HC Deb 26 January 1972 vol 829 cc1555-75

11.16 p.m.

The Financial Secretary to the Treasury (Mr. Patrick Jenkin)

I beg to move, That the Northern Ireland Loans (Increase of Limit) Order 1972, a draft of which was laid before this House on 20th December, be approved. The Order increases by a further £50 million the amount which is available for lending from the National Loans Fund to the Northern Ireland Government. The House will recollect that under the Finance Act, 1970, there was an original limit of £50 million on this lending, but the limit can be raised by the same amount on up to three occasions by order. Last April the House accepted the first of these orders which I moved, and during the debate on it, I indicated, in reply to a question from the right hon. Member for Cardiff, South-East (Mr. Callaghan), that it might be necessary to come back for a second order within the twelve-month; and so it has proved.

The Northern Ireland Government have not yet exhausted the whole of the £50 million made available under that order, but they are likely to do so fairly soon. In view of the uncertainties of the situation, we thought it desirable to seek Parliamentary approval for an increase in good time.

Also last April I indicated to the House the broad purposes for which the money is to be available, and I explained how those purposes are broadly settled between the Westminster and Stormont Governments. Since then we have had the report of the Cairncross review body, which recommended, among other things, that a finance corporation should be set up in order to help the Northern Ireland economy. The legislation setting this up will fall to be introduced into the Northern Ireland Parliament and has not yet been so introduced. Therefore, it is not possible for me to go into any great detail as to what will be involved, but it is envisaged that some of the money which passes from the National Loans Fund to the Northern Ireland Government under this Order may be made available to that finance corporation if and when it is set up. It is right to point out to the House that the scope for the spending of the money passed by these orders may in future be somewhat wider than it was when I spoke to the House on the last order.

The Order has been reported on by the Select Committee on Statutory Instruments. I commend it to the House. If hon. Members have any queries to raise, perhaps, if I catch your eye at the end of the debate, Mr. Deputy Speaker, I can deal with the questions in reply.

11.20 p.m.

Mr. Merlyn Rees (Leeds, South)

The House will not wish to deny the passage of the Order, but I wish to raise a number of issues which, given the great interest in Northern Ireland, should form part of the wider discussion which is taking place. It is important that we know more about the machinery of government between Westminster and Northern Ireland in respect of the National Loans Fund expenditure involved in the Order. There is much talk about the wider relationship between Westminster and Northern Ireland. Solutions have been offered in many documents and newspaper articles. It would assist the discussion of this question if we knew more about the financial relationship between Westminster and Northern Ireland.

On delving into the subject recently, I have been struck by the fact that, to obtain information about this relationship between the two Governments, it is necessary to look in many corners.

The Financial Secretary explained again this year that under the Finance Act, 1970, the borrowing powers were 15 million units, so to speak, but could be increased by order. Last year we had £50 million. This year we have another £50 million. I presume the time is coming when we shall have to look at the whole matter again, because we can have only one more bite at the cherry, and I question, whether this is the appropriate way of setting about it.

How is the required sum calculated? I know from experience that there is a direct line between the Home Department and Northern Ireland. Where does the Treasury come into it? Does the Treasury talk direct to Northern Ireland, or does it talk through the Home Office? In the Finance Acts, 1965 to 1969, the sum rose from £70 million to £120 million to £170 million. The figures are different as a result of the 1970 legislation. What bearing does an increase have on the macroneeds of United Kingdom finances, a major reason for establishing the National Loans Fund originally to finance the nationalised industries, local authorities, and even private bodies? Do the Government say that there are the overall needs of the United Kingdom but that, Northern Ireland being what it is, there shall be no relative limit?

Last February's issue of the accounts of the National Loans Fund states merely— Loan transactions appearing in the National Loans Fund account in respect of which no account is included in this volume. —and then it says "Northern Ireland" and gives the figure. In this form the accounts of the National Loans Fund do not tell one much about the finance of Northern Ireland. Why is there not a separate volume dealing with the finances of Northern Ireland?

