GRANTS FOR PROVISION OF NEW HOTELS

HC Deb 24 June 1969 vol 785 cc1341-68

Mr. Buchan

I beg to move Amendment No. 46, in page 6, line 23, after 'Board', insert 'after the completion of the hotel'.

Mr. Speaker

I have suggested that with that Amendment we can take Amendment No. 106, in Clause 8, page 7, line 23, leave out 'after the completion of the extension or alteration' and insert 'by payment on account against cost of work certificates', and Amendment No. 108, in Clause 9, page 8, line 7, leave out 'after the completion of the installation' and insert 'by payment on account against cost of work certificates', which bear on the same point.

Mr. Buchan

The Bill as originally drafted provided an entitlement to grant after completion. In Committee a number of Amendments were put down, one of which deleted the provision that the new hotel project must be completed before it became eligible for grant, but this creates a number of difficulties. For example, it would be necessary to amend Clause 10, which prevents a tourist board from paying a grant for a new hotel to anyone who is not either the occupier or the lessor on the date of the first opening of the hotel after completion. Second, we do not accept the principle of payment by instalments, and we do not intend to make consequential Amendments to make this possible, because of the complications that would arise.

As a result, the Bill is in a very untidy state, and we would have to rely on a later Clause to impose the provision that projects entitled to grant under this Clause must first be completed. I have therefore moved the Amendment to insert those words.

Mr. Evelyn King (Dorset, South)

I think that the Minister's explanation is unsatisfactory. All the Minister said was that if the Amendments were rejected consequential Amendments would be necessary to other parts of the Bill. This is not an argument of substance. I think that this is a singularly unimaginative suggestion by the Government.

It must be relevant for us to consider the economic climate in which we live. We have got to the point almost of usury in the Old Testament sense. It is part of the Government's policy that overdrafts cannot be given, that credit shall in every case be restricted to the utmost, restricted to the point at which firms in my constituency are finding difficulty in paying their wages.

It is in that climate that we are asked to approve a Clause which says that although help may be given to hotels for a variety of purposes, no money shall be advanced to them until the work is completed. This may be all right in big cities such as London where big companies are involved, but in my constituency in Dorset we have no Hilton Hotels, no big hotels, no big companies. Hotel keeping, though an industry upon which we are vastly dependent, is on a very small scale, and an hotel with 10 to 20 bedrooms is regarded as a fair-sized hotel. These people do not have the necessary capital, and it follows that the builders who carry out this work are also short of capital. They cannot borrow.

Nor is this the only case in which the Government do this. There is a parallel with the agricultural industry where subsidies are withheld because farmers have not filled up a form. Most painful parallels occur when a grant has been made to a householder and is withheld because the work was begun too soon. These are objectionable practices. If we give a subsidy, let us do so in a way which enables it to be made use of.

The Minister has given no substantial reason why normal payments should not be made on account as work proceeds, as is common in the building industry. This is particularly hard on the small hotel or boarding-house owner, the man who cannot raise capital, and it is a piece of favouritism towards the millionaire outfit. I ask the Minister to reconsider this.

Sir C. Taylor

I had intended to move an Amendment in Committee dealing with this, but to my astonishment the hon. Member for Lewisham, South (Mr. Carol Johnson) put his name above my Amendment and was called to move it. He said in Committee: My Amendment is based on the normal practice governing the financing of new building and the assumption that the boards would, from time to time, be prepared to take a calculated risk and at least have the power to make interim payments on account where they seem desirable and work on construction is progressing. The hon. Member went on to say that if those interim payments were not made, the constructors of these hotels would have to borrow money from the bank or in some other way. We all know that small businesses cannot borrow money from the banks, and there are very few alternative forms of borrowing open to them. The Minister said that this was where grants and loans came in, and that if an operator was in receipt of a grant he could get a loan to tide him over. That seemed to be an untidy way of doing things. If the B.T.A. agrees that an operator should receive a grant it is normal practice for the payments to be made against cost of works certificates or other documents, without going through the curious procedure of promising a grant and giving a loan.

The hon. Gentleman went on later: I therefore ask my hon. Friend to have second thoughts about this. I do not think that the position he has taken up would be prejudiced in the slightest."—[OFFICIAL REPORT, Standing Committee E, 17th April, 1969; c. 356–360.] The hon. Member was not convinced; nor was I. We put it to the vote and won. The Government side was convinced by our argument. I regret to say that although the hon. Member for Lewisham, South had moved the Amendment and had expressed dissatisfaction with the Bill, he voted with the Government. However, the Committee decided in its wisdom, by seven votes to five, to carry the Amendment.

Mr. Pardoe

We are discussing with the Amendment two Amendments standing in my name, Nos. 106 and 108. If accepted, my proposal would do to the Bill precisely the opposite of what the Government Amendment proposes. In other words, it would ensure that payment could be made on account against a cost of work certificate. I regret that the Minister's arguments entirely missed this point.

Mr. Buchan

Because I knew that the hon. Gentleman would speak following me, I felt that it would be better tor him to deploy his case so that I could follow by giving him an adequate reply, particularly since two contradictory Amendments have been grouped together.

Mr. Pardoe

I am glad to learn that the hon. Gentleman will give a more detailed reply later.

Although acceptance of my proposal would mean amending the Bill later, notably in Clause 10, this should not inhibit the Government from accepting it. My Amendments arise, to a large extent, out of experience which I have had by representing a development area and by having knowledge of the administration of grants paid for industrial development purposes. Like other hon. Members, I have come across many difficulties because of the need to bridge the gap between the start and completion of an enterprise and the payment of Government grant. Bridging finance is notoriously difficult to obtain today and, for the small hotelier, it is virtually non-existent.

