INDUSTRIAL DEVELOPMENT BILL

HL Deb 04 August 1966 vol 276 cc1484-542

4.25 p.m.

Order of the Day for the House to be again in Committee read.

Moved, That the House do now resolve itself into Committee.—(Lord Rhodes.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD STRANG in the Chair.]

Clause 4:

Hired assets

4.—(1)

(2) Subject to the provisions of this section, the Board may make to any person carrying on a business in Great Britain of hiring out any asset mentioned in subsection (1) of this section a grant towards approved capital expenditure incurred by that person in providing for the purposes of that business a new asset such as is mentioned in that subsection, but such a grant shall be made only— (b) in the case of machinery or plant, if it is provided for the purpose of being hired out for use in Great Britain for carrying on any process for or incidental to the purpose mentioned in section 1(2)(e) of this Act.

LORD DRUMALBYN

moved, in subsection (2)(b), after "section 1(2)(e)" to insert "or 1(2)(f)". The noble Lord said: This I would regard as being in the nature of a consequential Amendment on Amendment No. 7, accepted by your Lordships on Tuesday, which enabled grants to be extended to forestry. The effect of this Amendment would be to enable grants to be made to persons carrying on the business of hiring for the acquisition of plant and machinery to hire to other persons, provided that those other persons were otherwise eligible. The effect of subsection (2)(b) is to enable these hirings to be made even if those other persons are not eligible. So the difference between having this Amendment and not having it is, in effect, to make quite clear that the hiring could be done to the Forestry Commission.

I am bound to say that I had in mind that possibly it would be the intention of the Government, in view of their general policy, to include the Forestry Commission in Schedule 2. This would bring the Commission into line with the other bodies excepted there. If that were done it would enable grants to be made to the Forestry Commission in the same way as hiring grants can be made to local authorities. I do not know whether that is the intention of the Government. If it is not, I conceive that the Forestry Commission would be able to hire plant from someone who was in the business of hiring, and that that person would still be able, even if we did not have this Amendment, to get the grants. I should be obliged if the noble Lord, Lord Rhodes, would make this clear. I am not certain whether this Amendment is necessary. It would be necessary if, as I anticipated, the Commission were included in Schedule 2. If it is not included, I doubt whether it would be because I doubt whether local authorities would ever engage in forestry activities.

Amendment moved— Page 4, line 36, after ("section 1(2)(e)") insert ("or 1(2)(f)").—(Lord Drumalbyn.)

THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES)

It is hard to resist the blandishments of the noble Lord, Lord Drumalbyn, who knows his subject as well as anyone in the House. What he proposes to do by this Amendment is to put in an additional qualifying industrial process. What interpretation may come after I am not prepared to say, because in any event we do not want this Amendment in and we are objecting to it. Fundamentally, we do not believe that the extraction of forestry products is a qualifying industrial process. It is true that this is a consequential Amendment to the debate we had the other day on whether to include timber extraction, when, as the noble Lord remembers, the Government were defeated. In that connection the "Backwoodsmen" were brought in to pass the Amendment. Today we do not want this consequential Amendment, and, without going through the painful repetition of the answer I gave the other day, I would ask the Committee to reject it.

LORD DRUMALBYN

I should have liked to accept what the noble Lord has said about our creating another qualifying process, but that point has already gone into the Bill. What we are now concerned with is the small point of whether, if the Forestry Commission hire plant and machinery from a person who is in the business of hiring plant and machinery, that person will get the grant. As I understand it, that person would not get a grant for such hire if the Forestry Commission were added to Schedule 2. Surely it is reasonable to ask the noble Lord to explain what the effect of the Amendment would be. It really is not fair to the Committee for the noble Lord to ask us to reject the Amendment when he does not assign a reason or give the effects. I must ask him to do that.

LORD RHODES

May I say to the noble Lord that I do not regard what I said in my answer as unfair to the Committee. This is an Amendment consequential on one that was passed the other day. We do not want this Amendment. If the noble Lord wants an answer to something which may crop up on the next Amendment on the leasing of equipment, let me say that I am quite prepared to give him an answer on who gets grants in the case of equipment being hired, but that is as far as I am prepared to go.

On Question, Amendment negatived.

On Question, Whether Clause 4 shall be agreed to?

LORD DRUMALBYN

I hope that the noble Lord will be a little more forthcoming in this case than he was in the last, otherwise I am afraid that we shall not make very good progress. Subsection (2) of this clause provides that a grant may be made to a person acquiring a new asset for the purpose of hiring it out only if, first, he carries on the business of hiring in Great Britain; secondly, the asset has been hired out to another person and, thirdly, it is something on which that other person could have got grant if he had provided it for himself. I may say now that it was quite unnecessary to press the last Amendment because, as the Forestry Commission is not included in the Schedule, it would make very little difference—it would make only a marginal difference, as the noble Lord knows perfectly well. He was really inviting us to make fools of ourselves, but we do not "buy" that so easily.

Paragraph (b) introduces an exception to paragraph (a) by providing that if a new asset is acquired for the construction industry, grant may be given in respect of machinery and plant provided for the purpose of being hired out, whether or not it is in fact hired out to anybody, and whether the persons who hire it are eligible for grant. We know that the Board of Trade would not give grant unless it was hired out, and I am not quite certain why this clause has been drafted in this way. But the reason for this distinction is that much of the hiring in the construction industry is made to local authorities, and local authorities are not eligible for the grant. This emerged in the debates in another place.

The reason why I have not moved Amendment No. 23 is that I understand that in the construction industry the hiring of machinery and plant is often made for periods of less than six months and the Government are consulting with the industry on the whole subject of hiring. There are three questions I want to ask the noble Lord. First, can he inform the Committee of the results of these consultations? Have the Government decided on the minimum period of hiring that will qualify for grant in the construction industry, if indeed there is to be a minimum period laid down in general by the Board of Trade for the industry?

Secondly, do the Government still adhere to the policy announced by the President of the Board of Trade in another place, that for hirings in all other cases machinery and plant covered by this clause will not qualify for grant unless hired out for at least three months, and despite the changes made in the Report stage in another place? Thirdly, bearing in mind that in another place the Government resisted an Amendment similar to Amendment No. 23 on the ground that a fixed period of six months might be too long in some cases (although it is said that three years is to be the normal period), can the noble Lord say what would be the absolute minimum period the Government would regard as sufficient to qualify for grant in industries other than the construction industry? He must have some period in mind.

I recognise the noble Lord's difficulty in the last case, but I hope that in the present case he will be able to give some information, because I am sure that it will be useful for everybody who is either likely to take advantage of grants as a hirer, or as likely to hire, and would hope to get hirings at the lowest possible rate because of grant coming in.

LORD RHODES

I am delighted to be able to reply. The circumstances are as the noble Lord has read out. As everybody knows, the custom of hiring out equipment of all kinds has grown up considerably during the last few years. Hire-purchase and loans of all sorts have encouraged the leasing of equipment. It happens in many industries, and more often than not in the contruction industry. Taking the noble Lord's first question, talks with the construction industry are still proceeding. They are bound to proceed throughout the whole time this Bill is in the form in which it is. But may I say that I should regard a minimum period as a very short one? It is quite possible for a hiring firm, or a lessor (as it is called in the Bill), to hire out a piece of equipment for a fortnight, and the grant is on the basis of the new piece of equipment loaned to a lessee, who does not get any grant but who qualifies under Clause 1(2), as a qualified processor. In the case of the building and construction industry a lessor can get the grant of20 per cent. if he loans out a piece of equipment to a lessee for less than the three years mentioned in the course of the discussion on the Bill.

LORD DRUMALBYN

Does the noble Lord mean even it it is less?

LORD RHODES

Yes; even if it is less. If apiece of equipment for the construction industry was leased for three years in a development area this would qualify for 40 per cent. grant; if it is for less than that, it would he a 20 per cent. grant, and, of course, there will be flexible rules about whether the machine is handed on or loaned to somebody else with a qualifying process after the first one. That is as far as I can go, because it will have to be dealt with as the situation arises. But your Lordships can be quite certain that this is agreed; although it was brought in at a late stage, it is acceptable.

The next question was whether we stick to the rule, which the noble Lord says was enunciated in another place, about the three years. I must draw the attention of the noble Lord to the fact that we have always admitted that it will be possible to hire out, for instance, computers for a shorter period. So we have the two main elements in this. But the noble Lord asked about the (shall I call it?) more fixed type of asset—machinery and such things—leased to somebody in an industrial process. If the lessor on leasing a piece of equipment gets a 40 per cent. grant because the machinery is leased to somebody in a development area, it will have to be for three years.

The noble Lord can see the sense of this. Suppose a piece of machinery got the 40 per cent, grant and was then leased to someone in the development area, if we had not got an administrative rule of a reasonable length of time—three years—what could happen? They could get the 40 per cent. grant, and they might then lease the machine into a non-development area, and the whole idea of discriminating and helping industry in a particular area would be thwarted. I hope that that answers the second question.

The third question was related to the one I have just dealt with. Apart from the two I have mentioned—computers and construction—we regard the rule about three years as a valid one. I think what I said in reply to the second question answers the third, and I hope that is is satisfactory to the noble Lord.

LORD DRUMALBYN

I am bound to say that, while I quite appreciate the desirability of having some kind of rule, in so far as the development areas are concerned I should have thought that as a general rule in the case of the 20 per cent. grant three years was much too long. I should have thought that it would be better to have an administrative rule of much less than this. I feel sure that the Board of Trade will be bound to relax this intention considerably as time goes on, because I think they will find, in practice, that they are not getting the results that they hope for if they impose such a long period.

It was stated in another place that the Board of Trade would keep pretty close tabs on all the hiring, and would know where the machinery was going to at any given time, and that this would be a condition. If that is so, I should not have thought that the condition of three years for a 40 per cent. grant was as necessary as all that. I should have thought that a six months' period would have been much better. I quite see—and this is why I did not move the Amendment—that one does not want to have too much flexibility in the rules laid down, but, by the same token, I hope that the Board of Trade will not introduce a rather inflexible rule at a very high level along the lines that the President originally suggested. I rather gather from the noble Lord in replying that the Board of Trade intended to be more flexible than the President indicated when he first made this announcement. In the circumstances, I do not propose to put this Amendment down again at the next stage, but I would strongly urge the Government not to be too inflexible or to impose a high period for hiring to qualify.

LORD RHODES

While making it quite clear that I do not accept that there is any difference between what the President of the Board of Trade said and what I have said now, I would say to the noble Lord that in all its aspects this is only an administrative rule, anyway, and we have the powers to alter it. What he says will be taken note of, and I hope that we can now go on to the next Amendment.

Clause 4 agreed to.

Clause 5:

5.—

Ships.

(3) No grant shall be made under this section in respect of a ship, or of the provision of a part for a ship, which— (b) is of less than one hundred tons gross tonnage or is not self-propelled;

4.49 p.m.

LORD ERROLL OF HALE moved, in subsection (3)(b), to leave out "or is not self-propelled". The noble Lord said: I beg to move Amendment No. 24, and it might be convenient for your Lordships if we consider at the same time Amendment No. 42. Clause 5 deals with ships, and in subsection (3) it is specified that no grant shall be paid if a ship is of less than 100 tons gross tonnage or is not self-propelled. My Amendment seeks to delete the phrase "or is not self-propelled", so that marine craft which have no engines may qualify for grant.

In order to help the Committee, I have specified in Amendment No. 42, which deals with definitions, the type of marine craft which I suggest ought to qualify. Naturally, I do not think that rowing boats, small barges or the like should qualify, but there is a distinct class of marine craft which, I should like to suggest to the Committee, should certainly qualify. They include such items as hopper barges, which are often of very large size, and are essential for use in connection with harbour improvement schemes and the disposal of waste material in various parts of the oceans. Floating cranes can be used either for the repair of ships or, what is of particular importance in the docks, for lifting and lowering heavy specialised items of cargo.