Keeping within the rules of order on the National Loans Fund, it is helpful to consider why the finance should be in the form of loans. One could judge how much should be in the form of loans if the same document contained details of the Joint Exchequer Board's decision on the share of the national taxes that are given to Northern Ireland and if one also knew how much went to Northern Ireland in the form of agricultural subsidies, R.E.P., social services and—I am hesitant on this point because it has not been possible for me to check it—the extra money given, at least by the previous Administration as I recall, which came under the heading of Monies to relieve the present distress". If the finances of Northern Ireland were presented together we could consider, in particular, the question of loans from the National Loans Fund. Of course, it was right, as the previous Administration said, and as was reaffirmed by my right hon. Friend the Member for Cardiff, South-East (Mr. James Callaghan) in Command paper 4178, to cover the agreed capital requirements of Northern Ireland on a continual basis. It was difficult for Northern Ireland to raise these loans on the market.

To which "on-lending" purposes—that was the expression used by the Financial Secretary last year—are we agreeing tonight in approving this Order? It used to be the Northern Ireland Housing Trust and it used to be, and maybe it still is, because they are in a transitory position, new towns and local government. The Northern Ireland Housing Executive is taking over all these responsibilities. We are providing money tonight for the Electricity Board for Northern Ireland and also money for the Northern Ireland Transport Holding Co. This intrigues me because last night we abolished the Transport Holding Co. in this country. Does the Westminster Government have no say in how this money should be spent? I have looked at the Northern Ireland Transport Holding Company's accounts and its activities make most interesting reading. Do the Ulster Government simply ask for money for this company or do our Government refuse to provide it because we have abolished such a company here?

There is also the Northern Ireland Finance Corporation, which is another title for the Industrial Reorganisation Corporation. Do the Westminster Government suggest that because they have abolished the I.R.C. here, it would be foolish to have a similar lender of last resort in Northern Ireland?

Money is provided for education and rates and the Northern Ireland development programme. Do the Westminster Government get involved in any way in the development programme that has been announced? In arriving at the sum for which we are being asked, do they take into account, other than the monies "to relieve present distress", the amount of destruction that is taking place in Northern Ireland?

Is industrial development taken into account through the National Loans Fund? If not, why not? I ask because in the Report of the Shipbuilding Industry Board, a Westminster document of 2nd August, I find that grants were given to Harland and Wolff under Sections 3 and 5 of the 1967 Act. The board was ended at the end of last year. I accept that grants are involved, but how will the Westminster Government now provide the money for Harland and Wolff, given the demise of the board? Will that have any bearing on the monies we are being asked to vote?

Apparently the money we are to grant tonight must be spent on capital projects. I think I am using the words the Financial Secretary used last year. These projects are described in agreements between the two Governments. The hon. Gentleman also said last year that the Government do not specify but that the Northern Ireland Government specify certain broad categories. Where can we find out what those broad categories are? I have not been able to find them. They should be readily available.

There is, quite properly, a great deal of discussion here and in Northern Ireland about changes in the representation of Catholics and Protestants in Northern Ireland. In the discussions, which I presume are conducted by the Home Office, though the Treasury provides the money, is anything said about such matters? For example, when money is provided for the Electricity Board for Northern Ireland, is anything said about the number and type of people on the board? I am seeking not to make the sort of speech now that becomes involved in the delicate problems of Northern Ireland, but it was brought to my notice that none of the five members was a Catholic. I do not know whether that position has altered.

My last point has a bearing on the fact that we are providing money out of the National Loans Fund. By the signing during the past week of the Treaty of Accession in Brussels, both the United Kingdom and Eire—and, therefore, Northern Ireland and Eire—are in the same trading organisations. The Financial Secretary to the Treasury may not be able to explain the ramifications off the cuff, but do we have any comitment to report these sums of money from the National Loans Fund to Brussels? If so, as may well be the case in terms of macro decisions that I understood were under discussion, is there any question of co-ordination with other members of the Ten, as they will be, and in that case with Eire?

It might be a good idea, because I have notice from the Press during the last couple of days that the Prime Minister has expressed the view that if we had been in the European Economic Community in 1961, the Northern Ireland conflict would not have arisen; economic developments would have taken place which would have muted it. I simply ask whether, in terms of loans and, therefore, capital infusion into Northern Ireland, there could be any discussions as a result of our going into Europe in which the Eire Government would be involved.

