HL Deb 08 August 1966 vol 276 cc1585-98

2.56 p.m.

Report of Amendments received (according to Order).

Clause 1:

Machinery and plant

1.—(1) Subject to the provisions of this section, the Board of Trade (hereafter in this Act referred to as "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 new machinery or plant for use in Great Britain—

(c) for carrying on the business of a hotel, a restaurant, licensed premises or other like establishment.

LORD NUGENT OF GUILDFORD

moved, in subsection (1)(c), to leave out "licensed premises or other like establishment". The noble Lord said: My Lords, the object of this Amendment is to amend the Amendment which this House agreed to last week and which lies at lines 19 and 20 of page 1 of the Bill. The effect of the Amendment would be to limit the benefit to hotels and restaurants only and would cut out the licensed premises and other like establishments which your Lordships included last week. I had the sense that, certainly on the opposite side of the House, your Lordships were disturbed at the thought of giving this grant to public houses in the possession of the brewing industry, and at least one noble Lord thought this was hardly necessary. Therefore, it might be generally more acceptable to the House if the original Amendment were replaced in this fashion, so that the grants would be given to hotels and restaurants only. I should perhaps add that it would not be the intention of the movers of this Amendment to limit it to temperance hotels and restaurants only; I feel that that would be going too far. I rely on my old friend, Lord Blyton, to support me at least in this respect, even if he cannot support me on the rest.

I would just add that we had some discussion last week about the position of Trust Houses and the profits they were making. I was interested to notice over the weekend that it was reported that the first half-year's trading results of the current year showed for this, quite the largest group of provincial hotels in the country, a loss of over a quarter of a million pounds, and they have also had to announce the abandonment of £2 million worth of capital improvements in their present programme. This fully substantiates the point I was making, that the hotel industry needs these grants. It really is in the interests of the country. I hope that this Amendment will find favour on both sides of the House. I beg to move.

Amendment moved— Page 1, leave out line 20.—(Lord Nugent of Guildford.)

LORD SHEPHERD

My Lords, the noble Lord, Lord Nugent of Guildford, has moved what must be regarded by noble Lords opposite as an important Amendment. The Amendment came to my knowledge officially only early this morning, and I have not had the opportunity of discussing it with my noble friends, or to be in a position to give them any advice. Therefore, if I may be forgiven, I would address a few remarks to them, to which of course the House can listen.

The purpose of this Bill was to create industrial incentives for the manufacturing and the extractive industries. We felt that this was right, taking into account the need for stimulating exports and, above all, import saving. We took the view that services would have to be excluded, certainly at this stage. Noble Lords opposite on two occasions widened the area of the Bill. On the third occasion they failed, but by a very narrow vote—a vote of one.

I think my noble friends will take into account the attitude and sense of noble Lords when they pressed this particular Amendment. I would refer to the Amendment which was moved by the noble Lord, Lord Redmayne, and defeated. He wanted Government grants to be available to the construction industry. I pointed out to him that we were giving grants to the construction industry at home, but he had in mind grants to construction companies working overseas from the taxpayer's pocket. I pointed out to the noble Lord that this would mean that foreign equipment could be bought by those companies and that grants would have to be made available to them; and, furthermore, that if we were to exclude foreign equipment we should run into problems with GATT. On the earlier occasion noble Lords opposite included timber. No doubt the noble Duke, the Duke of Atholl, who is not here at the moment, was particularly concerned with the large landlords and landowners in Scotland.

The Government take the view that we cannot possibly accept this Amendment. We should also take into account the views of noble Lords opposite in regard to public expenditure because, whether we like it or not, this incentive grant will be a form of public expenditure. Certain noble Lords opposite have said that in the present economic situation we should reduce our public expendiure. It is quite clear in the minds of noble Lords opposite that they were not thinking that it should be in the field of defence, because only last March they went through the Division Lobby to vote for an increased carrier programme. I think it is quite clear that noble Lords opposite had in mind cuts in social expenditure within the social services. We should bear all these factors in mind.

