HC Deb 09 March 1967 vol 742 cc1888-94

Queen's Recommendation having been signified—

Motion made, and Question proposed, That, for the purposes of any Act of the present Session to provide for the establishment of a public board with the function of promoting the ability of the shipbuilding industry in the United Kingdom to compete in world markets. it is expedient to authorise—

  1. A. The issue out of the Consolidated Fund of sums to be paid by the Minister of Technology to the board and to be used by it for making loans not together exceeding £32,500,000.
  2. B. The payment out of moneys provided by Parliament of—
    1. 1) sums to be paid by the Minister to the board and to be used by it—
      1. a) for making grants which except in so far as they are in relief of interest on loans made by the board) do not together exceed £5,150,000;
      2. b) for meeting expenditure on subscribing for shares, being expenditure which when taken together with loans made by the board, does not exceed the amount specified in paragraph A above;
      3. c) for meeting the expenditure of the board so far as it does not consist of grants or loans made by the board or of expenditure on subscribing for shares;
    2. 2) any sums required by the Minister for fulfilling guarantees given by him in connection with the construction of ships in shipyards situated in the United Kingdom and the equipment of ships constructed in such shipyards, so however that his total 1889 liability at any time in respect of such guarantees exclusive of any liability in respect of interest on any principal moneys the payment of which is the subject of any such guarantee) shall not exceed £200,000,000;
    3. 3) any expenses incurred by the Minister in consequence of any provision of that Act whereby property, rights and liabilities of the board are transferred to him on its dissolution:
    4. 4) any administrative expenses incurred by the Minister for the purposes of that Act
    5. 5) any sum required by that Act to be paid by the Minister into the Exchequer in connection with the issue of shares in satisfaction of a loan made by the board;
  3. C. Borrowing for the purposes of the Act in any manner authorised by the National Loans Act 1939
  4. D. The payment into the Exchequer of any sums falling to be so paid by virtue of the said Act of the present Session and the re-issue out of the Consolidated Fund of such of those sums as fall to be so re-issued by virtue of that Act.—[Mr. Benn.]

9.59 p.m.

Sir Harry Legge-Bourke (Isle of Ely)

I hope that the House will forgive my raising one or two matters on the Resolution. I have sat through the Second Reading debate, which became as much a debate on the Geddes Report as it was a debate on the Bill itself. Perhaps the House has not given all the attention it should have given to the financial provisions of the Bill, which are largely contained in the Resolution. The House should remind itself of the very considerable sum to which we are being committed. I am not saying that all the money has to be found; indeed, it has not, but it is a considerable total, amounting to £237,650,000. That is the maximum authorised under the Resolution.

The Treasury has considerable control all the way through. There are 10 different mentions of the Treasury in the Bill. Everything the Minister can do under the Bill is something financial. The Resolution gives him authority to do it. Yet even the most important power that the Minister has—that is, of giving directions to the Board—is subject to the Treasury. Therefore, the Treasury has a very big hold here. I am delighted that the Chief Secretary to the Treasury has turned up.

Mr. Speaker

Order. I have every sympathy with the hon. Gentleman, who has sat through the debate, in which I had hoped that he would have been called. However, he must stick to the Money Resolution.

Sir H. Legge-Bourke

Indeed, Sir, but I hope that I shall be allowed to welcome the one Treasury representative on the Front Bench, who, after all, is mainly concerned in this matter.

One matter gives some cause for concern. Paragraph B(2) deals with the authority to permit by way of guarantee the expenditure of a sum not exceeding £200 million to guarantee any loans, which I understand will be charged at the rate of 5½ per cent. by the banks. Paragraph C says: Borrowing for the purposes of the Act in any manner authorised by the National Loans Act 1939. I have been looking at that Act. I hope that the House realises that tinder that Act the Treasury would be entitled to issue stock at a far higher rate of interest than that at which the loan which the money was being raised to cover had to be serviced. Is that fully appreciated? This matter must depend to some extent upon whether any stock the Treasury issues to finance these loans up to £200 million will be specifically related to the shipbuilding industry under the Act, or whether it will form part of a general issue of stock. Is it to be a named stock like Electricity Stock, Gas Stock, and so forth; or will it be part of a general Treasury issue?

Under the Resolution, read in conjunction with the 1939 Act, it will be possible for the Treasury to fix a higher rate of interest for the money it is using to cover the loans being made at the fixed rate of, I understand, 5½ per cent. on the money provided by the banks. We are at least entitled to know what is in the Treasury's mind in exercising the powers given to it under the Resolution, assuming that is passed by the House.

