HC Deb 04 March 1981 vol 1000 cc280-3


The Ministers may, with the consent of the Treasury make grants to the Authority, on such conditions as they think fit, in respect of—

  1. (a)any expenses incurred by the Authority in fulfilling a guarantee given under section 3(1)(f) above;
  2. (b) any loss incurred by the Authority by reason of foreign exchange fluctuations where the Authority has borrowed money in one currency and lent it in another'— [Mr. Buchanan-Smith.]

Brought up, and read the First Time.

Mr. Buchanan-Smith

I beg to move, That the clause be read a Second time.

Mr. Speaker

With this we may take Government amendments Nos. 5, 6, 11, 12, 33, and 34.

Mr. Buchanan-Smith

The new clause is in two parts and I shall deal with them separately. The first part and most of the amendments relate to loans to fishery cooperatives. In the amendments the Government are providing powers for additional financial help to fishery co-operatives. In doing so, we recognise the position of co-operatives and, in particular, the role that they can play in improving the marketing of fish.

By their nature, co-operatives can face special problems in obtaining loan finance, and the powers could be of value to them. That problem has been drawn to our attention by fishery co-operatives since the publication of the Bill, and in introducing the new clause I am responding directly to those reasonable representations.

Amendments Nos. 5 and 6 provide powers for the Sea Fish Industry Authority to act as guarantor in respect of loans to co-operatives. Such a power is currently available to the White Fish Authority, and we consider that it should also be available to the new authority. Any sums for which the new authority stands guarantor are potential commitments, analogous to its own borrowings, and amendments Nos. 11 and 12 therefore provide that the sums guaranteed by the authority shall count towards its borrowing limits as set out in clause 6.

The power to guarantee loans has not been exercised by the WFA, because of the potential costs to the authority of fulfilling a guarantee if it became necessary. We have carefully considered the problem, particularly in the light of representations made to us, and we have decided to seek powers in the first part of the new clause to enable a Government grant to be made to the SFIA if, in using the guarantee powers, it incurs expenditure. That should be welcome to the co-operative movement. It is available to agricultural co-operatives and we hope to extend a similar facility to fishery co-operatives.

3.45 pm

The second half of the new clause is related to the powers of the authority to borrow finance. If it borrowed from overseas it would presumably be borrowing in foreign currency, but it would obviously be lending to the fishing industry in sterling. If exchange rates fluctuated, the authority could be involved in financial loss. The power in the second part of the new clause will allow the Government to give a guarantee to the authority in respect of such losses. It would be a further power to assist the authority in obtaining loan finance from whatever might be the most suitable source at any time. Amendments Nos. 33 and 34 make consequential provisions.

It is not possible at this stage to judge precisely how the powers will be exercised. However, it is clearly advantageous to insert them into the Bill so that they will be available to the authority if appropriate circumstances arise. The new clause is introduced in the same spirit as was the previous new clause. It will enable the authority to operate in a flexible way, in the best interests of the fishing industry, and to carry out its functions effectively.

Mr. Strang

The Opposition are happy to approve the new clause and amendments. As the Minister of State explained, they give greater financial flexibility to the authority and we support their inclusion in the Bill.

Mr. J. Grimond (Orkney and Shetland)

I also welcome the new clause, but I wonder whether the Minister of State could help us to be clear about the drafting. The new clause refers to clause 3( 1)(f). Although the new clause relates only to co-operatives—as I understand—it appears from the drafting of the Bill that the authority might be empowered to make loans or grants for the purchase of fishing gear, fuel, stores or other materials requisite for the sea fish industry". whether through a co-operative or not. Am I correct in understanding that the new clause applies only to co-operatives?

Mr. J. Enoch Powell (Down, South)

Will the Minister kindly say something further about the second element of the new clause? The power of the authority to borrow overseas does not appear to be in any way connected with the nature of the authority or its functions; it appears simply to be an extension of the borrowing opportunities of a public authority—much as local authorities and nationalised industries have borrowed abroad in recent years.

What ground is there for giving to the authority, any more than to any of those other bodies, including the Government, in other forms, and indemnity against bad speculation in borrowing in foreign currencies?

Mr Buchanan-Smith

The right hon. Member for Orkney and Shetland (Mr. Grimond) is correct. The new clause applies solely to co-operatives. In reply to the right hon. Member for Down, South (Mr. Powell), all that we are seeking to do is to give the authority the opportunity to borrow funds from whatever may be the most suitable source. I might add that the power is already available to the White Fish Authority. We are not introducing a new precedent in connection with the public authority that has responsibility for the sea fish industry.

The right hon. Gentleman fairly asks"Why should the Government carry the can if the authority seeks to speculate in foreign currencies?" I hope that the authority will not speculate in that way. It will borrow only where it is appropriate, and in the best interests of the functions that it performs, and it will do so prudently. I believe that it will benefit the industry that the authority serves.

Mr. Powell

Perhaps I was injudicious in using the word"speculation". In any case, it is an ambiguous term. Any borrowing in foreign currency of necessity involves the implication of future fluctuation of the exchange rates. Will the Minister say, first, whether the existing borrowing powers have been subject to a similar indemnity and, secondly, whether he knows of any parallel for other semi-public bodies which are authorised by statute to borrow being indemnified in a comparable way?

Mr. Buchanan-Smith

There are precedents for these powers. I shall be happy to give the right hon. Gentleman details of them. We are not seeking to do anything new in this regard. We simply wish to help.

Will the right hon. Gentleman remind me of the second question that he asked me?

Mr. Powell

If we have to indemnify authorities for losses incurred as a result of borrowing overseas, and if a Government have to stand over those borrowings in this way, we had better limit the borrowing powers of those authorities to the national loans fund. After all, they seem to have it both ways; they are able to borrow outside the national loans fund and have the security that borrowing from the fund gives, and at the same time the public will indemnify them against the consequences of such borrowing. It is part of the Government's policy, and a part with which I agree, to borrow from the general public, if possible, but if at the same time we indemnify those who borrow from the general public we are trying to have our cake and eat it.

Mr. Buchanan-Smith

I shall look into that matter, but I do not accept the fears that the right hon. Gentleman expresses.

As a result of the strange way in which the House works, I now have the information about the other question that the right hon. Gentleman asked. British Nuclear fuels, for example, has powers in this connection. However, I shall look into the matter further, and if I obtain any fresh information about the way in which these powers are used by other bodies, I shall be very happy to let the right hon. Gentleman know.

I assure the right hon. Gentleman that all that we are seeking is to give the authority the opportunity to borrow from the most favourable sources. We believe that one such source could be a foreign source. Clearly, we expect the authority to act prudently, but without this guarantee we believe that it would be less prepared to borrow in that way. We think that the provision helps the authority, and the industry that the authority serves, by enabling it to go to the best sources for finance.

Sir Albert Costain (Folkestone and Hythe)

Before the Minister leaves that matter, will he say what will happen to the profits that are made on the exchange movement? Will the authority pocket the profits, while someone else has to pay for its losses?

Mr. Buchanan-Smith

I shall look into that matter. If the body is successful in its exchange transactions I am sure that it will be to the benefit of the sea fish industry. I shall consider the matter in relation to the guarantee and let my hon. Friend know.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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