TRADE FACILITIES BILL. (Hansard, 7 May 1924)

§ LORD ARNOLD
My Lords, I do not think it will be necessary to detain your Lordships at great length in moving the Second Reading of this Bill, as its main aims and provisions have been discussed, both here and in another place, on previous occasions. I will endeavour, however, adequately to summarise the objects of the present Bill, and, in particular, I must explain Clause 2, because that clause introduces a new provision. The Bill has four main clauses, and, as they deal with entirely different matters, it follows that the Bill falls into four separate parts. I will deal with them in order.
320 Clause 1 of the Bill increases from £50,000,000 to £65,000,000 the total amount of loans, the principal and interest of which may be guaranteed by the Government, and extends the period during which guarantees may be given from November 9, 1923, until March 31, 1925. The principle involved was fully discussed in the debate upon the original Acts—the Trade Facilities Acts, 1921 and 1922. Your Lordships will remember that the genesis of these Acts was that the Treasury should have power to guarantee loans for works of a capital nature with a view to relieving unemployment. These Treasury guarantees have undoubtedly been of value in the vital work of finding employment. Under the original Acts, as I have said, there was power to guarantee up to £50,000,000. It is now sought to raise the limit to £65,000,000. The guarantees already given and promised amount to about £43,000,000. Therefore, when this Act is passed the Treasury will have in hand powers to the extent of a further £22,000,000, but these powers, either wholly or in part, must be exercised before March 31, 1925. Before I leave this clause, I would advise your Lordships of one fact which is important in this connection, and will, I think, be recognised as highly satisfactory. In all the guarantees which have been given the Government has only in one case so far been called on to make good a loss. This was in the case of a small brickwork, and the Exchequer was involved in an expenditure of, approximately, £4,000.
Clause 2, as I have before indicated, deals with a new matter, which had no place in the previous Trade Facilities Acts, 1921 and 1922. The clause carries out the Resolution adopted by the Imperial Conference last autumn, that the Treasury should be empowered to contribute towards the interest charges on loans raised in the United Kingdom where the proceeds are spent in this country and are to be applied on, or in connection with, a public utility undertaking in some part of His Majesty's Dominions or in a British Protectorate. I must make it quite clear, my Lords, that this is a proposal to pay money, not to guarantee it, and the clause gives power to pay up to a maximum of three-quarters of the interest on any loans such as I have described.
Now, certain provisions are laid down in the clause, the chief of which is that 321 the contribution must be limited to £1,000,000 in any one year and to £5,000,000 in all. Another important condition is, as I have indicated, that this contribution will only be made by the Home Government on such part of a loan as is expended in the United Kingdom. One of the chief objects of this proposal is to stimulate orders for goods which will be supplied from this country. Thus the clause should do something to reduce unemployment, more particularly as another condition of a contribution by the Home Government is that the loan must be for expenditure which would not normally be incurred until a later date, and it is also definitely laid down that the loan must be calculated to promote employment in the United Kingdom. The extent of the possibilities under this clause is considerable. If I assume that loans are raised at 5 per cent. per annum, the Treasury contribution of the maximum of three-quarters of the interest would in all enable assistance to be given towards capital works involving an expenditure of from £26,000,000 to £27,000,000. Having regard to all these conditions, I venture to think that this clause is one which will meet with a wide measure of support.
I now pass to Clause 3, the purpose of which, shortly stated, is to extend the period during which requests for guarantees under the export credits scheme may be received, and also for an extension of the time during which guarantees may remain in force. I need scarcely remind your Lordships of the history of the export credits scheme. It was started five years ago mainly with the object of endeavouring to help our trade with certain countries which had been specially disturbed as a consequence of the war. In the first instance, the plan was to make advances through the Board of Trade in respect of goods exported to those countries. Later, the Government decided to adopt a procedure more closely approximating to the normal methods of financing trade, and agreed to guarantee bills drawn by traders in respect of goods exported to the countries included in the scheme, and to share a proportion of the ultimate loss, if any.
By this clause the Bill extends the period for acceptance of requests for guarantees up to September 8, 1926, and extends the period during which the guarantees may remain in force up to 322 September 8, 1930. According to the most recent figures the total amount of credits actually taken up, including both advances and guarantees, was, in round figures. £9,400,000. To this should be added another £3,400,000 which has been earmarked but not yet taken up, making £12,800,000 in all Out of this total £5,400,000 has already been repaid or, in the case of guarantees, the guarantees have been cancelled on the bills being met. The total amount now in use or earmarked is, therefore, £7,400,000, leaving a balance of £18.600,000 for further transactions No new principle is involved in this clause: it merely continues the system already in force, and the extensions are given with a view to making the export credits scheme more effective in contributing to trade improvement and the provision of employment.
I come now to the last clause of the Bill, Clause 4, which deals with matters which are already well known to your Lordships' House and have been discussed on several previous occasions. The clause provides that the Treasury may guarantee the principal and interest of a loan to be raised by the Government of the Soudan of a further amount of £3,500,000. This money is required in connection with the Gezirah irrigation scheme. Previous guarantees have been given by the British Government for this scheme to an amount, in all, of £9,500,000. Therefore, the further £3,500,000 provided for by this clause will bring the total in respect of which guarantees have been given to £13,000,000. This clause, which gives power for this additional guarantee of £3,500,000, lays down conditions similar to those which have been previously enacted. The general effect of these conditions is that the Soudan Government must make proper arrangements for applying the loan and charging it on the general revenue and assets of the Soudan, and establish a proper sinking fund to redeem the loan within fifty years of the time it is raised.
This farther loan of £3,500,000 is to complete the Gezirah irrigation scheme. The contract for the work is let to a British firm, and it is to be completed by July, 1925. It is estimated that after the completion of the irrigation scheme, 70,000 bales of cotton annually wall be obtainable from the Soudan. This will be 323 a substantial contribution towards increasing the output of a vital raw material. Another advantage which will accrue from this loan is that the placing of this big contract with a British firm means an expenditure of considerable sums of money in this country upon plant, machinery, steel and iron work and materials, all of which should help to relieve unemployment. I should say that it had been hoped to raise this final loan of £3,500,000 without the guarantee of the British Government. Proposals to that end have, however, proved impracticable, and therefore this guarantee is needed. If the British Government were to decline to guarantee this £3,500,000, the position might be somewhat serious. It might be I that the whole of the irrigation scheme would be in jeopardy, and, as the British Government has already given guarantees up to £9,500,000 in connection with the scheme, it seems the wiser plan to guarantee this further sum of £3,500,000 with the object of carrying the work through to a satisfactory and remunerative conclusion.
I have now dealt with all the provisions of the Bill, and I venture to think that, taken as a whole, it is a measure which will commend itself to your Lordships because it is designed to continue and extend schemes already adopted for reducing unemployment and furthering trade. I beg to move that the Bill be now read a second time.