Dredgers may be self-propelled, but there are certain types which are not, and it would seem invidious to draw a distinction between the two types of dredger just because one had an engine and one had not. Since the self-propelled dredger would normally qualify for grant, it might be worth while putting an engine—it need be only a small one—into the non-self-propelled dredger in order to get the 20 per cent. grant, thus making the dredger cheaper for the user than it would otherwise be.

The earlier Paper refers to dry docks. That was a misprint on my part. I meant floating docks, and I suggest that they are an important marine asset which should qualify for grant. Since I have not tried to make the list conclusive, I have suggested in Amendment No. 42 that other waterborne craft might qualify as might be specified from time to time by the Board of Trade. I beg to move.

Amendment moved— Page 5, line 28, leave out from ("tonnage") to end of line 29.—(Lord Erroll of Hale.)

LORD SHEPHERD

As I have said on quite a number of occasions, the purpose of this Bill is to give special assistance to the manufacturing and extractive industries, since they are the industries which will have the biggest impact upon our export effort and also upon our import saving. However, we decided to include ships in Clause 5 because our maritime fleet plays a major part in balancing our payments by overseas earnings. Therefore, we thought it right that we should give this specific encouragement for the building of new ships and also, as in Clause 1, for the repair, conversion, maintenance and refitting of a ship; but we thought it right that there should be some exclusions, and these are contained in subsection (3).

It is paragraph (b) we are concerned about, in that there should be an exclusion of vessels of less than 100 tons gross tonnage. The reason for this is that we wanted to give special assistance to the overseas travelling ships, and to exclude what you might call the internal transport system, because this would be in conflict with road, rail or air, which do not receive assistance from the Bill. Therefore, we thought that 100 tons was a fair arbitrary figure, and about the right figure, for that type of exclusion.

The words, "or is not self-propelled" were brought in to indicate clearly that it would be a ship; that it would be operating in a basic transport service. The noble Lord is asking to delete the words, "or is not self-propelled". It is quite clear that certain barges and certain harbour craft could become eligible, but I hope the noble Lord will agree with me, when I deal with those vessels that come within that category but which, I believe, are already covered by this Bill or by other legislation, that the vessels he might have in mind which provide a transport service should not be included for incentive grants on the basis that we do not want these services covered in the Bill.

In the case of those vessels—if I may use the phrase—such as floating cranes and floating docks, they may well be for harbour improvement. If they are, then they will come within the Harbours Act 1964. But if they are part of ship repairing, conversion or maintenance—and here one thinks particularly of a floating dock—they will come within Clause 1(2) and they will get the grant. Here perhaps we have in mind hopper barges for the dredging and removal of what has been dredged, and the dredgers themselves, and if they are within a harbour improvement they will get the grant under the Harbours Act. If an industrial organisation was forced to use some water transport internally, such as a barge, again it would receive a grant.

I would suggest to the noble Lord that if the craft he has in mind—at least those specified in his Amendment—come within the terms of assistance or are incidental to manufacturing process, or play a part in harbour operations, they are all covered either by this legislation or the Harbours Act. But we have specifically excluded other forms of water transport which are purely and simply internal transport services. I hope that with those few words the noble Lord will see that there is little need, if any, for his Amendment.

LORD HAWKE

Could I clear up one point in this subsection? I am not sure that we do not get into deep water over part of a ship which is of less than 100 tons gross tonnage. When you start repairing ships, I understand that you will be able to get allowances, but how do you measure the repaired portion exactly to make sure whether it is under or over 100 tons? If you put a bit on to a ship which you can calculate as 101 tons, presumably you will get the allowance. On the other hand, if the bit you mend it with is 99 tons, you do not get the allowance. I think there is rather deep water somewhere here.

LORD SHEPHERD

I am the last to enter into deep water, and here I speak subject to correction. I have no previous knowledge of the point the noble Lord has made. I think what he has in mind is that you may be building a new bow of a ship to attach it to an existing hull. In my view, that is conversion. That is what I should have thought it would be. If it is conversion, then it would come under Clause 1(2). I should not have thought, therefore, that it would come within the ambit of the clause. If you look at subsection (1) in particular you find it refers to the providing of a new ship for use. Here I do not think you would build a new ship; you would just build the bow. If you build a special bow, it would be for attachment to an existing hull. I speak with some care in this matter, but that is my own view. If later on this evening I am corrected by my officials, who no doubt are beginning to quake, I will get in touch with the noble Lord. But I think the point he has made is dealt with by the word "conversion".

LORD ERROLL of HALE

I do not think the noble Lord will get away with it as easily as that, because a part of a ship could be the propulsion unit—the engines. These are quite often purchased separately from the ship by the owners-to-be and are issued to the builder of the hull for insertion into the hull. I will leave the matter there.

LORD SHEPHERD

The noble Lord is not going to be allowed to leave the matter there. I am quite sure as the noble Lord was going on he was getting into deeper water than I was. If he would read the clause he would find we are referring to a new ship, not to a part of a ship. If you are seeking a grant for the propulsion units, in my view these would be new propulsion units for an existing ship, and that would be covered by paragraph (b) of subsection (3). I think the noble Lord is getting into deep water but I will not push him right in.

LORD HAWKE

I am not sure that either of us made the point absolutely clear. Where I think the drafting may have gone wrong is in the question of the 100 tons. Is that intended to qualify the part of the ship or the ship itself? That is the point that needs elucidation.

LORD SHEPHERD

Will the noble Lord read with me subsection (1) of Clause 5, which says: Subject to the provisions of this section, the Board may make to any person carrying on a business in Great Britain a grant towards approved capital expenditure incurred by that person in providing a new ship for use, whether or not in Great Britain, for the purposes of that business or in converting a ship for such use. I think that is sufficient. The "100 tons" is included so that the grants will be made for these purposes for the ships which in our view will be those which will be sailing overseas and which will give us increased income and help to balance the balance of payments. We are trying to exclude ships which are primarily used for internal services and which would be in competition with other forms of transport which do not receive the grant under this Bill.

LORD HAWKE

I do not quarrel with what the noble Lord is trying to do, but I am not certain that the Bill would be interpreted by the courts in that way. Frequently Governments try to do things in Bills and the judges rule that they have not done them. I think the 100 tons should be said to qualify the part rather than the ship itself, and perhaps the noble Lord will look at it again before the next stage.

LORD SHEPHERD

I do not think the noble Lord, Lord Hawke, is a lawyer, and neither am I, but I will see that this is referred to the highest legal authority in the Board of Trade—not the noble Lord, Lord Rhodes—and I will see whether I can give an assurance on this point between now and Monday next.

LORD ERROLL OF HALE

I am sure my noble friend Lord Hawke is grateful for this undertaking by the noble Lord, Lord Shepherd, and I, for my part, would like to thank him for his lucid explanation of the background to my Amendments, in view of which I see no reason to press them. Therefore I have pleasure in withdrawing this Amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

Clause 6:

Mining works.

6.—(1) Subject to the provisions of this section, the Board may make to any person carrying on a business in Great Britain a grant towards approved capital expenditure incurred by that person in providing works in Great Britain for use for the carrying on in the course of that business of any process for or incidental to the searching for, or the extracting or getting of, coal, oil or other minerals, brine, peat or natural gas.

5.6 p.m.

LORD ERROLL OF HALE

moved to add to subsection (1): "and sand, gravel, slate, marble, stone and granite". The noble Lord said: The purpose of this Amendment is to clarify the meaning of the word "mineral". Since it is regarded as necessary to insert in that line "coal, oil or other minerals", because coal and oil are both minerals, it seems therefore to be necessary to specify other materials which may or may not be minerals in order to ensure that they are not left out by reason of the fact that two items which are minerals are nevertheless specified. It would have been much simpler if the Government had accepted my Amendment and had eliminated "coal, oil or other minerals" and merely referred to "minerals", which are clearly definable. But I suppose "coal "was put in to satisfy the miners' lobby in another place, and "oil" was put in because a lot of people were in doubt whether oil was a mineral; but it is a most unsatisfactory way of drafting. If we are going to do it in the way I deplore, I suggest we make a thorough job of it and include "sand, gravel, slate, marble, stone and granite"; nearly all of which have substantial lobbies in different parts of the country who would no doubt be grateful for a mention in this Bill. I beg to move.

Amendment moved— Page 6, line 10, at end insert ("and sand, gravel, slate, marble, stone and granite").—(Lord Erroll of Hale.)

LORD RHODES

The noble Lord has omitted "Uncle Tom Cobbleigh and all"; that is about the only thing he has not mentioned.

LORD ERROLL OF HALE

It is not a mineral.

LORD RHODES

We had a debate on this the other night and I said it was not perhaps strictly necessary to put in the words "coal and oil", but it was done for an administrative reason. When you think about the number of qualifying processes and the things that could qualify under this particular Amendment, it would need a list as long as your arm to name them all, and it could cause a tremendous lot of difficulty and investigation and telephoning and writing to the Board of Trade. There are quite a number of things that are known which the noble Lord has not mentioned—china clay, for one thing, or the water got from the ground for a private enterprise authority. I think in the circumstances it is better to leave the wording as it is, knowing that in this comprehensive language all qualifying items are identifiably known, and also leaving room for things that may not be known or discovered at the time. Who would have thought, perhaps ten years ago, of the three last words in subsection (1) "or natural gas"? These things alter from time to time, and I think the noble Lord will agree that this point is not of sufficient importance to pursue very far. I would ask him to withdraw his Amendment.

THE DUKE OF ATHOLL

Could the noble Lord assure us that all these things are included in minerals, and also salt? I suspect that technically salt is a mineral, but it would be as well to have the matter clarified.

LORD ERROLL OF HALE

I wonder whether the noble Lord, Lord Rhodes, could say "Yes" to the noble Duke's question in a sufficiently loud voice for the Hansard reporter to hear it? Are all the items within my Amendment minerals within the meaning of this clause?

LORD RHODES

Yes, of course. That is what I conveyed last Tuesday.

LORD ERROLL OF HALE

Although we did not discuss this Amendment last Tuesday, as I had not then put it down, I will withdraw it now, in view of the assurance the noble Lord is giving.

Amendment, by leave, withdrawn.

Clause 6 agreed to.

Clause 7:

Power to vary rates of grant and add further assets eligible for grant

7.—(1) The Board may by an order made with the consent of the Treasury— (b) make provision for the making of grants under this Part of this Act, at such rates as may be specified in the order, in respect of assets of any class or description, being assets of a class or description not eligible for grant under any of the foregoing provisions of this Part of this Act.

5.10 p.m.

LORD ROYLE moved, in subsection (1), after "Treasury—"to insert: () make provision for the making of a grant under sections 1, 2, 4 or 6 of this Act amounting to thirty per cent. of the expenditure in respect of which it is made (not being expenditure which qualifies as development area expenditure in accordance with Schedule 1 to this Act) if the Boards are satisfied that the expenditure relates to assets or works which will be used or provided (as the case may be) in an area specified in the Order for the purpose of this paragraph;".

The noble Lord said: I beg to move the Amendment which stands in my name. I do not know if it has any significance, but I notice that of the 53 Amendments to this Bill, 52 of them have been submitted by Members on the opposite Benches. I am not claiming in any way that the one remaining, which I am now about to move, is of equal importance to the whole of the other 52, but I regard it as of a great deal of importance. This Amendment is consequential on the remarks I tried to make on the Second Reading, but as certain noble Lords have not had the tremendous advantage of hearing my Second Reading speech, perhaps I may just recapitulate very briefly.

