DEVELOPMENT (LOAN GUARANTEES AND GRANTS) BILL. (Hansard, 25 July 1929)

§ LORD ARNOLD
My Lords, though the hour is, in a sense, somewhat late. I feel it my duty to place before your Lordships an explanation of the main provisions of this measure and its object, but I trust not to detain the House at any great length. Following upon the Colonial Development 315 Bill, two days ago, this Bill is a further instalment of the Government's unemployment policy. My right hon. friend the Lord Privy Seal has already outlined in various speeches some of the Government's plans for dealing with unemployment. As regards his plans for roads no legislation is needed, at any rate at present. The prospects opened up by the Colonial Development Bill, to which I have referred, were outlined and discussed in your Lordships' House as recently as two days ago, and therefore I need not touch upon those matters. Another field in which employment may be increasingly looked for is electrical development. As regards the necessary finance for that the position is that the Central Electricity Board has already considerable statutory borrowing powers. Again, it was only last evening that the Housing (Revision of Contributions) Bill was passed through your Lordships' House. This was the first step in the Government's housing policy, and, as time goes on, we trust that that policy will also increasingly help unemployment, quite apart from what it will do for housing.
The Bill of which I now move the Second Reading is intended further to help unemployment by giving statutory authority for Government financial help, in ways carefully regulated and administered, for sound schemes which will help unemployment. And—this is an important consideration—these schemes would otherwise not be proceeded with at the present time. The Bill is intended to help schemes of that kind in the case of public utility undertakings working for profit and public utility undertakings not working for profit. It is also intended to help local authorities' schemes. I will explain to your Lordships in a few words what the term "public utility undertaking" is intended to cover, and also will make clear the difference between a public utility undertaking working for profit and one which is not working for profit. A public utility undertaking, for the purpose of this Bill, is one for providing means of transport or communication, or for providing gas, electricity, power or water. A public utility undertaking trading for profit is one which can pay dividends to its shareholders. There are statutory limitations and obligations under which it works, but it can pay dividends to its shareholders. As 316 examples I may name railways, tubes, gas companies and so forth. A public utility undertaking not working for profit is one, for instance, like the Port of London Authority or the Metropolitan Water Board. Such undertakings have stockholders but they have a fixed rate of interest upon their stock holdings, and, if there is any increase in the net receipts of the undertaking, any increased net revenue does not go in increased dividends or interest, but goes either for the improvement of the undertaking or for the reduction of its charges.
The operative clauses of this Bill are in Parts I and II. It is Part I which deals with public utility undertakings working for profit, and Part II deals with schemes of local authorities and those other public utility undertakings not working for profit. Part I, that is the Part which, as I say, deals with public utility undertakings working for profit, provides two forms of assistance. The first is in Clause 1 and it is a State guarantee of principal or interest or both of any loan raised for the purpose of carrying out an approved scheme. The procedure here, is really very similar to that of the Trade Facilities Acts. The second form of assistance, which is set forth in Clause 2, is a direct grant from the Exchequer to assist the undertaking in defraying either in whole or in part interest on a loan for carrying out an approved scheme for any period up to fifteen years from the raising of the loan. An undertaking can have one or other of these forms of assistance. It can have a guaranteed loan or guaranteed interest, or it can have an interest grant, but it cannot have both a guaranteed loan and an interest grant.
I think your Lordships will readily see the advantage of this plan in helping forward various works. The State guarantee of a loan will assist undertakings which have difficulty in raising money at a reasonable rate, and the second and more substantial form of assistance, an actual grant of interest or towards interest, will help those undertakings which cannot proceed without this more substantial form of help. These interest grants are intended to assist approved schemes where the prospects of an early return on the capital expenditure are not very assured. As regards procedure, application for a State guarantee or for an interest grant will be examined by an 317 advisory committee. My right hon. friend the Lord Privy Seal has called in the aid, which is being readily given, of some very experienced and very able business men, and their co-operation in this work will, I think, assure your Lordships that the best experience is being obtained in the working of the plan. The term of this Bill is for three years; that is, three years in which the various loans can be made, but interest in respect of them will in many cases run on for a much longer term. The actual operation of the Bill is three years from August next.
