HC Deb 11 May 1978 vol 949 cc1573-87
Mr. Richard Wainwright

I beg to move Amendment No. 14, in page 2, line 31, before "The" insert Subject to subsection (6) below,".

Mr. Deputy Speaker

With this amendment we are to take Government Amendments Nos. 15, 17 and 18 and the following amendments:

No. 16, in line 35, leave out from beginning to end of line 5 on page 3.

No. 19, in page 3, line 5, at end insert— (6) The Secretary of State may by order authorise the Agency to exercise all or some of the powers under subsection (3) above where the Agency can satisfy the Secretary of State that such powers are required to facilitate the discharge of its functions. (7) A statutory instrument containing an order under subsection (6) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Mr. Wainwright

I was able just now to congratulate the Government on taking on board the feeling in Committee that the measure should expressly stress the educative and training functions of the Agency. I am sorry that at that point my congratulations must stop very short, because the Government have failed to take on board a point which was stressed in Committee, that the clause, unless it is amended, not only totally prohibits the Agency from making loans for the purpose of setting up training and educative facilities but even goes so far as to prohibit the Agency from making mere grants for that sort of purpose.

It casts a little doubt on the sincerity of the Government's purpose when they prohibit this responsible Agency from making any financial contribution to the spread of co-operative principles and training people in the carrying out of co-operative work. I very much regret that that I suspect is some kind of bureaucratic inhibition is putting this shackle round the Agency.

I do not want to over-stress this, because I suspect that out of the generosity and good-heartedness of parts of the voluntary co-operative movement—which only goes to show that things do not need a statutory basis to be effective—money will be forcoming for educative and training work. But it is a great pity that the Agency should be shackled in this way. It is to try to overcome that that I move the amendment.

Mr. Kenneth Clarke

This is a matter on which we strongly differ from the hon. Member for Colne Valley (Mr. Wainwright), because the dangers that his amendment would open up would be considerable. It is with great pleasure that we see Clause 3 as drafted, and with some surprise, because we find that the Government have provided that the Agency will not have any power to disburse grants or loans out of the taxpayers' money for the forwarding of co-operative enterprises. When one listens to the hon. Member for Sowerby (Mr. Madden) making his appeal that the Kirkby workers' co-operative should be given yet more taxpayers' money to carry on with its loss-making activities, one realises the dangers that would arise if the Bill were amended to enable the Agency to start disbursing other people's money to unsuccessful co-operatives.

Those co-operatives that are successful, commercially viable and well founded can have access to funds on the same basis as any other commercial enterprise under the many pieces of legislation that exist for that purpose. We would not welcome a suggestion that the Secretary of State might authorise the Agency to go in for disbursements of funds to promote co-operative organisations simply because they were co-operative organisations and regardless of the other relevant factors which affect taxpayers' money going to any other commercial organisation.

I realise that the hon. Member for Colne Valley has a much more limited objective, but his amendment would go far beyond authorising the Agency to make grants for educational purposes. It would empower it to start forming partnerships engaging in commercial activities, and that would be an alarming prospect.

This group of amendments also contains Government Amendments Nos. 15 and 17, which have been tabled in response to points I made in Committee. They are attempts to meet some of the questions we raised then about the precise meaning of subsection (3), which spells out those matters which the Agency shall not have powers to do. Amendment No. 15 is a further attempt to get right the wording of the part of the bill which salys that the Agency shall not have power to acquire securities of any kind.

It was explained in Committee by the Minister that it was not contemplated by the Government in the form of the words they had chosen that the Agency should acquire share capital in any firm, company, co-operative or other commercial activity as a way of promoting that activity, and that the problem considered in drafting subsection (3) (a) was what would happen if the Agency had for a short time surplus funds that it did not want to waste in current account but to invest in some way for administrative purposes.

It it correct that, while the Agency is being prevented from subscribing to shares and stock of any kind in commercial activity, such reserve funds that it might have at any time will now be only in local authority or Government stock which it will be empowered to hold by Amendment No. 17? If that is the case, that seems to us to be satisfactory and makes it clear that any holdings are purely for the proper safeguarding of any surplus funds that it might have for a short time.

Amendment No. 17 prevents the Agency from making loans otherwise than by subscribing for government or local authority securities; It seems to delete the existing subsection (3) (c) in Clause 3, which prevents the Agency from making land or other property available for use by other persons; Why is that provision being taken out? No one queried it in Committee as far as I can remember. I would not welcome any idea that the Agency should start making land or other property available for use by other persons", and I cannot see why the proscription is being dropped as a side-effect of Amendment No. 17, which is imposing limits on the Agency's power to make loans.