I would draw your Lordships' attention to the remarkable speech of the noble Viscount, Lord Eccles, in the economic debate of July 28. His was a remarkable speech because on that occasion he asked noble Lords on this side of the House to rise if they supported the Government economic programme. It was a very smart debating point because if my noble friends had arisen en masse they would have been out of order because only one noble Lord may stand at a time. Moreover, had we all stood up it would have resulted in a very prolonged debate. The noble Viscount went on—and on this occasion he did not ask noble Lords to rise and support him, because I believe that the cries of "Hear, hear!" were sufficient—to say this (I should like to read this very short passage from his speech because it has some connection with the matter now before us): I therefore appeal to my noble friends in the Party to which I have the honour to belong to come forward and give us an example of a patriotic, radical and, I must add, puritanical spirit which in history has been the only effective answer to the kind of disorder that we have round us today. Let us take our head out of the economic sands and make the character of the people—not the pockets of the people, but the character—the object and the test of all our political actions. If we did that, we should soon see that the heart of the people is sound."—[OFFICIAL REPORT, Vol. 276 (No. 45), col. 979; 28/7/66.] That was a remarkable peroration indeed when the noble Viscount spoke of "the puritanical spirit".

The following Tuesday noble Lords opposite, like a lot of lost sheep without a shepherd, went through the Division Lobby in favour of public expenditure for brewers. They went even further than that. They wanted the phrase or any other like establishment". I do not know what noble Lords had in mind. I must make it quite clear to the noble Lord, Lord Nugent of Guildford, that while we are not going to vote against this Amendment, we cannot support it, because we are utterly opposed to the words noble Lords opposite put into the Bill on Committee stage. I hope that, with those words of advice to my noble friends, they will agree to let this Amendment go through, but on the clear understanding that we do not accept it in principle.

LORD NUGENT OF GUILDFORD

My Lords, I would thank the noble Lord, Lord Shepherd, for the advice he has given to the House, and the somewhat tempered reception which he has given to the Amendment. I would remind him that, in asking that these grants be extended to these particular premises, he is at the same time taking away from them their previously held investment allowances. We are not really asking him to be very extravagant, but to try to keep them going when they so obviously need help. However, I thank him very much for the distance to which he has gone.

On Question, Amendment agreed to.

Clause 13.—[Interpretation and supplementary provisions]:

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: My Lords, this Amendment refers to an attempt at the Committee stage last week to bring the corn and agricultural merchants and the agricultural co-operative societies within the scope of the Bill. Due to the obscurity of my Amendment, its meaning was not entirely clear to the noble Lord, Lord Shepherd. Nevertheless, he gave me quite a helpful reply and indicated that, if he had had more time, he could have given me an even more helpful one. Therefore, I have put down this Amendment again. I beg to move.

Amendment moved— Page 12, line 4, at end insert the said words.—(Lord Nugent of Guildford.)

LORD SHEPHERD

I am most grateful to the noble Lord, Lord Nugent of Guildford, for moving this Amendment. I hope that what I now have to say will prove satisfactory to him. We cannot accept the Amendment as it is, but I think we can meet the point of substance which the noble Lord made in Committee. He explained the importance and the complexity of the processes carried out by agricultural merchants. I understand that seeds, for instance, may be cleaned, dried, freed from impurities, de-husked, have damaged seeds removed from them, and, finally, be coated with protective chemicals. Herbage seeds will be blended according to use. Grain, similarly, may be cleaned and dried at carefully controlled temperatures and humidity, and undergo other similar processes until it is ready for sale for seed or for further manufacture, such as brewing or flour-milling.

These processes have been described to us at length by the associations in the industry, and we are now prepared to accept them, taken together, as constituting a sufficiently substantial manufacturing process to be the making of an article as the Bill requires. We shall not be paying grants to farmers for their own drying equipment—which will in any case be eligible for grants under other legislation—but where a series of the processes I have described are carried on in the course of a business in one establishment, then we shall accept them, taken together, as manufacturing, and the equipment used in the various stages of processing will qualify for grants.

We cannot accept the Amendment, for as drafted it would compel the Board of Trade to have regard not only to existing decisions of the courts but to any deci- sions which may be reached by any Court of Record in the future. Moreover, we should have to have regard to those decisions even where they related to "manufacturing" as defined in a highly technical sense, and for the special purposes of a particular Statute. As I understand the Amendment, we should not necessarily be required to have regard to decisions relating to the applicants' own processes, but also, and probably most often, to those carried on by others which the applicant alleged were identical with, or similar to, his. We do not think that such a proposition can be accepted.

We have chosen for the purposes of this Bill the broad and relatively straightforward concept of the making of an article, and I am sure that it is right to stick to this concept, without any such uncertain gloss as this Amendment would attract. I think that the example which I gave in Committee, of turning water into ice, would be classed as "manufacturing" something, and that this has given an indication of what the Government have in mind in terms of manufacturing. I would again remind the noble Lord of the view which I took that, having made this Bill permissive and kept this Bill permissive, it would be wrong to permit an outside judicial body—in spite of all the wisdom that it may have, and recognising some of the difficulties that arose with regard to the investment allowance—to influence in any way the decision of a Minister. With those few words, I hope the noble Lord will feel that I have met the points of substance that he made in Committee, and will now be willing to withdraw the Amendment.