Now I come to a question about which there has been considerable discussion—that is, the limit to be put upon these forms of help. There is definitely in the Bill a limit to the help provided by Clause 1, a limit of £25,000,000. The Government have also undertaken—this is not in the Bill, but the Government have undertaken—that as regards the second form of assistance which I have outlined there will also be a limit of £25,000,000. The Government will not exceed that amount—at any rate not until Parliament meets again. The words of the pledge are: there shall be no commitment of any sort or kind over a capital expenditure of £25,000,000 between now and November. I hope I have made that clear. The matter is complicated, and if any noble Lord should ask a question I will do my best to deal with it later on.
I now come to Part II of the Bill, which gives statutory authority for grants to be made by the Unemployment Grants Committee, usually known as the St. Davids Committee. This authority is given by Clause 4 of the Bill. I should explain before I go any further that amongst other provisions Clause 4 gives the St. Davids Committee a statutory basis which it has not hitherto had. The Committee has been in existence for many years—in fact since 1920—but hitherto it has had no statutory basis at all, and before I explain the terms and conditions upon which grants will be made by the St. Davids Committee I should like very broadly to remind your Lordships of some of the facts about this Committee and of the work which it has done. The Committee, as I have said, was formed in 1920, and from 1920 to 1925 it assisted works to the value of upwards of £100,000,000. That was between 318 1920 and 1925. In all, down to June of this year, the Committee has assisted work to a total value of about £113,000,000. Between 1920 and 1925, I repeat, the amount was rather over £100,000,000. But in November of 1925, almost at the end of the year, the late Government practically stopped the work of the Committee by a circular which they issued, and its operations which, as I have said, had been averaging about £20,000,000 a year, fell to £700,000 and then to £300,000—as low as that. Therefore the Committee was very nearly stopped working. At the end of last year, however, a fresh development of the Committee's work was decided upon.
I should explain that broadly speaking the work of the St. Davids Committee from December of 1925 until November of last year was confined to giving assistance to areas where there was 15 per cent. of unemployment. It was a high percentage and it had a restrictive effect upon the Committee's operations. Right down to the end of last year the Committee's operations were confined to one class of area—that is, areas where there was 15 per cent. of unemployment. That is from 1925. I am not going into what happened before on that particular point. But last year a very important change in this matter was made, owing to the extreme desirability of transferring unemployed men from distressed areas like South Wales and Durham to areas where there was little or no unemployment. A circular was issued and authority was given to the Committee to assist works in those areas where there was little or no unemployment, provided that on works of that kind there would be engaged at least 50 per cent. of transferred men—that is, men transferred from these distressed areas.
It thus came about that its operations then were in respect of two areas—first, as I have said, those where there was a great deal of unemployment, and secondly, those where there was little or no unemployment. There, remained another class of area—those areas where there was substantial unemployment, not so great as 15 per cent. and yet sufficiently large to take them out of the category of areas where there was little or no unemployment. The Government holds, and I think it is clearly desirable, that the operations of the Committee should 319 be enabled to be extended to this third class of areas, and it is with a view to effecting this that new regulations are being issued, and, as has been stated, the 15 per cent. of unemployment will be reduced to 10 per cent. Nor is that final, because, if it seems desirable, the volume of employment in an area can be taken into account as well as the percentage. Indeed, the Committee will have a wide discretion to consider all aspects of the problem in special cases—and I stress those words.