There is much discussion about Northern Ireland. Financial support is vital. But why not let us have the information, by way of an annual report, over the whole spectrum so that we can come to a clearer decision about the need for this sort of money? I express the hope that before we meet again to discuss loans from the National Loans Fund to Northern Ireland—and at the present rate that might not be too far distant—we shall have heard news of major political steps which the Government have taken in that unhappy Province, because in discussing finance prosaically, as we are tonight, we cannot forget the major political problems that exist there.

11.37 p.m.

Mr. Rafton Pounder (Belfast, South)

I do not feel that this occasion can pass without saying two things. The first is to express sincere thanks and gratitude to Her Majesty's Government for increasing the borrowing powers of the Northern Ireland Government, particularly at this time. The Government have shown very considerable financial generosity to Northern Ireland, as the hon. Member for Leeds, South (Mr. Merlyn Rees) said. That financial assistance should be understood, acknowledged and appreciated.

As I understand the position, the £50 million which is the subject of the Order is for capital expenditure projects and developments in the Province. It is in no way earmarked for repairing the ravages of terrorism. Perhaps my hon. Friend the Financial Secretary will correct me if I read it wrongly. Nor do I assume that the £50 million which is suggested for the funding of the Cairn-cross Finance Corporation, if I may call it that, would necessarily automatically be the same amount as we are putting forward tonight, although anything that is left over from this £50 million may go to the funds of the new finance corporation when it is formed.

My second point concerns the capital expenditure on development projects for which the funding envisaged in the order will be used because, despite what may be claimed in certain quarters—that over the past three years of terrorism Northern Ireland has been brought to its knees—Ulster is getting on with the job, as I hope to show, and this underscores the timeliness of the order at this juncture.

When one thinks of Government funding in Northern Ireland, one inevitably thinks of the current tragic rate of unemployment of 8.9 per cent., or, to express it another way, 11 per cent. of the male population. Government finance can assist substantially in creating employment opportunities, and thereby reducing that awful figure of 8.9 per cent.

The Northern Ireland Government succeed in attracting investment other than that which comes directly from the Treasury, as the statistics for the last quarter of 1971 show. We attracted more money in that period than in the corresponding period of 1970—£7½ million in the last quarter of 1971.

I assume that some of the funding of this loan will go to the Local Economic Development Unit which was established this year under the aegis of the Ministry of Commerce. Its function is to promote small industrial projects in rural areas, and it has already created 800 jobs. On the job front, quoting statistics of the last quarter of 1971 against the last quarter of 1969, the number of jobs created in that three-month period was only 10 fewer in 1971 than in 1969.

The Minister of Finance in Stormont last week outlined capital expenditure of £18½ million, which I assume in part to be the residue of the previous £50 million loan granted by Parliament and in part the sum which I hope will be granted tonight. I presume this will also be used for apprenticeship training, which has increased by 25 per cent. in the last year.

Reference has been made to the Housing Trust, now the Housing Executive. In the last calendar year Northern Ireland built more houses than at any time in its history. A comparative figure for England would be a rate of 450,000 houses a year, which I am told by English standards is a fairly substantial number.

I apologise for having used more statistics in one speech than in any of the speeches I have made since I first came here. This being a financial order, it is important not only to get on the record the purposes for which one hopes the money will be used, but also to give some idea of the purposes for which previous loan funds have been used.

When one looks at the five-year development programme for which the last £50 million was in part used, one finds that in its first year, 1971, school building, health and welfare and industrial training programmes are right on target. Whereas industrial production in the United Kingdom has increased by 2.6 per cent. in the last two years, in Northern Ireland the increase has been 11 per cent. and in manufacturing industry 14 per cent.

This £50 million which we hope the House will grant is most welcome and timely, and will be of enormous assistance. It is well known that high unemployment inevitably contributes to community troubles. Despite the bombs and bullets of the terrorists and the drenching publicity which Northern Ireland has had to endure, it can be seen that the silent majority is getting on with the job of developing Ulster's economy, and this £50 million injection will be most welcome. I warmly and whole-heartedly support the Order.

11.43 p.m.

