HL Deb 12 June 1972 vol 331 cc632-43

7.27 p.m.

LORD WINDLESHAM rose to move, That the Northern Ireland Finance Corporation (Northern Ireland) Order 1972, be approved. The noble Lord said: My Lords, I beg to move the third of the Orders standing in my name on the Order Paper. This Order, again made under procedure contained in the Northern Ireland (Temporary Provisions) Act, has its origins in the recommendations of the Joint Review Body on Economic and Social Development in Northern Ireland. This body, under the chairmanship of Sir Alec Cairncross, was set up jointly by the Northern Ireland and United Kingdom Governments in June last year, and proposed the establishment of a Northern Ireland Finance Corporation. The Review Body's analysis of the economic situation in Ulster indicated that while business had withstood much of the stresses of economic recession and the civil disturbances, nevertheless the situation was likely to deteriorate, unless remedial measures were taken. This phenonomen they ascribed to the effects on liquidity of the extra burdens imposed by the disturbances—additional security and insurance costs, disruption of production, difficulty in securing orders, and so on—and also to contraction in the flow of new incoming investment. They concluded that the cumulative effect of unrest justified the treatment of the Northern Ireland economy as a special case.

A Bill to establish the Corporation and give it powers had passed all stages in the Northern Ireland House of Commons and was awaiting a Third Reading in the Senate when Parliament was prorogued. The Bill reflected closely the Review Body's recommendations and the effect of the Order now before your Lordships is, with one exception, the same as the Bill. I believe that most of your Lordships will agree on the importance, as part of the general objective of restoring peace in Northern Ireland, of promoting industrial and economic development as rapidly as can be achieved in the present circumstances. The Finance Corporation should help in this aim; it will be, equipped to assist firms which have liquidity problems but which, in the Corporation's view, have prospects of solvency in the longer term, and have a useful contribution to make to the economy. It will also be in a position to supplement the efforts of the Northern Ireland Ministry of Commerce to stimulate new investment.

The House will see from Article 4, which gives the Corporation functions and is a key provision, that financial assistance can be given in the forms recommended by the Review Body—loans, guarantees and share participation. Grant assistance will remain with the Northern Ireland Ministry of Commerce. The members of the Corporation, chaired by Mr. Charles Villiers, include representatives of the city, industry and the trade unions and Northern Ireland Government Departments. There will be a small executive group responsible to the Board and together they should bring to the Northern Ireland economy a special expertise. It is an important aspect of the concept of the Corporation that it will be able to combine speed of decision with a quality of judgment which will be essential in evaluating the contribution which firms seeking assistance are likely to make to development. The Review Body stressed the importance of management and Article 4 requires the Corporation to satisfy itself about the management of firms applying for assistance and enables it to take action if it is not so satisfied. The Article makes similar provision in regard to company organisation. Here min the Corporation should be equipped to bring a new strength to the economic life of Northern Ireland.

The Order at paragraph 9 of Article 4 gives the Corporation wide powers to assist virtually any sector of the economy where employment is provided. We expect—as did the Review Body—that in practice most of its assistance will go to manufacturing concerns but it is not intended to limit the Corporation's freedom of action if it decided that companies in other sectors met the criteria of the legislation. The Corporation will be working in close co-operation with the Ministry of Commerce in formulating schemes both to assist existing undertakings, and to encourage the establishment of new concerns. I have mentioned that the Order departs from the Bill which was being considered in Stormont at the time of Prorogation. This is on Article 9 which, unlike the earlier Bill, requires the Northern Ireland Comptroller and Auditor-General to carry out a secondary audit of the Corporation's accounts after the normal commercial audit has taken place. We have taken the view that on balance, it would be preferable for the Order to reflect the principle, recently expressed by my right honourable friend, the Secretary of State for Trade and Industry, in another place, that there should be appropriate public accountability for any new body to promote industrial development which has substantial sums of public money available to it.