About 18 months ago a hotel, the first to be built in Newquay for many years, was under construction. Workmen had to be laid off for a time because the bridging finance ran out. Finally we were able to obtain additional help. This is obviously an inefficient way to finance developments in the tourist industry. Ideally, I should like developments of this kind financed from cash flow. This might be possible for hotels with an all-the-year-round trade. However, in Cornwall we do not have an all-the-year-round trade, which means that we do not have an all-the-year-round cash flow.

Most building work is done in the winter, when hotels are closed. Bills often become payable before the season has begun and before any money has begun to flow in. This means that a considerable gap must be bridged, and unless the Minister can produce convincing arguments to the contrary, I cannot see, other than by accepting my proposal, from where this money is to come.

We are told that the grant will become payable after the completion of work, but exactly when will it be paid? In administering industrial development grants there is often a long delay—of six months or more—before the cash is paid into the bank account of the developer. At what stage will the amount of grant be decided and the eligibility of the work in hand be assessed? When a developer goes ahead with a development under the industrial development grant procedure he is uncertain of the amount that he will receive and whether the work which he has instructed his builder to do will be eligible for grant. It is, therefore, impossible for him to say to his bank manager, "The Government have promised me a cheque and I will be getting x £ on a certain date." I want to know from the Under-Secretary at exactly what stage in this process tourist boards will decide whether particular work is eligible and how much grant they will pay.

10.15 p.m.

The size of the grant will often decide the extent of the plans the developer proposes. Often he will be extremely dependent on this type of grant and unable to go ahead until he knows exactly where he stands and on what rate it will be.

Mr. Speaker

Order. The size of grant and the rates of grant come under Clause 11. We are discussing now whether the hotelier should get the grant on completion of the work or in the way suggested in the hon. Member's Amendment.

Mr. Pardoe

I entirely accept the point, Mr. Speaker, and I am sorry that I may have strayed. The hotelier should know at what point he will get the grant. It should be paid on account during the course of the work and there should be no delay. I cannot see that administrative reasons inhibiting the Government from accepting this proposal. The hon. Member for Eastbourne (Sir C. Taylor) suggested that it could be paid on production of cost-of-works certificates or on whatever the Government insist and that the grant could be made on an instalment basis. Unless this is done I cannot see how the small hotelier can get bridging finance.

Mr. A. G. F. Hall-Davis (Morecambe and Lonsdale)

Other hon. Members have addressed themselves to the specific question of the desirability and practicability of grants being paid on a progress basis. I address two points to the Under-Secretary in view of his remarks in which he apparently suggested that he would amplify his statement later. Assuming that he rejects the proposal that it is entirely reasonable for payment to be made on a progress basis and he intends to keep to the path he has already indicated, I simply ask whether the Chancellor of the Exchequer is prepared to give an indication to the joint stock banks that the financing of expenditure of this nature which will be eligible for grant should be regarded by the banks as in the same priority category as expenditure by exporting industries.

The Government have introduced this system of grant on the view that it is in the broad national economic interest. It is perfectly reasonable therefore to ask the hon. Gentleman, when he is taking the categoric position he has taken up, if he has investigated whether the present control of credit by the Government will of itself frustrate the intentions of the Bill. I ask him to say that when a hotel owner goes to his bank manager and says, "I will be eligible for grant under the Tourist Development Bill" and can convince him that the grant will be 20 per cent., or 25 per cent. if he is in a development area, this may be treated as priority lending and not subject to all the rigours of restriction at present in force.

I should like the Under-Secretary to assure us that that will be the case and that the hotelier would not be met by the answer that unfortunately the President of the Board of Trade failed to tell the Chancellor of his intention and that the bank manager has to act under the instructions of the Chancellor. This is not by any means the kind of marginal point it may appear to be. While the payment is spread over a period it would be a great help to the hotel owner if he could have 25 per cent. or 20 per cent. of the total expenditure regarded as priority borrowing. Then he would have to persuade his bank manager only to lend him the balance over a shorter period.

In other words, he would not only be taking 20 per cent. or 25 per cent. out of the area in which he has to persuade the bank manager that he can allow him the credit, but he could take it out right at the beginning of his borrowing and, therefore, his task of persuading the bank manager to grant him the credit would not only be restricted to a smaller amount but, which is more important in these days, would be restricted to a shorter period.

I shall be a little less aggrieved if the Minister adheres to his decision about the payment of grant only on completion but makes it clear that because it is the Government's view that this expenditure should be encouraged they have taken steps to ensure that the Treasury knows what the Board of Trade is about.

Sir J. Gilmour

If benefit is to be derived from the Bill, it must help not only the large hotels but the small ones. It is in that category of hotel that the Amendment will do so much harm. The Highlands and Islands Development Board is building hotels in the Highlands and, I imagine, will be able to draw Government finance for the building of such hotels. Alongside, somebody in private enterprise may be seeking to build a small hotel but will not be able to obtain the same facilities. This will put smaller private developers at a disadvantage. I believe that hotels will not be built in such areas if the Amendment is carried.