Mr. A. E. P. Duffy (Sheffield, Attercliffe)

Having listened to some passages of the speech of the hon. Member for Belfast, South (Mr. Pounder), one might be forgiven for wondering why the House thinks it necessary to make available so much more money to Northern Ireland. I welcome the increase although, like my hon. Friend the Member for Leeds, South (Mr. Merlyn Rees), since such a large sum of money is involved, I want to raise some questions on the use to which it will be put.

I echo the question put by my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) to the Financial Secretary last year about how the money is being spent and how it is being accounted for. The Financial Secretary has come to the House tonight no better equipped to answer that question than he was last year. He said last year—and this is more than he has said tonight: … one must look to publications of the Northern Ireland Government to find out how the money has been spent. It is not detailed in this country. I am told that there are publications, in much the same way as we would have for our National Loans Fund, detailing the expenditure which the Northern Ireland Government have made drawing on the money they have borrowed."—[OFFICIAL REPORT, 6th April, 1971; Vol. 815, c. 408.] He said that he indicated the broad purposes last year. They were very broad and I hope that he will have more to say tonight, not merely about how the money is being spent but about the priorities. The hon. Member for Antrim, South (Mr. Molyneux) in the discussion last year on a similar order spoke for less than a minute, and uttered fewer than 50 words. The only two objects of expenditure he thought necessary for the money then being made available were the motorway system and the development of Belfast Airport. This was given the state of affairs in Northern Ireland and the condition of the people there. This is not a condition to which they have been suddenly reduced but is a condition which for many has been a permanent state of affairs.

Mr. Pounder

As I was present when my hon. Friend the Member for Antrim, South (Mr. Molyneux) made that speech, I should tell the hon. Gentleman—and I know he is not trying to be unfair—that the two points my hon. Friend raised were both constituency matters.

Mr. Duffy

It seems remarkable that his hon. Friend could not have gone on to say a further word about other purposes to which the money might be devoted. I cannot find in the speech of the hon. Gentleman a year ago much evidence of urgency. If last year's loan and its distribution is any guide, then half of the monies now being made available will go to local authorities. Is there not a case for a larger share to go to the housing authority? Given the reference of my hon. Friend the Leader of the Opposition on Monday to the setting up of the I.R.C., I am tempted to ask whether some of this money will go to the I.R.C., and how much will go to the development programme. How much might yet go to investment grants, as we are led to understand there is a considerable attachment in Northern Ireland to the continued use of these?

Does the Minister envisage some of this money being made available to Harland and Wolff'? I raise these matters for three reasons. First because it could mean that there will be less money available for local authorities and therefore for infrastructure and consequently less money to relieve the social conditions of the people; and, secondly, it could be that we are being asked to make money available for purposes which conflict with Government policy. Thirdly, it could be that we are being asked by the Government to support policies which will seem to be in conflict with those of the E.E.C.

The 96th annual report of the Public Works Loan Board for 1970–71 seems to suggest that the recipient local authorities in Northern Ireland are in a highly favourable position compared with those in this country. My right hon. Friend the Leader of the Opposition on Monday had something to say on that. My right hon. Friend said: We have hard-hit regions in England and Wales and Scotland which are entitled to the same remedies."—[OFFICIAL REPORT, 24th January, 1972; Vol. 829, c. 1011.] That is certainly true of my own division. Attercliffe Common, which runs through the centre of the constituency, reminds me of the Falls Road, which I know very well. The whole of South Yorkshire has social and industrial problems which are every bit as urgent as those of any part of Northern Ireland outside the Falls Road area of Belfast and the Bogside area of Derry.

When hon. Members talk about unemployment of just under 9 per cent. in Northern Ireland, I wonder whether they know that there are parts of South Yorkshire where unemployment is higher than that and has been for the last two or three years.

The days of open-ended British financial commitment to Northern Ireland are over. The Finance Act, 1970, provides for a further order, similar to this, presumably for a bigger tranche next time. That order will be subject to much more scrutiny than it has been possible to give to this. It may not receive the same warm welcome. It may even come in for some opposition unless there is some evidence during the next few months that the purposes to which this money will be devoted are broadly consistent not only with the bringing about of peace and reconciliation in Northern Ireland but also with the promotion of constructive policies of the kind described by the Leader of the Opposition two months ago.

11.53 p.m.