Next—and this should be a helpful provision—assistance can, in special circumstances, be given in a transfer scheme notwithstanding that the proportion of labour proposed to be transferred does not reach 50 per cent. These matters, I know, are complicated and technical, but I am endeavouring to cover the ground so that everything may be made as plain as possible, I trust in not too long a time. These various changes will open up before the Committee an increased field of operations and we believe that they will lead to fruitful results in securing employment, in getting men transferred and in helping works of real utility to the community. A factor which has to be taken into consideration by the Committee is how far schemes are calculated to promote economic development. The change in policy last December also authorised the Committee to resume grants in respect of non-classified roads in distressed or non-distressed areas. Since 1925 that power has been taken away from the Committee. Prior to the inhibition of 1925, road work of a considerable magnitude had been assisted from time to time. I find that the total amount of road works assisted in the five years 1920–25 amounted to £23,000,000. That sum, I should make clear, is included in the total sum given for that period of rather over £100,000,000. Another vital change that is just being made is that, whereas according to the Government circular of 1925 grants could only be made when a work would not otherwise be undertaken for at least five years, what is called the acceleration period is now to be reduced to three years. That is a change of considerable magnitude. I should add that this condition regarding five years, now to be reduced, was never applicable to areas where schemes of transferred labour were authorised.
320 The whole Bill is limited in its operation to three years, so far as the giving of grants and assistance of various kinds is concerned. The actual terms upon which grants will be made under Part II of the Bill—that is, grants to local authorities and public utility undertakings not trading for profit—are not set forth specifically in the Bill. The clause in the Bill which refers to this point lays down that grants shall be made upon such terms as the Ministry of Labour, with the approval of the Treasury, may determine. As a matter of fact the terms will continue, at any rate for the present, to be what they have been in the last few years. The definite limitation in the Bill in these matters is the proviso to subsection (1) of Clause 4, which says that the grants of interest in connection with a loan shall not be for more than thirty years. That is in the Bill. In this matter of grants by the St. Davids Committee, there will also be a limit of £25,000,000—the same limit as applied to the other two forms of assistance of which I have been speaking. There is a limit of £25,000,000 for the actual value of works assisted, and this limit is to be in operation at any rate until Parliament meets again. That is an undertaking, but it is not in the Bill.
I do not think that it is necessary to trouble the House with the actual terms upon which interest has hitherto been granted and will, at any rate for the present, continue to be granted. They are very complicated and lengthy. I have them here and, if any noble Lord wishes to ask any question, I shall be very pleased to reply, but I do not propose to give them to your Lordships unless I am asked to do so. But there is one provision that I should mention in this connection. The St. Davids Committee has had the power to make a percentage grant of 75 per cent. of the wages cost of certain schemes, and it will continue to have this power. It has been almost entirely used for comparatively small schemes of various kinds, such as recreation grounds, resurfacing of roads and so on. I think that, out of the total operations of the Committee throughout its existence, which, as I have said, amount to £113,000,000, these wages grant schemes have amounted to about £17,500,000. Hitherto wages grants have been confined to the areas where there is 321 15 per cent. or more of unemployment, but it is intended to relax this, and they can now be given to practically all areas, if the scheme is approved.
As I have told your Lordships, between 1920 and 1925 the average amount of schemes assisted by the Committee was £20,000,000, and the bearing of this upon the unemployment problem can be seen if I give your Lordships one or two figures. It is estimated that the expenditure—this is a very vital figure in this whole matter—of £1,000,000 on schemes of the kind we are discussing employs directly 4,000 men for one year. In addition to this, some of the schemes, at any rate, employ as many more men in indirect labour, in the preparation of materials, in factories, workshops, transport and so on. On this basis the expenditure of £1,000,000 would employ 8,000 men for a year, and the expenditure of £20,000,000 would employ some 160,000 men for a year. That may be somewhat on the high side in certain schemes, but it has worked out so in others and it is a figure which I think we are entitled to put forward, at any rate for the purpose of illustration and discussion. On any-think like that basis, it is clear that the expenditure of £20,000,000 would lead to a considerable amount of employment and have a sensible effect upon the unemployment problem. Hitherto, practically every form of municipal activity has been assisted by the St. Davids Committee. I might toll your Lordships—I have nearly finished—a rather interesting fact. The operations in certain road works undertaken by the Committee unearthed a tablet showing that the particular road had been originally constructed over a hundred years earlier by unemployed men. That, I think, is at any rate a tribute to the good work that was done by the unemployed.