I am concerned about certain areas that have come to be known as the grey areas, those which are not certified in a normal sense as in need of industrial development. I am thinking, in the main, of areas such as North-East Lancashire, the Rossendale Valley, the area around Wigan and Leigh. But it does not apply only to Lancashire: there are parts of the North-East and the West country, and other parts of the United Kingdom which are equally in these grey areas. The result is that they have never had the opportunity of getting the advantage of grants of this character which have been awarded to areas which are now to be called industrial development areas. As a result, they have been in the nasty position of having hundreds—that is not an exaggeration—of derelict factories. They have suffered very severely from depopulation, and from declining industries (and particularly I would mention coal and cotton) and there is great need on their part for renewal of industries and revitalisation.

I submit to your Lordships, and to my noble friend, that a 20 per cent. grant is quite insufficient for this type of area in such a state of need. I was greatly encouraged, so far as these areas are concerned, when I read subsection (3) of Clause 15, and perhaps your Lordships would pardon me if I read it, for the Record. It says: The areas to be specified by the Board under subsection (2) of this section shall be those parts of Great Britain where, in the opinion of the Board, special measures are necessary to encourage the growth and proper distribution of industry; and in exercising their powers under that subsection the Board shall have regard to all the circumstances actual and expected, including the state of employment and unemployment, population changes, migration and the objectives of regional policies. In the past, the criterion seems always to have been unemployment, and when I read that subsection I was encouraged to feel that there might be a great deal of sympathy extended to these areas, which are not suffering from unemployment but are suffering in the ways that I have tried to indicate.

When, on Second Reading, I put this point to my noble friend Lord Shepherd, I am afraid that he gave me little hope that there would be an extension of the development areas to include many of those that I have in mind. I noticed the other day that in the statement made by the President of the Board of Trade he said that greater priority would be given than ever before, so far as the black areas are concerned. This gave me a little concern, because it seems that the areas I have in mind are going to be pushed further back and have little chance. Therefore, I am suggesting an alternative. As I have said, I did mention it in the course of my remarks on Second Reading, when I felt that my noble friends were not encouraging me a great deal. The alternative scheme is that, instead of having 20 per cent. grants in the non-development areas and 40 per cent. grants in the case of the development areas, there should be a new grant of 30 per cent. to meet the necessity and the difficulties of these particular districts.

My Amendment, your Lordships will notice, deals with the application of Clause 1 (Machinery and Plant), Clause 2 (Computers), Clause 4 (Hired Assets), and Clause 6 (Mining Works). I have put nothing else into the Amendment at all, and in that respect I feel that I have an advantage over some of the Amendments moved in the course of the Committee stage, which have departed from the principle of the Bill; that is, machinery and extraction. I feel that by sticking to those four points I stick to the principles of the Bill, and I am not asking the Government to depart from the principles which they have enunciated.

I would say one other thing. My noble friend Lord Shepherd in winding up on Second Reading, referred me to the Local Government Bill, which I understand is now on the stocks in another place, and he said that in the Local Government Bill might be the answer to the problem I have tried to state. That gave me some hope, but I would point out that in the Local Government Bill, as at present written, there are no specific percentages mentioned for development and redevelopment. It merely proposes a maximum grant of 50 per cent. for things like open spaces and reclamation of derelict land, but does not suggest a very generous or ungenerous grant in the case of development and redevelopment. Therefore, I thought it fit to put this Amendment on the Order Paper, to see whether the Government cannot think again and give some relief to these areas. We are now calling the development areas "black"; other areas of the country, like the South-East, are regarded as "white "areas. My plea this afternoon is for the "grey" areas, and I hope that something may be done and that I may receive some assurance from my noble friend in regard to this Amendment. I beg to move.

Amendment moved— Page 6,line 26, at end insert the said paragraph.—(Lord Royle.)

5.20 p.m.

LORD RHODES

I am glad to be able to reply to this Amendment. The noble Lord is quite right in saying that the purpose of this Bill is to alter the criterion. We have altered it. We do not tie it to employment in its entirety when we are considering which part of the country should have development area status. I am glad to reply to the Amendment as well, because the noble Lord comes from the same part of the country as I. He knows the circumstances and the way in which the Industrial Revolution has in many places left its mark and scars, and other things that have gone with it.

We who were Members of another place and come from these "grey" areas know full well the implications. We know some of the reasons why there is migration from these areas. I can remember well once opening an Election campaign in one part of an area, and I was directing the attention of the occupants of back-to-back houses to the squalor in which they were living. Within half an hour I went away with a "flea in my ear". They were proud people, proud of what they had got. Once I had realised that, as did the noble Lord in another constituency not far away, I started getting on with the folks on the spot. Things emerged which caused him and me anguish as Members of Parliament. For instance, young people were leaving the area for a quite simple reason, because of the facilities that they had in terms of housing. People said, "It is difficult if our Joe wants to bring back a girl he has met at Black-pool, because we have to go all the way round the block to get at the clottie." These are not things which can be treated lightly.

I will come in a few moments to the, shall I say, rejuvenation or re-emergence of the determination of a number of these places to put themselves on the map in their own way. The noble Lord has mentioned Rossendale. Years ago I went to Rossendale to locate a mill which belonged to a firm, David Whitehead. I stopped in a street in Rossendale and asked a local where it was. He went into a tremendous amount of explanation as to where it was, and then at the end said, "You know, I don't think I would start from here if I were you." But it was difficult not to start from there, because I was there. So with a lot of these places; they cannot opt out. They have the mills of old; they have the new mills—they have all sorts of mills, and I put them in this kind of category. Any mills that have been built in this century are reasonable; they are able to be converted as so many cotton mills that were built in the first decade of this century have been able to be converted and adapted to many uses. There are not many mills available now that have been built in this century. Then you had the mills, which are perhaps not up to standard now, and which were built soon after the coming of the joint stock banks, when the machinery was available and the processes were speeded up for the making of cotton in many of these areas. But, before them, we still have numbers of these buildings which are not fit for anybody to work in. I take it that these are the buildings that my noble friend has so truly drawn attention to. Believe me, his remarks ring true; they were like a good bell. This matter will be taken notice of by those higher up than myself.

Before I conclude, I want just to put one or two answers to my noble friend. This is not the Bill to accomplish this kind of thing. We cannot make this Bill into what might be called an urban renewal Bill. Your Lordships see the additions that we have here, and the powers that we have to alter the development area boundaries. We have put these conditions in the Bill because we mean business at the first opportunity. This is not just a matter of considering the employment situation. What would be the situation if everything was right, if we did not realise that places like Rossendale were not unusual. Haslingdon Borough is in this district of Rossendale. Ramsbottom is in the district of Rossendale. They get a 40 per cent. rate assistance from the Government. Rawtenstall Borough gets 46 per cent. and Bacup Borough gets 50 per cent. That is the sort of assistance that the Government are providing under legislation which was introduced at the time that the noble Lord was a Minister.

We realise that there is an enormous amount to be done, but I must say that an enormous amount is being done. While there may be some reluctance to move to these places from desirable areas like the South and the South-East, I would say to this Committee and to those who are interested in setting up businesses in and moving to the North that a lot of these "grey" areas are now taking themselves in hand in a way which was inconceivable years ago. I have in my hand photographs of my old constituency as it was with its back-to-back houses, its derelict spaces and its slums. I do not want to take up the time of the House, but if anybody wants to look at them during this discussion so as to realise how the North is setting about the job of tidying itself up and making itself presentable, they will provide the answer. So many influences are being brought to bear in these days, for people are demanding higher standards and asking for amenities to be provided. Ordinary folk are taking an interest in what is going on. In our neighbourhood we have societies and other bodies engaging in these activities. Bodies such as the Civic Trust would not have been thought of only a few years ago but they now play their full part.

From an employment point of view, whereas up to now the criteria have been severe, Rossendale, as the noble Lord has said, is very favourably placed, because unemployment there has been running at about 1 per cent, and has been purely nominal. These words have not been put into the subsection for nothing. In the words of one of our officials at the Board of Trade which appear in my brief and which I thought were very human, "We shall watch that nobody gets behind." That is exactly what we intend to do.

LORD ROYLE

I am familiar with the great improvements which have been made in the areas mentioned, and I agree with the noble Lord completely. My difficulty has been that they have had no more Governmental help in these activities than very many better placed areas in the country, and have had to do so much on their own initiative. However, I feel strongly about the question, but I am not in the same position as noble Lords opposite who can divide the House without any worry at all. I am a loyal supporter of the Government and I am aware of the heavy programme in another place and in this place next week. I should not like from these Benches to cause further embarrassment to the Government, added to the embarrassment which has been caused to them by noble Lords opposite on other Amendments to this Bill. I am not completely happy on this matter, although what my noble friend has said encourages me tremendously. I am quite sure that when what he has said is read in many parts of the country it will encourage many thousands of people in these grey areas. Therefore I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD REDMAYNE moved to add to subsection (1) (b): including in particular any assets which can be clearly shown to contribute to increased exports or a specific saving of imports,".

The noble Lord said: It might be for the convenience of the Committee if Amendments Nos. 29 and 30 were discussed together. They are related points and are both relevant to the same part of the Bill. The first Amendment seeks to ensure that if the Board of Trade make grants for assets of a class or description not eligible for grant under any of the foregoing provisions—and that is a very wide power of the Board of Trade—they should pay particular attention to whether the assets concerned clearly contribute to increased exports or to a saving of imports. I think that this is sense. I accept that the Government, in their wisdom or, as I think, their un-wisdom, have wholly excluded distributive trades in all forms from the Bill, and it is no good arguing about that now. But it would be an act of grace for the Government if, in response to this Amendment—and I do not pretend that this is the sort of Amendment which could go into the Bill in these words—they would say that there could be in their minds cases of special argument where they would be prepared to accept that the overriding value of the proposition was such that it would enable them to make a grant, despite the fact that the assets were not part of a qualifying manufacturing process.

I will not waste time by trying to give all sorts of examples. One example comes easily to my mind, and that was given by the President of the Board of Trade when winding-up the first day of the economic debate in another place. He cited the expansion of the mail order export business as a new field in which there were practical possibilities. That is fine; but mail order is a distributive trade and cannot be anything else. Success in it depends, as does all retail trading, on a wide variety of goods attractively presented. If one were going to embark on export mail order in a big way, there is no question at all that the plant and organisation required for it would be considerable. Packing equipment, machinery for the production of catalogues, machinery for mailing and so forth, even a computer, would be necessary. If the President of the Board of Trade talks about the practical possibilties of expansion of exports through mail order, it seems a little inconsistent, whatever the dogmas of the matter may be, that the Government will not admit that perhaps in this particular case they would be prepared to use the generous powers they have given themselves in Clause 7 of the Bill for the benefit of that activity, even though it is distributive. It seems to me to be such a powerful argument in support of my Amendment that I do not propose to labour it any further, in the happy anticipation that the Government will accept the principle of it if nothing else.

The second Amendment seeks to persuade the Board of Trade that in respect of the construction industries there is a strong case for allowing grants, despite the fact that the machinery for which the grants were allowed is to be used outside the United Kingdom. My reason for putting forward this Amendment is that none can deny that the construction industries are in fact the spearhead of a great deal of future export. Being the spearhead it is they, the construction industries, rather than the industries which follow them, which run the greater risks, because they work mostly in developing countries and are exposed to extreme political and economic hazards.

I doubt whether I have to remind Ministers that within these last ten years the construction industry has made tremendous progress. In fact, the value of contracts obtained by British contractors overseas has risen from £72 million in 1955 to some £198 million to-day. This figure reflects the activities of some 60 or 80 companies working in about 80 countries. Of course, not all this £198 million stems directly from the United Kingdom, but I am told that a conservative estimate would be £90 million of activity stemming from this country. That is an export effort. It is just as much an export effort as manufacturing and compares favourably indeed with the export record of a great number of other industries. I shall not quote them all in detail, but if one looks at the trade returns one sees that these figures are better, for example, than the exports of the leather trades, of paper board, of sanitary ware, of furniture, of clothing or of footwear. And, of course, one must remember that those industries qualify for investment grants, and incidentally, also, qualify for export rebate, from which the construction industry is excluded. Therefore, we are talking about an industrial activity which is of great value to us. One has to remember that it is not only the turnover which the construction industry itself brings to this country which matters to us; it is, as I have said, the spearhead, and every million pounds' worth of work which it does produces many millions of pounds' worth of future exports.