Mr. J. Bruce-Gardyne (South Angus)

I share the anxieties expressed by hon. Members opposite, particularly the hon. Member for Leeds, South (Mr. Merlyn Rees) about the extent to which we may, in this order, be abrogating our financial responsibilities in this matter. I do not want to be a "macro" like the hon. Member for Leeds, South: I shall be a "micro". I am concerned with a specific aspect of the order.

It may seem strange that an hon. Member representing a Scottish constituency should be concerned about this, but my hon. Friend explained that one of the purposes for which these funds could be used was the establishment of the Northern Ireland Finance Corporation, which was announced after the publication of the Cairncross Report last year. I am by no means an enthusiast for the idea of this corporation. It was described at the time of its announcement as a Northern Ireland I.R.C.

I was delighted that my right hon. Friends decided to enter that disreputable body on this side of St. George's Channel, and I believe it is a mistake to establish it on the other side. However, I am sure that you, Mr. Deputy Speaker, would become impatient with me if I were to go into the demerits of the establishment of this retrograde body on the other side of St. George's Channel, so I do not intend to do so.

What I am concerned about is an aspect of the accountability of this body. I understand that the Northern Ireland Finance Corporation when set up will be answerable exclusively to the Northern Ireland Government. Therefore, once we vote funds to provide for the establishment of this body, we in this House will in effect disembarrass ourselves of responsibility for how these funds are spent.

There is one aspect of this which concerns me not a little. It has been drawn to my attention that there is functioning in Northern Ireland at present a company which is in direct competition with a company operating in my own constituency. This is why I am participating in this debate. I am not mentioning names, though I think my hon. Friend the Financial Secretary has the name of the company concerned, for reasons which I think will become clear to the House and because my essential argument concerns not the point but the general point. I use this instance of the anxiety which arose in my constituency simply to illustrate a general point.

The particular point is that a company in my constituency is in direct competition with a company in Northern Ireland—a company which, as I understand it, could be a recipient of funds from this new body which it is proposed to set up in whole or in part with funds which this House will vote tonight. I understand that this company in Northern Ireland has for several years quoted substantially lower prices for its products than all its competitors in the rest of the United Kingdom. I should be the last to complain about that. I would ask, "Why not?". But the company in Northern Ireland traded at a substantial loss in 1966, it has traded at a substantial loss in 1970, and again on the latest accounts in the first six months of 1971. I am advised—and this is one reason I do not quote the names concerned—that technically it may well have been in a position of bankruptcy. Last year I understand that it negotiated a loan from the Northern Ireland Government. It is obviously a potential recipient—and I emphasise the word "potential"—of loans from the new Northern Ireland Finance Corporation.

We all realise the very real and special problems in Northern Ireland and, as the hon. Member for Sheffield, Attercliffe (Mr. Duffy) pointed out, there is a strong case for reducing levels of unemployment in Northern Ireland to assist with the problems in the Province. But I suggest that it would be intolerable if this finance corporation, set up with funds which we vote tonight, were to help finance a company which, in a technical sense at any rate, has been bankrupt and thereby enable it to undersell and even perhaps to induce the closure of a viable company in the same industry in my constituency which happens to operate in a burgh where the level of unemployment is at present higher than it is in Northern Ireland. It seems to me that that is not an acceptable possibility.

When my right hon. Friend the Home Secretary announced the prospective establishment of a Northern Ireland Finance Corporation at the end of November, he said that it would be …a finance corporation which will offer help over the next three years to undertakings which have reasonable long-term prospects but are faced with particular needs at present."—[OFFICIAL REPORT, 29th November, 1971: Vol. 827, c. 50.] It is an entirely acceptable proposition that companies assisted by this finance corporation should be those which have particular needs resulting from the emergency situation in Northern Ireland but which also clearly have reasonable long-term prospects. All that I ask my hon. Friend is whether he can give us an assurance that Her Majesty's Government will make it their business to ensure that the funds that we vote tonight are not channelled into companies which do not have "reasonable long-term prospects", thereby undermining the viability of competitive firms in the United Kingdom which have reasonable long-term prospects.

I believe that that is not an unreasonable undertaking to request from the Government at a time when we are voting funds for the purpose in part of establishing this corporation which, once established, will be essentially outwith the control of this House.