It is extraordinary that, although the Resolution covers the sums paid by the Minister in the form of grants, in the Bill this is one of the few things where the Minister is given powers without having to seek the approval of the Treasury to exercise it. As I understand, the Resolution will cover the present financial year or this Session of Parliament, but what will matter in the future is what is in the Act itself. Here we have power given to the Minister to make grants up to £5 million.

Mr. Speaker

Order. That is a point which the hon. Gentleman must raise when we come to the Bill itself.

Sir H. Legge-Bourke

I accept your Ruling, Mr. Speaker, but I draw your attention to the fact that the Resolution covers only this Session of Parliament. Under the Resolution, the Minister will be provided with funds to pay grants up to £5,150,000. That is under paragraph B(1,a), but when it comes to relating the Resolution to the actual fine, the Bill insists that the Minister shall consult with the Treasury before he commits himself to any of the loans, whereas he does not have to consult the Treasury when paying these grants.

There seems to me to be an extraordinary inconsistency. The liability mentioned in the Resolution is far greater in respect to the loans—the potential is far greater. In actuality, one would expect the biggest liability within the Exchequer would come under the heading of grants, yet the Minister does not have to ask the Treasury for permission before he gives the grant. I would be grateful if this matter could be cleared up.

Mr. Speaker

Order. That is a matter which the hon. Gentleman could raise when we come to the Bill itself.

Sir H. Legge-Bourke

I am trying to understand exactly why there should be this inconsistency between the Resolution and the Act. I thought that before we passed the Resolution we should be clear that the Resolution is properly drawn. That is my point.

I am extremely grateful, Mr. Speaker, for your indulgence. I have appreciated, right through the Second Reading stage, that ultimately the Bill is, above all, a financial Bill. We therefore ought to pay particular attention to this Resolution and I am grateful to the House for having heard me.

10.8 p.m.

Mr. Stanley R. McMaster (Belfast, East)

The Resolution provides, as my hon. Friend the hon. Member for the Isle of Ely (Sir H. Legge-Bourke) has stated, for a large charge on public money, a charge which has been written up as £232½ million. That is a very large charge. However, £200 million is to be provided, not by the Government but by the banks. Part of the £32 million can be used by companies to whom an advance is made to buy shares.

The Parliamentary Secretary admitted to buying existing shares in shipbuilding companies as part of the reorganisation and amalgamation. In so far as this is used to take up existing shares, it goes out of the industry and does not assist it. I should like the Government to make clear what part of this £232 million they expect to be charged to the taxpayer.

Mr. Speaker

Order. With all due respect, this is a matter which the hon. Gentleman must raise when we come to discuss the Bill. On the Money Resolution we can discuss the Resolution.

Mr. McMaster

If I may restrict myself entirely to the Resolution, I should like to be told by the Chief Secretary to the Treasury what part of the Resolution he expects to be charged to public funds, and what part of it will be retained and used by the industry for the purposes set out in the Bill.

10.10 p.m.

The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Edmund Dell)

I shall endeavour to answer the questions which have been raised on the Money Resolution.

The hon. Member for the Isle of Ely (Sir H. Legge-Bourke) asked a question about paragraph B (2), which enables the Minister to give the guarantees which are necessary under the £200 million credit scheme. We hope that no guarantees will have to be paid, but this paragraph will enable the Minister, if he has to meet a guarantee through a default, to pay it. If he has to meet such a default it will have to be met through a vote of the House. The House will have the right to vote on it.

The hon. Gentleman also raised the point about relative rates of interest. The point here is that the rate of interest in question under the credit scheme is a rate of interest charged by the banks when a guarantee is given to them by the Government, and therefore there is no necessary relationship between that rate of interest which is their commercial judgment of an appropriate rate of interest for money over a long period, say eight years, guaranteed by the Government, and any particular rate of interest at which the Government are themselves borrowing at any time.

The hon. Gentleman also asked a question relating to the financing of the loans and the grants. The grants are to be financed out of voted money, so again the House will have the opportunity of taking a decision. The loans, which are repayable, will be financed out of the Consolidated Fund, and, therefore, Treasury permission will be required.

With regard to the point raised by the hon. Member for Belfast, East (Mr. McMaster), it is not possible to say what part of the £32½ million loan money will be used to acquire shares. This is something which we can discover only in practice as the Shipbuilding Industry Board pursues its work. All I can say is that any part which is used to acquire shares will then give rise to a vote of the House, because, the money having been borrowed from the Consolidated Loan Fund, it will have to be repaid to the Fund, and the only way in which the Minister will be able to pay it, having bought shares, will be by the House voting the money to enable him to do so.

Question put and agreed to.