I spoke to my first Amendment with very little hope that the Government would do more than make a gesture, saying that there may well be conceivable circumstances in which exceptions could be made for the express purpose of export or of import saving. But I believe that in regard to the second Amendment—and with respect to the noble Lord, Lord Shepherd, I am rather sorry that the noble Lord, Lord Rhodes, is not replying, because in a sense I might have struck a more sympathetic chord with him, although I realise that the noble Lord, Lord Shepherd, also, is not without sympathy; I am getting into some difficulty on this point and I hope the noble Lord will forgive me—it is undoubtedly true that these industries are of equal value, in an export sense, to any manufacturing industry. Although I do not want to use an oratorical phrase on a Committee stage, I will just say that whereas one used to say that trade follows the flag, one could now say that trade follows the bulldozer, and I hope that the Government may take that view. I beg to move.

Amendment moved— Page 6, line 37, at end insert ("including in particular any assets which can be clearly shown to contribute to increased exports or a specific saving of imports.").—(Lord Redmayne.)

LORD SHEPHERD

The noble Lord, Lord Redmayne, has been in this House only a very short time, but as his speeches develop he becomes increasingly persuasive. However, he spoiled it at one moment when he suggested that I was not so sympathetic as he hoped my noble friend Lord Rhodes would be. I thought that was rather hard. I said to him yesterday that I thought one of the necessities of a Chief Whip in the House of Commons was a long memory. May I say to him now that my experience of being Chief Whip in this House shows that one has to be generally sympathetic to all quarters of the House.

I am very sympathetic to the proposition which the noble Lord has made in his Amendment No. 29. The whole purpose of this Bill is to give assistance, in the way of stimulus, to investment in the manufacturing and extractive industries, for the purpose of exports and for the saving of imports. The noble Lord, Lord Redmayne, is quite right in saying that there are a number of businesses which contribute to the export effort, and we have not at this stage been able to give them a special position in line with the manufacturing and extractive industries. However, they do receive considerable assistance through the various Board of Trade services.

The noble Lord referred to the provisions in paragraphs (a) and (b) of subsection (1). It is possible under paragraph (a) to vary the rate of grant. We will look at all applications, but we must always bear in mind our need to keep in line with our various international trade agreements, such as GATT. Paragraph (b) gives power to the Board of Trade to bring in a different class of assets or business, and this power we will use. But we shall have to be careful in the early stages how this is used. But I can say—and this is not just a pleasant sound—that the Government are determined to do all they possibly can to assist and stimulate those who are in the export business. This is as vital to this country as anything I can conceive, and this will be the burden of the Board of Trade. I am quite sure that they will use all their efforts to achieve it.

LORD REDMAYNE

May I interrupt the noble Lord? Would he add to that assurance, that in carrying out that policy the Board of Trade would not exclude the distributive trade in special circumstances?

LORD SHEPHERD

Paragraph (b) of subsection (1) is quite clear. The words used are: assets of a class or description not eligible for grant". These are very wide words, and the paragraph does not specify a limitation as to what could be included. It has deliberately been drafted widely. It may well be that there are a number of businesses (and, having been in the export trade I can think of a number) which play a very important part in exports and in the earning of overseas currencies, but which are not in themselves even distributive. There are quite a number of businesses which could be helped, and the Government and the Board of Trade will be watching this. If we can give assistance this will be done.

LORD REDMAYNE

May I pursue this point? I am extremely grateful to the noble Lord and he has been very helpful. But he will be aware that in another place a Minister of the Crown specifically said that it was the Government's policy to discriminate against merchant exporters as opposed to exporting manufacturers. That is a very different tune from the one which the noble Lord has so kindly sung today.

LORD SHEPHERD

I am not now giving an undertaking as to what the Government will do in the immediate future. All I am trying to say to the noble Lord is that the power exists to do this and many other things. As time proceeds, assistance will no doubt have to be given to varying forms of business. The noble Lord mentioned merchant houses. We are, in fact, through E.C.G.D. and other Board of Trade organisations, giving considerable assistance to the merchant traders. I think my noble friend Lord Silkin had a point he wished to make.

LORD SILKIN

I am concerned with the position of goods which at present are being imported but which somebody wants to set up a business to produce in this country. Will they get similar support? Such activity is really equivalent to an export, because it is saving imports.

LORD SHEPHERD

I cannot find it now, but I drew the Committee's attention to a provision in the Bill that even in the case of a firm or a group of individuals who, having the capital, wish to manufacture a new item—some item which they have never produced before—a grant will be available to them, if they have satisfied the Board of Trade. So there is this considerable flexibility, not only in the field of export stimulants but also in the field of import savings. I think, if I may say so, that, through our discussions, the importance of the flexibility of this Bill has become clear—and this is the point that I was stressing right through our discussion on the first Amendment.

I come to the second Amendment—and here I fully recognise all that the noble Lord, Lord Redmayne, has said about the importance of the construction industry. The problem is that this Bill is to stimulate investment and modernisation within Britain, although there are some exceptions, such as ships and hovercraft. But the Amendment, as I understand it, would mean that the grants would become available to the construction industry to assist them in, perhaps, the purchase of plant and equipment for use in overseas projects. There is not even a limitation here—and this, of course, would be a dangerous omission, from one point of view—to prevent us from being called upon to make grants to a home-based constructor who is in fact using entirely American equipment in his operations overseas. I should not have thought that that would be very acceptable to the Committee. It is true that we can make grants in respect of American machines if they are used in this country, but that is for the purpose of stimulating our own production. I do not think the taxpayers would take very kindly to the thought that we were providing monies from their own tax contributions for the purchase of foreign equipment for use in foreign lands. But—and this is the difficulty—if we were to put in the stipulation that the equipment had to be of British manufacture, then one would again be up against all the difficulties as regards GATT and the various other trading agreements.

I would say to the noble Lord, Lord Redmayne, that we have now included (and I think very rightly) the construction industry within Clause 1, which means that companies will receive the varying

grants, either 20 per cent. or 40 per cent. according to the area in which that construction company is operating. This should have a significant effect, I think, upon the construction industry; and, if my memory serves me aright, most of the large construction companies which operate overseas have themselves large, home-based construction companies, so they will, in fact, receive the stimulus. I am sorry, but I cannot possibly accept Amendment No. 30. As for Amendment No. 29, I assure the Committee that it is not necessary. The Government are determined to meet the spirit behind the Amendment, but we do not think the Amendment itself is necessary, since the powers are already contained within the Bill.

LORD REDMAYNE

I am grateful for what the noble Lord has said about Amendment No. 29, and, with leave, I should like to withdraw it.

Amendment, by leave, withdrawn.

LORD REDMAYNE

If I may, I should like to move this Amendment formally. I accept that the Minister has done his best, but I think he could do more if the will was there. Therefore, I move this Amendment.

Amendment moved— Page 6, line 37, at end insert ("and when considering making such grants shall not be bound by section 1(1) or by section 4(2) of this Act (which specify that machinery or plant must be for use in Great Britain):

Provided that it can be shown by the applicant that he is—

1. (a) an individual ordinarily resident in Great Britain, or
2. (b) a body corporate incorporated and resident in Great Britain

and that the machinery and plant in question is to be used for the execution of specified industrial contracts outside Great Britain.").—(Lord Redmayne.)

5.54 p.m.

On Question, Whether the said Amendment (No. 30) shall be agreed to?

Their Lordships divided: Contents, 36; Not-Contents, 37.

CONTENTS
Abinger, L.	Carrington, L.	Ferrers, E.
Atholl, D.	Cullen of Ashbourne, L.	Ferrier, L.
Auckland, L.	Daventry, V.	Fortescue, E.
Barnby, L.	Drumalbyn, L.	Goschen, V. [Teller.]
Boston, L.	Effingham, E.	Grenfell, L.
Brooke of Cumnor, L.	Emmet of Amberley, Bs.	Grimston of Westbury, L.
Brooke of Ystradfellte, Bs.	Erroll of Hale, L.	Hawke, L.
Ilford, L.	Massereene and Ferrard, V.	St. Aldwyn, E. [Teller.]
Killearn, L.	Merrivale, L.	St. Helens, L.
Kilmany, L.	Nugent of Guildford, L.	Sempill, Ly.
Kilmarnock, L.	Redesdale, L.	Strange of Knokin, Bs.
Luke, L.	Redmayne, L.	Vivian, L.
NOT-CONTENTS
Addison, V.	Hurcomb, L.	Rhodes, L.
Amulree, L.	Iddesleigh, E.	Rowley, L.
Beswick, L.	Kahn, L.	Royle, L.
Bowden, L.	Kirkwood, L.	Shepherd, L.
Brockway, L.	Latham, L.	Silkin, L.
Burden, L.	Leatherland, L.	Sorensen, L. [Teller.]
Champion, L.	Longford, E. (L. Privy Seal.)	Southwark, Bp.
Crook, L.	Moyle, L.	Stocks, Bs.
Francis-Williams, L.	Peddie, L.	Stonham, L.
Gardiner, L. (L. Chancellor.)	Phillips, Bs. [Teller.]	Summerskill, Bs.
Hall, V.	Plummer, Bs.	Williamson, L.
Henderson, L.	Rea, L.	Willis, L.
Henley, L.

Resolved in the negative, and Amendment disagreed to accordingly.

6.0 p.m.

LORD NUGENT OF GUILDFORD moved to add to the clause: () No order under this section shall result in the reduction of a grant below the rate ruling at the time when any contract to incur the expenditure was made.

The noble Lord said: I beg to move Amendment No. 33. This is a short but simple Amendment which noble Lords opposite intend to cover in the Statutory Orders which will be made under this Bill. The Amendment would have the effect of protecting an applicant for a grant towards the cost of machinery or plant which qualified in terms of the current Order from losing the grant because the President of the Board of Trade had introduced a new Order varying the conditions in a way which excludes the machinery or plant concerned before the grant is paid. We know that an eighteen months' interval may elapse—later it may be shortened to six months—before the grant is paid. The Amendment would provide that where a firm contract had been entered into to buy the plant, the application would still qualify despite the terms of a new Order.

As noble Lords opposite know, one of the main objections and criticisms of industry, and indeed of my noble friends on this side, to this Bill is the uncertainty of getting a grant as compared with the former investment allowances which were given as of right. Despite the sedentary interjections of the noble Lord, Lord Rhodes, this is the fact. These grants are at the discretion of the President of the Board of Trade the old investment allowances were automatic. Indeed, it is part of the case of noble Lords opposite for bringing in this Bill that they believe they will get a better effect by making it discretionary. Time will show. But this is the objection; and it is in order to clear up this narrow point to-day that I put this Amendment down. I hope noble Lords opposite will be able to meet this point, and as their intention is to put it in a Statutory Order later I feel it will be all the better if it were in the Bill.

Amendment moved— Page 7, line 28, at end insert the said subsection.—(Lord Nugent of Guildford.)

LORD SHEPHERD

There is a proverb which says that the leopard does not change its spots. The noble Baroness, Lady Emmet of Amberley, who spoke yesterday in the debate on incomes and prices, said that it was now time for the Conservative Party to speak for the ordinary man in the street. We have been in Committee on this Bill and, if I remember aright, there have been three Divisions. The first would have required the Board of Trade, out of taxpayers' money, to make investment grants to the brewers—the ordinary people of the country! Then there were the big landlords with their estates of timber. They were to receive, according to noble Lords opposite, by a Division, an investment allowance out of taxpayers' money. We have just had a Division in which, thank goodness!, the Committee showed some sense. Noble Lords opposite wanted taxpayers' money to be available to the great construction industry working overseas, free to buy foreign equipment.