11.30 p.m.

Mr. George Rodgers

I should like to speak very briefly in support of Amendment No. 16. Along with a number who supported the majority view of the whole working party, and certainly the wide opinions of those who produced the minority report. I am convinced that the financing of the CDA is totally inadequate. The majority of those who took part in the deliberations believed that this defect could be remedied in the course of time and that the CDA would eventually become a logical and effective channel for funding suitable co-operative enterprises.

As the Bill is now drafted, it could not do so. Indeed, a major amendment would have to be made once it became an Act if the CDA were to be utilised as a conduit for money. I accept that finance will not be thrust towards the CDA at the present time, in current economic circumstances, but surely that does not mean that we should restrict the flow of financial support for ever, even when the Agency is working efficiently and effectively and demonstrating that it is a valuable avenue of industrial investment.

We are too cautious by half. It has taken four long years for the legislation to make its appearance and I am anxious that we should not suffer another four years of waiting before the measure can play a wider and more useful role in generating prosperity. I do not see why the Bill should contain the list of provisions in Clause 3 which is designed to curtail and deny the CDA the right to make loans or grants or to borrow money. After all, the Secretary of State has absolute control over purse strings by virtue of Clauses 4 and 5.

The CDA is a bold and visionary concept. It would be a thousand pities if it were denied in future years the right to respond to opportunity because it lacked the necessary financial flexibility. I hope that the Minister will seriously consider the strength of the amendment.

Mr. Pavitt

I have followed very carefully the arguments on Amendments Nos. 14 and 19. May I ask my right hon. Friend to clarify the relationship of the powers which will arise under the proposed amendments? I apologise to him because I am in a cleft stick. There are two Bills going through the House. The Inner Urban Areas Bill will have its Second Reading, I think, on 19th May, and my right hon. Friend has been leaning over backwards to meet a number of the points which arise on the development that this Bill will provide in Clause 3 and which are affected by some of the amendments now before the House.

I received only yesterday the Press release of my right hon. Friend the Minister for Housing and Construction in which he said of the other Bill that it will, along with other action the Government have taken —meaning this Bill— be particularly useful in helping small firms, including producers and workers co-operatives inner urban areas and at local level.

Arising from this short debate, will my right hon. Friend tell us more about the way in which the powers in the Bill and these amendments could affect the possibility of a much stronger use of the CDA at local level and of its being able to participate in local authority matters?

I congratulate my hon. Friend the Member for Lambeth, Central (Mr. Tilley) on his speech. My hon. Friend the Member for Luton, East (Mr. Clemitson) said that it was one of the best speeches he had heard in his short period in the House. It was one of the best speeches that I have heard in a long period in the House.

Mr. Stanley Newens (Harlow)

I should like to begin by offering my congratulations to my hon. Friend the Member for Lambeth, Central (Mr. Tilley) on his splendid speech. I had the pleasure of working for him during the election campaign, and I think that, by the way that he has addressed the House this evening ha has amply justified our confidence. We all look forward to hearing him on many occasions in the future.

I am very glad that my hon. Friend the Member for Luton, East (Mr. Clemitson) and my hon. Friend the Member for Chorley (Mr. Rodgers) have tabled Amendment No. 16, which touches on the issue of whether the Agency should be deprived of all powers to make loans and grants. I agree very much with the words which my hon. Friend the Member for Chorley has addressed to the House this evening.

In the period of the genesis of the concept of the Co-operative Development Agency in the late 1960s everybody concerned with the issue took the view that such an Agency should be able to dispense funds to assist the development of appropriate co-operative projects. Everybody argued that it was essential that it should be provided with precisely the powers which this Bill takes away from it from the outset.

It remained the situation right down to the last year or two that the proposed Co-operative Development Agency should have funds—right until the moment when the implementation of the pledge made in the Labour Party manifesto was considered by the working party. It was very unfortunate that its terms of reference excluded the possibility of making funds available. I believe that that was a mistake, as I said during the course of the Second Reading debate.

Bearing in mind that the Government had introduced a Bill which might have been omitted from their timetable and also bearing in mind the present disposition of forces in the House, I am prepared to accept the situation at the present time, but I want to place it on record that I do not regard it as a situation that we should accept indefinitely when the opportunity presents itself in the future, as I am sure it will, for us to amend the measure on a future occasion.

