HC Deb 14 February 1983 vol 37 cc63-8

Order for Second Reading read.

6.37 pm
The Minister of State, Treasury (Mr. John Wakeham)

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

Apart from the fact that they are all connected with finance, there is no obvious connection between the clauses in the Bill. If there were, it would not be called "miscellaneous". But that is not to imply that the clauses have no value. I commend them to the House as good, sound administrative measures; the sort of thing which a Government have to bring before the House from time to time. For convenience we have grouped seven such measures in the present Bill. I shall explain what the clauses do, and why the changes they bring about are desirable, and I hope that these essentially administrative measures will command support from both sides of the House. I shall, of course, be happy to answer any question on any aspect of the Bill which any hon. Member cares to ask me.

Clause 1 concerns the Development Commission, which was established by Lloyd George shortly before the first world war with the task of identifying and tackling the various problems of rural areas. Following a review of the work of the commission my right hon. Friend, the then Minister for Local Government and Environmental Services, told the House in March last year that he believed that the commission still had a distinctive and necessary role in bringing economic and social assistance to rural areas of England. The Government accepted that the commission should have a greater degree of independence and should, for example, itself choose the areas in which to concentrate assistance.

At present, the commissioners advise Ministers on how money in the development fund voted by Parliament should be spent. This is an archaic and possibly unique arrangement, so the Bill seeks to establish the Development Commission as a grant-aided body, able to spend directly the money provided by Parliament, and accounting for it directly to Parliament, on the same basis as other grant-aided bodies. The Secretary of State and the Treasury will continue to have a duty to supervise financial matters, and a power to give broad direction of policy and practice.

The Bill also gives us an opportunity to resolve a recent legal doubt whether the Council for Small Industries in Rural Areas, which is the principal commercial agent of the commission, has been acting ultra vires in helping profit-making commercial undertakings. Since the doubt arose the matter has been covered by authorising the relevant sums under the Appropriation Acts. This should not be allowed to continue indefinitely and the Bill, when enacted, will regulate the position.

I shall describe the specific provisions in the Bill. Clause 1 establishes the Development Commission as a grant-aided corporate body, defines its purposes, and, together with schedule 1, sets out its powers, duties and financing. The purposes of the commission are substantially unchanged from what they were when it was set up in 1909, although the terminology used in this legislation is different from that of 1909. In specifying some of the areas of activity of the commission, the Bill reflects the special role that the commission now plays in the social and economic regeneration of rural communities in England.

These provisions, then, are to bring the statutory basis of the Development Commission into line with its present-day role—not to change that role. The commission's objective remains the economic and social development of rural England, and I hope that the House will welcome this clause as enhancing its ability to carry out or assist others to carry out such a development.

Clause 2 similarly introduces no new principle. It represents a piece of necessary tidying up, in providing statutory authority for the Secretary of State for Industry to make grants, out of money voted by Parliament, to English regional development organisations. At present, authority rests on the Supply Estimates and the conforming Appropriation Acts.

Successive Administrations have paid grant-in-aid to the four organisations listed in the clause. The money supports their work of helping to attract new industrial and commercial development to their regions, which include the main assisted areas in England. The local authorities in the regions are the other main source of income for these regional bodies, which therefore represent a partnership between central and local government. Similar promotional bodies—again supported by both central and local government—exist in Scotland and Wales.

Mr. D. N. Campbell-Savours (Workington)

Do the Government intend to make additional money available to county authorities, since some authorities with particularly high levels of unemployment have a special role to play, through industrial development units? Will the Minister address himself to such authorities?

Mr. Wakeham

The Bill is not the appropriate place to deal with that. If the Government were seeking to increase the sums available they would not do so in this Bill, which is basically a bookkeeping arrangement. The Minister of State, Department of Industry made a statement only a few days ago in a written reply and I have nothing to add to that.

Mr. John Prescott (Kingston upon Hull, East)

I have that answer here. In the Bill, why do the Government choose to give the full amount to some areas and not to others? Is that because of disagreement with some of the local authorities or with the new town corporations? Why is there a differential in the policy?

Mr. Wakeham

That is a matter for the Secretary of State for Industry. It does not arise under the Bill.

Mr. Prescott

We appreciate the Minister's difficulties. He thinks that the Bill is a simple financial measure, but he must know that the Treasury determines policy. I understand that we shall interrupt consideration of this Bill at 7 o'clock and return to it later. In the interval, perhaps the Minister will consult the relevant people and then tell us what clause 2 is about. Many of my hon. Friends will want to ask questions about clause 2, and if necessary the Secretary of State should be brought in to assist.

Mr. Wakeham

I shall listen to everything that is said and do my best to answer any questions. It seemed right in my opening remarks to outline what the clauses set out to do and to deal with specific points later.