Before closing—this is an important Order—perhaps I may draw your Lordships attention to two further provisions. First it will be seen that under Article 8 a total of £50 million is made available to the Corporation. This is a substantial sum but the Corporation will have a large job to do and it would be a mistake not to provide it with substantial backing. Secondly, I should mention that Article 12 provides for the cessation of the Corporation's powers of financial assistance at March 31, 1975 but also for the possibility of their prolongation by affirmative order. On this I would only say that it will obviously be necessary, before the expiry of the initial period up to March 31, 1975, to form a view on whether the Corporation is likely to have a continuing role to play and whether in its present form, it is still equipped to play it. If circumstances dictate the Corporation's continuance, possibly in an altered form and perhaps with somewhat different functions, we can then come forward with the necessary legislation at that time. I hope that the House will share the Government's view that this is an important measure and one which is likely to make a valuable contribution to the economy of Northern Ireland. I beg to move.

Moved, That the Northern Ireland Finance Corporation (Northern Ireland) Order 1972, be approved.—(Lord Windlesham.)

7.30 p.m.

LORD BESWICK

My Lords, I think we should all agree with the noble Lord, Lord Windlesham, that this is an important measure and in anything approaching normal circumstances one could see that this Corporation could indeed be a most fruitful organisation for the future wellbeing of Northern Ireland. What the outturn will be in the present situation is of course less clear. But one has to return to this question of public accountability. Although the noble Lord was very kind and patient in answering (or, shall I say? trying to answer) the questions which I posed to him on the earlier Appropriation Order, I still am far from clear how this thing is going to work out so far as our Parliamentary system in Whitehall is concerned. The noble Lord called our attention to the fact that the Corporation will have at its disposal £50 million. May I ask him, in the first place, on which Vote will this £50 million appear?

Secondly, the noble Lord says that the money will be advanced on the recommendation of the Ministry of Finance. But what exactly is happening now so far as the Ministry of Finance is concerned? Is this functioning as a Ministry? To whom is it answerable? How exactly is the relationship now as between the Ministry of Finance and the Secretary of State? Are we to assume that where there is a reference to the Ministry of Finance it will in practice now be the Secretary of State? The noble Lord also says there will be an audit of the Comptroller and Auditor-General; and earlier he was good enough to say to me that the reports of the Comptroller and Auditor-General will be available in the Library of this House. But this is a little (shall I say?) slap-happy as a means of public accountability, simply to have a report in the Library of the House. Has any procedure been considered as yet? Has any progress been made towards the agreement of a procedure under which reports of this kind can have the proper scrutiny which they need to have? How are we going to ensure that the money spent is in fact being spent to the best advantage?

There is a further point I would ask about the Corporation. The noble Lord rightly pointed out that in the present situation in Northern Ireland a number of firms will have liquidity and other problems associated with the emergency situation. If this Corporation is to advance monies in that kind of situation, and for that sort of purpose, then the possibility of the Corporation's proving a commercially viable organisation is remote. Is it the intention of Her Majesty's Government, therefore, that the Corporation should not be in any sense a commercially viable organisation? Is it going to be a sort of ambulance organisation for a transitional period, for the present emergency period? What kind of criteria will be applied to the outturn of the Corporation? In the ordinary way the kind of organisation we have spoken about, for this country certainly, would be expected to pay its way, to prove itself economically a self-supporting organisation. There could he no chance of that, presumably, in Northern Ireland at the present time so far as this Corporation is concerned. What therefore is to be the test? What sort of guidelines will the Corporation have to work to, and who will lay down these guidelines at the present time?

I recognize—and I say this straightaway to the noble Lord—that we are dealing with a very difficult and a very serious emergency situation there. One does not wish to be over-critical. But, at the same time, we owe it to the taxpayers of this country to ensure that if money is raised it is being spent to the best possible advantage; and I think we are entitled to further information as to the sort of control, the machinery of control, that will be exercised in this case.

7.35 p.m.

