Lords Sitting of 20 May 1936

Preamble
The House met at a quarter before four of the clock, The LORD CHANCELLOR on the Woolsack.
Lord Wharton—Sat first in Parliament after the death of his father.

DALTON-IN-FURNESS URBAN DISTRICT COUNCIL BILL.
Brought from the Commons; read 1a, and referred to the Examiners.
FISHGUARD AND GOODWICK URBAN DISTRICT COUNCIL BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.
NORTH WALES ELECTRIC POWER BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
GRAMPIAN ELECTRICITY SUPPLY ORDER CONFIRMATION BILL.
Considered on Report (according to Order).
ALEXANDER SCOTT'S HOSPITAL ORDER CONFIRMATION BILL. [H.L.]
Considered on Report (according to Order).
MALTA (LETTERS PATENT) BILL. [H.L.]
Read 3a (according to Order), and passed, and sent to the Commons.

HOUSE OF LORDS OFFICES.
Order of the Day read for the consideration of the Second Report from the Select Committee.
The Committee reported as follows:
1. MARRIAGE GRATUITY.
The Committee sanctioned a marriage gratuity of £498 3s. 0d. under Treasury Minutes of 17th March, 1894, and 21st November, 1895, to Miss M. E. Waterman, Examiner of Acts, who had resigned after eighteen years' service.
2. ACCOUNTING AND COPYING DEPARTMENTS.
The Committee sanctioned the following appointments consequent upon the resignation of Miss M. E. Waterman:

(1) Mr. Percy Johnson, lately clerical officer in the Public Trustee Office, to be Assistant Accountant.

(2) Miss W. M. J. Phipps to be Examiner of Local Acts.

These two appointments to be on the scale £337—£18—£515 and to date from 16th April and 1st May respectively.

3. Miss R. J. Griffith to be a clerical assistant with salary on scale £166—£10—£337.

This appointment to date from 20th April, 1936.
3. PARLIAMENTARY OFFICE MESSENGERS.
The Committee sanctioned the appointment of an additional messenger in the Parliament Office consequent on the temporary re-allocation of accommodation in the Palace.
THE CHAIRMAN OF COMMITTEES (THE EARL OF ONSLOWS): My Lords, I beg to move that the Report of the House of Lords Offices Committee be now considered and agreed to.
Moved accordingly, and, on Question, Motion agreed to.

CIVIL LIST BILL.
Read 3a (according to Order), and passed.

SPECIAL AREAS RECONSTRUCTION (AGREEMENT) BILL.
Order of the Day for the Second Reading read.
THE EARL OF MUNSTER: My Lords, in the unavoidable absence of my noble friend Lord Templemore, I beg to move the Second Beading of this Bill. The Bill, as the House is no doubt aware, is designed to give effect to the decision of the Government, which was announced by the Chancellor of the Exchequer in another place in making his Budget statement. It is founded principally on the Second Report of the Special Areas Commissioner, which referred in these words to "the difficulty of getting capital for the establishment of new or the expansion of existing industries in the Special Areas." The main purpose of the measure is to test that statement by a process of experiments in realism. The Bill is not, and never has professed to be, the Government's solution to the problem of the