My hon. Friend the Minister of State, Department of Industry, anounced on 19 January the level of grant to be paid to each of these bodies next year. The English regional bodies work closely with the Invest In Britain Bureau in the Department of Industry, and their overseas campaigns are co-ordinated with the promotional activity on behalf of the United Kingdom as a whole.

Although the main purpose of the clause is to regularise the payments to these existing bodies, we think it right also to provide for the possibility that other similar bodies may be supported in this way, for the benefit of other regions in future.

Clause 3 is different. Its object is to writeoff debts of £13.4 million owed by Zimbabwe to the Consolidated Fund. These debts stem from obligations contracted by the Governments of Southern Rhodesia towards Her Majesty's Government before the unilateral declaration of independence in November 1965. The debts included liability to reimburse the Government for payments made out of the Consolidated Fund under Treasury guarantees when the Government of Southern Rhodesia defaulted on five loans from the International Bank for Reconstruction and Development.

Following independence, Mr. Mugabe stated that his Government intended to honour these obligations. However, discussions were held in May and June 1980 about Zimbabwe's capacity to service debt obligations in the light of prospects for the country's economy, and under the terms of the Zimbabwean debt settlement which was announced in Parliament on 2 July 1980 the Government agreed to writeoff the sum owed in respect of three of the five guarantees. On 7 November 1980 the then Financial Secretary stated that it was our intention to provide for this by legislation in due course. This is necessary because the debt is an asset of the Consolidated Fund.

The Bill sets out the dates and amounts of loan made by the International Bank for Reconstruction and Development. The first loan was to provide funds for an electric power project, and the final instalment was paid on 2 May 1977. The second loan went towards the development of the Rhodesia railways, and the final instalment was paid on 4 May 1978. The third loan was for an agricultural development programme, with the final instalment being paid on 1 December 1969. The second and third loans were technically made to the Federation of Rhodesia and Nyasaland, but when this was dissolved in December 1963 the Governments of Southern Rhodesia and Northern Rhodesia each assumed direct responsibility for half of both loans. The guarantees were in respect of principal, interest, and other charges in various currencies to the dollar values given. The sterling equivalent of all three was £13.4 million.

Clause 4 widens the range of financial liabilities of public bodies which the Treasury may guarantee under its existing statutory powers. At present these powers generally extend only to guaranteeing the repayment of principal and interest on a loan, though there is a considerable disparity among the industries. The bodies covered are listed in schedule 2 to the Bill. The Bill does not add to the number of bodies covered, nor should what is proposed add to the cost to public funds—rather the opposite.

Lenders offering attractive terms to our public bodies have occasionally insisted on additional obligations beyond the undertaking to guarantee the repayment of principal and payment of interest. For example, they may ask for payment of certain fees in respect of a loan. It is clearly in the taxpayer's interest to guarantee these additional obligations if this is a way of ensuring, that the best terms can be obtained, especially as this can be done without the guarantee adding significantly to our liabilities.

Clause 4 permits that. A guarantee will be given only if the Treasury considers that the loan is worth making on the terms demanded. This is exactly what happens now. Thus, we shall continue to ensure that the best possible rates are obtained, with minimal liability for each loan that our public bodies take on.

Clause 5 amends section 3(2) of the Crown Estate Act 1961 so as to extend the maximum statutory period for which the Crown Estate Commissioners may grant leases from 100 to 150 years. The background is that the commissioners are not normally in a position to be able to finance major site developments as they have no borrowing powers. They therefore look to institutional investors to finance commercial projects. However, in the field of commercial property nowadays, institutional investors favour leases of 125 to 150 years duration, because that allows sites to be redeveloped about halfway through the lease—after 60 years or so, which is reckoned to be the life expectancy of a building.

The commissioners judge that their present inability to grant leases for periods as long as 150 years means that they cannot make the most of the earning potential of the Crown estates. The revenue surpluses from the estates are surrendered to the Exchequer in accordance with the Civil List Acts. I hope that the House will agree that we should not tie the commissioners' hands unnecessarily and should therefore extend the period of leases, as the Bill proposes.

Mr. Campbell-Savours

Is there any evidence that the Exchequer will receive greater sums of money for those leases, or will the clause have little effect on the valuation? As the Minister must be able to justify this to the House, can it be said that the commissioners have found it impossible to relieve themselves of leases and that with the Bill they will now be able to let those properties?

Mr. Wakeham

The commissioners consider that they are best able to make the best use of their property if they can enter into leases of 150 years. That will therefore improve the return to the Exchequer in the sense that they will be able to do better deals by getting better institutional support. That is the purpose of the exercise.

Clause 6 gives the Treasury the power to redeem, upon the payment of compensation, certain small periodic payments at present charged direct on the Consolidated Fund or on Votes under old legislation. These payments are expensive to administer, and it has therefore been decided that it would be sensible to discontinue them, subject, of course, to the payment of reasonable compensation. The compensation is to be so calculated that if it were invested in an appropriate Government stock it would provide an income equivalent to the redeemed annuity.