LORD NUGENT OF GUILDFORD

My Lords, I thank the noble Lord, Lord Shepherd, for his very helpful answer to the Amendment which I have moved. I accept, of course, that my Amendment was a peg, in order to get the matter before the Committee and to develop discussion there. I am most grateful to the noble Lord for accepting in principle the point that this particular activity should be brought within the definition of "manufacturing". I am sure that that is right. I did not take up the time of the House this afternoon by repeating the arguments that I deployed last week in Committee, but I am grateful to the noble Lord for recognising their cogency. I shall be quite happy to leave the matter like this. Quite clearly, any bona fide mill which is a manufacturing process will now come within the definition of "making", and in those circumstances will qualify for the grants. I therefore beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 23 [Restrictions or conditions attached to certificates]:

LORD DRUMALBYN

moved to leave out subsection (3). The noble Lord said: My Lords, I apologise to your Lordships for the fact that this Amendment is in manuscript. I put this down because, in my view and from my experience, it is sometimes desirable and even necessary for the Board of Trade to attach conditions to an industrial development certificate. I am also aware that in the past there has been some difficulty where, through inadvertence or for some other reason, the condition attached to the industrial development certificate has not been reproduced in the planning certificate subsequently given.

What worries me about subsection (3)—and, again, I can only rely upon my own experience—is that I am not aware of any occasion on which a condition was attached 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 and the carrying out of any works required for the reinstatement of land at the end of that period. It would be undesirable if we were to write a new kind of condition into this Bill which has not, so far as I am aware, been felt to be required in the past, and I would ask the noble Lord to indicate what the Board of Trade considers to be the necessity of this particular subsection. I beg to move.

Amendment moved— Page 22, line 5, leave out subsection (3).—(Lord Drumalbyn.)

THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES)

My Lords, we did not think it was necessary to include subsection (3) when the Bill was being discussed in another place. This subsection has been put in entirely on account of the representations that were made by Mr. Corfield and accepted in another place.

LORD DRUMALBYN

My Lords, I do not think we want to get off on the wrong foot about this. Of course, the conditions are not specified in the Bill, so that it is quite possible that a condition of this type might have been attached to an I.D.C. What I am saying is that, in my experience, no such conditions have been attached to the I.D.C.s. I am asking the noble Lord whether that is so, and, if so, whether it is intended to attach such conditions in the future. That is the whole purpose of putting down the Amendment.

LORD RHODES

My Lords, I appreciate that, but I cannot give the noble Lord an explanation of a very complicated subject in my first sentence. If he will be patient, I will try to do what he asks. Mr. Corfield pointed out that under the Bill as it then was, an industrial development certificate would not be required under Clause 22(2) for the removal of a condition imposed by a local authority for planning reasons, but would be required for the removal or extension of a limitation of time. Amendments were therefore made to the Bill, to make it quite clear that when planning permission is given for a limited period that is a condition the same as any other condition.

Mr. Corfield's point was that a condition might be imposed by a local authority under Section 18(1)(b) of the Town and Country Planning Act 1962 if, for instance, a factory was alleged to be carrying on a noxious trade. The local authority might then say that they would give the factory owner a period—say, for the sake of argument, five years—to get the matter rectified. There is hardly a noble Lord in this House who has not had some such experience in his own locality. What Mr. Corfield was wanting to do was to make it possible for the man who owned the factory to carry on, without coming to the Board of Trade to get an I.D.C. before he could proceed. That is precisely what we have covered in this clause.

It will probably be rare for the Board of Trade to put a condition in an industrial development certificate to the effect that a building shall be put to an individual use for only a limited period. But we might wish to allow a temporary extension of a factory whose production was expanding until such time as a new factory could be built elsewhere—perhaps in a development area. The noble Lord will know the circumstances, without my labouring the point. He will know how sometimes the Board of Trade may give permission for a temporary building to be put up adjacent to a factory in the South-East or in the London area, in order that a firm can get through, perhaps, a succession of export orders which are very important to our balance of payments. In that case, to answer the noble Lord's first question, what would happen is that the Board of Trade would give the firm a time limit so that they would be able to put up a temporary building on condition that it was demolished after the end of the time.