There was no reason, even in these circumstances, for the Government and for my hon. Friends to go to such extreme lengths to exclude the possibility of altering the Bill in future and excluding the possibility of making loans. In these circumstances I regard it as extremely important that it should be placed on record once again that, while the Bill is very welcome, it is a weakness that the Agency should not have the power to disburse funds. I believe that if the amendment were carried it would strengthen the Bill.

The hon. Member for Rushcliffe (Mr. Clarke) used the opportunity of this short debate to take a side-swipe at the Kirkby co-operative. He said that the Opposition were opposed to using other people's money for subsidising loss-making activities. I point out to him that he would not make such a comment about using public money—"other people's money", as he termed it—for supporting all loss-making activities, particularly when those loss-making activities are carried out by private enterprises. In my view, he would be quite right not to make such a recommendation, because all of us must recognise, at a time when unemployment has reached its present proportions, that it is frequently necessary that public money should be put both into private enterprises which temporarily are making losses and—I would argue—forms of socially owned enterprises, including co-operative enterprises such as that of Kirkby.

Mr. Kenneth Clarke

Of course we accept that occasionally there are circumstances in which public money has to be put into commercial activities of one kind or another, including private enterprise companies. When we have the debate on the increased limits under the Industry Act in 10 days' time we shall demonstrate again that we think that far too much public money is going into industries in that way at the moment. But in so far as money is disbursed it should go to all activities on the same basis, and Kirkby, Meriden, and so on should have access to funds only in circumstances in which any of the commercial enterprise would have access to funds. In fact, Kirkby has been given large sums of money which would not have been given to any other enterprise, quite against the advice of the Industrial Development Advisory Board, and for purely political reasons. It is a great waste of taxpayers' money to put so many millions of pounds into a small unsuccessful firm of this kind.

Mr. Newens

This is not the occasion to thrash out this matter in detail, but it is wholly wrong and unfair for the hon. Gentleman to be so deeply prejudiced against co-operatives such as that at Kirkby. We know that some co-operatives sometimes get into diffculties for a while but, equally, there are private enterprises that get into difficulties at various times. My hon. Friends and I frequently make representations on behalf of constituents and private enterprises who seek public money to help them to continue in business. That is in the interests of the employees and the owners.

Mr. George Rodgers

It should be made clear that in many instances co-operatives have been launched from the collapse from a private company and these are hardly ideal circumstances for an enterprise to get off the ground. Against this background, co-operatives have had a remarkable record of success.

Mr. Newens

I entirely agree with my hon. Friend. I hope that the Government will take careful not of what has been said in the debate and will recognise the strength of feeling on this side of the House that Kirkby should be given adequate funds to enable it to achieve eventual success.

I realise that the Government are unlikely to accept the amendments and I would not support it in a Division, but I hope that my right hon. Friends will recognise the strength of the arguments that can be advanced in favour of providing the Agency with funds that it could dispense in the interests of creating employment and enabling successful co-operative enterprises to get off the gorund. We shall have to return to this matter. Many of us will continue to believe that there is a strong case for doing as the amendments suggest and giving grants and loans to appropriate co-operative enterprises.

Mr. Alan Williams

The amendment introduced into the Inner Urban Areas Bill in another place is aimed at focusing the attention of local authorities on the fact that they will be able to give support not only to the more conventional form of commercial undertaking but to co-operatives. It is designed to draw attention to the opportunities that exist in this area in parallel with the introduction of the Agency which will be able to assist local authorities if they wish to investigate this course further.

I realise that the Government amendments do not go as far as some of my hon. Friends would like. They are intended to meet fears expressed in Committee that the clause was too restrictive even in terms of a promotional and advisory body, and that it might prevent the sensible use of short-terms surplus funds that might occasionally be available to the Agency.

11.45 p.m.

Our amendments have three specific purposes. The first amendment refers to subscribing. What remains prohibited is the provision of new capital. It is subscribing for issues of shares which is not permitted.

This is in keeping with our feeling, which I recognise is not shared by everyone, that the major role of the Agency, especially in its formative years, is on the advisory and general promotional side rather than in providing funds. Therefore, it will be able to use any surplus cash, if it seems appropriate, to purchase existing shares but not to provide capital to launch new enterprises, and we envisage that the sums that it would have would be fairly limited. It is obvious from the figures in the Bill that the Agency is hardly likely in these early years to be in a position where, in purchasing existing shares, it could take over any substantial firm. We believe that this just gives it slightly wider flexibility in the use of any temporarily idle resources.

Mr. John Roper (Farnworth)

Does my hon. Friend feel, therefore, that the Agency can buy bodies corporate both under the Companies Act and under the Industrial and Provident Societies Act?