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Special Areas as a whole. It is, and I would impress this upon the House, quite definitely an experiment which the Government thought it well worth trying, and which, if it proved successful, can be considerably enlarged in the future.
The scheme, as outlined in the Bill which is before your Lordships, takes the form of establishing and setting up a finance company, whose object will be to lend money to persons or undertakings desiring to establish or develop small businesses in the Special Areas, but who are not able, for some reason or other, to obtain finance for any long or medium term periods from existing financial institutions. The proposal is that a company should be set up with a capital of £1,000,000 sterling, of which £900,000 will be cumulative preference shares of £1 each, bearing interest at the rate of 3½ per cent., and £100,000 in ordinary shares of £1 each, on which the maximum dividend will be limited to 3 per cent. per annum. The whole of this capital will be subscribed privately, but the contribution to be made from the State takes the form of payments which are set out in the first four paragraphs of the Schedule to the Bill.
Before I deal with the liability of the Treasury, may I refer briefly to the intentions of the Government concerning the lifetime of the company. It is proposed that the company shall have a life of ten years and it will be laid down in the Memorandum of Association that the company shall be wound up not later than ten years from the date of its incorporation; but I want to impress upon your Lordships that it does not follow from this provision that the company will necessarily be wound up at the end of this period. If it proved itself a success it would be possible by agreement of all parties to obtain an amendment in this respect of the Memorandum of Association. The company will have a central board of directors, to whom no fees will be paid, but it will be authorised to pay remuneration to the chairman, the managing director or technical directors.
Perhaps I might now turn to the provisions contained in the Bill. The first clause is an operative one authorising the Treasury to do two things—(1), to make an agreement with the company when formed; (2), to make the payments specified in paragraphs 1 to 4 of the
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Schedule to which I have referred. The first of these paragraphs lays down that the Treasury will find the preliminary and winding up expenses of the company. The second paragraph states that they will pay to the company the amount of their administration expenses annually, subject to a maximum of £20,000. The third paragraph lays down the payment, pound for pound with loans made, of a sum not exceeding £100,000, as a contribution to the reserve funds, and under the agreement with the company this sum may only be used for the purpose of meeting losses, and for no other purpose whatever. Lastly, paragraph 4, concerning the liability of the Treasury, deals with the payment, upon the winding up of the company, of losses incurred, whatever they may be, subject to a maximum equal to one-quarter of the total of loans made by the company. Paragraphs 5 and 6 deal with the provisions as to the winding up of the company. The second clause of the Bill is inserted as a precaution against the company being subjected as a moneylender to the restrictions included in the Moneylenders Acts.
I have dealt very briefly with the measure that is before your Lordships, but I hope my explanation has been effective in inducing your Lordships to believe that the Bill is one which should quickly go upon the Statute Book, in order to see if the success which we hope for will be achieved. Before I sit down may I deal with one criticism which has been mentioned quite frequently, and indeed a great deal in another place? It was directed to the fact that the company would only have a capital of £1,000,000, which appeared to be an infinitesimal sum with which to carry on any satisfactory work in the Special Areas. As I pointed out at the beginning of my speech, the object of this measure is entirely experimental, and there is provision laid down in the Bill that the capital may be increased with the consent of the Treasury, that is, if the Act proves successful and the suggestions of the Government prove workable. Furthermore, your Lordships will have observed that this capital sum of £1,000,000 sterling must not be considered as fixing the total capital that can be lent, for this sum can be lent to the public who are forming companies in this district over and over again. That, I think, covers the main portions of the

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Bill, and I hope the measure will commend itself to your Lordships. In the absence of my noble friend I shall be prepared to endeavour to answer some of the questions which will no doubt be addressed to me. I beg to move.
Moved, That the Bill be now read 2a.—(The Earl of Munster.)
LORD FARINGDON: My Lords, my friends on this side of the House cannot be expected to approve of this Bill. We cannot in principle approve of the bolstering up of private enterprise, but so desperate are conditions in these Special Areas that I will say at once—and I think my noble friends will agree with me—that we certainly hope that this Bill will meet with success. But I cannot say that we expect it. The Government have just stated, and stated repeatedly in another place, that this is not their solution of the problem of the Special Areas. I am not going to labour this point, but the Government have been in power now for live years, the problem has been with them since the beginning of their term of office, and as solutions all that they have produced are Reports of Commissioners, the appointment of a Commissioner, and the giving to him of certain funds to be expended—funds which, owing to the fetters set, upon him, he has been unable to use even to the full extent of the amount put up. Now we have this fiddling little Bill.
Well, if one criticises this Bill as being the Government's solution to the Special Areas problem, I think one would not be altogether justified. One suspects that this is really a kind of eye-wash. The Chancellor of the Exchequer in his Budget Speech promised that he would do this for the Special Areas, because I think the feeling is universal, not merely in the Special Areas but throughout the country, that something has to be done about this running sore which exists in certain parts of our country. The Chancellor of the Exchequer, however, when speaking of this Bill, did not seem to be very much more optimistic than I am. He said that the public would be called upon to take risks for little reward, and that there was not much hope that the risks would be taken unless the prospects became rosier. Frankly I do not see how the prospects can conceivably become rosier. So far as I can see, this Bill is meant to make those
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prospects rosier, the prospects without which the Bill apparently cannot succeed. Well, it seems to me hopeless.
You are trying, so far as I can make out, to help small industries in the Special Areas. These industries cannot, I believe, prosper in those Areas unless the condition of the Areas themselves improves fundamentally. These industries must have markets. There are no markets there, and the Government have done their best to cripple those markets even more. They have imposed a means test which, it has been calculated, takes about £5,000,000 a year out of those Areas, and then they hope that these unfortunate people will be able to support new enterprises. This is not the way to solve this problem. The way is not merely to found even new industries on a large scale. New industries, light industries, which the Government have been pressed to set up in the North, will not establish themselves there again unless there are markets for their produce. Light industries have settled themselves in the South because they have found that for their particular trades proximity to their markets is far more important than proximity to their raw materials. The only thing to do in the North is to revive the industries which made the North; and the same with South Wales. The chief of those industries is coal. I suppose that really during the ensuing years of this Government we can hardly hope that they will do anything. Nationalisation of the coal industry is quite obviously the only conceivable solution which is going to deal with this problem, and that, I fancy, is hardly to be expected from a Tory, or oven a National Government.
I should add, incidentally, that there is yet another disadvantage in these Areas, which is the enormously high rating. The Government, though they show no inclination to do so, may be forced to deal with this trouble on broad lines. To show how extreme the differences can be, I will quote the case of Merthyr Tydfil, with rates of 27s. 6d. in the pound, and Oxford with rates of 7s. 4d. It is not necessary to say that the difference is due to the Poor Rate. Surely this is not a question of Party; it is a responsibility of the whole nation, and not of certain regions in which the trouble happens actually to exist. If the Government could spread this expense over the whole