As to the conditions which the Board of Trade envisage imposing in a normal case, I explained one of those conditions last Thursday, and I will not go over it again. But I want to point out that, if we pass this Bill, we shall have power to impose conditions, and that they will be operative from the grant of the I.D.C. to the grant of planning permission. To vary one of the conditions application must be made to the Board of Trade for a new industrial development certificate. That is quite clear. But if conditions, including time limits, are imposed by local authorities for planning reasons, an industrial development certificate is not required for an application to vary them. This is entirely to meet Mr. Corfield's point—and I return to what I said before, that this point would not have been covered in the Bill if it had not been for his asking the Board of Trade to meet it. I can assure the noble Lord that it will not be used very often, but to try to suit Mr. Corfield we put it in; and I hope that, in the circumstances, the noble Lord will withdraw his Amendment.

LORD DRUMALBYN

My Lords, by leave of the House, perhaps I can say that I am grateful to the noble Lord for his explanation. As he is probably aware, this was put down because anxiety had been expressed in certain quarters of industry. I hope that his explanation will allay those anxieties, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

3.23 p.m.

Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of August 1):

LORD RHODES

My Lords, before I move the Third Reading of the Bill, perhaps I may pay a tribute to noble Lords on the opposite Benches, including the noble Lord, Lord Drumalbyn, and the noble Lord, Lord Erroll of Hale, for their (I hardly dare say it after what was said earlier this afternoon) co-operation. In the short time I have been in this House I have never known an occasion on which helpful suggestions have not been put up by the opposite side in order to improve a Bill. This one has been no exception, and I thank them. With that, I beg to move that this Bill be now read a third time.

Moved, That the Bill be now read 3a.—(Lord Rhodes.)

LORD DRUMALBYN

My Lords, I shall not take long, but there are one or two things I should like to say on this Bill. First of all, I should like to thank the noble Lord for the very disarming way in which he has moved the Third Reading. But do not let us be in any doubt about the fact that, while we have tried to improve this Bill, it is a Bill with which we are not wholly in agreement. Like the Prices and Incomes Bill, this this Bill is really two Bills in one. Unlike the Prices and Incomes Bill, it has been so from the start, so it has a slight edge in that way.

We do not object so much to Parts II, III and IV of the Bill, although we still think that it is better to concentrate assistance to development localities in those parts of the country that need it most, rather than to spread it as widely as the Government propose to under the Bill. Whether the objective is confined to reducing unemployment in the areas where unemployment is, or is likely to be, greatest, as it has been in the past, or whether it is extended to the reinforcement of an area by the reduction of migration, we still think that the growth point policy is in fact the one which will continue to be followed. We would not have opposed making available the advantages of the Local Employment Acts to wider areas, although we believe that it will mean that many of the localities which the Bill includes for the first time will be disappointed in their hopes of new industry.

Part I, however, is quite different in character. It does two things. In the first place, it puts in the place of investment allowances, which are to be abolished by the Finance Bill, the new system of selective investment grants. Unlike investment allowances, and unlike the assistance at present given to firms in development districts, the grants will be payable whether or not the investment is likely to be profitable. In that sense they are random and unselective. We do not believe that to give grants irrespective of the viability of a concern is making the best use of taxpayers' money.

Secondly, it replaces the free depreciation arrangements, which have proved one of the greatest attractions to industry to go to development districts, by a differential investment grant in favour of the new development areas. These grants are to be limited, in the main, to grants towards the cost of new machinery and plant for use in Great Britain in manufacture, shipbuilding and repairing, power generation, the extraction industries, the construction industry and scientific research connected with these industries. Those industries which do not get the grant will lose taxation allowances—not altogether, but they will lose in taxation allowances—and, of course, if other legislation goes through, they will not be able to increase their prices to cover the loss. This selective policy will certainly have a distorting effect on the economy—no doubt the Government think (if they did think about it) for the better, but we think for the worse.

My Lords, the noble Lord, Lord Shepherd, during the Committee stage, suddenly launched an attack on this side for having carried two Amendments against the Government. From what he said, one would think that the noble Lord was claiming for the Government a monopoly of wisdom in deciding what industries should receive this new grant. Any proposals that the Government lay before Parliament for paying out taxpayers' money are bound to be good: any proposals either House of Parliament decide should in fairness be added are bad. And what were the proposals? I pointed out on Second Reading that the more remote areas—I mentioned particularly the Highlands, but the same goes for the South-West of Scotland and the South-West of England—are heavily dependent on the tourist industry and on forestry. The Government, in their so-called wisdom, had left out these industries, thereby largely nullifying the advantages of the Bill so far as these remote areas are concerned. My Lords, I am sure that we in this House can congratulate ourselves on having amended the Bill so as to extend the grants to hotels and to the extraction of timber. These are the two industries which are most important to the Highlands and are very important to the South-West of Scotland and the South-West of England. It is greatly to be hoped that another place will agree with this House that it was only right and fair to do so.