Mr. Williams

I should need notice of that. I shall look at that and have a word subsequently with my hon. Friend and with any other hon. Member from the co-operative movement who is concerned about this aspect. If there are any unforeseen difficulties in the way in which we have framed the amendment, we shall seek to eliminate them in another place.

Mr. Tony Durant (Reading, North)

I am slightly confused if the purpose of using the surplus funds is to buy in shares. What is the purpose of that? With the small sums of money involved, presumably there will be no opportunity to stage a takeover. What is the point of doing it at all?

Mr. Williams

It is merely meeting what was required in Committee, which is that there should be slightly more flexibility in the opportunities that are available to the Agency in placing these funds. It is up to the Agency to decide which is the best use of those funds at the time they are available. We are merely building a marginal additional flexibility into the Agency's opitions.

The same applies to loans. Although we retain the prohibition on loans for commercial purposes, it seems absurd to deny the Agency the opportunity again to place funds perhaps in local authority or Government securities for short-term objectives which might produce a better rate of interest than could be obtained from a hank. This again is a minor hut, I think, helpful, variation.

Mr. Kenneth Clarke

Now that the Minister has explained this, it may well be taken up again in another place. He has given the Agency more flexibility, but in the opposite direction to that sought in Committee. We were trying to ensure that it would have no power to acquire securities of any kind. As I understand it, the hon. Gentleman is giving the Agency a general power to acquire stocks and shares of any kind in existing companies. Will he at least confirm that it is only the intention to provide flexibility in investing small surplus funds? What does he think of the danger that, in theory, it would enable the Agency, if it is successful in charging fees for its services and in building up assets, to start acquiring a portfolio of holdings, which would be somewhat outside the range that is contemplated?

Mr. Williams

I emphasise that certainly in the foreseeable future, even looking to a period when the Agency was self-sustaining, it is hardly likely that it will be in command of large sums of money. The revenue that it would get from fees would not be substantial and, although the hon. Gentleman says that I have responded in the opposite way to his request in Committee, he was not the only hon. Member to express a point of view and, while I may not have pleased him, I have tried to accommodate some of the sentiments put to me by some of my hon. Friends.

I was asked about the land. At first sight, it is strange to have made this change. It is not for any deep, ulterior motive. We simply discovered that in the form in which the clause was originally drafted it would have been impossible, for example, for the Agency to let its premises for a co-operative seminar. It was so ridiculously restrictive that we felt that we had to find some way of covering the normal functions that it would undertake. We think that subsection (2), with its limitation on commercial activities, ensures that it will not indulge in any of the wilder extremes that the hon. Gentleman might refer.

Turning to the amendments of my hon. Friends, I recognise that there is a genuine difference of view about the Agency's precise role. I suspect that in its first three years it will have a full time just fulfilling the functions which it is being given by the Bill. The normal financial resources, plus those which are available within the co-operative movement itself, will be available for those wishing to set up co-operative enterprises. The role of the Agency will be to link those wishing to form co-operatives into the sourees which exist, rather than to be a source itself.

Mr. Clemitson

But surely my hon. Friend's point did not relate to the situation now or to that which will exist over the next few months or couple of years, when we realise that financial resources cannot be available under the Bill to enable the Agency to make loans or grants. The point is that the Bill as drafted preempts the future for all time. It prevents the Agency from developing into that kind of body should it wish to do so. If we want an Agency which can fulfil those functions, we should need to amend the Act. After waiting a long time for this Bill, we might have to wait a long time for an amending Bill to enable it to fulfil that sort of Function.

Mr. Williams

I have previously said that it will be possible for the Agency itself, in the light of its experience during its first few years, to recommend that any of the powers which are precluded by this provision should be available to it. If on the basis of hard experience its finds that this is a major inhibition of its activities, it will be able to make recommendations accordingly. But we feel that the appropriate time for review is towards the end of the initial three years. It may be that the hon. Member for Rushcliffe (Mr. Clarke) is right and that it will then become self-supporting. On the other hand, perhaps it will move to a fifty-fifty basis before eventually becoming self-sustaining.

But if the Agency needed any further Government finance, there would still need to be legislation at about the end of the three years. So a vehicle would be available, through Parliament, in which we could also consider powers. I suggest that we let experience show whether this is a major limitation or whether the Agency will find that there are ample sources available—from the Government, under the Industry Act, from the private sector or from sources within the co-operative movement itself. I know that the movement is already looking constructively at the possibility of mobilising some of its own finances in support of the Agency.

