Hiley, Joseph Powell, Rt. Hon. J. Enoch
Batsford, Brian Hill, Mrs. Eveline (Wythenshawe) Proudfoot, Wilfred
Bennett, F. M. (Torquay) Hill, J. E. B. (S. Norfolk) Pym, Francis
Bennett, Dr. Reginald (Gos & Fhm) Hirst, Geoffrey Quennell, Miss J. M.
Biffen, John Hocking, Philip N. Rawlinson, Rt. Hon. Sir Peter
Bishop, Sir Patrick Holland, Philip Redmayne, Rt. Hon. Martin
Black, Sir Cyril Hollingworth, John Rees-Davies, W. R. (Isle of Thanet)
Bossom, Hon. Clive Howard, Hon. G. R. (St. Ives) Ridsdale, Julian
Bourne-Anton, A. Howard, John (Southampton, Test) Roberts, Sir Peter (Heeley)
Boyle, Rt. Hon. Sir Edward Hughes-Young, Michael Ropner, Col. Sir Leonard
Braine, Bernard Hurd, Sir Anthony Scott-Hopkins, James
Brown, Alan (Tottenham) Hutchison, Michael Clark Shaw, M.
Browne, Percy (Torrington) Iremonger, T. L. Smith, Dudley (Br'ntf'd & Chiswick)
Bullard, Denys Irvine, Bryant Godman (Rye) Spearman, Sir Alexander
Campbell, Gordon (Moray & Nairn) James, David Speir, Rupert
Carr, Rt. Hon. Robert Jennings, J. C. Stainton, Keith
Chataway, Christopher Johnson, Eric (Blackley) Stanley, Hon. Richard
Chichester-Clark, R. Joseph, Rt. Hon. Sir Keith Steward, Harold (Stockport, S.)
Clarke, Brig. Terence(Portsmth, W.) Kerans, Cdr. J. S. Stodart, J. A.
Cleaver, Leonard Kershaw, Anthony Storey, Sir Samuel
Cole, Norman Kitson, Timothy Studholme, Sir Henry
Cooke, Robert Legge-Bourke, Sir Harry Taylor, Sir Charles (Eastbourne)
Cooper, A. E. Lilley, F. J. P. Taylor, Frank (M'ch'st'r, Moss Side)
Costain, A. P. Linstead, Sir Hugh Taylor, Sir William (Bradford, N.)
Courtney, Cdr. Anthony Lloyd, Rt.Hn. Geoffrey(Sut'nC'dfield) Temple, John M.
Critchley, Julian Lloyd, Rt. Hon. Selwyn (Wirral) Thatcher, Mrs. Margaret
Crosthwaite-Eyre, Col. Sir Oliver Longbottom, Charles Thomas, Sir Leslie (Canterbury)
Cunningham, Knox Loveys, Walter H. Thompson, Sir Kenneth (Walton)
Currie, G. B. H. MacArthur, Ian Thorneyoroft, Rt. Hon. Peter
Dance, James MoLaren, Martin Tiley, Arthur (Bradford, W.)
Deedes, Rt. Hon. W. F. McLaughlin, Mrs. Patricia Tilney, John (Wavertree)
Digby, Simon Wingfield McMaster, Stanley R. Touche, Rt. Hon. Sir Gordon
Doughty, Charles Maddan, Martin Turner, Colin
Drayson, G. B. Markham, Major Sir Frank Turton, Rt. Hon. R. H.
du Cann, Edward Mathew, Robert (Honiton) van Straubenzee, W. R.
Duncan, Sir James Matthews, Gordon (Meriden) Vaughan-Morgan, Rt. Hon. Sir John
Elliot, Capt Walter (Carshalton)
Farr, John Mawby, Ray Vosper, Rt. Hon. Dennis
Finlay, Graeme Maxwell-Hyslop, R. J. Walder, David
Fletcher-Cooke, Charles Maydon, Lt.-Cmdr. S. L. C. Wells, John (Maidstone)
Fraser, Ian (Plymouth, Sutton) Mills, Stratton Williams, Dudley (Exeter)
Freeth, Denzil Miscampbell, Norman Wills, Sir Gerald (Bridgwater)
Galbraith, Hon. T. G. D. More, Jasper (Ludlow) Wilson, Geoffrey (Truro)
Gammans, Lady Morgan, William Wise, A. R.