12.3 a.m.

Mr. Patrick Jenkin

This order has been generally welcomed on both sides of the House, perhaps with the exception of the hon. Member for Sheffield, Attercliffe (Mr. Duffy), who put to us a somewhat remarkable proposition when he said that the days of open-ended finance for Northern Ireland were over. I do not know when he thought that they ever existed.

Mr. Duffy

I did not say that. I said that the days of open-ended British financial commitment to Northern Ireland were over. It is well known that that is the view of the Prime Minister.

Mr. Jenkin

I took down the hon. Gentleman's words carefully because what he said struck me as being a very remarkable proposition. The financial commitment to Northern Ireland has never been open-ended. So far as we are discussing finance available under Section 35 of the Finance Act, 1970, passed when the previous Administration were in power, and by orders made under Section 35, it is most specifically limited to £50 million under the Act and no more than three subsequent tranches of £50 million each. I cannot see how anyone making a pretence to understand the English language can describe that as "open-ended".

More serious is the fact that I believe that the hon. Gentleman is speaking only for himself when he challenges the sums that we are discussing tonight of capital spending in Northern Ireland. I wonder whether the view which he has expressed is shared by the right hon. Member for Cardiff, South-East (Mr. Callaghan) or, indeed, the hon. Member for Leeds, South (Mr. Merlyn Rees) who followed me earlier in the debate.

The truth—it needs to be stated frequently—is that Northern Ireland is part of the United Kingdom, and the United Kingdom has a unified capital market. The inhabitants of Northern Ireland invest in British Government securities and in many of the National Savings media which feed the National Loans Fund. Therefore, it is wholly appropriate that the Northern Ireland Government should be able to borrow from the National Loans Fund.

The hon. Member for Leeds, South asked a formidable number of questions arising from what is a very short order. However, I will try to answer his points. If there are any of the more technical matters which I do not answer tonight, I will study HANSARD the day after tomorrow and perhaps write to him further.

The hon. Gentleman asked about the machinery of the financial relationship between Westminster and Stormont. This, as one might expect, is not to be found in a very clearly defined institutional framework. It goes on continuously. On financial matters, it is fair to say that the Treasury is in the lead, but naturally co-operating and consulting fully with my right hon. and hon. Friends in the Home Department.

The hon. Gentleman asked how the global sum is decided and how the totals are worked out. I assure him that the Northern Ireland Government participate fully in the whole of the P.E.S.C. machinery, which is the basis for the determination of the aggregates of public spending in the whole of the United Kingdom. This system works with increasing sophistication, and it would obviously be important, where money is passing through the National Loans Fund to a provincial Administration like the Northern Ireland Government, that they should participate in the P.E.S.C. system, as they do.

I can understand the request that the accounts of the National Loans Fund might show in more detail the outgoings relating to Northern Ireland. I assure the hon. Gentleman that I will have this matter looked into. I cannot promise that anything will emerge, but we will certainly study the problem to see whether something might be done on that basis.

A number of hon. Members asked the same question which was asked last April: for what purposes is the on-lending spent? Under the terms of the 1970 Act, this is for capital spending. It feeds what might be called the common stockpot of money available to the Northern Ireland Government for capital spending. There is no separate allocation of this money which would be separable and different from the allocation which the Northern Ireland Government can raise by Treasury bills, by short-term borrowing, or by the Northern Ireland savings certificates. However, there is broad agreement between the two Governments—the hon. Member for Sheffield, Attercliffe, referred to this point—on the main headings on which spending may be put. I can give the House an indication of what they are. They must be capital purposes, as required by the Act. The money which we would be voting tonight will be used for on-lending by the Northern Ireland Government. They expect about half of it to go for housing.

I was asked about housing. The Housing Executive is in the course of taking over housing from the Northern Ireland local authorities. For the most part, on-lending in future will go to the Northern Ireland Housing Executive. Nearly one-quarter will go to the North- ern Ireland Electricity Board for electricity investment, and the balance will be split about equally between the new finance corporation—I shall come to the point raised by my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne)—and general local authority services other than housing.