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country, that alone would enormously improve the possibility of new industries establishing themselves in those Areas.
In passing I should like to mention a very common complaint that is made—namely, of the purely arbitrary limitation of those Areas. It gives rise to a great deal of discontent and dissatisfaction in areas where suffering is just as serious, but which are not included. I quite understand that possibly it was difficult to draw a hard-and-fast frontier, but it seems to me that it might have been better done. Was it not possible to say that any place where unemployment was above a certain percentage would automatically be a Special Area? I suggest that to His Majesty's Government because it is a point which has already struck me as unfair, and which certainly strikes the people in those areas as a great injustice, though (as I have already pointed out) they have not really missed much. The Chancellor of the Exchequer boasted of the decrease of unemployment and said that it was now only 14 per cent. That is true, but in Durham it is 34 per cent., in South Wales the same, in all of Scotland it is 28 per cent., and the highest figure I believe in any one place is 70 at Jarrow. These are horrifying figures, and they are figures which have not improved.
It is hopeless, I maintain, to have any expectation that a Bill such as this will succeed; that is to say, I do not believe that it will be used. I am not complaining that the sum is only £1,000,000. I do not believe, and many of us on this side of the House do not believe, that this money will ever be called upon at all. It will, in any case, only benefit the small business man. Indirectly, of course, it may benefit the ordinary working man, but directly not. It is not really a Bill which tackles the big problem of unemployment as a whole. I personally am extremely doubtful, and I should like some assurance from the Government on this point, because I feel that they must have very definite expectations. I am very doubtful, and I cannot see why this money should be subscribed at all. It is difficult to imagine what attraction a company of which a quarter of the shares are guaranteed by the Government and which will be paying only a small rate of interest, should have for capital when it can obtain as good a rate or a better rate of interest in gilt-edged securities. It seems to me doubtful whether this
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money can be raised, but I presume the Government have definite expectations on that point. In another place reference was made to public spirit and so on. I sincerely hope that the necessary public spirit will be forthcoming. It has not been our experience in the past that capitalism has a very strong sense of public spirit or charity. Perhaps it may develop one.
It seems to me, too, that the expenses of administration of this company, or of this method of administering this particular kind of company, are unnecessarily high. Why could not the Government, prepared as they are to give this guarantee, have advanced this money through the present credit organisations—banks and so forth? If this is a private enterprise company it will, of course, require security for money advanced. It apparently will require 25 per cent. less security than an ordinary bank would have done since 25 per cent. is guaranteed by the Government. Could not the Government have produced a scheme much less costly than this which would have extended that guarantee to the banks themselves directly? I suggest this, and I should like to have some answer to the point. It seems to me also that the Government have chosen a peculiarly expensive way of raising the money. If this is, in their opinion, a good scheme, they could themselves have borrowed the money easily at a very low rate of interest, and therefore would have been in a position to advance it at a very much lower rate than this company will have to charge. That is an additional disadvantage with which the Government have saddled their Bill.
Apparently the Government are prepared to lose money. I have had some little difficulty in working out the figures, but by going carefully through everything that was said in another place I gather it may amount to £1,000,000 by this process of revolving credit. I am not an actuary, and I should hesitate to say exactly what the precise figure of the maximum loss may be. Presumably it will not be £1,000,000, because that is the whole capital of the company, and with a guarantee of 25 per cent. it could not lose the whole capital. I am open to correction on this point, but that is my reading of the Bill and my understanding of what was said in another place. It does not, however,

