HC Deb 24 March 1969 vol 780 cc1175-82

10.4 p.m.

The Financial Secretary to the Treasury (Mr. Harold Lever)

I beg to move, That the New Towns (Scotland) Act 1968 National Loans Fund Substitution Order 1969, a draft of which was laid before this House on 28th February, be approved. The draft Order has a very long title, but what it does is brief, simple and completely uncontroversial, and I hope that the House will be able to agree to it speedily.

As the House will remember, the National Loans Act, 1968, removed from the Consolidated Fund most of the domestic lending transactions previously charged on that Fund and all the Government's borrowing transactions and brought them to the account of the National Loans Fund. The Treasury's borrowing powers, which were previously scattered over a variety of Statutes, were also consolidated and reframed into a single set of provisions in the National Loans Act.

These changes involved a number of Amendments of existing Acts, much simplifying the various time-honoured financial arrangements. It was hoped that all the necessary Amendments would be made in the National Loans Act, but it was realised that this might not happen, either through human error in combing through the vast amount of existing legislation going back into the last century, or because a Bill might be going through Parliament simultaneously with the National Loans Bill. As a result, it was impossible to make the required Amendments in time.

Section 20 of that Act, therefore, allowed Amendments which had not been made in the Act itself to be made by Order. Since they were Amendments, although minor and consequential ones, nevertheless it was felt proper to acquire approval in draft by this House before they could be made.

The House will be relieved to know that, so far, no cases of human error have been found. But there was one Bill which went through Parliament almost simultaneously with the National Loans Act——

Mr. Speaker

Order. The hon. Gentleman is coming to this Order, I hope.

Mr. Harold Lever

I am referring to this Order. It relates to an Act which went through Parliament almost simultaneously with the National Loans Act, so that the necessary Amendments could not be made in that Act itself and required this Order to be approved by the House. This became the New Towns (Scotland) Act, 1968, a consolidation Measure. The Acts being consolidated were amended in the National Loans Act, but the Act itself was not. It is for that reason that we require this Order.

This draft Order amends the New Towns (Scotland) Act, 1968, by substituting references to the National Loans Fund for references to the Consolidated Fund and by making certain related Amendments. The effect is that no longer will the charges resulting from that Act be charged to the Consolidated Fund, but according to the arrangements of the National Loans Act.

10.7 p.m.

Mr. Alick Buchanan-Smith (North Angus and Mearns)

We are grateful to the Financial Secretary for his technical explanation. On this Order, the emphasis has to lie more on the word "technical" than is the case with some other Orders.

While he has explained the background and why it has to be considered by the House tonight, it is only fair to register from this side of the House that the procedure which the Government have had to adopt is somewhat untidy. They find themselves having to amend a consolidation Measure, the New Towns (Scotland) Act, within a few months of its passing through the House. While we appreciate the hon. Gentleman's explanation, a case like this is not exactly an example of Parliamentary legislation at its best.

As the hon. Gentleman said, when the National Loans Bill was before the House, it was envisaged that there would be other legislation passing through the House at the same time which might be affected by it. I understand that that Bill and the New Towns (Scotland) Bill went through the House within the matter of a fortnight of each other. Surely it would not have been beyond the wit of the Treasury or Scottish Office to have seen that this was happening and either to have delayed the Public Loans Bill so that it could take account of this consolidation Measure, or to have speeded up the consolidation Measure so that it went through before the Public Loans Bill.

I am disturbed that this Order should be necessary. It indicates a lack of liaison between the Treasury and the Scottish Office. If there had been better planning in relation to this legislation, particularly in the timetabling of these Acts, the need for the Order might have been avoided.

Equally important is the fact that we constantly hear exhortations that the law should be simplified. I am not sure that this Order helps towards any simplification. Taking the case of someone in Scotland who does not have access to revised Statutes but who knows about the National Loans Fund, if such a person refers to the National Loans Act, he finds no reference to the New Towns (Scotland) Act. A person in that situation would not naturally look for an Order. He would look for an Amendment to an Act, and the first Act at which he would look would be the National Loans Act.

Mr. Harold Lever

I hope the hon. Gentleman has appreciated that the only amendment to the Act that is involved here is in the minor technical particular of charging matters, not to the Consolidated Fund, but to the National Loans Fund.

Mr. Buchanan-Smith

I appreciate that. I said at the beginning of my speech that this was a minor technical matter, but some people still read and try to follow Acts of Parliament, and I do not think that it will help them if we try to make things more difficult.

Does not the hon. Gentleman agree that it would have been better to have amended the National Loans Act rather than make the Amendment in this slightly untidy way by bringing in an Order? Had that been done, anyone who looked at the New Towns (Scotland) Act and at the National Loans Act would have found the Amendment in those two Statutes without having to look elsewhere for an amending Order. We appreciate, of course, that if an amending Act had been introduced it would have put a strain on the Parliamentary timetable, whereas the introduction of this Order makes things easier for the Government.

I turn, now, to the details of the Order, and in particular to the Schedule which amends Section 37(1) of the Scottish Act. I cannot see exactly how this Amendment fits in textually to that Act, and it would help considerably if the hon. Gentleman could explain this. I appreciate that the Amendment is the same as that which appears in Schedule 1 of the National Loans Act which amends the parallel new towns legislation for England and Wales, but is this really a tidy way of doing things? Would not it have been better and easier for the House and for people outside who have to use these Statutes if the amended text had been set out in full, rather than have this odd Amendment? I do not know whether this matter was questioned in relation to the English Act, but I do not see why we in Scotland should slavishly follow the form of the English and Welsh amendment. I do not see why there should not be a clearer and better Amendment to Scottish Statutes.