Mr. A. P. Costain (Folkestone and Hythe)

Does not the Minister appreciate that, as drafted, the Amendment is useless. If the expression: after the completion of the hotel is taken literally, it could mean 50 years afterwards. Why was not a phrase such as: a reasonable time after the completion of the hotel sought to be inserted? I do not think that any bank manager advising my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davies) would regard it as much security if he was presented with a Clause of this type. Payment could be delayed. This is typical of this Government. They are already writing their 1975 election manifesto so that they can say what they have given away without saying what they deducted before they gave. I ask the Minister to make it clear that: after the completion of the hotel means a reasonable time afterwards. In a building contract that is a maximum of six months.

Mr. Gower

The incorporation into the Bill of the Amendment will impose a severe limitation on the use to which the Bill will be put and on the value of the grants which will be taken up. The global sum will be severely restricted. A severe limit will be imposed certainly in Scotland and Wales and probably in peripheral areas of England. This will mean that most of the hotel building which will benefit from the Bill will be concentrated in the Greater London area and in one or two traditional places where the large companies are likely to embark upon developments.

If this is the Government's intention, they should have made it clear at the outset. By setting up three separate boards they have given the impression that there is to be a lot of hotel development all over the United Kingdom. I fear that if the Amendment is carried the total amount of benefit accruing from the Bill will be minimised and that the overall benefit will not be considerable outside a few parts of England. In Scotland and Wales, except for places like Edinburgh, Glasgow and Cardiff, very little use will be made of the powers and benefits conferred by the Bill. The Government are being unreasonable in insisting on this wording. This is completely contrary to all normal engineering and building practice.

How on earth does the Minister expect a developer to proceed with such a project, after carefully estimating the probable cost and finding that marginally it is likely to be an economic proposition with the benefit of the grant, under the very loose wording? The Amendment says that he shall receive nothing until an unnamed date after the hotel's completion. In those circumstances, the developer is in an invidious position. He must from time to time meet the expenses of the building or engineering firms he employs. If the grant is to be of real use it should be available proportionately at the same stages as he must meet his obligations to the builders he employs. This is reasonable building and engineering practice, and the Government are putting something in the Bill that is completely at variance with normal practice in these industries. They are reducing to absurdity the value of the benefits in the Bill, and I implore the Minister to alter it.

Mr. Buchan

I listened with great interest to the debate. Some of it covers earlier ground in Committee, but some of it is fresh and valuable and interesting.

I should like to clear up one point for the good name of my hon. Friend the Member for Lewisham, South (Mr. Carol Johnson). He said in Committee, in not voting for the Amendment, that the Minister of State had gone more than half way to meet the argument put forward. The other half was the Minister's promise to look at certain aspects that had been raised, and we have done this.

I regret to inform the hon. Member for Cornwall, North (Mr. Pardoe) that we find insuperable difficulties in the way of carrying out both the suggestion in the Bill and his proposals for Clause 8. First, it is extremely difficult in the instalment method to safeguard against the misuse of public funds. If repayment were required in the event of the hotel not being completed or, when completed, not complying with the requirements of the grant, the tourist boards would probably be in the position of unsecured creditors, and if things went wrong they would be in a disadvantageous position in relation to other creditors.

Mr. Emery

How would the Government be in a different position from commercial undertakings advancing money to meet set payments? The banks make certain that they are not unsecured creditors. How are the Government in a different position from the banks, which make part-payment to meet ordinary building contracts in the same circumstances?

Mr. Buchan

We are concerned with the public purse. In making such a loan a bank would have to carry out from point to point and from customer to customer the right kind of examination of the customer's viability. We are offering 20 per cent. This removes the reason for the payment of instalments, because of the existence of an amount of capital. If we were to do what the hon. Gentleman suggested, the boards would have to examine the creditworthiness of each applicant and look at the viability of each project.

We have been told in Committee and here that we must leave the industry to private enterprise, yet here the Opposition want to involve us in an authoritarian requirement that the boards shall be strictly satisfied on the nature and good prospects of a hotel's completion. Under Part II it would be an intolerable burden on the tourist boards. There would be enormous delay in making grants and loans if the boards were to carry out viability studies for such projects on every single occasion.

10.30 p.m.

Another point of difficulty is that the board before making the grant would have to be satisfied that the hotel complied or would comply with the requirements of the Bill. We remember discussing this in Committee, and the number of criteria which are laid down. Before the hotel was complete, the board would have had to be sure it satisfied the requirements of the Bill, not only as to physical characteristics but in the mode of operation—how the hotel would be run—and, if the grant were to be paid by instalments, the board would have to rely merely on undertakings given by the applicant, and might well feel it could not be satisfied with those without detailed investigation, amounting almost to investigation of the character standing of the applicant.

The next point was raised first, I think, by the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) and then by others, on the financial side. I have taken his point. He wants me to make sure that the Chancellor knows what we are doing in this Bill. Of course the Chancellor knows what we are doing in this Bill. However, I have taken note of the hon. Member's interesting point, whether we should regard this as a priority category, as with exporting industries. I will personally follow up the pressure he has put on this and have a look at that kind of equality of treatment in this way to see what thinking can be done on it.

On the financial side, we have to remember that we are dealing with a 20 per cent. grant. In other words, there is no reason why progress payment should not be made from the capital which the person providing the hotel has in any event to contribute. He has to have at least 80 per cent. of the eligible cost of the project. Progress payments of one kind and another are unlikely to exceed this proportion of the total cost. In most construction, payments are not paid to the contractor till some time after completion, and therefore I think the necessity is in any case not present when it is a 20 per cent. grant which is involved. If the person providing the hotel is unable to find the whole or the balance of the capital, loans are available under Clause 14, and loans can be made by instalments. In any case, of course, it would involve examination of creditworthiness, viability, and so on.