§ EARL STANHOPE
My Lords, in view of the proposals which have been made by the Government in another place to abolish the McKenna Duties, and which, it is obvious, will increase unemployment, I must say that I am very much surprised that they should now produce in your Lordships' House a scheme which may affect unemployment in an opposite direction.

§ LORD BANBURY OF SOUTHAM
My Lords, I should like to ask the noble Lord in charge of the Bill whether my understanding of Clause 2 is correct. The clause is rather involved, but, as I understand it, the fact is that we guarantee to spend a sum not exceeding £5,000,000 in all, and that we shall never get that five 324 million pounds back. We practically make a present of £5,000,000 to certain people in the Dominions. Is that correct?

§ LORD ARNOLD
Potentially. If all the money is used £5,000,000 would be paid, not guaranteed, as interest on loans, but the loans in respect of which that interest would be used must be money which is spent in this country, and therefore it will help unemployment here and will also help the Empire.

LORD BANBUBY OF SOUTHAM
It is really giving a subsidy to a certain undertaking on the understanding that that undertaking spends the money in this country.

§ LORD ARNOLD
In effect, yes.

§ LORD BANBURY OF SOUTHAM
We are going to spend £5,000,000 to alleviate unemployment, and I do not think we shall ever get a penny of it back. We are really making a present of it. When we come to Clause 4, as I understand from the noble Lord, another £3,500,000 is to be spent because, if you do not spend this additional £3,500,000, the £9,000,000 which we have already spent, or some such sum, will probably be wasted. I dare say that is true, and it may be advisable to spend a certain amount of money in order to complete the work, but what is going to happen if what we see in the newspapers is correct? I do not always believe what I see in the newspapers, but what is going to happen if the Egyptian Government take over the government of the Soudan and we abandon the control of the Soudan to that Government? I may be wrong, but if so I should like to be put right. So far as I can gather from the newspapers one of the claims made by the present Egyptian Government is that we should withdraw altogether from the Soudan, and that the Soudan should be managed by Egyptians and by them only. Are the Government going to say: "No, we have invested a certain amount of money in that country, we have made that country prosperous, and we are going to stand as we are," or are they going to give way? If they are going to give way I do not think they ought to lend any more money. If they are going to retain control of the Soudan itself I should not object to it, but I should like to know what the position is.

§ LORD PARMOOR
My Lords, this is really not an occasion on which to embark upon a question of foreign policy. Whatever may be the policy of the Government in the future, on which I desire to say nothing at present, I think it may be taken that an expenditure of this kind will be safeguarded. But I shall not be led into embarking on a discussion of foreign policy on this Bill.

§ LORD ARNOLD
My Lords, may I ask that we should be permitted to take the Committee stage of this Bill to-morrow? It is a Money Bill, and no Amendment-can be carried. The Bill is rather urgently required. Contracts are awaiting confirmation, and can be entered into as soon as this Bill is passed. The Government have done their best to push it forward, and in the circumstances I hope that we may be permitted to take the Committee stage to-morrow.

§ THE MARQUESS CURZON OF KEDLESTON
I think the request of the noble Lord is a reasonable one, and I shall agree to it.