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seem to be a matter of any great importance. Why could not the Government, if they are prepared to lose £1,000,000, have lent it themselves directly, raising it at a very much lower rate of interest and re-lending it again at a very much lower rate? In that case there would have been considerably greater possibility that this fund would actually be used. Incidentally could the Government tell us why we are not supplied with Articles of Association, and also why the Treasury will apparently have no representative on the board of this company? If public money is to be lent, it seems to me only reasonable that the Treasury should be represented on the board of such a company.
The Government maintain that they have produced this Bill in answer to the Commissioner's Report. I am sorry to use slightly abusive language, but this again is so much eye-wash. The Government are apparently pretending that they are carrying out the recommendations of their Commissioner. They are doing nothing of the sort. They are following one small recommendation that he made and ignoring all the others. If the Government do not wish us to treat this as their solution of the Special Areas problem, we have the right to be told what the Government really intend to do. This is a problem so urgent that I sometimes wonder—we on this side all wonder—whether the Government are fully aware of it. In another place, on this very Bill, the Chancellor of the Exchequer was asked whether he was aware that people were starving. He replied that he was not. That seems to me to show either that the Chancellor of the Exchequer was less well-informed than anyone else in the country, or else it shows the dangerous influence of words, because starvation in those Areas has been described by a new word, "malnutrition," so people like the Chancellor of the Exchequer are apparently able to say starvation does not exist. That is to my mind a very shocking attitude and one which must inevitably bring the Government into disrepute. It gives rise to the feeling that the Government do not fully appreciate the horror of the position. If they do, perhaps they will tell us what they intend to do about it. When they reply on this Bill, perhaps they will be so generous as to throw us a few crumbs of encouragement to show they really
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mean to do something else; otherwise I am afraid all these criticisms are thoroughly justified. We shall be justified in saying this is the Government's solution, and only a Tory Government, I fancy, would have thought of solving the Special Areas problem by turning it into a limited company.
THE EARL OF ELGIN AND KINCARDINE: My Lords, I am fully aware that in your Lordships' House any Bill of a financial nature is treated rather as a formality, but I feel quite certain that there is no single individual in this House or elsewhere, who has been brought into close or personal contact with the needs of the Special Areas, who is not impressed with the fact that this is not a formality, that this is a subject of vital importance and of great urgency. Unlike the noble Lord who has just spoken, I welcome this Bill, but I welcome it only as a consignment on account, and I was glad to note from the remarks of the noble Earl who introduced the Bill that the Government consider it in that light. Even so, the matter is urgent and, as the noble Lord who has just spoken has pressed, it is urgent that we should get down to these facts, that we should find a solution. This Bill, in the words of its Preamble, is to set up a company in order that financial facilities may be given
"to persons setting up or carrying on business in the Areas specified in the First Schedule to the Special Areas (Development and Improvement) Act."
All these people, under the terms of this Bill, must be able to give a "reasonable expectation of ultimate success," and show that they have been unable to get these facilities through the ordinary channels.
Being to a certain extent cognisant of the conditions, I know that in Scotland particularly there are agencies in addition to the banks supplying credit for industry, and the result has been to afford some measure of help to these very people. I think it may be generally agreed that, except for such cases as are included under the setting up of new businesses and certain marginal cases, there has been no very great difficulty in securing the finance. In other words, I might put it that the securing of finance has not been the really crucial stumbling block. But I would suggest, as was indeed suggested by the noble Lord who