The Treasury is already empowered under the Consolidated Fund (Permanent Charges Redemption) Act 1873 to agree that any perpetual or non-life annuity charged on the Consolidated Fund or Votes should be redeemed on certain terms and subject to certain conditions. In the years immediately following the 1873 Act, redemption terms were agreed for many annuities. In some cases, however, this proved impossible and the annuities have continued at increasing administrative cost. The new clause will empower the Treasury to redeem unilaterally small annuities which have been payable since before 1873 or, to put it another way for the benefit of Opposition hon. Members, in 1873 the Government of the day took powers to deal with these matters where a voluntary agreement could be made. We are now in 1983 and hoping to take power to deal with those where voluntary agreement has not been possible.

Clause 7 is designed to amend the provisions of the Local Government Act 1972 so as to provide a greater degree of flexibility to local authority members when making use of the option that is available to them under section 24 of the Local Government, Planning and Land Act 1980 to receive financial loss allowance when they perform the approved duties of the council, instead of the attendance allowance which is generally offered.

At present, the legislation provides that councillors can make this choice or revert to receiving attendance allowance after making an earlier choice to receive financial loss allowance, only three months prior to the beginning of a financial year—or, in the cases of newly elected councillors, at their election or re-election. This creates difficulties for those councillors who have chosen financial loss allowance and who lose their jobs during the year. Under the present arrangements, such members would presumably not be able to show financial loss, yet would be unable to receive attendance allowance instead until the next financial year. That could mean a prolonged period—possibly up to 15 months—without any allowances other than those for travelling and subsistence expenses.

The attention of the Government has been drawn by the local authority associations to the fact that the way in which the present legislation is drawn up is causing considerable hardship in cases where members, having chosen to receive financial loss allowance, quite unexpectedly lose their jobs. The number of these cases of hardship has risen with the increase in unemployment.

Clause 7 provides that a member who loses his job will in future be able to withdraw his financial loss allowance and, from the following day, be entitled to receive attendance allowance for the perfomance of approved duties. The amendment to the law will bring the position in England and Wales into line with that which already exists in Scotland. I think hon. Members will agree that this is a very desirable adjustment to the existing arrangements. The proposal has been pressed by the local authority associations, which welcome the change.

In conclusion, the Bill contains seven measures, some to tidy up or modernise existing arrangements, and the last one to remedy a hardship caused by the operation of the present rules. All can be justified on their merits, and I commend the Bill to the House.

6.56 pm
Mr. Robin F. Cook (Edinburgh, Central)

I hope that I shall not offend the dignity of that great Department, the Treasury, if I describe the Bill as something of a job lot. It is no disrespect to the Minister's office if I observe that it has been unable to provide the Minister with a thematic speech but has come up with a Bill in which there are seven clauses not one of which bears any relation to the others.

As the Minister said, at least one of the clauses has been waiting since 1980 for legislation, and, having studied the notes on clause 6, I am inclined to feel that it has been waiting since the eighteenth century for legislation.

I shall begin by putting the Lord Commissioner out of his suspense by saying that the Opposition welcome some of the clauses. We see no objection to the rest, and, therefore, it will not be our intention to divide the House tonight. Nevertheless, a number of questions are naturally prompted by the clauses in the Bill and there are some lessons that they can tell us about the economic handling of the country's affairs by the Government over the past three years. I propose to explore some of those questions and some of those lessons. I know that some of my hon. Friends will wish to intervene at a later stage in the debate to rub home the lessons as they affect the regions my hon. Friends represent.

I do not propose to return to those clauses, Mr. Deputy Speaker, if I catch your eye later in the evening and I hope to be excused if I begin, therefore, by following the Minister on his brief tour of the byways of the Bill. I should like to start with clause 3, which relates to the extinction of Zimbabwean debts.

It is obviously unfair that we should contemplate smartly passing back to the Government of Zimbabwe debts that we incurred only because the earlier Government of Rhodesia defaulted on them. It is apt that we should be examining this question tonight, the day after the Chancellor has returned from the IMF meeting where he has claimed a certain triumph in averting major defaults of countries in debt to the IMF by increasing the liquidity of the IMF. The Opposition remain unconvinced by that triumph since the entire increase in the liquidity of the IMF over the next five years is equivalent to the borrowing of Mexico in a single year.

At a time when the number of developing countries is increasing, when those countries are struggling to avoid being pushed into default by bank debts and when the Government have proved singularly accommodating to Argentina in assisting it to avoid defaulting on its bank debts, it is salutary to recall that one of the rare cases of default in international finance occurred in the history of the rebel regime of Rhodesia. I was in this place for half the period during which that rebel regime—

It being Seven o'clock, and there being private business set down by the Chairman of Ways and Means under Standing Order No. 7 (Time for taking private business), further proceedings stood postponed.