It seems to me that there is an absolute, coherent, and incontestable argument against retention in the Bill of the Amendment made to it in Committee and the inclusion in the Bill as it now stands of the point made by the hon. Member for Cornwall, North.

Many hon. Members raised the question of delay. It is always delays by public bodies which hon. Members are worried about. Any payments will be subject to exactly the same kind of thing which happens in relations between industry and the Board of Trade and I.D.C.s. What would cause delay would be to make them subject to a viability study in order that the board could pay by instalments as asked for here. The Bill as it stands and the Amendment now proposed would bring about delay rather than the speed and urgency which, it is said, are desired. We want this operation to be done quickly.

Amendment agreed to.

Mr. Buchan

I beg to move Amendment No. 49 in page 6, line 29, leave out 'five' and insert 'ten'.

Mr. Deputy Speaker (Mr. Harry Gourlay)

With this Amendment we can discuss Amendment No. 52, standing in the name of the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis), in page 7, line 21, leave out 'five' and insert 'three'.

Mr. Buchan

The House will recall that our original proposals for a scheme of assistance to hotels, outlined in the White Paper "Hotel Development Incentives" was limited to hotels which will have at least 10 letting bedrooms after completion of the work for which grant is claimed. This requirement was reflected in the Bill as originally drafted. During discussion in Committee, an Amendment to reduce the lower limit from 10 to five letting bedrooms was carried. The Government cannot, however, accept this very considerable extension of the scope of the Hotel Development Incentives Scheme and Amendment No. 49 would accordingly restore the 10 bedroom minimum requirement.

I remind the House of the purpose of this assistance. We have stressed throughout that it is an immediate and temporary scheme. We need a substantial increase in hotel accommodation, especially hotel accommodation for overseas visitors. That was the starting point. During 1968, the number of visits to the United Kingdom by people from other countries rose to nearly 5 million. During the first four months of this year, the number of foreign visitors arriving in this country was 740,000, an increase of 20 per cent. on the first four months of last year. We could not secure that very large increase in accommodation needed to deal with this situation with a scheme in which the resources were devoted to encouraging the provision of bedrooms in penny numbers.

We want to encourage the expansion of accommodation and we have heard the argument, indeed, that the 10 bedroom minimum is a modest enough target as it is. We would have preferred in some ways a higher figure but did not adopt one because of the problems this might have raised in rural areas. It might have impeded the development of accommodation in rural areas. There are certainly difficulties in relation to that kind of development but a five bedroom limit is no target at all.

It is reasonable to say that, at the 10 bedroom level, such a hotel represents a full-time business, even though a small one, requiring some staff, if only part-time, in order to operate efficiently and to supply reasonable visitor needs. If we were to accept the lower limit of five bedrooms, we would face the tourist boards with a very difficult problem. There would be the genuine hotel or guest house on the one hand and the private house taking in summer visitors as a sideline on the other. This was the background of much discussion in Committee. Studies carried out in the South-West showed the difficulties of making this distinction in the case of very small establishments. Every hon. Member knows the kind of difficulties involved.

Mr. Costain

The hon. Gentleman has referred to five-bedroom hotels. Is the grant to be given for five extra bedrooms? Does he really mean a 15-bedroom hotel with five extra bedrooms on the original 10? Or five extra bedrooms on the original 10?

Mr. Buchan

On that basis it would be a 10-bedroom hotel. There is a demarcation line between the two types of property, but we accept how useful is the supplementary sideline accommodation. In some ways, it is one of the amenities of our tourist trade, but it is not the purpose of that scheme to subsidise it. We have made clear the kind of hotel accommodation we want.

In one way, the smaller establishment will still benefit. A hotel which has five bedrooms at present will be able to qualify for extension grant under Clause 8 by building on five more bedrooms. I am sorry that I misunderstood the point raised by the hon. Member for Folkestone and Hythe (Mr. Costain). If a five-bedroom hotel extends to 10 bedrooms, it will benefit. If that involves the enlarging of the catering side, the lounge and so forth, the extra expenditure on these facilities will also count for grant.

This is a short-term scheme. In the present priorities, the Government could not justify a scheme designed to devote considerable resources—and they are considerable—of money and manpower to the assistance of very small projects which could not make a substantial contribution to the urgent need for more hotel accommodation.

Mr. Hall-Davis

Will the Minister have another look at the fact that Clause 7 not only governs grants under Clause 8 but under Clause 9 too? Clause 9 relates not to the provision of additional bedrooms but to the installation of fixed equipment specified in Schedule 3. The provision of a 20 per cent. grant for fixed equipment, such as additional bathrooms, lavatory fittings and central heating, would go some way to compensate for the withdrawal of investment allowances, which hit the smaller hotel establishment so hard.

There is a strong case for having a different limit for the number of bedrooms as the qualification for grants for extensions and additions and the installation of new fixed equipment. I take the point, reluctantly, about disqualification for grant in relation to new hotel bedrooms. There are many hotels with six, seven, eight or nine bedrooms which would benefit from a grant to assist them install equipment set out in the Schedule. I hope that when the Government introduce a further Bill, or in another place, they will look hard at the fact that Clauses 8 and 9 relate to two entirely different sorts of expenditure, and there may be a case for having different qualifications governing the expenditure under them.