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has just sat down, that it might have been prudent, it might have been wise, and it might still be prudent and wise, if the Government, in setting up this company, would operate through those agencies which are already in touch with the situation, which have already been "vetting" the various proposals that come before them, and which, therefore, are cognisant of the conditions. That, I believe, is possible under the provisions of the present Bill, and I do press upon the Government that it would be much wiser to make use of those agencies that exist than to set up a new agency which may cut across the paths already trodden and investigated.
To my mind there are three great obstacles. Two of them have already been touched upon by the noble Lord who has spoken. The first is the tremendous burden of local rates. He pointed out, quite truly, that it is impossible to encourage a new enterprise to come to a district where the rates are very heavy as compared with such a district as Oxford or one near London where rates may be much less. But he did not add this point, that the burden of providing those rates is on the shoulders of a very few, and, therefore, that the solution sometimes suggested of giving the preference to a new industry by relieving it of the local rates, would add very unfairly to that already very heavy burden borne by the industries which do still survive in those Special Areas.
The noble Lord, Lord Faringdon, also referred to the difficulty which arises from the arbitrary boundaries given to these Special Areas, and I think Scotland produces perhaps the most clamant example of the difficulty of these delimitations. We have scheduled as an Area Lanarkshire, Dumbartonshire, part of Ayrshire and part of Renfrewshire, but the City of Glasgow, which is situate in the middle of that Area, is excluded. Similarly, we have the fishing communities along the North-East coast, burghs like Buckie, Lossiemouth and so on up the Moray Firth, where unemployment is as high as 40 per cent., unable to obtain any assistance from the Special Area Commissioner's Fund. I think that a point which deserves the very careful consideration of the Government is as to whether the limitation could not be cither wholly done away with for Scotland,
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or at any rate some discretion given in distributing the funds which are at the disposal of this company and of the Special Commissioner.
Thirdly, we have experienced under the present conditions the great difficulty which arises from the inflexibility of the distribution of these funds, the tying up with all sorts of red tape regulations any grants that may be given, so that it is almost impossible to make use of some of these grants even if they are given. From that point of view I welcome the formation of this new company because—I think I am right in my interpretation—of the possibility of these funds being distributed with less inflexibility and with more discretion. But I would press upon the Government that this Bill is no solution. It is a help, a temporary help, to those bodies who are already working, but it can never be taken as a solution of the Special Area problem. I think we have got to go a great deal deeper if we are to attempt to find any possible solution. The transfer of businesses from a prosperous area, such as the two mentioned, to one of the Special Areas may be a good thing; it may have a psychological effect, but unless it can produce new demands, or unless it can open new markets, it is not going to have any effect upon the main problem of unemployment. It is merely transferring the burden from one place to another. But there is a faint possibility, and perhaps even more than a faint possibility, that by transferring industry from a prosperous area to a depressed area you may revive among the people of that particular area a demand for some further goods and the possibility of supplying that demand.
That is possible, but the opening of new markets is a far more important problem, and I think it is possible of introduction into the Government's plan. If, for instance, instead of limiting our minds, as we usually do in these discussions, to the setting up of new factories and to the establishment of trading estates, we set our minds to the deeper problem of those two big industries which at present are in a very depressed state, agriculture and fishing, I think we have an opportunity of doing something larger, deeper and more effective towards the solution of unemployment. Anything which can help to produce in this country more wholesome food at a price that the poorest can afford to pay is doing a

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double service. On the one hand it is producing a more prosperous agriculture, employing more people in that industry, and on the other it is producing for those people such as were mentioned by Lord Faringdon—those people who are on the subsistence level—the possibility of getting a really full wholesome diet. As he pointed out, there is a tremendous opportunity in following that particular object. Millions are on that subsistence level. Give them the opportunity of obtaining at a price which they can afford to pay a full wholesome diet, vegetables, fruit, meat, bread, eggs, poultry and such like, and you are not only helping that particular industry, but you are making a happy and a contented people.
I think that is a possibility to which the Government ought to give more thought and they ought to endeavour even more than they have done to find a solution on those lines. We have encouragement in this from the attempt which has been launched under the Ministry of Agriculture to set up small holdings in various parts of the country. Hitherto it has been said that it has been difficult or even impossible for a small holder to make ends meet except under favourable conditions. Unfortunately we have had in the past a good many instances of the difficulty of success, but the Land Settlement Association, which was formed about a year ago with the help of the Commissioner for the Special Areas in England, has established various settlements and men have been taken from the Special Areas in Durham, set up on holdings in Bedfordshire and other places, and have been given the opportunity of working on the land.
I should like to give a few figures of the results of the first year's working because I think they are really encouraging. At Potton, in Bedfordshire, where an estate was given by Mr. Malcolm Stewart to the Association, twelve men who will come off the "dole "next month have been established in holdings. The position with regard to these men is that at the end of the period of their training there will be approximately £200 per man available and the total working capital advanced will amount to approximately £330 per man. In another case, that of Fen Drayton, actual figures are not available, but there are estimates which are perhaps more illustrative of what can be done by development on these lines. In
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that case it is estimated that the holdings, which provide for market gardening, poultry keeping, pig keeping, etc., will produce in twelve months a gross income of approximately £494. The charges for labour, seeds and so forth amount to £145, leaving a net income of £349. Deducting from that rent and rates at approximately £50, replacement of working capital on a basis of 5 per cent. and other deficiencies, totalling another £64, there is left at the end a credit of £235 for each holding. I think those figures illustrate what we may look forward to as a result of this work. I do not put trust in the belief that land settlement can be taken as a wholesale panacea for unemployment, but it does give a real opportunity for doing something practical.
I wish, finally, to turn to what can be done under the provisions of this Bill, and in doing so I would suggest one or two possibilities of amendment which might make it even more efficient. In the first place I would call attention to the restriction of the operations of the company to the Special Areas. The experience we have gained through Credit For Industry, Ltd., and through association with the banks, shows that that would be likely, I will not say to make the operations of the company wholly ineffective, but to limit very seriously the usefulness of the company. The experience we have had in the past shows that very few applications have been received from businesses in districts which are within the Special Areas. After all, the whole of the industrial belt of Scotland, right across the country, is virtually one unit. The Bill as it now stands would preclude the assistance of the company to firms in all our principal Cities—Glasgow, Edinburgh, Aberdeen and Dundee—and the fishing community in the North-east, in Aberdeenshire, Banff, and Moray. So, although we can look for a certain amount of help under the Bill, even though that help is given wisely and with discretion, it goes a very little way. I shall look forward as a result of what the Chancellor of the Exchequer said, and of what the noble Earl said in moving the Second Reading of this Bill, to the Government taking this matter very seriously in hand and giving us a further instalment at no very distant date.
LORD RHAYADER: My Lords, both the noble Earl who has just spoken and

