§ 2.48 p.m.
§ Order of the Day for the Second Reading read.
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL WALDEGRAVE)
My Lords, I do not think that any lengthy introduction is needed from me. We can all agree that the Agricultural Mortgage Corporation is an important source of long-term credit for the industry in England and Wales, though in saying this I do not forget that the Lands Improvement Company is also doing good work in providing long-term loans for improvement of agricultural land and that Scotland has its own Corporation operating on the same lines as those we are now considering. This Bill is needed to remove obstacles to the expansion of the Corporation's business, which is to provide long-term loans for the acquisition and improvement of agricultural land.
Very briefly, the provisions are twofold. First, Clause 1(a) makes a further increase in the maximum amount of the advances which the Government may make to the Corporation's guarantee fund. It will raise the limit to £5 million; that is a further £1¾ million above the figure of £1¾ million at which it now stands. Perhaps this calls for a short explanation. When the Corporation was established under the Agricultural Credits Act, 1928, the share capital was provided by the joint stock banks, but the Government provided for a similar amount to be advanced as long-term loans free of interest for sixty years. These advances are not lent by the Corporation but are invested in gilt-edged securities so that the Corporation may have strong reserves and at the same time have an income from interest which helps it, in the words of the Act, to make loans "on terms most favourable to the borrowers ". Broadly, the Government's advances have a direct bearing on the amounts that the Corporation can borrow from the public. Since 1928 the Government's advances have already been increased twice and the effect of this part of Clause 1 of the Bill is to enable further advances to be made as required 775 so that the effective limit on the Corporation's power to borrow money will be raised from £46 as it stands to-day to a figure of the order of £70 million.
The second provision, in Clause 1(b), is to extend for fifteen years the power given to the Government by the 1939 Act to contribute towards the Corporation's losses. Those losses stem from the fact that the Corporation had in its early years to borrow at high rates of interest and then, when interest rates fell, had to lend at the current rates which were substantially lower. Through no fault of its own the Corporation thus ran into operating losses and the Government had to come to its aid in the Acts of 1939 and 1944. Many of these low-interest loans are still running and there is still, therefore, an element of loss on them which this clause will help to mitigate. I hope I have said enough to explain how this Bill will enable the Corporation to continue the good work it is doing for agriculture by strengthening its reserves and by providing for further assistance towards the Corporation's operating deficiencies. I beg to move that the Bill be now read a second time.
§ Moved, That the Bill be now read 2a.—(Earl Waldegrave.)
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, I am much obliged for the explanation of the Bill. I think the strengthening of the reserves is very important indeed. I would pay tribute to the work of the Corporation; I have had experience of it and I think it is exceedingly well done. The only unfortunate thing is that at the present time the rates have to be so high. If the continuing fall in the bank rate will assist in changing that situation, I am sure the farming community will welcome it very much. The financial position of a large part of the community is giving anxiety at the present time, and if we are to get efficiency improved by means not only of grants but of loans taken up by people seeking aid in other directions, then it is very important in this time of financial stress in some parts of the industry that the rates of interest should be lowered as soon as possible.
§ On Question, Bill read 2a; Committee negatived.