Some indication of the breadth of the spending which might come in that last head was given in the statement by the Minister of Finance, Mr. Kirk, on 20th January—it was referred to by my hon. Friend the Member for Belfast, South (Mr. Pounder)—which gave a long list of spending. Some of it is revenue spending, and therefore not eligible to be financed by this money, but obviously some of it is capital spending—education, new nursery schools, industrial training and training schools. Those are included in the spending, and in so far as that is capital, it would be eligible to be financed by this money from the National Loans Fund.

The reality of the position is that within the broad framework agreed with the Westminster Government, the Northern Ireland Administration are responsible and accountable for the spending of the money. This is money which is lent to them and then comes under their jurisdiction. I take the point made by my hon. Friend the Member for South Angus that the money passes out of the control of this House, but our control is exercised at this stage by the continuing agreement between Westminster and Stormont. It is inherent in the nature of the relationship between the Stormont Government and Westminster that once the money is in the hands of the Stormont Government they are responsible for deciding the priorities within the range of heads which I have indicated.

Mr. Merlyn Rees

This is obviously a difficult matter to assess in discussions between Governments in the way that has developed over the years, but from what the Financial Secretary said it appears that there could be money for training grants if it came under the heading of capital. I presume that it must be industrial training but it must come under the heading of capital. That is fair enough.

The Northern Ireland Government provide investment grants. The investment grant system can be used for capital purposes. The Government at Westminster do not agree with investment grants. Have there been discussions about this, or is this entirely a matter for the Northern Ireland Government, bearing in mind that the Government here have strong views about these grants or they would not have ended them here?

Mr. Jenkin

I am not sure how far I can go in answering that, because I must be careful, as all Ministers speaking from this Dispatch Box must be, not to trespass in any way on matters which are the prerogative of the Northern Ireland Government. But there was considerable discussion with the Northern Ireland Government, when the system of investment incentives was under review in this country, about what would be the consequences in Northern Ireland of the ending of investment grants, and what reasonable alternative measures they might take. Investment grants were provided in Northern Ireland long before they were introduced here by the Labour Party in 1966, and the system still operates there. It is justified on the grounds of the overall average higher level of unemployment and the economic difficulties which they have faced over a long period.

I think that I must be cautious on the question of training grants. It is not covered by the terms of the agreement with the Treasury, and one would imagine that, overwhelmingly, money spent on industrial training would be of a revenue nature, and not capital. Perhaps I might, therefore, qualify what I said earlier by that statement.

The hon. Gentleman asked about the money voted for the relief of distress. That is of an entirely different nature. That was a United Kingdom donation of £250,000 in 1969, up to £400,000 this year, and it goes partly for what may be described as charitable purposes. This in no sense finances the Northern Ireland Government. No doubt they have a considerable say in its administration but it is an entirely separate sum and nothing to do with what we are discussing tonight.

It is clear that money under this order is not available for industrial development, except insofar as some of it will now pass through the Finance Corporation and come within the scope of its lending—and it will be lending and not grant-aiding. None of this money will go to Harland and Wolff. It would be extremely unlikely that the Finance Corporation would put money into Harland and Wolff, since the Northern Ireland Government have put a lot of money into the company and have a 49 per cent. equity stake in it. That is since the last order.

Hon. Members asked where they could find the categories. Here, I fear I must give the answer that I gave to a similar question last year, that details of this spending are to be found in documents published by the Northern Ireland Government, not in documents which we publish here. The National Loans Fund Accounts show that the money moves from the Fund to the Northern Ireland Government, who are responsible for the spending of it, are accountable for it, and publish the details.

The hon. Member for Leeds, South asked about what was said during discussions and took as an example the type of people who are members of the Electricity Board. That is perhaps a matter for my right hon. Friends at the Home Office, but I remind him that the Northern Ireland Government are pledged to non-discrimination and are pursuing that policy.

He raised the question about reporting to Brussels on co-ordination with the Ten, but that is a matter on which I can give no help tonight. I will look into it, however, and if there seems to be a reply that I can give, I will write to the hon. Member.

My hon. Friend the Member for Belfast, South was right when he said that this money was not available for repairing, as he put it, "the ravages of terrorism", but is money for capital development under the broad headings I have described—although it will go to supply employment opportunities and reinforce the £18.5 million programme which Mr. Kirk announced on 20th January. I am sure the House was encouraged by the figures he gave of the astonishing growth in industrial production in Northern Ireland in the last few years—growth in spite of the trouble, growth which offers considerable hope for the future of that part of the United Kingdom.