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the noble Lord, Lord Faringdon, who spoke from the Labour Benches, have criticised this Bill because it is not a complete cure for unemployment in the Special Areas. I do not think the Government have ever pretended that it is a complete cure or that it is really anything more than a hopeful attempt to help start smaller industries in those Areas where the one great industry has broken down. The phrase used by the noble Lord, Lord Faringdon, was that this is the bolstering up of private enterprise. I do not know really what is the meaning of "bolstering up," but if it means that the Bill is going to help enterprise in these Areas to be successful then I certainly think it is a very desirable process. Unlike Lord Faringdon, I want to thank the Government for making this attempt. I am not very fond of subsidies and I would rather that we should have been able to help these districts without calling upon the Government to put up money. But they are spending so much for the relief of the Special Areas that I think this may be a very useful expenditure, and I want to congratulate the noble Earl who moved the Second Reading on the lucid explanation he gave of the Bill and its purpose.
I think the Government have never claimed that it is a comprehensive measure. It is a limited measure to meet the difficulty which has arisen in those Areas where the staple industry has petered out, and it is a little surprising to me that, in opposing the Bill, the noble Lord on the Labour Benches should belittle these other enterprises as unlikely to do any good at all in those neighbourhoods. He seems to forget that the carrying-on of an industry is the creating of wealth, and that the mere distribution of wages in that Area will make things better than they are at present. The primary need at this moment of Areas like the North-east of England, the West of Cumberland and South Wales is the multiplication of the smaller industries. Mr. Stewart himself in his Report uses these words:
" In my first Report reference is made to the difficulty of getting capital for the establishment of new or the expansion of existing industries in Special Areas. The difficulty relates in the main to the smaller industries, for which in my view there is the greatest need in the Special Areas at the present time."
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I think those words will be agreed to by everyone who has been living in or near these Special Areas.
I would venture to trouble the House with my personal experience, not of one of the Special Areas, but of an area which is between the Special Areas in the East of Cumberland and the West of Northumberland. A group of men up there, of whom I was one, formed some years ago a public utility company which was based on exactly the principle, as I understand it, of this Government measure. We called our trust the Miners' Industries Trust. We put up what money we could among ourselves, and then we appealed to the public for money. Altogether we received £30,000 from the confiding public. The area in which we endeavoured to set up this enterprise was, as I say, not classified as a Special Area, but I think that but for the operations of this company it would have become a Special Area, because it was an area which had been given up almost exclusively to coalmining in the past, the colliery company which had worked it went bankrupt, and the area was practically derelict. This utility company, having raised £30,000 from the public, was enabled to lend money for various enterprises, and at this moment, as a result of the operations of this company, there is—I do not want to use highflown language—a comparatively prosperous coal pit; there are granite quarries which are supplying the roads with road stone; there is a limestone quarry which is supplying limestone for the roads and lime for the farmers; there is a very successful brickmaking enterprise; and all of them have been financed by this public utility company.
It is the case that for these enterprises in those derelict, or nearly derelict, areas you cannot easily raise money from people who are merely looking to make profit out of the capitalisation of the enterprises. Our £30,000 was put up by a public who know the distress that there is in these Special Areas and who are willing to take some risks in order to deal with those Areas. They have given us this money; they have no security for it. We said that while we could we should pay them 5 per cent. for their money; we had it for some years and then we were able to lower the rate of interest to 4 per cent. The utility company advanced the money to the different interests at 6 per cent. and has now been