Mr. Gower

One of the useful improvements which we effected in Committee was a reduction from ten to five in respect of the number of new bedrooms. When the Minister says that this is unduly low I would point out that there is still preserved in the Bill a minimum requirement of 25 in the Greater London area. Ministers are already adopting a "metropolitan" attitude to these problems. They think in terms of the big developments, which are undoubtedly very useful, but if we look for dynamic growth in the industry we must look beyond the traditional areas of Greater London and the fashionable resorts. We can foresee much more spectacular growth, proportionately, in places like the Lake District, East Anglia, the Broads and parts of the Thames and Scotland and Wales, which have not been fashionable in the past.

It is in these areas where we can hope for much more useful local growth, perhaps in the form of numerous small units. I cannot see why the Minister should suggest that only by having a small number of large developments can we get dynamic growth. Surely significant and rapid growth could be achieved by a larger number of small developments dispersed throughout the country? It would be far more healthy for the industry if that were the case. It has been one of the weaknesses of the industry that benefits accrued to limited areas, often only London, and seldom to other parts of the United Kingdom. It would be retrograde to reverse the most useful alteration we effected in Committee, reducing the requirement outside Greater London to five bedrooms. It may seem a small matter to the Minister, but I assure him that in some parts of the United Kingdom an additional five bedrooms in a small hotel or in a public house providing residential accommodation is a most useful addition and could lead to further future development. I hope that the Government will have second thoughts about the Amendment.

10.45 p.m.

Mr. Pardoe

I appreciate the reasonableness of having a minimum level below which grant shall not be paid. I know of people who have come to Cornwall from the North who have said to me, "I have three bedrooms to let and cannot make a living." My answer has been, "You do not expect to make a living with three bedrooms. You may be able to use the money to pay the rent." Probably 10 bedrooms is too low a level at which to start.

There are certain anomalies involved, and I hope that the Minister will check my mathematics. If one starts with no hotel at all, with no bedrooms, and then builds 10 bedrooms, I assume that one is eligible for grant. If one starts off with five bedrooms and then adds five bedrooms, one is eligible for grant on both counts. But if one starts with eight existing bedrooms and adds four to bring the number of bedrooms up to 12, one gets no grant although one has more bedrooms. Although 12 bedrooms make a more economically viable unit than 10 bedrooms, I am perplexed that in the last example grant should not be payable.

On the point that was raised about the application of the regulation to Clause 9, I am advised by hoteliers in Cornwall that the minimum of £1,000 for fixed equipment is unrealistic. In Cornwall it is unlikely that the fixed equipment in five bedrooms would amount to £1,000. It might amount to that figure in London at plumbing and building prices obtaining in the capital, but that would not be the figure in Cornwall. A figure of £500 would be a more reasonable level on that account.

Mr. Evelyn King

I must contest what has been said on the matter of principle, and would also refer to a point of ambiguity.

It has been said that that provision might not help rural areas. I suggest that it certainly will help them. I am concerned with places a little different from rural areas. The place that is most in my mind in this connection is Weymouth, which is typical of similar places.

Weymouth in winter has a population of something like 40,000. In summer it increases possibly to 110,000 or 120,000. I have not the precise figure in my head, but I should not be surprised to learn that of the additional 60,000 or 70,000 people who go into the area in summer probably half go into hotels with less than 10 bedrooms. It is not a rural problem. It is a problem that affects every seaside place which is dependent on the tourist industry. Nowhere more than in Weymouth is the industry urged to modernise and to grow. The Clause has been referred to as a metropolitan clause. It is certainly a disappointing one to the people of Weymouth and similar places.

The Minister did not reply to the points made about amenity. The situation is most ambiguous. The provision refers to a hotel with not less than five bedrooms, but the operative words are "as from its opening". A hotel with five bedrooms which proposed to have nine bedrooms would not be eligible. I do not know what will happen to a hotel with five bedrooms which proposes to extend to ten or twelve bedrooms. I hope that the Minister will clear the point. I should not have thought that Clause 8 over-rode Clause 7. Judging from the opening words of Clause 8, certainly it does not override Clause 7. I hope that the hon. Gentleman will have an opportunity to answer that point.

There will be terriffic disappointment with the Bill throughout seaside resorts on the South Coast which are small in size but immensely important to those who live in them—

Mr. Deputy Speaker

Order. We are not discussing the Bill. We are discussing an Amendment which is before the House.

Mr. King

With respect, what I said was directly relevant to the Amendment. I was pointing out the fatal results of confining the benefits of the Bill to the larger places, and it is with them that the Amendment deals specifically.

I hope that the Minister will answer the question as it should be answered.

Mr. Rees-Davies

We had a very full debate in Committee about the number of letting bedrooms which should qualify for grant, and many hon. Gentlemen opposite found the arguments persuasive. On this Amendment, we defeated the Government in Committee and, as a result, reduced the number of qualification bedrooms from 10 to five. I do not think that we would have succeeded in doing that unless we had been appealing to hon. Gentlemen opposite on a matter which they also recognised as having a very special argument.

In Committee, the Government's argument was one solely of increased finance. But it is quite clear that it is essential to create the right market for mergers in small hotels. If it is desirable for small hotels to merge, those with five or six bedrooms must be given every opportunity to increase their bedrooms to 10 or 12. There is no reason why they should not be able to achieve that objective, providing that we decide that the lower criteria shall be five instead of 10.

