HL Deb 27 June 1968 vol 293 cc1556-63

3.33 p.m.

LORD MITCHISON

My Lords, I beg to move that this Bill be now read a second time. It is a short Bill with the object of clarifying, and to some extent enlarging the powers of the Highlands and Islands Development Board given by Sections 6 and 8 of the 1965 Act under which the Board were constituted. Section 6 gave the Board power to acquire by agreement and carry on or set up and carry on any business or undertaking which in their opinion would contribute to the development of the Highlands and Islands. Section 8 provided for grants and loans. In both cases the consent of the Secretary of State and the Treasury is required for any exercise of the powers.

The present Bill enlarges in three respects the powers of the Board. It comes before the House because the 1966 Industrial Development Act, which covered a wider and more contentious field, contained broadly similar powers—powers not expressed in the same language, but wide powers. Doubts then arose as to whether the powers which I have mentioned in those two sections were sufficient and whether there was not a case for doing as the Board wished and enlarging the powers in respects which I will mention in a moment.

The Bill was introduced in another place under the Ten-Minute Rule. The result was that when the Bill came up for consideration both the Bill itself and the Amendments to it had to fall within the Long Title of the Bill, which is: An Act to enable the Highlands and Islands Deveolpment Board to acquire equity shareholdings in companies carrying on business in the Highlands and Islands… and so on. The 1965 Act did not stipulate that the companies should be in the Highlands and Islands. It provided for the benefits of the Highlands and Islands, but no more. The result was that the amending Bill in that respect was considerably restricted. It is also restricted in another respect, in that only equity shareholdings can be acquired by the Board. In the first place, the Board wish to be able to promote companies—a power which they probably have already in the Bill, but it is felt that this matter ought to be made clear. Secondly, they want to be able, in proper cases, to enter into a form of partnership with private interests and take up part of the shares of a company. Thirdly, they do not want to be tied to the geographical location of a company—that it must be located in the Highlands and Islands.

My Lords, that is really all there is to the Bill. It is rather tangled and complicated. I have been describing the Bill as it will be with the Amendments which I hope to introduce if your Lordships give the Bill a Second Reading. The point is that it ought to be made clear that the Board can promote companies. I should have thought there was little doubt about it, but doubts have arisen. This probably means that some critical lawyers have taken perhaps a rather narrow view, but they have, of course, taken proper precautions. Furthermore, they ought to be able to take a part of the shares of the company, not necessarily only the equity shares but the preference shares also. That is a matter for subsequent Amendment, because the Bill as presented is confined to equity shares. In accordance with the original Bill, but not with the Bill I am now bringing forward, there ought to be no insistence on the location of companies inside the Highlands and Islands area.

Your Lordships will have seen recently the interesting report of the Board. I hope that it is the feeling of the House that we wish the Development Board, whatever we may think about any particular one of their activities, to have full powers to do what they think right in a matter of this sort. To avoid any misunderstanding, I wish to make it clear that not only is the consent of the Treasury and the Secretary of State for Scotland required for all these things, but they are matters for agreement between the company concerned and the Board. There is no element of compulsion whatever. I hope that the Bill will commend itself to all those who wish well to the Highlands and who would like the Board to do all it properly can to help the Highlands, which comprise most of Scotland. I have put this matter as shortly as possible. I will not discuss the Bill at great length, because one wants to save time, but other matters can be dealt with at a later stage if the Bill is given a Second Reading this afternoon.

Moved, That the Bill be now read 2a.—(Lord Mitchison.)

3.40 p.m.

THE EARL OF DUNDEE

My Lords, I hope your Lordships may think it right to give this Bill an easy passage. The Highlands Development Board was set up three years ago by the general consent of all Parties, and either the Board or something very similar to it would have been set up if the Conservative Party had been returned in the 1964 Elections. I do not think this Bill provides a suitable opportunity for discussing the general question whether a public body ought or ought not to own equity capital in any undertaking, because it seems to me that the circumstances here are wholly exceptional. The long-term policies which all recent Governments have pursued in seeking to restore economic life and to reverse the tide of depopulation in the Scottish Highlands are bound to take a long time before they can achieve their full results. Meanwhile, we need as many short-term expedients as we can find to prevent as many people as we can from leaving the Highlands within the next five or ten years.