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able to lower the rate to 5 per cent. In every case the interest has been fully paid up and the shareholders of the company have received their interest regularly as the years went round. Everybody in that neighbourhood is the better for these industries. They have been paying wages all this time. We have distributed, I suppose, £500,000 in wages in the last ten years, and as a result, although the staple industry of the place, the coal-mining industry, is very unsuccessful, nevertheless that area has a very small proportion of unemployed—hardly any unemployment. It is the very method which enables this to be done that, I understand, underlies this Bill.
Of course you must find people on the spot capable of doing it, and we have been fortunate in finding among our directors men living on the spot able to direct these enterprises, but the thing has been thoroughly successful and it is commented upon by Mr. Stewart in his Report. I would recommend any of your Lordships who are so anxious to deal with unemployment, but apparently so determined not to accept any small alleviation because it does not face the whole problem and solve the whole difficulty, to go to these places and ask the working men in those different works whether they are not glad to have had this opportunity given them of living where they used to live, and whether they are not happy to carry on these new enterprises, these small enterprises, these enterprises not worth mentioning when you are considering things on a national scale.
I think we owe thanks to the Government for this effort. I want to make one suggestion of an Amendment. I am afraid they will not grant it, but it seems to me an unnecessary limitation to say that the help can only be given if the enterprise exists in a Special Area. Perhaps my suggestion is due to the fact that I have been hoping that we might get some help for another enterprise in this very area of which I have been speaking, which is between two Special Areas. There are on the very border of Northumberland, but in Cumberland, disused works with a great deal of plant lying idle: they are within a very short distance of Haltwhistle, which is a depressed area in Northumberland. If that enterprise could get started, I
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believe the workmen would be almost exclusively drawn from Haltwhistle, because our enterprises have used up all the free labour in our district and we should have to bring in the labour. I think it would have to be got in from the Haltwhistle area, but as the works are just inside Cumberland and not in Northumberland it is ruled out by the terms of the Bill.
I have an Amendment which is based upon the original Act of 1934, and which I should very much like to see incorporated in the Bill. In Section 1 (6) of the 1934 Act it is said:
"The functions of the Commissioners shall extend to the initiation, organisation, prosecution and assistance of measures outside the Areas specified in the First Schedule to this Act in so far as they are satisfied that such measures will afford employment or occupation for substantial numbers of persons from those Areas."
Why cannot a clause similar to that be put into this present Bill? Would it not be possible to put into the Bill some words like these as a new clause?
" The functions of the company shall extend to the provision of financial facilities to persons setting up or carrying on business in areas adjacent to those specified in the First Schedule to the Special Areas (Development and. Improvement) Act, 1934, in so far as the company is satisfied that such financial facilities will afford employment or occupation for substantial numbers of persons from those Areas."
That would be doing, in this case that I happen to know personally, the very thing that the Bill is intended to do. At least I think it would. Our company, the Miners' Industries Trust, is not able to deal with the proposition, and, although other people have been looking at it, they are doubtful about being able to raise the capital. If this loan company could give them a loan—and it is just on the border of a Special Area—I believe it would be a real contribution towards relieving distress in Haltwhistle and that neighbourhood.
I do not want to prolong the discussion, but I should be very grateful if the Government could put that Amendment in, or look at it and see what can be done. I am not ignoring the Privilege of the Commons. This would not involve any increase in the £1,000,000 which the Government are prepared to risk, but merely suggests that a loan might be made to some enterprise not actually in a Special Area. This is a limited Bill,