At this stage the advantage of pursuing what I recognise my hon. Friends regard as a rather modest course is that the Agency is to be launched in the atmosphere of the greatest good will that I can remember any new statutory body achieving, certainly on the commercial side. All the three major parties are wishing it well at the outset. There is no wish on the part of anyone to damage it. The consensus will be valuable in the Agency's early years. I recognise that after a period of operation it may be felt that changes are required, but I suggest that the initial three years will provide an appropriate field study for us to establish whether any new powers are required.

An alternative approach could be the use of a discretion, but that would be a marked change in the role of the legislation and of the Agency. We are getting the Bill through the House with maximum co-operation from both sides of the Chamber. We all recognise that without maximum co-operation Bills can take much longer to get through the House. We are getting it through on an understanding that it is initially a promotional and advisory Agency. If we were to make a major change in its role, it would be right to do so through the statutory process.

I hope that my hon. Friend the Member for Luton, East will reconsider his position. I give him my assurance that we would consider seriously any recommendations that came from the Agency in the light of its experience in operation.

The hon. Member for Colne Valley (Mr. Wainwright) referred to education. It may be that the hon. Gentleman and I can get together before the Bill is launched in another place. If we can identify a legitimate gap that would be at variance with the promotional objectives of the Agency and if we can frame some form of amendment that ensures that those objectives are fulfilled without creating any loopholes, I am willing to consider whether an amendment is possible. I say that without commitment, because at this stage I am not sure whether that is a practical course.

I hope that on the assurance that the Agency will be able to make recommendations about its own future form and role my hon. Friends will feel able to withdraw the amendments.

Mr. Durant

Following the right hon. Gentleman's reply, I am now slightly anxious about what is happening. We seem to be in a slightly confused state.

I understand that the Agency is to have an advisory role and that it is to use its money for helping co-ops in every way possible. If it has any surplus funds, surely it should spend them in continuing and developing its advisory role. Surely it should use its money in that way and not to buy shares. There is logic in that for which some Labour Members are pressing as there is logic in not allowing any purchases. However, we now seem to be in a confused state about what will happen to any surplus. I suggest that the Minister reconsiders this issue and introduces a tidying-up amendment in another place. It seems that we are going beyond what many of us thought the Agency was all about.

I do not support the amendment but at least it has logic. The right hon. Gentleman has resisted it but I am not sure what is to happen to the money. If an advisory agency accumulates money, surely it should provide more advisory services and not accumulate money by the buying of stocks and shares.

Mr. Williams

All that we are doing is opening up the possibility of the Agency, in the event of its having surplus short-term funds, having available to it a wide range of options, including going to the normal financial institutions, or even looking to the temporary purchase of stocks and shares. We are not contemplating a commercial gambling operation, which would be prohibited under the subsection. Alternatively, the Agency could look to the loans raised by local authorities or the Government. I assure the hon. Gentleman that it is a modest addition to a range of options for the use of idle money.

12 midnight

Mr. Durant

I am not looking for anything sinister. I am just getting clarification. The main purpose of an advisory body such as this is to be, which we all support, should be to use all the money for advisory services. However, there is a danger. Although such organisations may not mean to accumulate money, they may do so. Therefore, they may think that it is nice to have a few stocks and shares. Then they talk about having annual reports and trustees and so on. That is how these things begin. I am anxious about this matter. Therefore I urge the Minister to look at it in another place to make it absolutely clear.

Mr. Richard Wainwright

I am obliged to the Minister for his offer to discuss the possibility of some amendments in another place so that the educative and promotional functions of the Agency will not be totally shackled. It is not enough for Ministers to say that they have so far asserted themselves against the Treasury clamp on the Bill that it will now be possible for the Agency to use its premises for co-operative seminars. That does not go as far as we would wish. However, it is a centralised concept to have seminars only at the Agency's headquarters.

My hon. Friends and I are anxious that part of the membership of the Agency shall positively reflect its educative and promotional functions. If potential members who have great experience and ability in education look at the legislation and find—I hope they will not—that they are not allowed to spend a penny on grants to bodies to assist in this work, it may discourage them from considering any invitation which might be issued. If the Government are sincere—I am sure they are—in wanting to promote the educative side of the Agency's work, there must be some modest provision for financial assistance.

I shall be glad to take up the Minister's offer. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 15, in page 2, line 32, leave out from second 'to' to end of line 33 and insert 'subscribe for shares or stock'.

No. 17, in page 2, line 35, leave out from 'make' to end of line 36 and insert 'loans otherwise than by subscribing for govenment or local authority securities;'.

No. 18, in page 2, line 37, leave out 'loans or'.—[Mr. Alan Williams.]

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