LORD WADE

My Lords, I should like to thank the noble Lord, Lord Windlesham, for explaining the nature of this Order and of the two earlier Orders, and the procedure that has been followed. I certainly hope that this Finance Corporation will prove to be of value to the economy of Northern Ireland. I am asking only one quite short point with regard to the procedure that is being followed; I think it is slightly linked with the point about accountability which has been raised by the noble Lord, Lord Beswick. Is the noble Lord, Lord Windlesham, in a position to say whether we are following a precedent in the case of these Orders, or in fact in approving these Orders are we being asked to follow some new precedent arising out of the exceptional circumstances in Northern Ireland?

7.36 p.m.

THE EARL OF LONGFORD

My Lords, I should like to raise a point which is certainly not inconsistent with what has been said by the noble Lord, my acting Leader, but comes at it from a rather different angle. Before doing so, however, may I express my own heartfelt admiration for what the noble Lord and his Ministerial colleagues and others are doing on the spot in Northern Ireland. I am glad to have the opportunity of saying that much, at least. Anybody who knows the economic situation at all in Northern Ireland (and I am sure that the noble Lord knows it very well now) knows that unemployment is extremely severe in certain areas and, one must say, among certain elements in the community. I should like to ask the noble Lord what is really a quite simple Question. In making this money available from this country are he and his colleagues going to do their best to see that the funds are used to promote the maximum employment?—because that means taking fairly strong measures not to follow merely what might be called commercial principles, but social principles. He knows the situation very well. I expect I have mentioned once before in this House that on one particular housing estate, the Ballymurphy Estate, when I was last looking into it the unemployment figure was 46 per cent. As a result of this kind of finance, is the unemployment in Ballymurphy—if one takes that area simply as an example—going to be very much affected? I do not want to tread on matters too delicate, but perhaps when the noble Lord replies he would say a word on that aspect of the matter.

7.38 p.m.

LORD WINDLESHAM

My Lords, I hope I can reply to most of the points that have been raised. If I do not cover all of them, I will go through Hansard and pick up any outstanding questions. The noble Lord, Lord Beswick, asked on what Vote would the £50 million appear. I understand that the Finance Corporation will be funded out of borrowing from, the Northern Ireland Consolidated Fund, which in turn is likely to borrow from the National Loans Fund. The noble Lord also asked whether the Ministry of Finance is still functioning and what procedures had been evolved for controlling its activities. I can assure him that the Ministry is indeed still functioning. It is in business and functioning extremely efficiently, although inevitably under some strain and pressure because of the unusual circumstances of the Northern Ireland economy at the present time. The Permanent Secretary to the Ministry of Finance, Sir David Holden, is also the head of the Northern Ireland Civil Service. As such he is one of the Secretary of State's principal advisers at Stormont Castle. We are therefore in regular and close touch with him. The Secretary of State has also asked the Parliamentary Secretary, Mr. David Howell, to take particular responsibility for matters concerning finance and commerce. He is therefore in close touch on a regular basis with the Ministry of Finance. I hope the noble Lord will follow what I am saying. He will understand that in circumstances like this the relationships which I have described between Ministers and officials can sometimes be a great deal more important than what is written down in some official document.

LORD BESWICK

My Lords, I assume that the last few words were addressed to my noble friend Lord Hoy and not to myself. The noble Lord said that the Ministry of Finance was functioning, but part of the function of a Minister is to report to Parliament and normally he does or does not do certain things because he has the support and the agreement and approval of Parliament, but in this particular case as the Stormont is prorogued the Minister of Finance cannot, as I see it, function as far as this aspect of his responsibility is concerned. The question I asked, therefore, was whether he goes to the Secretary of State. The noble Lord has indicated that personal relationships are good and I can well imagine that terrific personal sacrifices are being made and that the machinery is working because of personal relationships, but I think it is necessary to try to sort out the constitutional side of the problem. The question I asked was not answered by the noble Lord—to whom does the Minister go for approval of what he is doing under this Order?

7.43 p.m.

LORD WINDLESHAM

My Lords, I understand that there is to be a debate later tonight in another place on exactly this point. Noble Lords who have shown some interest in this matter have not referred to the White Paper which has been published. I referred earlier to the title—Northern Ireland: Financial Arrangements and Legislation. This spells out present arrangements in some detail. In another place when the Appropriation Order is considered tonight there is likely to be a fairly full debate covering such matters as financial accountability and control.