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but the question wants to be attacked from many aspects and from many points of view. There is not one great cure that you can fire off, unless you believe that Socialism in everything would be a complete cure; but I am afraid that a great many of the evils which exist are due to human nature and not to the system which we have adopted. I think this is a Bill to deal with a practical difficulty in a practical way, and I hope it will produce results.
LORD SNELL: My Lords, it had not been my intention to say anything in this debate, and I intervene only for one or two minutes. The noble Lord who has just sat down has given me probably the greatest astonishment in my recent political career. He has accused the Labour Party, as you will have heard, of being hostile to this measure. The Labour Party is nothing of the kind. It has certain doubts as to whether the provision that this Bill makes is going to be adequate to meet the difficulty. In any case we feel that the problem is so immense, and the effort made in comparison so little, that even at the best the results must be unsatisfactory. That was the criticism we made. Now, from the noble Lord's speech, especially the end of it, it appears that criticism of this measure is permissible when made from the Liberal Benches but not permissible when made from the Labour Benches, and I want to draw upon your Lordships' memories for a little time. The noble Lord said that we had accused this measure of being an attempt to bolster up certain interests in Special Areas.
LORD RHAYADER: Lord Faringdon's words.
LORD SNELL: Let us admit the statement that it was an attempt to bolster up capitalist enterprise. The noble Lord now warmly congratulates the Government on this Bill, and covers the Government in a bouquet of flowers. I ask your Lordships to carry your minds back a few weeks when we were discussing the question of sugar bounties—
LORD RHAYADER: It is so very seldom that I speak with enthusiasm of the Government that perhaps I let myself go.
LORD SNELL: Late repentance is better than no repentance at all. Perhaps your Lordships will remember the
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vigour with which the noble Lord denounced the attempt to bolster up certain interests on the land not long ago. Apparently it is wrong to bolster up the farmer, although that is a distressed industry, it is wrong to do anything which would give the farm labourer wages, but it is right to do something which will help the coal interests and the coal miner. We have no objection to that, only I have a personal objection to the betrayal of my principles. We have always regarded the noble Lord as the very guardian of the Cobden treasure, and we have accepted from him and the Liberal Benches the doctrine of Free Trade with a certain half-sanctity. Now the noble Lord comes in at a late hour and attempts to put the Labour Benches into confusion by supporting this measure of subsidy, which he denied so vehemently a few days ago. I have just risen to say that that is the worst of having leaders whom you try to follow. Somehow or other they are apt to let you down. My main object in rising, however, was to say this. We do earnestly believe that this measure is not adequate to the need. If our fears are wrong, and it does prove to be adequate, we shall be the first to confess that we were wrong, but we shall congratulate the Government on results lather than on promises.
THE EARL OF MUNSTER: My Lords, such criticism of the Bill as has been expressed this afternoon has not been, I think, of a very serious character. Lord Faringdon entered into the discussion in a most bombastic spirit, describing the whole measure as a mere fiddling little Bill to assist private enterprise. The object of the measure is, as I stated at the beginning of my remarks, entirely of an experimental nature, and if a small Bill of this character can bolster up private enterprise in those districts, and help those men and women who live in that part of the country, then surely we shall have had some measure of success. We were fortunate in hearing Lord Rhayader most warmly support the Bill, and the Amendment which he suggested, and which I own has my own sympathy, I will communicate to my right honourable friend. There may be objections to it of which I am not aware at the present time, but I will certainly take the matter up with him.
From the speeches which have been made the main criticism appeared to be

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that the scope of the scheme was far too small, and that the scheme ought not to be confined to the Special Areas as defined in the Special Areas (Development and Improvement) Act, 1934. As I have said, the scheme is experimental. It does not pretend and is not intended to be more than that. It is not intended to be a solution of the whole of the Special Areas problem, but if it is successful and the experience of its working shows that it could be profitably extended, either as to the amount or as to the area, it will be very easy to extend. It will be the policy of the directors of the company to keep in close touch with the Special Areas Commissioners, with the local authorities, and other authorities, and with institutions such as development councils, banks, insurance companies, and finance companies, which I think was the point made by Lord Elgin.
The noble Lord, Lord Faringdon, suggested that small industries in the Special Areas can be of very little use or assistance. I fear that the noble Lord has not acquainted himself with the Report of the Special Areas Commissioner, for he says in that Report that these Special Areas do require small businesses in particular; and I think here is an opportunity for these small businesses at last to be started, and tried in an experimental measure, to see if they may bring some small measure of success.
LORD FARINGDON: I said I was doubtful of their success in areas where there appeared to be no customers.
THE EARL OF MUNSTER: The noble Lord appears to be doubtful of their success, but that is not, I think, the opinion of the Special Areas Commissioners. The noble Lord also raised the question of the capital, and I can give him this assurance, that the capital will be subscribed. He is perfectly correct in saying that there is no great attraction in the issue from an exclusively monetary point of view, but nevertheless
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I can give him that assurance that we have very little doubt that the money which is required will certainly be subscribed. He further suggested that the Government should consider appointing a director on the board. On that I would say quite definitely that it is a matter of policy and that His Majesty's Government do not look upon that suggestion with favour. It was the only question which was divided upon during the passage of this Bill in another place. I fear that if the noble Lord should put down an Amendment to that effect on the next stage of this Bill I can hold out no possible hope of its acceptance.
I do not know whether there is really any other matter that I can usefully deal with. The suggestions and the information which were offered in the speech of the noble Earl, Lord Elgin, will, I feel sure, be received with satisfaction by the authorities concerned, and the other matters which were mentioned I will certainly bring to the attention of my right honourable friend. The question which he raised concerning the restriction of the Areas and his point that the scheme was too small will, I think, be fully discussed on the very Amendment which ray noble friend Lord Rhayader has suggested that he would move at the next stage of the Bill. I hope that I have given your Lordships some answer to the many and various questions that have been raised, and that the House will be prepared to give this Bill not only its blessing but a Second Reading to-day.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

SOUTHERN RAILWAY BILL.
Examiners Certificate of non-compliance with the Standing Orders referred to the Standing Orders Committee on Tuesday next.
House adjourned at fourteen minutes past five o'clock.