Finally, may I turn to the question asked by my hon. Friend the Member for South Angus. I fully understand his anxieties. I am glad that he welcomed the statement made by my right hon. Friend the Home Secretary on 29th November in which he said that the money available to the Northern Ireland Government will offer help … over the next three years to undertakings which have reasonable long-term prospects but are faced with the particular needs at present."—[OFFICIAL REPORT, 29th November, 1971; Vol. 827, c. 50.] Perhaps it will help my hon. Friend if I enlarge on that by quoting the Minister of Commerce in Northern Ireland, Mr. Robin Baillie, who said on 16th December, 1971, in the Northern Ireland Parliament—as reported at column 1358 of their OFFICIAL REPORT: The Corporation will offer assistance to firms which, because of the current situation in Northern Ireland, are suffering serious liquidity problems but which, in the words of the report, have reasonably good prospects of solvency in the longer term and have a useful contribution to make to the economic life of Northern Ireland". This in a sense tightens up still further the language used by the Home Secretary in the debate on 29th November.

My hon. Friend the Member for South Angus asked for an assurance which I cannot give him and I do not want him to be under any illusions about that. I cannot conceive that it would be in the interests of the Northern Ireland Government, given that the Finance Corporation will have a finite sum of £50 million, to have any part of that amount spent on bolstering up a firm of the description which my hon. Friend gave. To do so would seem to be financial, economic and indeed social folly.

I will not begin to comment on the individual case. I have seen my hon. Friend's letter. but it must be clear from the terms of the Cairncross Report, from what the Home Secretary said and from what Mr. Baillie said on 16th November, that this is aimed at helping companies which are facing short-term liquidity problems as a result of the disturbances but which could not possibly be made available to a firm such as that which my hon. Friend described, which was in serious difficulties long before the troubles arose in 1969 and which would have no long-term hope of solvency. That is as far as I can go tonight on this subject.

Mr. Bruce-Gardyne

I appreciate that there are limits to what my hon. Friend can say in this matter. However, would he agree that the phrase reasonably good prospects of solvency in the longer-term is a good deal less satisfactory than the phrase used by the Home Secretary, about undertakings which have " reasonable long-term prospects? " I am particularly concerned about this in view of the undertaking that my right hon. Friend gave to the House, and my hon. Friend will agree that there is some obligation on Her Majesty's Government to see that that undertaking is fulfilled.

Mr. Jenkin

I accept that during the setting up of the Fund and the provision of the money there must be close consultation. This is, in fact, part of the day-to-day consultation that goes on. As I said at the outset, when answering a question from the hon. Member for Leeds, South, it is not possible to look for a clearly defined institutional framework within which these things are done. The relationship is close, harmonious and continuing, and that often gives the best results when one is dealing with a sensitive relationship of this sort.

I entirely understand my hon. Friend's concern about, for example, the position of the Scottish firm in his constituency, and also the concern which my hon. Friend the Member for Colchester (Mr. Buck) has expressed to me on a similar point. My hon. Friend will agree that Northern Ireland is a special case. The civil disturbances are having and have had a serious effect on some firms and, therefore, on the economy. Other parts of the United Kingdom have, happily, been spared this turbulence.

The Cairncross Committee recommended that funds should be made available to help with this difficulty. That recommendation has been accepted by the Westminster and Stormont Governments and we rely on those who will administer this money to see that it is put to the purposes for which it is intended.

I have done my best to answer most of the questions that have been put to me and I hope that hon. Members will now feel that it would be right to accept this Instrument. I appreciate the warm welcome it has received, particularly by my hon. Friend the Member for Belfast, South (Mr. Pounder). I, too, believe that it will play a vital and necessary part in maintaining confidence in the Northern Ireland economy and will provide the wherewithal with which the people of Northern Ireland can continue to enjoy the parity of treatment to which they are entitled under long-standing financial arrangements between the two Governments.

Question put and agreed to.

Resolved, That the Northern Ireland Loans (Increase of Limit) Order 1972, a draft of which was laid before this House on 20th December, be approved.