This is not a matter which affects only seaside towns. In the Lake District and other parts of the countryside the great majority of small hotels have between five and 10 letting bedrooms. Two requests are made of them. The first is to increase the number of bedrooms overall, and that is of the greatest importance if we are to have the diversification of tourist traffic from overseas throughout the nation. We are seeking to encourage British people to take their holidays at home and to attract overseas visitors, and we want them all to go far and wide, whether it be to Thanet, Cornwall, Aberystwyth, Scotland, or the Lake District. They will need small modern hotels. For a hotel with eight or 10 bedrooms, it will be necessary to convert some into modern bathrooms and then extend. It is when such an establishment extends that it is met with the position that, as from opening, it must have the qualification of 10 bedrooms. Therefore, it is important to have the lower limit in order to secure the expansion sought by the Government in the Bill.

Any further argument would be repetitive. There are two points: the mergers which are essential, and the modernisation which is necessary. If we are to achieve an effective pattern throughout the country, we must encourage the small hotel to grow.

The House will be taking a retrograde step if it overthrows the careful concern, thought and vote of the Committee upstairs.

Mr. Buchan

With the leave of the House. I intervene only briefly because I deployed my argument at the beginning.

I do not think that we can describe this as a metropolitan Clause, which was the description given to it by the hon. Member for Dorset, South (Mr. Evelyn King). We make the clear distinction that in the Greater London area the minimum requirement will be 25 bedrooms. We make this clear distinction, so in that sense it is not a metropolitan Clause.

We are aware of the importance and value of the smaller hotels and the importance and value of the merger concept put forward by the hon. Member for the Isle of Thanet (Mr. Rees-Davies). But we are facing a situation in which we have to allocate our resources most intelligently. In this respect, my hon. Friend, in Committee, said: Given that there are limits on public expenditure and that we cannot expect a vast expenditure under the Bill, what are the priorities?"—[OFFICIAL REPORT, 15th April, 1969; Standing Committee E, c. 338.] At that time I noted that there was widespread agreement that this was the nub of the problem. Clearly, expansion of that kind will impose limitations upon other aspects of the scheme. I am pleased that hon. Gentlemen opposite are so enthusiastic in their desire for the expansion of public expenditure, but this is the consequence.

I accept that there will be the kind of anomaly suggested by the hon. Member for Cornwall, North (Mr. Pardoe). But we are saying that criteria have to be laid down to bring about expansion. Therefore, we think that it is correct that there should be a greater expansion figure than five and that it should be related to the business type of hotel which can create the accommodation that is needed now. The figure of 10 has its origins in this business sense.

I recognise that on the borders there will be apparent anomalies, but this is not a real anomaly because we are laying down as the minimum expansion five bedrooms. In this case it does not meet the criteria of expansion. This is the reason for rejecting it.

Mr. Evelyn King

Before the Minister sits down—

Mr. Buchan

I have finished.

Mr. Kingrose—

Mr. Deputy Speaker

Order. The Minister has finished.

Amendment agreed to.

Mr. William Rodgers

I beg to move Amendment No. 50, in page 6, leave out lines 33 to 41 and insert: (b) that breakfast and an evening meal are provided on the premises for persons staying at the hotel.

Mr. Deputy Speaker

With this Amendment it might be convenient to discuss the Amendment to the Amendment, to leave out 'provided on the premises' and insert 'available on request'.

Amendment No. 47, in page 6, line 25, at beginning insert: 'Except in the case of an establishment recognised by a Tourist Board as a self-catering establishment, which need not comply with paragraphs (d) and (e) of this subsection'. Amendment No. 58, in page 13, line 37, Clause 16, at end insert: '"hotel" includes a motel or self-catering establishment'. and Amendment No. 93, in page 13, line 45, Clause 16, at end insert: '"provided", in relation to any meal, means that such meal shall be available on request at reasonable hours for the provision of such meal'.

Mr. Rodgers

Amendment No. 50 restores the Bill to the form which we felt was most suitable.

Firstly, I want to make one point which repeats what was said by my hon. Friend in dealing with Amendment No. 49. It has been said today, as was said in Committee, that although public funds are being made available, they are certainly not available in unlimited amounts to replace necessary and desirable private investment.

The hon. Member for Oswestry (Mr. Biffen) emphasised the importance of leaving it to the private investor and not introducing public capital because, as the hon. Member for Yeovil (Mr. Peyton) said, sometimes the risk is greater.

The object of the Bill is not to provide funds of an unlimited kind to all those who might provide accommodation. The specific purpose is to put the money where we judge it is most needed. I emphasise that point, which I made in Committee, because we are to some extent working in the dark.

11.0 p.m.

The information that we have about the tourist industry is limited. We hope that we shall obtain more as a result of the Bill. It is a speculative judgment about what tourists need most. Our best judgment on the available evidence is that what people going to hotels, perhaps with their families, need most is a certain sort of accommodation which is not being provided. Our job is not to do with public funds what the private investor can do. Our job is not to provide accommodation simply because there is some need for it. Our job is to put the money where it is most needed. We take the view that it is most important that breakfast and an evening meal should be provided on the premises for people staying at an hotel.

I emphasise again that that does not mean that self-catering hotels do not have a rôle to play. It does not mean that the hotel industry is not changing. But here and now, for a short scheme, as a shot-in-the-arm, our best judgment is that this is where the money is most needed. No evidence has been produced to show that we are wrong. If the money was unlimited, if public expenditure was of no account to the Opposition, or to us, either, we might consider extending the scheme to provide grants and loans for anybody who would benefit from them, for anybody who would like them. But, given limited resources, our objective is to put them where they are most needed, and the purpose of the Amendment is to ensure that this happens.

Mr. Gower

Have the Government made any inquiries into the proportion of visitors to hotels, particularly in London, who take their evening meal in the hotel? I imagine that the figure is quite small.