LORD REDMAYNE

May I—

LORD SHEPHERD

Let me finish; I am going to say what I think. When my noble friend Lord Royle spoke for a depressed area of the country not one voice was raised from the other side. I find it hard to believe that the noble Baroness, Lady Emmet of Amberley, spoke in such terms yesterday. The leopard does not change its spats; and, so far as I can see in this House, it never will. I wanted to get that off my chest. I have done so. If the noble Lord, Lord Redmayne, wishes now to intervene he may do so.

LORD REDMAYNE

I want to intervene only to say this: that although I sympathise with the noble Lord's indignation I hope he will allow it to go on the record that I made no reference to giving grants for foreign equipment. That was, and remains, no part of my argument.

LORD SHEPHERD

The noble Lord must understand that the Amendment on which he voted permitted it; and I told him so. He never denied it. That is the Amendment on which the noble Lord, Lord Redmayne, and his friends opposite voted. Therefore they cannot make excuses by saying they did not mean that; it is for that they voted.

BARONESS EMMET OF AMBERLEY

The noble Lord accused me of having spots. I do not have them and cannot change them.

LORD SHEPHERD

Shall we proceed with the more genteel—

LORD ERROLL OF HALE

Might I make one point? The noble Lord, in referring to the buying of foreign equipment, conceded the point that contracting firms in this country may buy foreign equipment. What is the criticism of buying foreign equipment in respect of overseas contracts? If the case of the noble Lord, Lord Royle, was that there are depressed areas not included in the Bill, why have the Government not included them?

LORD SHEPHERD

The subtle difference (perhaps the noble Lord, Lord Erroll of Hale, does not appreciate it: he obviously does not) is that if we are able to buy foreign equipment, if we are forced to buy foreign equipment, and we use it in British factories, at least we give work to British workmen.

LORD RHODES

Exactly!

LORD SHEPHERD

Is that not right? But if we buy foreign equipment to use in Singapore, do we use British workmen?

LORD ERROLL OF HALE

British supervisors.

LORD SHEPHERD

British supervisors—which no doubt come from the sort of spots we have been talking about. But we must get on. I wanted to get that off my chest. I have done it, and most of my noble friends are glad that I did it.

The noble Lord, Lord Nugent of Guildford, in a much quieter speech than I have just delivered, said that the industry which will receive these grants should have some security, and the knowledge that if equipment is purchased, and if the rate was to be varied, industry would not suffer by it. My right honourable friend the President of the Board of Trade has made quite clear that we do not intend to make frequent and sweeping changes in the investment grants. That is our firm intention.

I cannot go so far as the noble Lord suggests, that a person who has made a contract or an undertaking to purchase equipment prior to the Order that is being made for the reduction of the grant should automatically be entitled to the earlier grant. It may well be that when an Order is made there will be a period between the making of the Order and the actual reduction taking place. But we must have some protection here. Again speaking as a merchant, I have seen the back-dating of orders in order that the Order should not be applied in any granting of an import licence. I have seen letters of credit being established and pro forma orders made to cover a certain position, perhaps even for the sale of the import licence itself. There are certain malpractices—here I am not condemning industry at all but it will be recognised that there are some black sheep in industry. It may well be that orders could be back-dated in such a way that grants would have to be paid if the Amendment were accepted. I will give the very firm assurance that it is not the intention of the Government to put in jeopardy the genuine investors and manufacturers in this country; nor do we intend to make frequent and sweeping changes in the rate. But we need to have some degree of protection for taxpayers' money.

6.13 p.m.

LORD NUGENT OF GUILDFORD

May I thank the noble Lord, Lord Shepherd, for the latter part of his speech dealing with the point that I raised? While of course I enjoyed the very dramatic intervention which he made to start with, I would explain that I was not asking either for the spotting or de-spotting of leopards to qualify for a grant. My request is a small one. I would remind the noble Lord that at the present time, under the provisions of the Agriculture Bill which is going through Parliament, there is a new system of grants coming in. It will still be another six months or more before that Bill is on the Statute Book. Nevertheless, since the beginning of this year, in other words for the last six months, and maybe eighteen months before the Bill is on the Statute Book, grants are being accepted on the evidence of the order of the applicant qualifying when the scheme occurs. So in principle I am asking no more than that concession in this case.

I am not asking for any back-dating, but only that where an applicant qualifies at the time he signs his contract, and if by chance the scheme is changed in the interval before he gets the grant, he shall still qualify. I feel that it is a very reasonable point and quite a reasonable thing to ask the noble Lord to make this concession in order to give industrialists the confidence which I am sure he wants them to have.

LORD SHEPHERD

Was the noble Lord asking if I can give an assurance if an investor makes a firm contract and, shall we say, a day after he has entered into the contract an Order is made?—in other words, he will have entered into the contract before the order is made but does not make his claim till perhaps three or four weeks later—

LORD NUGENT OF GUILDFORD

May I interrupt the noble Lord in order to make my point clear? My point is that, where the investor has actually made his application and lodged it with the President of the Board of Trade, and then a period of at least six months or possibly longer will be involved, I am asking that his application should qualify.

LORD SHEPHERD

I am glad to hear that. Now I can really help the noble Lord. If the investor has made his application before an order is made to reduce the grant, the fact that he has made his application means that he will get the grant at the old rate. The problem we had in mind was the evidence of contract. If the noble Lord is satisfied that the investor has notified the Board of Trade prior to the making of the order, then he will get the grant.

LORD NUGENT OF GUILDFORD

I thank the noble Lord, Lord Shepherd, for the assurance he has given. I should have liked it to be in the Bill but, for fear of being accused of further "jungle warfare", I will ask the leave of the Committee to withdraw the Amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 7 shall stand part of the Bill?

LORD HAWKE

Before we part with this clause, I should like to say a few sentences upon it. It is a very extraordinary clause but necessary in very extraordinary circumstances. We are in fact withdrawing from industrialists the grants they had from the pool of taxation to encourage them to invest money and we are redistributing it, or rather we are leaving the power to the Minister to redistribute it in certain specified directions and, by this clause, in any other direction that he, with the consent of Parliament, may afterwards agree to. This is almost unprecedented in this country on this scale. Fortunately, in this country we have always been remarkably free from any major public scandal. But suppose every country in the world were to pass this legislation to-day and put it on the Statute Book. I venture to think that in 90 per cent. of those countries there would, within a short time, be a major public financial scandal. I only hope and pray that it will not lead to that sort of thing in this country.

As I say, it is a very extraordinary clause. In fact, I have never seen the noble Lord, Lord Shepherd, so exhilarated in this House before, as he is at the thought of this clause. It made me wonder whether he had been "hitting the L.S.D." while the going was still good, before the order came into force.

LORD SHEPHERD

Noble Lords opposite—I am getting a little tired of it—in every speech continue to ask, "Is this a precedent?" In my experience, and I think that this is true of life, when we move forward in some respects we establish a precedent. So far as this type of grant is concerned the use of an Order is to widen and make the operation of the Bill or the Act more flexible. It has appeared in many pieces of legislation. If the noble Lord wishes to think in terms of large sums of money, he might speak to his noble friend Lord Nugent of Guildford with regard to the Agriculture Acts. Here we pour out millions of pounds, very sensibly and usefully, and vary this by order year after year with the consent of Parliament. I see no precedent in that. If there is a precedent, then I am glad that it is a precedent.

Clause 7 agreed to.

Clause 8 agreed to.

6.20 p.m.

LORD DRUMALBYN moved, after Clause 8, to insert the following new clause:

Right of Appeal

"—(1) Where a person applying for a grant such as mentioned in any of the first six sections of this Act is aggrieved by a decision of the Board with respect to any of the following matters:

1. (a) the refusal to make a grant
2. (b) the amount of the grant paid
3. (c) the failure to make a grant within nine months of application
4. (d) a decision on the part of the Board that a condition imposed under section 8(1) has not been fulfilled
5. (e) a requirement that any grant should be repaid in full or in part

he may appeal to the Appeal Tribunal.

(2) On an appeal under this section the Appeal Tribunal may confirm the decision of the Board appealed against, or substitute there-for any decision which the Board could have made under this Part of this Act, in which case the Board shall give effect to the decision of the Tribunal.

(3) Any decision of the Tribunal shall be conclusive for all purposes.

(4) For the twenty-four months immediately following the coming into effect of this Act, paragraph (c) of subsection (1) shall have effect as if for the words 'nine months' there were substituted the words 'eighteen months'."

The noble Lord said: I beg to move the new clause standing in my name. I made some reference to this Amendment when discussing on the first Amendment whether the power of the Board to make grants should be discretionary, as it is in the Bill, or mandatory. The reason was that if it were made mandatory, it was necessary to provide some form of appeal. I agreed to withdraw that Amendment, but that does not dispose of this one. While a form of appeal is not absolutely necessary where the power is discretionary, it may still be very desirable. The Minister of State said in another place: …we have not set our minds against a statutory form of appeals procedure".—[OFFICIAL REPORT, Commons, Vol. 732, col. 409, 19/7/66.] This Amendment is designed to discover whether, in the past fortnight or so, the Government have set their minds against it. A good deal can be said, on grounds both of principle and of practice, for providing a form of appeal to an outside body. I know that the noble Lord would not like a comparison with the Commissioners of Inland Revenue. There is the difference in that a decision can be appealed against, but the main reason they do not like the comparison is that in the Government's opinion the appeals in some cases of investment allowances have resulted in the wrong decisions. I think that that is an argument unlikely to commend itself to your Lordships.

There is ample precedent for some form of appeal. It comes almost textually from the Statute Book, with only such changes as the subject matter appeared to require.

LORD SHEPHERD

Would the noble Lord help me? Which Act did he refer to when he mentioned the Statute Book?

LORD DRUMALBYN

I should have thought that, with all his advisers, the noble Lord would have been advised of the Act.

SEVERAL NOBLE LORDS: No.

LORD DRUMALBYN

What is the Board of Trade coming to, if it cannot brief noble Lords on Acts of Parliament? The noble Lord knows perfectly well which Act.

LORD SHEPHERD

I am not trying now to be slick and to score a point. I genuinely want to know the class of legislation to which the noble Lord was referring. What I really wanted to have from him was whether it was legislation of a permissive character.

LORD DRUMALBYN

Yes; in a sense it is permissive. The drafting comes from the National Assistance Act. Discretion is there laid on the National Assistance Board. There is ample precedent. The noble Lord shakes his head, but I have merely selected what seemed to me to be a good form. The fact that it was a simpler form made it all the easier for me to put it down.

How often has the noble Lord, when he was on this side, said that he was talking about the principle and not the details of an Amendment! What I am suggesting here is the principle that there should be an appeal. Can we agree on that basis? I do not propose to press this Amendment, because I realise that this particular form of words may not be desirable. On principle, unless there are strong overriding considerations, I should not have thought it reasonable that where a Department makes a decision on whether a person is entitled to some benefit provided by an Act of Parliament, the sole form of redress open to someone who is turned down should be merely to ask the same Department kindly to reconsider its decision. This is the position that we have in the Bill as it stands.

On practical grounds, as my noble friend Lord Erroll of Hale said, an appeal tribunal is to be preferred, because an appeal to a Department against its own decision is going to take up a great deal more time. First, there are representations to the Department and then to the Member of Parliament, who may well lobby a hard-pressed Minister; and this may be followed by deputations and all the rest. I am sure that the Government have considered this point. They may not have found their way round it, but I think it is worth while asking the Government, if they are unable to accept the principle of an appeal, in spite of the fact that the Minister of State said that he had an open mind on it, to give their reasons.