This Bill is most unlikely to have any effect on any big or spectacular industry, like the Wiggins Teape pulp mill which the late Government established near Fort William with the aid of a large public loan, or like whatever development may now be about to start at Invergordon. This Bill is really intended to help new and small undertakings to be started in remote and scattered communities, some perhaps with not more than a few dozen inhabitants among whom the younger people may not be able to see much chance at present of finding anything useful to do and where it may not be possible to start any kind of new occupation without the help of some public capital. If it should be found more practical and expeditious to provide this capital in the form of equity rather than in the form of a loan, I think the Board should be allowed to do so.

Unlike some of the measures now coming before your Lordships, this Bill has been very thoroughly and fully discussed in another place without any guillotine, without any sans-culotte and, so far as I know, without any knitting; and possibly Robespierre has not even heard of it yet. While I do not expect that it will do more than a little good, I do not think we ought to have any difficulty in agreeing to the Bill. Indeed, I think it would have been agreed to three years ago if it had not been for those drafting errors which the noble Lord, Lord Mitchison, has mentioned.

3.45 p.m.

VISCOUNT MASSEREENE AND FERRARD

My Lords, I would certainly not oppose this Bill. We have had very similar legislation recently, such as the Industrial Expansion Bill, and I presume that this Bill is some sort of child or follow-on of that. But there is one point which I do not quite understand. Clauses 1 and 2 seem to nullify each other, because Clause 1 says that the Board can acquire equity with the consent of the company concerned, while Clause 2 says, in effect, that the Board can acquire equity without the consent of the company. As I read clause 2 the Board can demand that indebtedness to it should be discharged wholly or in part by the issue to the Board of shares or stock in the company". It appears to me that those two clauses rather contradict each other.

The danger of Clause 1 is that if the Board acquire shares only in companies which give their consent they will not be able to acquire equity in good companies, as presumably a prosperous company will not want to sell any equity to the Board. I am rather afraid that if the Board acquire equity under those conditions they will be left with unprofitable enterprises. I should have thought it was far better to help projects by loan, because if the Board had equity and a company did not pay a dividend they would not get their money back. The Board might get no dividend at all for years and then the company might go broke, and the Board would lose the taxpayers money. I really cannot understand the object of the Board's desiring to take equity in companies and it seems unnecessary.

Then, if the Board has shares in a company they might be inclined to favour that company more than other companies, but if the Board had loan stock they would not be so inclined. I should like to know whether the Board has the exper- tise and the business advisers to partake in all these companies. They may acquire them gradually, but do they have them now? I should not think they have. I think it is a mistake, as I have often said before, for the Government to start investing taxpayers' money in private companies in a big way, because that is not really a Government's job. It is rather like a Field Marshal bothering himself about a platoon. The Government's real job is to survey the economy from a lofty pinnacle and to give advice on the general economy from afar. If they start investing in companies all over the country they will become too much embroiled in day-to-day business, which is not suitable for the Government.

Having said that, my Lords, there is nothing more I want to say on the Bill. As I have said, I do not particularly praise it. We have had similar legislation: it was a foregone conclusion that we would get this. But I rather deplore this general attitude of the Government, as I have said in previous debates, of risking the taxpayers' money in the equity of companies. It is quite unnecessary for them to invest in equity because they get much of the profits of a company anyway if there is a profit. They get the majority of the profits back through taxation without any risk at all. I have no more to say, but I would re-emphasise that I do not approve the general principle although, as I say, I do not oppose the Bill.

EARL FORTESCUE

My Lords, as public money is involved, would it not be right to discourage the Board from taking preference shares rather than encouraging them, as the noble Lord, Lord Mitchison, has suggested?

3.52 p.m.

LORD STRATHCLYDE

My Lords, I find this a very agreeable occasion in more ways than one. In the first place, I find myself in complete agreement with the noble Lord, Lord Mitchison, which is something that very seldom happens in our association in this House. Further than that, I do not altogether agree with powers such as those mentioned in this Bill being granted broadcast, but I make a complete exception so far as the Highlands and Islands Development Board is concerned. I believe that the Board should have every reasonable power to be able to offer every inducement to get people to come into the Highlands, to keep the young people of the Highlands at home and to bring back those who, through lack of employment, have had to go elsewhere to earn their livelihood. When I say "reasonable power", I see that is provided for when it is said that the approval of the Secretary of State and the Treasury has to be obtained. So far as the Secretary of State is concerned, I wish it had been left with him alone and that the Treasury had not been dragged in, because my experience is that the Treasury are sometimes a little bit too concerned. They hold back longer than is necessary, and they are a little (to use a Scottish word) too canny. They do not come away, and they sometimes spoil the whole thing by holding matters up for too long.

