§ 3. Mr. VazTo ask the Secretary of State for Scotland if he will make a further statement on proposals to assist the local authorities that lost money in the Bank of Credit and Commerce International.
§ Mr. StewartI have nothing to add to the reply that I gave to a similar question on local authorities that lost money in BCCI from the hon. Gentleman on 18 November last.
§ Mr. VazWill the Minister assure the House that if the Treasury and Civil Service Select Committee report, which is to be published in a fortnight, recommends the payment of compensation to Scottish local authorities and the other victims of BCCI, he will accept the recommendation and the Government will pay the compensation? Does he accept that as long as there is money left in this bank liquidators will be at the door? Will he join me in condemning the huge fees—£700,000 a week—currently being charged by Christopher Morris and Touche Ross to conduct the bank's liquidation? If that money had been given to the Scottish local authorities, every one of them would have been paid in full twice over. Will he draw that matter to the attention of the President of the Board of Trade?
§ Mr. StewartI am sure that, as always, my right hon. Friend the President of the Board of Trade will read the report of our proceedings very carefully tomorrow morning.
Let me emphasise again that my right hon. Friend the Secretary of State for Scotland granted Western Isles islands council consent to borrow £24 million, and granted Ross and Cromarty district council consent to borrow £1.8 million, to help the councils to cope with the losses to which the hon. Gentleman refers.
Our response to any recommendations from the Treasury and Civil Service Select Committee will be a matter for my right hon. Friend the Chancellor of the Exchequer, but no doubt the Government will, as always, take any recommendations from that Committee as seriously as we take recommendations from any Select Committee.
§ Mr. GallieDoes my hon. Friend agree that the drop in interest rates over the past year will be of considerable help to councils such as Western Isles? Does he agree that the interest rate reduction has injected many millions of pounds into the coffers of local authorities throughout 308 Scotland? [Interruption.] Should not those authorities be able to use the money to improve services, and to reduce council tax demands?
§ Mr. StewartI entirely agree, and I am astonished that Opposition Members should jeer the good news for Scottish local authorities to which my hon. Friend refers. I should have expected them to welcome the news that authorities will now face lower interest rates.
My right hon. Friend the Chancellor of the Exchequer has announced substantial reductions in interest rates. Our base rate is now the lowest in the European Community, and the lowest since 1977. There is no doubt that those reductions will be of immense benefit to public organisations that have borrowed, to the private sector and to the whole Scottish economy.
§ Mr. MacdonaldI thank the Minister for adopting my suggestion last year that an inquiry should be held into the islands special needs allowance and for his decision at Christmas to implement the inquiry's findings. His action will go a considerable way towards meeting the special needs of the islands following the BCCI affair.
The economic situation in the islands, however, is still difficult. Will the Minister give equivalent financial support to the ferry service across the Sound of Harris proposed by the islands council? Such projects will include the islands' economy, and provide much-needed jobs immediately.
§ Mr. StewartI am grateful to the hon. Gentleman for his recognition—[Interruption.] I am thanking the hon. Gentleman for his recognition of what we have done in response to his representations on behalf of his constituents.
§ Madam SpeakerOrder. I do not think that the Minister quite understood the reason for the interruption. A Back Bencher behind him was a reading a newspaper; that is what hon. Members were complaining about—the reading of a newspaper in the Chamber.
§ Mr. StewartI am grateful to you, Madam Speaker. I cannot, of course, see what goes on behind my back. [Interruption.]
§ Madam SpeakerOrder. We must make some progress.
§ Mr. StewartI am grateful to the hon. Member for Western Isles (Mr. Macdonald). I assure him that my right hon. and hon. Friends will consider his point about ferry services very seriously.
§ Mr. Charles KennedyI refer to the Minister's reply to the hon. Member for Leicester, East (Mr. Vaz). If the Select Committee report mentions compensation, as we hope it will—Ross and Cromarty was one of the afffected councils—will the Minister take a slightly more enlightened view of the word "compensation" than the Treasury might and allow the local authorities involved longer to plan their borrowing and expenditure in order to offset the immediate impact of the losses incurred as a result of the BCCI affair?
§ Mr. StewartThe hon. Gentleman is asking a hypothetical question, although I am sure he will agree that I am one of the most enlightened of Ministers. Ross and Cromarty had £1.8 billion invested in BCCI, but it did not ask us for additional borrowing consent in that regard.