Gardner, Edward Morrison, John Wolrige-Gordon, Patrick
Gibson-Watt, David Mott-Radclyffe, Sir Charles Woodnutt, Mark
Gower, Raymond Nicholson, Sir Godfrey Worsley, Marcus
Grant-Ferris, R. Noble, Rt. Hon. Michael
Grosvenor, Lord Robert Nugent, Rt. Hon. Sir Richard TELLERS FOR THE AYES:
Hamilton, Michael (Wellingborough) Oakshott, Sir Hendrie Mr. Hugh Rees and Mr. R. W. Elliott.
Harris, Frederic (Croydon, N.W.) Osborn, John (Hallam)
Abse, Leo Boyden, James Delargy, Hugh
Ainsley, William Braddock, Mrs, E. M. Dempsey, James
Allen, Scholefield (Crewe) Bray, Dr. Jeremy Diamond, John
Awbery, Stan (Bristol, Central) Broughton, Dr. A. D. D. Dodds, Norman
Bacon, Miss Alice Butler, Herbert (Hackney, C.) Duffy, A. E. P. (Colne Valley)
Barnett, Guy Carmichael, Neil Ede, Rt. Hon. C.
Baxter, William (Stirlingshire, W.) Castle, Mrs. Barbara Edwards, Robert (Bilston)
Beaney, Alan Cliffe, Michael Edwards, Walter (Stepney)
Bence, Cyril Collick, Percy Fernyhough, E.
Bennett, J. (Glasgow, Bridgeton) Craddock, George (Bradford, S.) Finch, Harold
Benson, Sir George Cronin, John Fitch, Alan
Blackburn, F. Dalyell, Tam Foley, Maurice
Blyton, William Darling, George Forman, J. C.
Boardman, H. Davies, Harold (Leek) Fraser, Thomas (Hamilton)
Bowden, Rt. Hn. H. W. (Leics, S.W.) Davies, S. O. (Merthyr) Galpern, Sir Myer
Bowles, Frank Deer, George George,Lady MeganLloyd(Crmrthn)
Gourlay, Harry Lubbock, Eric Rhodes, H.
Greenwood, Anthony McBride, N. Roberts, Goronwy (Caernarvon)
Griffiths, David (Rother Valley) McCann, John Robertson, John (Paisley)
Griffiths, Rt. Hon. James (Llanelly) MacColl, James Ross, William
Hale, Leslie (Oldham, W.) McInnes, James Skeffington, Arthur
Hamilton William (West Fife) Manuel, Archie Slater, Mrs. Harriet (Stoke, N.)
Hannan, William Mapp, Charles Slater, Joseph (Sedgefield)
Harper, Joseph Mason, Roy Small, William
Hart, Mrs. Judith Mayhew, Christopher Smith, Ellis (Stoke, S.)
Hayman, F. H. Mendelson, J. J. Snow, Julian
Herbison, Miss Margaret Millan, Bruce Sorensen, R. W.
Hill, J. (Midlothian) Milne, Edward Spriggs, Leslie
Hilton, A. V. Mitchison, G. R. Steele, Thomas
Holman, Percy Moody, A. S. Stewart, Michael (Fulham)
Holt, Arthur Moyle, Arthur Stonehouse, John
Houghton, Douglas Neal, Harold Stones, William
Howell, Charles A. (Perry Barr) Noel-Baker, Francis (Swindon) Symonds, J. B.
Howell, Denis (Small Heath) Oliver, G. H. Taylor, Bernard (Mansfield)
Howie, W. (Luton) Oram, A. E. Thornton, Ernest
Hoy, James H. Oswald, Thomas Thorpe, Jeremy
Hughes, Cledwyn (Anglesey) Owen, Will Wade, Donald
Hunter, A. E. Paget, R. T. Wainwright, Edwin
Hynd, John (Attercliffe) Pannell, Charles (Leeds, W.) Weitzman, David
Janner, Sir Barnett Parker, John Whitlook, William
Jeger, George Parkin, B. T. Wilkins, W. A.
Jones,Rt.Hn. A. Creech (Wakefield) Pearson, Arthur (Pontypridd) Willey, Frederick
Jones, Dan (Burnley) Peart, Frederick Williams, W. T. (Warrington)
Jones, J. Idwal (Wrexham) Pentland, Norman Willis, E. G. (Edinburgh, E.)
Jones, T. W. (Merioneth) Popplewell, Ernest Winterbottom, R. E.
Kelley, Richard Price, J. T. (Westhoughton) Woodburn, Rt. Hon. A.
Kenyon, Clifford Probert, Arthur Woof, Robert
King, Dr. Horace Pursey, Cmdr. Harry
Lawson, George Rankin, John TELLERS FOR THE NOES:
Ledger, Ron Redhead, E. C. Mr. Grey and Mr. Ifor Davies.
Lee, Miss Jennie (Cannock) Rees, Merlyn (Leeds, S.)