May I ask the noble Lord who I understand is to speak on behalf of the Government, the noble Lord, Lord Hughes, if he would reflect for a moment and consider whether he could suggest to his right honourable friend the Secretary of State whether some inducement of some kind, or some power, could be given to the Hydro Board, which of course has a similar kind of duty to that of the Highlands and Islands Development Board, spread over a much wider area. I know from personal experience of many occasions when it appeared that if only the Board could have offered a carrot of some kind they would have got an industry, small or large, to come into their area. It was just because of a lack of any inducement whatsoever outside ordinary business considerations that they failed to get that industry to come in. If the noble Lord, Lord Hughes, could suggest to his right honourable friend that he might obtain some power of this kind and give it to the Hydro Board, I think it would help in the direction in which all of us would like to go. I commend this Bill to the whole House, and I hope it will have a very speedy passage to the Statute Book.

THE EARL OF CROMARTIE

My Lords, I, too, should like to join with my noble friend who has just spoken on two counts; first, that I certainly welcome this Bill, and, secondly, the possibility of Her Majesty's Government helping the North of Scotland Hydro-Electric Board to assist industry. It would make a very big difference. Further, in welcoming this Bill I would reiterate one thing. I hope that the Highlands and Islands Development Board will be a little careful with whom they deal, because I would remind noble Lords that within my own county we have had some very unfortunate circumstances. Having said that, I wish them success, and I think this Bill is one which will be welcomed in the Highlands.

LORD BURTON

My Lords, I, too, should like to join my noble friends in welcoming the Bill as a whole. I should like to put one point forward for consideration. I wonder whether there should be any limit on the capital which is to be made available, or at least the proportion of the amount of capital in any one company. I would be worried that virtually a nominee company might be set up and financed entirely by Board money, and I think that this should perhaps be looked at. I should not like to leave an open-ended company which would allow the Board to spend money very much faster than it is doing at the moment.

LORD HUGHES

My Lords, it would perhaps be for the convenience of the House if I indicated the attitude of Her Majesty's Government to this Bill. As my noble friend Lord Mitchison knows, we welcome the initiative which led to the introduction of the Bill in another place, and we are grateful to him for acting as sponsor to it in your Lordships' House. So far as the greater part of the powers are concerned, the position i3 quite simple. The very general powers which were given to the Board in terms a Section 6 of the Act of 1965 were thought to cover the powers which are asked for, but because the wider Act of 1966 spelt out powers in more detail, it has cast some doubt, at least in the minds of some lawyers, as to just exactly how far the general powers go. We are therefore seeking, in that instance, merely to put the position back to what we thought it was in 1965. The Bill also gives the Board powers to give assistance under Section 8 of the 1965 Act by way of taking shares or stocks, and this is a comparable power to that given to the Board of Trade by the Industrial Development Act 1966. The need for industrial development in the Highlands presents itself in a variety of ways, and in the Government's view—and. I think I am correct in saying, in the view of all those noble Lords who have taken part in this debate—the Board, in tackling the task, should be equipped with a range of powers which are both comprehensive and flexible.

I was interested, as I always have been and as I think I always will be, in the suggestions which the noble Lord, Lord Strathclyde, put forward to enable the Hydro Board to play a still greater part in helping to bring industry to the Highlands, and I can assure him that I will discuss with my right honourable friends the point of view which he has expressed to-day. My Lords, I commend the Bill to your Lordships.

3.58 p.m.

LORD MITCHISON

My Lords, I rise to thank noble Lords who have received this Bill so kindly and to say to them that I felt I could count on the co-operation of both sides of the House in giving the Board the powers it asked for so far as they involved any extension. It has been a rather confused business, first of all from the point of view of the wording of the original Act, before the 1966 Act came in, and secondly because of the Ten-minute Rule procedure in another place.

I do not think I need take up the time of the House by replying to the debate in detail. I should just like to say to the noble Viscount, Lord Massereene and Ferrard, that I think he will find the consent of the Treasury and Secretary of State stipulated for in the sections which are being amended. I really do not think that this Bill raises any new question of principle at all. It is really a means to the ends which Parliament intended that the Board should have. I should also like to say, in reply to the noble Lord who mentioned preference capital, that I think this is probably a matter for the Board and a matter which must differ in different cases. One ought not to rule it out, though probably, almost certainly, it will not always be required. Again, if I may, I should like to thank the House. May I also take the somewhat frivolous opportunity of congratulating the Board on having got a factory in Barra for making spectacles. To anyone who knows Barra, that is a quite remarkable achievement and worthy of the making.

On Question, Bill read 2a and committed to a Committee of the Whole House.