As I remarked earlier the Consolidated Fund Bill, coming at the beginning of the financial year, had already gone on to the Statute Book at Stormont. We shall have to see what happens next year. If the Parliament of Northern Ireland is still prorogued at that time alternative arrangements will have to be made to bring before the Parliament at Westminster a Budget estimated Statement. This will set out expenditure for the coming year comparable with the estimated expenditure referred to in paragraph 17 of the White Paper of £418 million for the current year. At the moment we are in a situation where, as I have explained, public funds have already been granted.

Then there are some difficulties on the constitutional side. There was some concern on the first of these Orders concerning the reports of the Comptroller and Auditor-General. The noble Lord, Lord Beswick, has hinted again in his remarks on this Order that, although he finds it useful to know that copies of reports will be available to both Houses of Parliament at Westminster, he still thinks perhaps this is a little too informal. In preparing myself for this debate I asked whether or not it could be argued that there should be an obligation that the report of the Comptroller and Auditor-General for Northern Ireland should be laid before the Westminster Parliament. But I am told by the lawyers that this is not possible for the following reasons. It would not be appropriate to include in an Order of this kind a provision requiring a report to be laid before the Parliament of the United Kingdom because, speaking generally. Her Majesty's powers under Section 1(3) of the Northern Ireland (Temporary Provisions) Act 1972 are no greater than those of the Parliament of Northern Ireland, and that Parliament has no power to impose rights and duties in relation to the Parliament of the United Kingdom.

I mention this to show that there are constitutional arguments which are relevant here as well as the ones which I happen to think are more important, such as the information made available; the relationships between members of another place and Ministers, and noble Lords opposite—indeed noble Lords on all Benches in this House and the Government. As I have explained, there is a debate later on tonight in another place on this exact subject.

The noble Lord, Lord Wade, asked me whether there had been any precedents for the procedure now being followed concerning what would have been legislation before the Parliament of Northern Ireland and which is now brought before both your Lordships and members of another place by way of Orders in Council. The noble Earl, Lord Longford, is something of an expert on these things and he might know from memory. I think there was a precedent concerning the Government of India at one time, but I should like to check on that.

I should like to thank the noble Earl, Lord Longford, for his kind words. He is always generous in his tributes. The aspect of unemployment is absolutely crucial. As I mentioned, the origins of this particular order setting up the Finance Corporation are in the report of the Review Body headed by Sir Alec Cairncross, which also included Mr. Charles Villiers. He is now Chairman of the Northern Ireland Finance Corporation. What lay behind this report was that firms which at other times would have been in excellent shape now find themselves facing appalling liquidity problems. Orders that in other circumstances would have been forthcoming are postponed.

The solution to the problems of unemployment in Northern Ireland is a complex one. It must lie partly in the conservation of the economic fabric in the present difficult circumstances; and, combined with this, the attempt to simulate as much investment as possible, both by expansion of established concerns and by the attraction of new industry. The Finance Corporation will have an important part to play in this. But there are many other measures which will have a great impact—the additional aid to Harland and Wolff, for example. This was outside the Finance Corporation and was a direct grant from the Ministry of Commerce. Aid on this scale not only maintains existing employment, but adds a considerable number of jobs in the shipyards at Belfast. The additional aid to I.C.L. at Castlereagh will enable a factory to keep going when otherwise it would have been necessary to have declared people redundant.

THE EARL OF LONGFORD

My Lords, the particular question which I sought to put to the noble Lord and which has not so far been answered is whether he has got power to make sure that the investment goes to the precise areas where the unemployment is greatest?

LORD WINDLESHAM

My Lords, we must not tie the hands of the Finance Corporation. As I have said, there is a range of other measures as well as this one. It would be a misapprehension if I left the House thinking that the activities of the Finance Corporation are all that we are doing to try to combat unemployment in Northern Ireland. Nothing could be further from the truth. There is a wide range of measures many of which have a function both in preventing those who are in employment from losing their employment if companies close down; and in expanding employment, particularly in some of the areas to which the noble Lord referred. But on this Order I think the noble Earl will agree that it would be wrong to tie the hands of the Finance Corporation.