The last point to which I want to refer is the discretionary nature of the grants. We have tried to elicit from the Government a clear statement of the way in which that discretion will be used. The noble Lord, Lord Shepherd, has assured us there will be no discrimination between firms—that is, if a process qualifies, any firm which provides machinery or plant for use in that process will get the grant. But that is not the end of the matter. Nobody has yet told us whether every process for or incidental to the making of any article will qualify. Will the noble Lord tell us before we part with this Bill whether or no they will qualify? In other words, are the Government, despite what the Bill says, to pick and choose between the processes that will qualify? Are they going to say that such and such a process will not qualify because it is not socially useful; that another process will not qualify because it is not economically useful; that another process will not qualify because it does not, and is unlikely to, contribute to exports?

If the Government are going to say this, then the discrimination goes much further than in any Government bonanza ever invented. The mere fact that an Advisory Committee is to be created whose advice the Board can accept or reject is neither here nor there. If they are not going to say this, what on earth is the point of discriminating between manufacturing and all those other arts and services, including transport, which contribute so much to the efficiency of production, which is undoubtedly economically necessary, undoubtedly socially necessary and undoubtedly contributes to exports? And, of course, if they are not going to say this, what is the point of discriminating between manufacturing of this kind? In either case the Bill is objectionable whether they are going to say there is discrimination in this way or not. Before we part with this Bill, at least let the Government say clearly whether they intend to exercise discrimination between manufacturing processes or not, as well as between manufacturing processes and other industrial activities.

LORD ROYLE

My Lords, I apologise for my husky voice, but I cannot let the Third Reading go without making one more appeal to my noble friends with regard to the subject I have raised on Committee stage and Second Reading. I expressed my anxiety on those occasions about the situation of the grey areas of this country, those that are classified with the areas which are to receive 20 per cent. grant and which, under the Bill, will not qualify for a 40 per cent. grant. I do not intend to keep your Lordships for long on this matter, but I want to say again to my noble friend that, in spite of the encouragement he gave me in replying to an Amendment I moved last week, I hope that a great deal of elasticity will be introduced in the application of the Bill so far as those areas are concerned. I hope it will not be just a question of the criterion of unemployment but that many other problems also will be taken into consideration. I hope, when the Bill is enacted, that these areas will receive a greater sympathy than seems to be apparent at the moment.

3.34 p.m.

LORD RHODES

My Lords, in answer to the last point about discrimination, may I say that it has been made clear on many occasions throughout the debates we have had in this House, and in particular on the Committee stage where the bulk of the Amendments were put down on Clause 1, that use—that is, the use to which the machine is to be put—will determine whether it is a qualifying process. I can only call in aid one or two industries with which I have been intimately connected in the past, and I can assure the noble Lord that they have already a very shrewd idea of what machines are going to qualify. For instance, in the wool trade, practically all the machines will qualify: machines for combing, carding, cotton making, spinning, warping and weaving—practically the whole lot. That is the case. There will be no discrimination between firms engaged in the same industries. It is quite simple. This will be accepted throughout the industry by arrangement with the trade associations which will be very helpful and powerful in this connection. I can assure the noble Lord they will not miss anything. It is true that the free depreciation has gone in many of the particulars; but in some respects it was about time it went because in many cases it had gone too far.

With regard to the comments of my noble friend Lord Royle, I think I went some way to reassure him when we were talking about this on Committee stage. I hope he realises that the extent of the qualifying areas (and there is a map in the White Paper which shows all that are affected) is quite new. It is a departure from what we have done previously and I hope that he will have another look at the criteria that we have introduced. Clause 15(3) of the Bill says: 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. This is important. This was introduced for a specific purpose. I am afraid I cannot give him any more assurance at this stage in the proceedings as to how the Board of Trade will interpret that in particular cases. But the noble Lord can be assured that in me he has a champion of the grey areas. I have lived in them all my life, and I hope I shall continue to do so. I hope he will accept my assurance on that basis. I think it is a good Bill; I think it will work. Manufacturers who have spoken to me have expressed themselves quite definitely satisfied that they will know where they are, and I have no hesitation in recommending it to the House.

On Question, Bill read 3a, with the Amendments, and passed, and returned to the Commons.

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