Mr. Rodgers

We have made some inquiries, but, as I have said, I cannot put my hand on my heart and say that a certain proportion do, and that over the next few years the proportion may not decline. It may do so. In Committee we talked about the family man who turns up with his family at an hotel at eight o'clock at night. He wants to settle down. He wants a meal. Unless we make this provision, we may find that we are helping to put money into accommodation which will be built in any case, and, secondly, that we will not meet the demand as we see it.

Mr. Rees-Davies

This is contrary to what the Minister said in Committee. He said then: The hon. Gentleman had an important point when he was talking about the meaning of 'availability' and asking whether only hotels which, as it were, provided an evening meal as a part of a contract, with an all-inclusive charge, would be eligible. This is not the case, and I would agree with him that it would be unreasonable to make as a condition of help under the Bill that those who stayed at such hotels had to eat meals which they might not want."—[OFFICIAL REPORT, Standing Committee E; 17th April, 1969, c. 375–6.] Surely the hon. Gentleman will concede that the availability of meals is ample, and that one does not have to provide them?

Mr. Rodgers

I cannot concede that, though I realise that it is the burden of the Amendment to my proposed Amendment. I do not think it would be satisfactory if meals were brought in on a tray, as might be the case, or, alternatively, if people turned up at a hotel and were told that if they walked 100 yards down the street they could get a meal which would be charged on their bills. That would not be satisfactory.

I am not saying that some people may not be content with that. What I am saying is that, on the best assumptions that we can make, this will not meet the need where the need is greatest. I must put it to the hon. Gentleman that the effect of his proposed Amendment to my Amendment, that the words "provided on the premises" be omitted, would mean that meals could be provided at a cafe down the street, or brought in for the convenience of guests. In other words, we would not have an hotel as we know it now.

I concede that as time goes on it may well be that the need for accommodation will change. It may be that in two or three years' time there will be no wish to renew the provisions of Part II of the Bill. It may be that investment in hotels, which is growing rapidly, will have reached the point at which there will be no wish to use the powers given by the earlier part of the Bill to continue an hotel investment scheme. Alternatively, it may be that on the available evidence what the hon. Gentleman is now suggesting will most meet the need at that time.

Therefore, if there is to be a further scheme, it could be a scheme other than the scheme proposed here. But, that having been said, and considering that the provisions of the Bill and of this Clause are for a short period, I would ask the House to accept the Amendment in my name and to reject the others.

Mr. Costain

This Amendment is just typical Socialism. Whitehall knows best. Does not the Minister appreciate that there are many country hotels, and indeed hotels in towns, where the residents just do not want to have meals in the hotel? There may be in a village a very popular and well-known restaurant. They may have come to that village in order to stay at the hotel and go out to dinner in this special restaurant, and I can think of one in my constituency. Why should the Government say that the hotelier shall be compelled, if he accepts a grant, to prepare meals every night when he knows that the meals are not going to be eaten? Is he doing something to help pig food? It is really stupid. What will happen if he goes on cooking food that is never eaten, and for how many years must this go on before Whitehall sees sense? That is the point behind my Amendment, and surely the Minister must see the sense of it.

Mr. Pardoe

I want to say a few words about the extension of self-catering holidays, and the application which this has to this Amendment. I cannot see that the provision of an evening meal is a necessary one, or particularly in the case of the tremendous extension of self-catering holidays in the West Country, one that is applicable to that area in the least.

If I may make rather a semantic point, I see real difficulties about the problem of defining the words "evening meal." I happen to have had, in connection with the Licensing Act, the most appalling case which has run on for ages between one Newquay hotelier, the police and the justices, about what constitutes an evening meal.

The hotelier was serving chicken legs in a bar, and this apparently does not come within the terms of the supper licence. The whole case hinged on whether a chicken leg, even in the bar, was an evening meal or not.

The only definition, which arises out of a decision of the Lord Chief Justice in 1964, is that a meal under the terms of the Licensing Act constitutes a sandwich, a beetroot and pickles. That is the only case so far that has decided this. The Home Office, in correspondence with me, have quite naturally refused to interpret the law. I do not blame them for this. They are not entitled to do so. I found that the Act defines table meals, but makes no definition of what constitutes substantial refreshment.

I should like to know exactly what this Government Amendment means when it talks about an evening meal. Is it going to be satisfactory to provide a sandwich, a beetroot and pickles?

Mr. Rees-Davies

To me, one thing is plain, and that is that we have had a thoroughly unsatisfactory answer from the Minister with respect to this matter. I have not myself said this to him in the course of the debates that we had in the Standing Committee, nor indeed on the Floor of the House, but I will take a little time to develop the reason why I say it because Part II of the Bill deals with a problem as important as Part I, and although we come to the main burden and tenure of the arguments only on this series of Amendments, we have already debated this Bill for some eight hours yesterday and some five hours today. I will show why the Government proposal is unsatisfactory, certainly for the hotel industry.

To say that one can have the grant only if one provides breakfast and an evening meal—this is not a discretionary grant but an absolute one to which one is entitled—is not to lay down a definitive criterion. There is no obligation to provide a good quality breakfast and evening meal. The Bill does not say that one must provide a lounge or dining room, although that is what the Government are implying. It was wrong for the Minister to say that one could not receive the grant if one supplied an evening meal on a tray. Indeed, one can provide not only breakfast but an evening meal on a tray. The Government Amendment proposes to … leave out lines 33 to 41"— lines containing a sensible provision, to which I will refer and insert— (b) that breakfast and an evening meal are provided on the premises for persons staying at the hotel". It does not suggest that they must be in a separate part of the premises; which means that breakfast and an evening meal can be provided in the bedroom, which is on the premises, to persons staying at the hotel. Thus, by failing to listen to the arguments which my hon. Friends adduced in Committee and by obstinately wishing to reinsert the new subsection (b), the Government are being totally inflexible.