Amendment moved— After Clause 8, insert the said new clause.—(Lord Drumalbyn.)

LORD SHEPHERD

I recognise the benefit in having some body to arbitrate between a claimant and the Minister who has to make a decision, but we have to take into account the purpose of the legislation. We have tried to maintain this Bill as a permissive piece of legislation, to lay down the responsibilities of the Minister and the areas and conditions in which grants can be made. We also give him discretion to make orders to widen these or in certain cases to contract them. My right honourable friend said that he did not intend to discriminate between one firm and another, and I should have thought that the fact that the Minister said that in Parliament was sufficient assurance that such a course would not be adopted by the Board.

If this is a permissive piece of legislation it is illogical that we should then set up an outside body to decide whether the Minister had been right or wrong in the way he used his discretion. The difficulties that we have had over the investment allowances stem from the fact that that legislation was mandatory and your Lordships' House, sitting in its Judicial capacity, has ruled some strange things. They were good judgments in law, I suppose, but I do not think that they represent what the Government and Parliament had in mind when they passed legislation on the use of public money. This is one of the difficulties, when a judicial body has the power to make judgments on a Minister who is responsible to Parliament for the spending of public money. The Minister is answerable to Parliament and I do not think it right that we should then put an outside body to sit in judgment on him.

The point I am trying to get across to the noble Lord, who referred to the National Assistance Act, is that under that Act a mandatory obligation is placed upon the Minister in regard to the operation of his duties. There is a degree of discrimination, it is true; but basically it is a mandatory duty. Clearly, that is rather different from the situation under this Bill. That Act deals with matters of great social importance. It deals with individuals, some perhaps in need of protection and guidance—especially, probably, protection; and in those circumstances it is right that there should be these various outside bodies. But here we are not dealing with that. We are dealing with hard-headed businessmen—and I hope that they will be hard-headed, and will go after exports and seek import-saving, in the same manner as I hope they will go to the Board of Trade to seek these grants.

I hope that the noble Lord now accepts the view that this Bill should be permissive. When dealing with an Amendment, replied to by my noble friend Lord Rhodes, the noble Lord said that we must keep this Bill flexible and must resist inflexibility. He said that two or three times: that one cannot have flexibility, and one cannot reduce inflexibility, unless the Bill is in this permissive state. And if it is in this permissive state, then the responsibility should be laid upon the Minister, and it would be wrong to have another body to pass judgment in a case where the Minister is finally responsible and stands on the judgment of Parliament.

LORD HAWKE

The noble Lord's explanation would, I think, be sounder, and would carry more weight, were it not for Clause 1(1)(b), which contains a very nebulous definition of what activity is liable to obtain a grant. Under that paragraph you can get a grant if you are carrying on in the course of that business scientific research relating to a qualifying industrial process whether carried on in the course of that business or not. I can think of all sorts of possible interpretations that could be put upon that particular collection of words. The applicant, if carrying on some sort of scientific research, tells the Minister: "I want 20 per cent, or 40 per cent. Grant". Presumably, the answer comes back: "Sorry; no". He will not have the slightest idea why he has been turned down, and he has no redress whatever unless he goes to Sir Edmund Compton—and Sir Edmund Compton will have such a queue of applicants to deal with that it will take years for him to get through. There should be some method by which a man can find out precisely what he has to do to qualify, and why he has been turned down.

LORD SHEPHERD

The noble Lord, Lord Hawke, does not seem to be able to get into his head what is the purpose of this Bill. It is to stimulate the manufacturing industry, and the science-based side of it is of tremendous importance. We have therefore included it in Clause 1(1)(b), which says: for carrying on in the course of that business scientific research relating to a qualifying process… If a man or a company is doing that, and is clearly conducting a business of scientific research connected with a qualified industrial process, he will get the grant. The noble Lord says: "How will he know that he will get the grant?" It is quite obvious. He will do what every other manufacturer will do. He will knock on the door of the Board of Trade Office and say: "These are my circumstances. This is what I am doing. What grant am I entitled to?" This is done every day in business. If I want to sell something I have to go and sell it; and if I want to buy, sometimes I have to go and buy it. It is necessary to go out.

I hope the noble Lord, Lord Hawke, is not suggesting that the Board of Trade should go around finding out all the people who want to receive grants. But I will say this to the noble Lord—and it is what my noble friend Lord Rhodes said on Tuesday: that we intend to publish from time to time lists of machinery and plant on which grants are being paid. This will be a continuing and, no doubt, growing list. But if your article does not appear on that list, do not give up hope. If you are within the definition of this Bill, go to the Board of Trade. I cannot really believe that the Board of Trade can be expected to do much more than that.

LORD HAWKE

I think the noble Lord went a little further than that in an answer he gave me the other day. He said that the Board of Trade would certainly give a ruling in advance of an applicant purchasing industrial machinery.

LORD SHEPHERD

Certainly.

LORD HAWKE

Will the Board of Trade give a similar answer in the case of somebody proposing to set up a laboratory for some particular form of pure scientific research when it is doubtful whether or not it precisely relates to an industrial process? That is the point.

LORD SHEPHERD

If you go to the Board of Trade and say, "This is what I intend to do", and you satisfy the Board of Trade that what you have in mind is both sensible and sound, that you really intend to do it and you come within this definition, the grant is available to you. I cannot see what the difficulty is. Businessmen, at least, will know what to do.

LORD DRUMALBYN

I am grateful to the noble Lord. Of course, there is a real difference of opinion, and, as he knows, there are limits of flexibility. In any form of administration administrative instructions have to be drawn up if the administration is to be done in a coherent way. On the basis of those administrative instructions you could have abasis of appeal. What we wanted to do was to guard against a feeling of injustice and dissatisfaction which might arise if there were disputes on questions of fact which could not be resolved. This is all there is to it.

LORD SHEPHERD

The noble Lord is aware that advisory committees will be set up. These committees will not arbitrate between the Board of Trade and an applicant, but their advice will be there on whether what is being produced, or what may be produced, comes within this definition. So this outside body exists to give advice to the Minister.

LORD DRUMALBYN

I am sorry that the noble Lord has not quite understood what I was saying. It is simply that I wanted to fill this gap that is left. There will be the technical advice that will come from the advisory committee, but there may still be disputes as to whether or not a person fulfils the qualifications. It is apparent that Government have now closed their mind—it was open a fortnight ago—and, in the circumstances, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clauses 9 to 11 agreed to.

6.40 p.m.

Clause 12 [Annual reports]:

LORD ERROLL OF HALE moved to add to the clause: The first report shall list all items of plant and equipment qualifying for grants, together with all those items in respect of which application has been made and refused and the views of the Advisory Committees where relevant. Subsequent reports shall list all additions, changes and deletions to the original list.

The noble Lord said: The noble Lords, Lord Shepherd and Lord Rhodes, in maintaining their principle of flexibility, have frequently referred to the fact that it would be quite easy for potential applicants to come to the Board of Trade to find out whether or not they are eligible for a grant. The purpose of this Amendment—and I apologise if the drafting is clumsy, though I hope the intention is clear—is to ensure that the Board of Trade will provide published lists which will show what is eligible and, possibly, what is clearly not eligible, certainly in the marginal cases.

The first list will be big, but at the end of each year it would be of value to industry if they could know what cases have been decided for and against by the advisory committees (or classes of case, as I understand that they are not to deal with individual items) and thus build up over a period of years a fully understood system, without the need for anybody having to refer to the Board of Trade about individual matters. This is the purpose behind the Amendment. If it could be achieved in any other way, if the Government do not feel they can accept it in this form, I shall be glad to withdraw my Amendment to enable an alternative Amendment to be tabled by Her Majesty's Government.

Amendment moved— Page 10, line 42, at end insert the said words.—(Lord Erroll of Hale.)

LORD RHODES

This reminds me of a colleague of mine in the House of Commons, who was always going to make a speech and he always gathered together the facts. Whenever one talked to him he said, "I am always getting the facts". He accumulated so many facts, but he was never able to make a speech, and his life went on like that for him. I am afraid that if this Amendment were to be put in the Bill we should be similarly placed at the Board of Trade.

It has been suggested to us on numerous occasions that we should make information available to firms to enable them to judge whether their applications are likely to be allowed. We have every intention of assisting firms in the submission of application forms, since if this scheme is to work effectively it is essential that they should know how best to take advantage of it. We intend doing that, and I can give that assurance now.

Having said that, may I say to the noble Lord who moved this Amendment in his usual engaging manner, that it is quite impossible to do this on account of the staff side of the question. It would require too large a staff. The flexibility the noble Lord talks about would cost a lot of money. I noticed the other day that a Question was asked, and there was an argument, about the increase in the size of the Civil Service. If we had to do this it would mean a tremendous increase.

This is a discretionary scheme, intended to concentrate the benefit of Government financial assistance to industry on certain key sectors, particularly manufacturing, construction and extraction. To this end, we have used in the Bill the concept of a qualifying industrial process, which renders new plant or machinery eligible to receive grants if it is provided for use in that process. There are bound to be cases where the same asset—and this is the point—for instance, storage equipment or fork-lift trucks, would be eligible for grant when it was provided for use in connection with a qualifying process, but not where it was used in the course of distribution. You could not say, for instance, by seeing a list like that, whether it would qualify or not, because every single application would have to be identified as a qualifying process. I am sure that the noble Lord, who has great experience in these matters, will see this, and will understand that it would involve a tremendous amount of work. If this request is to be of any use to anybody, it will have to cover everything, because otherwise it would not be any good. My word, when you think of that, it would be as big as the Domes day Book.

The noble Lord has had experience on the overseas side of the Board of Trade in his long career in the House of Commons, and he knows that the Custom Tariff, although it only identifies items broadly, nevertheless is enormous in its spread. But it would be nothing compared with this, because if every single item which was available was published, one industry being qualifiable and another one not, I am afraid that it would be so impossible, and it really would put up the need for money and staff. I hope that with that explanation the noble Lord will be kind enough to withdraw his Amendment.

LORD ERROLL OF HALE

I am most grateful for the explanation. I see that there are practical difficulties in the form in which I put it forward. But, surely, inside the Board of Trade there will have to be a compendium of this sort. May I therefore make the suggestion that that compendium could at least be available for inspection by applicants, rather than that they should have to write in in each case? As I believe there are to be five centres for the administration of investment grants, presumably each centre will have a compendium—if you may call it that—in order to ensure uniformity as between one area and another. Will it be possible for intending applicants to be able to inspect the compendium, quite informally, if necessary on payment of a small fee, rather than that each one should have to write a letter which would then be separately answered by an official? That will go a long way to meeting my point.

Secondly, there are also the borderline cases or the types of case which will presumably go before the licensing committees. It would be a great help for the borderline cases, whichever side of the line they may fall, if the reasoning behind the decision could be made public, so that people would know the principles on which the Board of Trade were acting and, therefore, would not bother to put in a similar application a year later, because the Case Law, so to speak, had been established, and was either published or made available for inspection.

LORD RHODES

There is a lot of sense in that suggestion. I will think about it, without being able to promise in what form we can increase the information available to applicants. We are intending giving applicants all the information we possibly can. There is no "hole-and-corner" about this at all in our minds. What we want is for these people, who are wanting to invest in capital equipment, to get what they are entitled to. We are not shoving off our responsibilities. The other day I promised that there would be a booklet available in the autumn, and I think I can safely say that it will make more information available, not only to the offices that are set up, but also to the trade associations. I am hoping that the trade associations will take a great interest in this, and that they will be able to tell their members what kind of facilities are available and what they should do about an application. I think it is up to everybody to help in what the Bill is intending to do.