There is one specific scheme of which I should like to tell your Lordships as an illustration. It is a scheme that has just been approved in the Midlands, where eight local authorities have submitted a plan to deal with 3,000 out of the 10,000 pit tips, slag heaps and brick mounds which abound in the Midlands, deface the countryside and considerably reduce the economic value of the land. Of these various mounds and heaps 3,000 are to be levelled by eight authorities. 322 This will improve the value of the land, increase the rateable area and make the land available for the building of houses, factories, recreation grounds, allotments and so on. This scheme will, I think, take about five years in all and will employ 2,000 men for that period. It is a considerable scheme, and I think that it will be generally agreed that it is a matter for congratulation that such a scheme is going to be undertaken. A scheme which was undertaken some time ago was the Nottingham-Trent Canal whereby as the result of dredging, widening and building locks, a great inland City like Nottingham has been made in a sense into a port, which can now be reached by 100-ton barges from the sea. I do not think that I need say more. I have done my best to outline the provisions of the Bill, and I hope I have made it clear that the Bill, and the other plans to which I have referred, are only part of the Government's unemployment policy. We have only been in office a few weeks, but we have not been idle. The Lord Privy Seal and Ministers particularly associated with him are working on this unemployment problem with relentless industry, and as time goes on the policy of the Government will be more and more fully developed. I beg to move.

§ THE EARL OF LUCAN
My Lords, I am very much obliged to the noble Lord for his very careful exposition and explanation of this Bill. It was rather difficult to get hold of a copy, because it was only circulated this morning, and it was only by reading the discussions in another place that I have learned a certain amount about the measure. It has, however, been very ably explained by Lord Arnold, and I quite understand from him that it is one of the series of measures for curing unemployment which the Lord Privy Seal is initiating. I can assure him that on this side of the House we are just as sympathetic with, and as keenly anxious to do, anything which will bring about a cure for unemployment, as any other Party. I can assure him that we shall always do all we can to support the Government in measures of that sort, and give it every assistance in order to bring about 323 such a desirable result. I do not think it is necessary at this hour for me to refer to any of the many subjects over which he has travelled. I notice that in another place there were no Divisions, and apparently the debates were very harmonious. Everybody was very sympathetic towards the Bill. There was, as he said, a limit of £25,000,000 put down for Clause 1, whereas for Clause 2 there was no limit, and it seemed rather like giving the Minister a blank cheque. However, I notice that the right hon. Gentleman met the objections by giving the undertaking to which Lord Arnold has referred, and that there will be no capital commitments between now and next November. I will not go any further into the Bill, and the only question I would like to ask is when we shall be told the constitution of the committee which is to be set up. Perhaps the noble Lord cannot give it now, but it might be interesting to know.

§ LORD ARNOLD
I am very much obliged to the noble Earl for his words about this Bill. With regard to the committee, I cannot say exactly when it will be constituted. The matter is being pushed on most relentlessly, and although I cannot give the exact date, I can assure the noble Earl that no time is being lost. We are as anxious as anybody can be to get on with the work. As the noble Earl knows, it takes a little time to constitute a committee. May I say one word with regard to his complaint that the Bill was 324 only circulated this morning. In that matter I can claim to have done all I could. I went to the officials to make certain that the Bill was being circulated this morning. With regard to another Bill which was circulated late, I was informed that that was not unprecedented in this House during the last week of the Session.

§ LORD ARNOLD
That is what I am told, and I think it must be so in certain cases, because if a Bill does not pass another place until nine o'clock, it cannot be printed in time to be circulated the next morning. Of course, copies can be obtained of the Bill as presented in another place, but that is not very satisfactory. I am not complaining at all of what the noble Earl said, but I only mentioned this in order to show that no time had been lost in circulating the Bill. The Government have done everything to supply the House with all the information they could, and I think in these matters they are doing as well as previous Governments.