In Committee I drew attention to the position which obtains in modern England. Many people who stay in hotels outside London want breakfast but often do not want an evening meal, although they may wish to have the opportunity of obtaining an evening meal at a suitable place and to a suitable extent. For this reason my hon. Friends propose Amendment No. 93, which seeks to define "provided" for this purpose. The Amendment says: … insert 'provided' in relation to any meal, means that such meal shall be available on request at reasonable hours for the provision of such meal. The Government have indicated that they are not willing to accept our proposal for there being, on request, the provision of an evening meal as well as the statutory imposition of providing breakfast.

In any event, the Government should have left the Bill as it was, since the words which the Government seek to delete are: (b) that the persons staying in the accommodation are provided either with breakfast or with self catering facilities on the premises whereby they may easily obtain breakfast. … The Bill goes on to provide, with discretion to the tourist board concerned (c) that suitable provision is made both structurally and otherwise to ensure the provision of meals either on the premises or nearby or with self catering facilities in such manner as in all the circumstances the Tourist Board shall think fit. … After considerable debate, the Committee inserted those words for a number of reasons.

11.15 p.m.

There are four classes of accommodation with which we are concerned. The first, and the one of overwhelming importance to the Government's strategy, is the city or metropolitan hotel in London and the main cities where there is great demand for lower-priced accommodation. We want to avoid the provision of large lounges and dining rooms today, and those who have seen what has happened in France and on the continent generally—and in the United States—know full well that they do not provide any dining room at all. They provide first-class bedrooms, with bathrooms, and the opportunity to meet one's friends in the bedroom, and when one wants a meal it can be served in the bedroom or in an adjacent room nearby.

It is said that we want accommodation in London which is cheap. If so, then why waste money and space on this accommodation for dining? Why not use it for the modern bedrooms, thereby increasing the ever-growing demand for them?

Secondly, there are the country hotels and every hon. Member knows that the new ones being built are mostly motels. Whoever heard of a built-in restaurant being provided in those? All one needs is space for one's car, your bed, and your breakfast, and that can be provided, as it is, in some place in the grounds. Usually, it is a restaurant, and very often people prefer to go into the adjacent accommodation which may, or may not, be associated with the project.

Thirdly, there are the camps and, as an example, they have arranged at Butlin's for another 1,000 units in order to allow the Dutch operators coming in to fit in a considerable number of people. We have to remember that these people are on the move. They go from one Butlin camp to another. All they want is accommodation and breakfast, but not accommodation for an evening meal in the traditional sense and, so long as it is provided if needed, it is not necessary to have it as part of the contract.

Then, lastly, what about the large amount of self-catering facilities? If there is accommodation, why cannot we allow people to do their own catering if they so desire? We have not sufficient money for this dining accommodation which makes one think of the old Grand Hotel at Bournemouth, where one gets the orchestra as well. We want to go forward into the modern age, and the most unfortunate answer that the Minister has made in this part of our discussions was when he said that the information about this is scanty and meagre. It may be scanty and meagre in the Board of Trade, but it is not in the British Travel Association and it is not meagre among our leading hoteliers. If the Minister would care to discuss this with the leading hotels, the Trust Houses, the Maxwell Joseph group and so on, they would tell him that the day of the large lounge or restaurant has gone.

The way in which this Amendment is set may mean that these groups will get round it. I hope that they will because we want the maximum variety of good quality accommodation in this country. We shall not succeed in getting it—we shall not have the variety which we need—either by this Amendment or by what the Government want. We shall only succeed in damaging this industry by not giving it the opportunity, with speed and expedition, which would enable it to meet the competition of which others have spoken and which is absolutely essential for the development of the industry. We very much regret the Minister's rejection of the Amendments which were carried in Committee, and the fact that he has not even tried to meet us in the very limited manner through the Amendment which we tabled to his own Amendment. We are in a situation which we hope will be remedied before the Bill reaches the Statute Book.

Mr. William Rodgers

I have a great deal of sympathy with much of what the hon. Member for Isle of Thanet (Mr. Rees-Davies) said. He said that the hotel industry is changing and the needs of tomorrow may be different from those of today. But this Bill deals essentially with the situation as we judge it today. Any information which the B.T.A. has obtained is equally available to us in deciding what sort of accommodation is needed at present.

In a sense, he unwittingly gave the game away when he said that most new hotels are motels. The place in which to put public money is not where private finance is already providing accommodation but where, on the evidence available, more accommodation is needed. Private finance may be falling behind because the returns on capital are not enough. The purpose of the Amendment is to make it possible to put public money where there is evidence that it is most needed.

Mr. Rees-Davies

Trust Houses have recently established at Connemara in Eire a magnificent hotel with capital advantages bestowed by Eire. This has not been done in this country and there is little indication that Trust Houses would be willing to do so in the present position.

Mr. Rodgers

If the hon. Member suggests that there is not much motel development in this country I am surprised. Trust Houses announced good results last week and the motel industry is not doing badly. We want to put the money where it is most needed. One might logically argue that there should be no Part II to the Bill. However, so long as there is, there are limits to public expenditure and we have to narrow the area. I think we have done so in the right way and our Amendment should be accepted.

Amendment agreed to.