LORD ERROLL OF HALE

In view of the helpful explanations, and the assurance that my proposals will be looked at, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 12 agreed to.

Clause 13:

Interpretation and supplementary provisions.

13.—(1) In this Part of this Act— machinery or plant" includes part of any machinery or plant but does not include a computer, ship or aircraft or any vehicle except— (b) a vehicle constructed or adapted for the conveyance or haulage of loads in or about private premises, including the site of building or civil engineering operations; ship" includes any vessel used in navigation.

6.50 p.m.

LORD DRUMALBYN moved, in the definition of "machinery or plant", to leave out "or about" and insert: about or between private premises occupied by the same person".

The noble Lord said: The definition of "machinery and plant" excludes vehicles except those specified in the following paragraphs (a) and (b). Paragraph (b) refers to: a vehicle constructed or adapted for the conveyance or haulage of loads in or about private premises, including the site of building or civil engineering operations; I suggest that the words "in or about" are perhaps more restrictive than was intended. I have not tried to expand the definition further than seems to me absolutely necessary, partly because this question has been debated in another place, and I am not sure if, in fact, I have extended it quite far enough.

I think there are three points here. I have in mind the sort of case where a firm has two or three plants close together, but not adjoining. I was told of one case where one firm happened to occupy a site whereas its competitor in the same town occupied three separate sites. It seems to me that as the Bill stands the second firm might have to buy three separate specially constructed vehicles where one would do. The second case is where a firm occupies two sites, separated by a main road, and materials or semi-manufactured goods have to be transferred between them. The case has been put to me of a company owning a quarry on one side of the road and a factory on the other, and dumpers, which are specially constructed for this type of work, take the materials across from the quarry to the factory. These vehicles are not only permitted to cross the highway under the law but also exempted from Vehicle Excise duty under Section 6 of the Vehicles Excise Act 1962. I am sure it is not intended that such vehicles, if otherwise qualified for grant, would be excluded from grant merely because they go outside private premises. It looks as if it would be impossible under the Bill to give a grant because then they would not be purely "in and about" Does "in and about" mean only in and about, or not? One knows how restrictive the law can be.

The third point is that the Board of Trade not only encourage but offer inducements to firms to expand into development districts, now to be called development areas, rather than to expand their existing premises. This means that such a firm may often transport semi-manufactured goods for processing or finishing from its original factory to its new factory in the development area, or vice versa. If vehicles of a certain type are constructed or adapted for carrying goods from one plant to another in the original premises, and one of the processes is transferred to premises in the development area, it seems reasonable that new vehicles of the same type provided for the same purposes should receive the grant if their use is to be confined to carrying loads from one plant to another, even though one of the plants is hundreds of miles from the other. After all, this is what happens when the Board of Trade have persuaded a firm to go to a development area in, say, the North of Scotland. If this point is not conceded then obviously the attraction of setting up a factory elsewhere is to that extent diminished.

So there are these three cases: the case of several plants fairly close together; the case of plants being merely separated by a main road, and the case of plants fairly far distant. I recognise that I have restricted this perhaps more than was intended by the words "occupied by the same person". I am not certain whether that was necessary, but obviously if they are in and about the same premises they are occupied by the same person, otherwise it would not be the same premises. I beg to move.

Amendment moved— Page 12, line 2, leave out ("or about") and insert ("about or between private premises occupied by the same person").—(Lord Drumalbyn.)

LORD RHODES

We wondered whether these were probing Amendments to find out what sort of vehicles would be eligible, and I take it that that is partly the reason. With regard to the first case, we have to show a bit of common sense about this matter. It is the vehicle that counts, and I want to make it absolutely clear that internal transport will qualify but external transport will not. If it were said that a fork-lift truck would do the job of working in the factory and carrying the materials across the road, then provided that vehicle was insured and licensed to enable it to cross a highway that would be all right. If it was a private road it would not matter, of course; they would go into the next factory and get on with it and nobody would quibble about it.

With regard to the second case, there again we have the difference between one vehicle and another. If somebody said, "All right, we shall have a three-ton truck and do the job that a forklift truck will do, but we shall be able to use the three-ton truck for all sorts of other things", we would rule that out. As regards the third case, where the new business has been established in a development area, that would naturally bring it right into the realm of transport and it would not be allowed. In order to qualify it must have special features which make it a works vehicle. I want to make that quite clear so that nobody has any doubt about it, and anyone who thinks he can substitute for a works vehicle something which can be used for a totally different purpose should be warned at this juncture. After all is said and done, it would be patently unfair for one firm to have the benefit of being able to run a vehicle in those circumstances somewhere else in a development area.

I am afraid I cannot concede anything on this point, except to say that common sense will be used in regard to works vehicles. If the works were contiguous one to another we should not say, "Because it is across a little road you cannot use it". Of course they will be able to use it, and this is what will happen in practice, but the difference is between one vehicle and another. If it is doing the job for which it was designed as a works vehicle, that is all right; but you cannot have a vehicle which is likely to run long distances for a totally different type of work. I ask the Committee to reject the Amendment.

LORD DRUMALBYN

I am grateful to the noble Lord for his explanation but I do not think he has gone as far as I should have liked him to go. It is not enough to talk about "just a little road"; either you can cross the highway or you cannot. I am sure you can. I am sure this is where common sense will come in. Vehicles of this kind do not need a licence; I have been given this assurance by those who are operating them. There is the additional point that some vehicles actually carry out excavating as well as being vehicles. I take it that something could be treated as machinery if it is machinery, even though it does haul a load incidentally as well. I am sure this should be so. I see the difficulty the noble Lord is in about competition with other forms of transportation, and I should not wish to press this matter. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

7.0 p.m.

LORD NUGENT OF GUILDFORD moved, after the definition of "machinery or plant", to insert: 'making' includes any process held by a decision of any Court of Record to be manufacturing;".

The noble Lord said: The effect of this Amendment would be to bring within the scope of the grants under this Bill the operations of corn and agricultural merchants and the agricultural co-operative societies. By some mischance this is the first time this particular Amendment has been discussed either here or in another place, and I feel it is of some importance and therefore it should be urged on noble Lords opposite. There are some 2,000 of these merchants in the country and of course there are a large number of agricultural co-operative societies, and they play a basic part in the agricultural industry.

Inquiries by some of the agricultural merchants have indicated that the Ministry of Labour classifies them under Order XX, heading 831, in the Standard Industrial Classification; that is to say, along with distributors of coal, building materials, et cetera; in other words, as a purely distributive industry. I understand that the Standard Industrial Classification is going to be used by Her Majesty's Government for the selective employment tax. Perhaps the noble Lord will be able to tell us if it is the intention of the Board of Trade to use this Classification for grants under this Bill. While the information is coming to him, I will proceed to make my point.

My Amendment would have the effect of bringing the industry within the definition of "manufacturing", therefore qualifying for grant, and my Amendment does that by reference to the leading case of McCausland v. The Ministry of Commerce (Northern Ireland Court of Appeal, 1955), which held that the operations of a corn and agricultural merchant amounted to "the manufacture of goods". These operations are, first, manufacturing animal-feeding stuffs; secondly, manufacturing by adaptation for sale cereals, herbage and other seeds; and, thirdly, manufacturing by drying, grading and conditioning home-grown grain.

In post-war years the nature of the corn and agricultural merchants business has changed substantially from the prewar world, when they were mainly distributive; they have become mainly manufacturing industry, and the change has occurred as a result of the very big increase of production from our own farms both of cereals and of herbage seeds. Home-grown cereals production has increased no less than eight times since pre-war, from one and a half million tons per annum to twelve million tons per annum. The agricultural merchant has been called upon to handle a very large part of this, drying, cleaning and storing it, and in many cases mixing and compounding as well.

A good instance is malting barley. In pre-war days we imported three-quarters of our malting barley; now it is 100 per cent. home-grown and there is a great deal exported as well. Much of this has to be cleaned, conditioned and stored by merchants, so that the whole picture of what the merchant does has changed. It has changed with the big increase of acreage and the arrival of the combine harvester, which has eliminated the old corn stack and completely changed the farming scene. This trend will continue as home-grown cereal production continues to increase to replace costly imports, and that is of course what we wish it to do.

The result is that the modern corn and agricultural merchants' premises have changed completely from the memories of my boyhood, with the traditional sleepy mill house with its barns by the mill pond. To-day these mills are small factories humming with expensive modern machinery and bristling with modern storage bins. Much more will be needed both on and off the farm as we continue to increase production and to increase capacity and save valuable labour. If the industry were to be deprived of investment allowances and they were not to be replaced by grants under this Bill, there would be quite a serious handicap to the further modernising and re-equipment which is needed in the handling of feeding stuffs, seeds, et cetera. This, of course, would mean some increase in costs in the business of food production, which of course would be undesirable, paid either by the housewife in higher prices or in bigger awards at annual Price Reviews.

I believe this is a good case. This happens through the definition which is being used being an old-fashioned one. The nature of this business really has changed to being a manufacturing one. I hope the noble Lord opposite will feel that I have made out a case which he can accept. I beg to move.

Amendment moved—

Page 12, line 4, at end insert— ("'making' includes any process held by a decision of any Court of Record to be manufacturing;").—(Lord Nugent of Guildford.)

LORD SHEPHERD

In future the noble Lord, so far as I am concerned, is going to be known as "Griffith Nugent", because I think that is about the fastest bit of bowling I recollect in a Committee stage—that we should have the matter of agriculture, particularly in connection with grain, raised when the Amendment on the Order Paper refers to a Court of Record. I think the noble Lord has scored a point. I would agree with him that the storage and the processing of grain is a growing and important industry. I say to him that manufacturing, as I understand it in the Bill, means when you turn one thing into something else. I understand that turning water into ice is manufacturing, turning something else into oxygen is manufacturing, but turning warm air into cold air is not manufacturing. So if we understand that manufacturing is turning something into something else, then we can see that in the industry to which the noble Lord has drawn our attention—where there is plant and machinery which is turning grain or whatever it may be into something else, perhaps feeding stuffs, cattle cake or perhaps even seed preparation—a grant would be available. But I understand that no grant would be available for such things as washing or even grading. I would not wish to be dogmatic on that, because, as I said, the noble Lord has bowled a pretty fast ball. I must tell the noble Lord that we do not intend to use the Standard Industrial Classification as a guide-line. We have, as I have repeatedly said, and no doubt the Committee is getting rather tired of it, the general provisions of Clause 1. We have the degree of flexibility that we want and we intend to use that, always having in mind the purpose of the Bill.

I hope that the noble Lord will not press the Amendment. I think it would be wrong for some particular judgment to be used as a basis for putting pressure upon a Minister. As I said on a recent Amendment, the responsibility is the Minister's; he is responsible to Parliament, and I should have thought that would be sufficient. A Minister is under considerable pressure in Parliament. It is not as though he can act in any dictatorial sense. There are limitations as to what he can and cannot do. These are the limitations which are imposed upon him by Parliament, as the noble Lord himself knows.

Having said that, I hope that the noble Lord will withdraw his Amendment. I will repeat that it was a fast ball, and if I have not dealt with it properly I will get in touch with him, so that he can raise this matter on Report stage on Monday and then perhaps I can deal with it more adequately.

LORD NUGENT OF GUILDFORD

I thank the noble Lord for his answer and I apologise if it appeared to be a fast ball. It was not intended to be. Of course, it is rare that the admirable advisers behind the noble Lord do not know precisely the meaning of every Amendment, from whatever angle it comes.

LORD SHEPHERD

I may say that the brief I have says, "The object of this Amendment is obscure".

LORD NUGENT OF GUILDFORD

I should be glad to be compared to Mr. Griffith in any capacity. If I had the speed that he has, I should think that I was doing quite well. I apologise if the meaning is obscure, because the intention behind it is a serious one; and it is curious that this particular point has not been dealt with earlier in the proceedings, for obviously it is a good one. But I am encouraged by what the noble Lord has told me: that where there is an element of manufacturing which is manufacturing, premises could qualify; and particularly that he is not intending to use the standard industrial classification.