The noble Lord, Lord Beswick, asked about the criteria under which the Corporation will operate. These are spelled out in Article 4 on page 2 of the Order: The Corporation may, for the purpose of assisting the economy of Northern Ireland—

  1. (a) assist any undertaking in Northern Ireland if, in the opinion of the Corporation, the undertaking might otherwise be forced to reduce its business activities or to close down, with adverse repercussions on that economy;
  2. (b) assist and encourage undertakings established in Northern Ireland to expand or undertake new investment in Northern Ireland;
  3. (c) assist and encourage undertakings to become established in Northern Ireland.

LORD SLATER

My Lords, the noble Lord said that it would be wrong to tie the hands of the new Corporation. He also referred to the sum of £50 million. Do I take it that this Finance Corporation for Northern Ireland will operate on a similar basis to the Corporation which we have in this country relating to development areas? Will it operate not basically in one sector but over the whole of Northern Ireland? As we now have a Secretary of State for Northern Ireland, may I ask the noble Lord to say what part he will play in this operation? We must remember that a local government set-up still exists in Northern Ireland. Will this be brought into the system in which the new Finance Corporation will work?

LORD WINDLESHAM

My Lords, I must not stray out of order in discussing this Order. I am entitled to speak only at the beginning, as the mover of the Motion, and once at the end in reply to points raised in the course of the debate. I am not permitted to speak a third time, but I will, with the leave of the House, comment briefly on the points raised by the noble Lord, Lord Slater. These were new points which perhaps should have been raised during the course of the debate when I could have dealt with them at the same time as the others.

The noble Lord, Lord Slater, asked whether Northern Ireland is comparable with a development area. In some ways it is. All of Northern Ireland can in some ways be regarded as a development area, except that for a number of reasons economic conditions are even more extreme in Northern Ireland than they are in what were formerly described as "development areas". Thus, the Northern Ireland Finance Corporation is concerned to inject public funds on a selective basis into a range of undertakings in Northern Ireland.

The noble Lord also asked about the relationship between the Finance Corporation and the Secretary of State. The Corporation will have the same sort of independence from Government as the Industrial Reorganisation Corporation had in the United Kingdom. That is, it must publish a report on its activities; its accounts will be audited not only by normal commercial auditors, but by the Comptroller and Auditor-General for Northern Ireland as well. The noble Lord Will see, therefore, that it will be accountable in that way and in the ways I mentioned when answering the noble Lord, Lord Beswick.

LORD BESWICK

My Lords, without wishing to burden the noble Lord unduly, may I question him further about the criteria or guidelines? He properly referred me to paragraph 4. What sort of criteria will be applied so far as the outturn is concerned? Under paragraph 4(a) the Corporation may assist any undertaking in Northern Ireland if, in the opinion of the Corporation, the undertaking might otherwise be forced to reduce its business activities or to close down… If that is given first priority, the outturn will, in commercial terms, be rather poor. Is the Corporation expected to operate as a commercial concern, or is it looked upon simply as an ambulance measure?

LORD WINDLESHAM

My Lords, measures of this sort tend to be both. It is helpful if any finance corporation can operate in the most commercial way possible, as was the case with the I.R.C. At the same time, there are in Northern Ireland very pressing considerations of unemployment. I have no doubt that the chairman and directors of the Northern Ireland Finance Corporation will have the first of these criteria very much in the front of their minds. At the same time, they will want to consider the possibilities of expansion and new businesses coming in.

The Finance Corporation has met on two occasions, is recruiting staff and is beginning to review situations as a matter of urgency. Those of your Lordships who know Mr. Villiers and the extent of his commitments in the City of London and elsewhere will agree that it is a notable public service that a man of his experience should take on the chairmanship. What I hope will go back to the public-spirited members of the Board, and the executives working with them, is that while there is some concern about accountability, they have our full support in their important and valuable work.

[The sitting was suspended at eight minutes before eight o'clock and resumed at eight o'clock.]