It might help the House if the hon. Gentleman could explain how the substitution of "National Loans Fund" for "Consolidated Fund" will affect the new town development corporation's officials and members in their dealings with the Treasury. It might make no difference, but it would be helpful to have the matter clarified.

I hope that the hon. Gentleman will explain what the rate of interest is to be. Section 37(1) of the Scottish Act is to be amended to read: Rate of interest to be fixed in accordance with National Loans Act 1968. At the moment the loan is made on such terms as may be approved by the Treasury". I should like the Minister to explain the effect of this change. I assume that the substitution of "National Loans Fund" for "Consolidated Fund" means that Section 5 of the National Loans Act will apply to advances. Under Section 5 of the National Loans Act it is implied that loans are to be made to new town development corporations at the full commercial rate. This was confirmed by speeches by the Financial Secretary and the Chief Secretary on Second Reading of the Bill on 11th December, 1967. This contrasts with what is said in the New Towns (Scotland) Act: such terms as may be approved by the Treasury. What difference is there in the rate of interest which can be charged to new towns and the terms and conditions laid down for them?

This is important at a time of high interest rates. It creates problems for new towns more than for established local authorities, because most of the new towns borrowings have taken place in recent years. It is particularly important for second and third generation new towns, second generation new towns such as Cumbernaud and third-generation new towns such as Irvine, which will have borrowed all their money in more recent years. It is important to know how they will be affected. We are looking with interest to the development of these new towns, particularly of Irvine, which we would not like to see hindered in any way by the high interest rates ruling at present.

The House would be grateful if the Financial Secretary could clear up the technical points in relation to how the amendment fits into the legislation which we are trying to amend and to the practical points of how this will work out in arrangements new towns have and the kind of rates of interest which they will be charged.

10.17 p.m.

Mr. Harold Lever

I ask leave to speak again in order to answer the questions put by the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith). I hope that it is in order to congratulate him on what I believe is his maiden appearance at the Opposition Dispatch Box. He has subjected this interesting subject to a very searching scrutiny.

How does the Order fit into the New Towns (Scotland) Act? The answer is that it does not fit into that Act but into the National Loans Act, in exactly the way the hon. Member would have liked. In effect, it has the same result as an amendment of that Act would have had, but, instead of it being incorporated in the National Loans Act, this is an Order made under the powers conferred by the Act and it takes effect exactly as if it were in the Act itself. If the hon. Member is disappointed that it is not statutorily enshrined in a place readily accessible to those who have an interest in these matters, he should know that there are card index arrangements which show that an Order has been made which has the effect of so startling a change as to alter the Government's accounting, and no one else's.

Under the old system these matters would be charged on the Consolidated Fund. It is a very exciting and interesting affair conducted in the bowels of the Treasury and the Bank of England. It means that instead of charging these matters to an account headed "Consolidated Fund" they will be charged on a sheet of paper headed "National Loans Fund". That is a matter of immense interest to occupants of the Treasury buildings, but it has not hitherto been thought to be of vital interest to others. If the hon. Member would like to question me more, I would prefer that we should do it as a duet rather than as a consultation involving other hon. Members.

Mr. Buchanan-Smith

While I appreciate the technical point about Government accounting, this still does not cover the point I asked. I cannot see how textually the amendment fits into Section 37(1) of the New Towns (Scotland) Act. I have referred to the English legislation. In that case, unfortunately, the revised Statute——

Mr. Speaker

Order. We cannot have a second speech.

Mr. Buchanan-Smith

—is not available in the Library. I am unable to see how that has been amended. If the hon. Gentleman cannot explain this now, perhaps he will do so later.

Mr. Lever

I shall be happy to add to my explanation later, if the hon. Gentleman wants it. I thought that I had explained to him that the Order does not amend the New Towns (Scotland) Act. It amends the impact of the National Loans Act so that it grips the New Towns (Scotland) Act so as to charge its monetary excursions in a ledger called "National Loans Fund" and not, as has hitherto been the case under that Act, in a sheet in a ledger headed "Consolidated Fund".

Mr. Graham Page (Crosby)

The Financial Secretary has said that the Order does not amend the New Towns (Scotland) Act. It specifically does so by Article 2. That was the complaint of my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith). The Order does not do what we expected—it does not amend the National Loans Act. It amends the wrong Act.

Mr. Lever

It does not technically amend either Act. It is an Order made under the powers conferred by the National Loans Act. The hon. Gentleman must be aware that there is no power in the National Loans Act to amend any other Act. It is a power which enables us to make an Order under the National Loans Act which will have an effect on other legislation in a particular way. I can only tell hon. Members that the way in which it acts is to transfer it from one ledger to another but without any other consequences which need worry hon. Members. If hon. Members are disquieted about this, I will follow it up with them more closely.

I have been asked two main questions—first, how far this change will affect dealings with the new town corporations in Scotland. The answer is that it will not. I have been asked, secondly, how far it will affect the rate of interest compared with the existing arrangements. The answer is that it will not. Hon. Members cannot have failed to notice that the only lending that can take place under the National Loans Act is on terms approved by the Treasury; and the terms approved by the Treasury would be the same in each case, so it will not have the smallest effect on borrowing rates. It is a purely technical accounting amendment so as to bring the whole system into order in a simplified way, a question which has been dealt with in detail. I urge hon. Members who are in doubt about this to read the debates, which were enthrallingly interesting, on the National Loans Act. I refer hon. Members in particular to the debates in Committee on that Act.

Question put and agreed to.

Resolved, That the New Towns (Scotland) Act 1968 National Loans Fund Substitution Order, 1969, a draft of which was laid before this House on 28th February, be approved.