I think it may be for the convenience of the noble Lord, and indeed of the Committee, if I put down the Amendment again on Report stage, so that he will then have a chance to obtain the full advice of his advisers, which was a little less complete than it usually is. I should like then to hear the full story. In the light of the noble Lord's reply, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 13 agreed to.

Clause 14 agreed to.

Clause 15 [Extension of powers under Local Employment Act 1960. 1960 c. 18.]:

7.14 p.m.

LORD ERROLL OF HALE

moved to leave out subsection (8). The noble Lord said: I beg to move this Amendment and the following Amendment together, if that is for the convenience of the Committee. The object of Amendment No. 44 is to ensure that no place which was a development district shall be excluded from being in a development area under the new legislation. I have in mind particularly Bridlington, about which I made some reference in the Second Reading debate, but I think there is a small area in North Wales which has been left out. It is not too late to rectify a measure of unfairness to these two places.

But if the Government is unable to accept Amendment No. 44, Amendment No. 45 would relieve certain hardship occurring in these two localities. One or two firms have only recently gone to Bridlington, in the confident expectation that development district facilities and inducements will continue to be available to them for some time to come. One of those inducements was free depreciation, which is coming to an end in any case, but, in substitution, in development areas there is a 40 per cent. grant. They will not get that. They will get only 20 per cent.

The purpose of Amendment No. 45 is to ensure that not only now in the case of Bridlington and, I think, Rhyl, in North Wales, but in any case in future when the boundaries of a development area are revised, those late arrivals in the areas will continue to receive the benefits for a period of at least three years after the area ceases to be a development area, provided they have not already been there for four years. The point of this is that when a development area becomes more prosperous, the Board of Trade may find some difficulty in persuading firms to go to that area, because there will be no guarantee that the inducements will not be chopped off arbitrarily at some date in the near future.

This Amendment ensures that any firm going to a development area knows that it will have a minimum period of three years in which to have all the facilities of going to a development area. If it continues to be a development area for a long time, then, once the firm has been there for four years, it knows that it will be cut off, like everybody else, when that particular locality ceases to form a development area. I submit this as a rea- sonable Amendment, designed to help some firms who might otherwise have doubts about the wisdom of going to development areas. I beg to move.

Amendment moved— Page 14, line 20, leave out subsection (8).—(Lord Erroll of Hale.)

LORD RHODES

Before I begin, I should like to give the noble Lord the opportunity to correct a remark he has just made. He said that when an area becomes prosperous it may not be possible to influence people to go there. I am sure he did not mean that, because the whole object of having a development area is to make it prosperous so that we can move on to a "grey" area, or somewhere else, to make that prosperous, too. I do not think he really meant to say what he did.

LORD ERROLL OF HALE

I did not think of a "grey" area in connection with this Bill. This is either a development area or not a development area.

LORD RHODES

But the noble Lord would agree that when a development area becomes prosperous it is a waste of money to pour more money in.

LORD ERROLL OF HALE

Certainly. Perhaps the noble Lord has not quite seen my point. It is a waste of money to pour more money in. Therefore, the way one stops pouring money in is to remove it from the list of development areas. But that is bad luck on the firm which went there in the six months before the decision is taken.

LORD RHODES

I will take the noble Lord's second point first: that in relation to Bridlington. When it was decided that Bridlington, which had been a development district, should be de-listed, eight months' notice was given about this de-listing. Unless we had taken special powers to do this in relation to Bridlington, all that the Bridlington people would have got would have been the 20 per cent. investment grant. As Bridlington enjoyed the facility of the 10 per cent. grant for machinery under the 1963 Act, unless special provision had been made they would have been worse off than hitherto.

It can be argued, of course, that they may be 10 per cent. worse off in relation to the total of 40 per cent. in a development area proper. But what has been done is this regard? Not only was eight months' notice given, but the Board of Trade has taken the trouble to get in touch with every single firm affected in Bridlington, and to ask them if they realised the advantages which were open to them. It may not be in the noble Lord's knowledge that, since they were told about the de-listing eight months ago, they have had at their disposal the means by which they can apply to the Board of Trade for assistance under the 1963 Act. This Bill is an enormous departure from what has happened before. What happened before was that when the status of an area was changed from a development status, whether it be a district or not, it meant that assistance had to be offered and that it had the advantages of being a development district. This is a very complex and difficult problem, and I should be very pleased if the conversation opposite could be ended.

LORD ERROLL OF HALE

I am listening.

LORD RHODES

Under the old Act assistance had to be offered if the applicant took advantage of the scheme after the time limit was imposed. Now, under the new Bill, if an application is received for assistance under the 1963 Act—and this is, so to speak, before the datum line—it will have just as good a chance of being granted as if the Order for the ending of the development district or area had never been made. Is that quite clear to the noble Lord?

LORD ERROLL OF HALE

Yes.

LORD RHODES

That is what has been done for Bridlington. Let me deal with the second one. We agree 100 per cent. that a firm should be certain about its future and should be aware of the way in which things are going, so far as it possibly can be. An industrialist needs to have the sense of security that he is not going to be let down. What is suggested in this Amendment is that there should be a period of three years during which benefits should remain available for certain firms; that is to say, just to those firms which have gone to the development area four years prior to the datum line.

LORD ERROLL OF HALE

I hope the noble Lord will give way. Perhaps I did not make it quite clear that if a firm has gone there four years before it does not get any benefit. It is only, so to speak, the late arrivals which have been there for the last four years which will get a continuing benefit up to a maximum period of four years altogether as being resident in a development district.

LORD RHODES

Yes, of course; that is as clear as crystal. I know that. What the Amendment says is that the benefits in relation to the three-year period after the datum line should apply to firms which went to the development area within four years before that time.

LORD ERROLL OF HALE

I will accept that.

LORD RHODES

Both figures are arbitrary. Our method of doing it is far more generous and far more equitable, as I will prove in a moment. The principles upon which we are working—and this exploration we are having will not do any harm and will make the matter clear—is to ensure that the industrialist gets the assistance he needs in order to complete his projects. He wishes to make provision for the event-utility that a development area may cease. If a project has been substantially entered into and commitments have been made either for the building or for the machinery, then the agreement stands.

The noble Lord from his experience knows as well as I do, and probably better, that many projects are started and continue for many years before the machinery is obtained and a place has been built to house it, and a substantial part of the project would consist of buying land to put the building on. We say that the project will be considered to have been undertaken when a substantial portion of the assets required have been contracted for. In the case of assistance under the Local Employment Acts applications are normally made well before the expenditure is incurred and usually before a project is undertaken. In regard to this assistance we shall therefore be taking power to deal with applications which are made before a place ceases to be a development area.

I believe—and I will try to prove it to the noble Lord—that our method is better than what is suggested in the Amendment. First, under our provisions it may be that some payments would be made after the three-year period prescribed in the Amendment. A substantial portion of the contract may have been entered into just before the time laid down, and in that case it could run after three years. Secondly, the Amendment discriminates harshly between firms which have been in the development area for over four years and those which have been in the area for under four years. Why discriminate between firms in that way? If there is any sense in having a development area at all—and everybody is agreed that there is sense in it—then the firms which have been there for over four years are as entitled to make their contribution to the removal of unemployment as anybody else. This is an unnecessary and arbitrary form of discrimination.

What has been emphasised by my noble friend Lord Shepherd so often in this discussion is that projects are advanced without people having any idea of what the cost is going to be and how much they will increase the need for capital funds. Government money would be spent to encourage expansion in an area which the Government had decided no longer needed special measures. What is the point in still pouring money into a place when the Government decide that it is not necessary? Instead of encouraging people to go where industry is not needed, it should be used to encourage firms to go somewhere else, thereby helping a new development area. There is another point, too, which "knocks this Amendment for six", and it is this. It may be that the noble Lord intends that his transitional period should be in addition to, and not instead of, the provisions which are already in the Bill. Are they in addition?

LORD ERROLL OF HALE

They would form part of the Bill.

LORD RHODES

They would form part of the Bill in addition. This is interesting, because the noble Lord moves the deletion of subsection (8), but not of subsection (4) of Clause 21, or the relevant passages in Schedule 1. If he intends this addition—and he mentioned the seven-year period, so I presume he does— the objection is greatly reinforced, because there will be a lot of forestalling. A man will have the three years after the time of de-scheduling, and perhaps two years and nine months after he would be able to say, "I want to be able to put down a project again ", in an area which did not need it and where public money would be wasted. If the noble Lord is exploring, as I think he is, the general attitude of the Board of Trade to this matter, that is one thing. But I can assure him that we cannot accept this Amendment, because it would get us into a lot of trouble and would be a waste of public funds.

LORD ERROLL OF HALE

I thank the noble Lord for his full explanation, and for the fact that he has gone into such detail about the Amendment. In view of that, I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 15 agreed to.

Clauses 16 to 22 agreed to.

Clause 23—[Restrictions or conditions attached to certificates.]

On Question, Whether Clause 23 shall stand part of the Bill?

LORD NUGENT OF GUILDFORD

May I ask a question on Clause 23, which seems to give considerable additional powers to the President of the Board of Trade in granting I.D.C.s, and to some extent seems to be going into the field of the planning authority? In particular, subsection (3) says: Conditions may be attached to a…certificate for requiring the removal of any building or the discontinuance of any use of land to which the certificate relates at the end of a specified period". This has normally been a condition which the planning authority has dealt with, and it would be helpful to the Committee to hear from the noble Lord, Lord Rhodes, what the thought is here, and what is the experience of the Board of Trade which has persuaded them that they should take these additional powers to extend their control over I.D.C.s. I make the point advisedly, and I am sure the noble Lord takes the point, that with planning consents there is a well-established machinery of appeal. With I.D.C.s, of course, there is no such machinery therefore it is most desirable in the interests of industry that the degree to which the President extends his control over I.D.C.s should not go further than is absolutely necessary for sound and understandable practicable reasons. I should be most grateful for some explanation.

LORD RHODES

I will give the noble Lord an explanation with pleasure. Before this Bill, a firm could buy a piece of land, get an I.D.C. and use it to get planning permission. Then it did not need to do anything about it and could let it lie. But what has happened? I am very glad that the noble Lord has mentioned this, and I hope he will mention a few more points on this sort of subject. The planning permission has laid there in an office, but it has carried with it very valuable assets. Then somebody has come along, looked at the land and wanted to buy it in order to put up a factory, so up has gone the price and people have paid "through the nose" for it. That has caused inflation, and people have been getting plenty of profit out of that.

Now we are stopping that, and under this Bill an I.D.C. is issued with conditions written in. Although the I.D.C. lapses when planning permission is obtained, under this Bill we shall have those conditions carried through into the planning permission. The conditions are set out in subsection (3). There have been occasions, which I could quote (but the hour is getting too late), where such an example as I gave have happened, and I think the noble Lord will agree that this is a necessary stopping-up of a loophole which in the past has contributed to quite a lot of inflation, as this country knows.

LORD NUGENT OF GUILDFORD

I thank the noble Lord for his explanation. I should not myself have thought that planning authorities were quite so lax as he implies, but I do not disagree with what he is suggesting. However, I should have thought that the planning authorities would normally not have been "taken for a ride" in the way that the noble Lord suggests.

LORD RHODES

That is the whole reason for putting in this clause, and the noble Lord did not know. I have told him the reason, and if he expresses any doubt about it I will give him chapter and verse.

LORD NUGENT OF GUILDFORD

I should be interested.

Clause 23 agreed to.

Remaining clauses and Schedules agreed to.

House resumed: Bill reported, with Amendments.