§ 3.8 p.m.
§ Lord Trefgarne
My Lords, I beg to move that this Bill be now read a second time. Apart from the fact that they are all connected with finance, there is no obvious connection between the clauses in the Bill; if there were, it would not be called "miscellaneous". But that is not to imply that the clauses have no value. I commend them to the House as good, sound, administrative measures; the sort of thing which a Government have to bring before Parliament from time to time. For convenience we have grouped seven such measures in the present Bill. I shall explain what the clauses do, and why the changes they bring about are desirable, and I hope that these essentially administrative measures will commend themselves to your Lordships.
Clause 1 concerns the Development Commission, which was established by Lloyd George shortly before the first world war with the task of identifying and tackling the various problems of rural areas. Following a review of the work of the commission my right honourable friend the then Minister for Local Government and Environmental Services announced in another place in March last year that he believed that the commission still had a distinctive and necessary role in bringing economic and social assistance to rural areas of England. The Government accepted that the commission should have a greater degree of independence and should, for example, itself choose the areas in which to concentrate assistance.
At present, the commissioners advise Ministers on how money in the development fund voted by Parliament should be spent. This is an archaic and possibly unique arrangement, so the Bill seeks to establish the Development Commission as a grant-aided body, able to spend directly the money provided by Parliament, and accounting for it directly to Parliament, on the same basis as other grant-aided bodies. The Secretary of State and the Treasury will continue to have a duty to supervise financial matters, and a power to give broad direction of policy and practice.
The Bill also gives us an opportunity to resolve a recent legal doubt whether the Council for Small Industries in Rural Areas, which is the principal commercial agent of the commission, has been acting ultra vires in helping profit-making commercial undertakings. Since the doubt arose the matter has been covered by authorising the relevant sums under the Appropriation Acts. This should not be allowed to continue indefinitely, and the Bill, when enacted, will regulate the position.
Clause 1 establishes the Development Commission as a grant-aided corporate body, defines its purposes and, together with Schedule 1, sets out its powers, duties and financing. The purposes of the commission are substantially unchanged from what they were when it was set up in 1909, although the terminology used in this legislation is different from that of 1909. In 729 specifying some of the areas of activity of the commission, the Bill reflects the special role that the commission now plays in the social and economic regeneration of rural communities in England. These provisions, then, are to bring the statutory basis of the Development Commission into line with its present-day role—not to change that role. The Commission's objective remains the economic and social development of rural England, and I hope that your Lordships will welcome this clause as enhancing its ability to carry out or assist others to carry out such a development.
Clause 2 similarly introduces no new principle. It represents a piece of necessary tidying up, in providing statutory authority for the Secretary of State for Industry to make grants, out of money voted by Parliament, to English regional development organisations. At present, authority rests on the Supply Estimates and the confirming Appropriation Acts. Successive Administrations have paid grant-in-aid to the four organisations listed in the clause. The money supports their work of helping to attract new industrial and commercial development to their regions, which include the main assisted areas in England. Similar promotional bodies, supported by both central and local government, exist in Scotland and Wales.
The English regional bodies and their overseas campaigns are co-ordinated with the promotional activity on behalf of the United Kingdom as a whole. Although the main purpose of the clause is to regularise the payments to these existing bodies, we think it right also to provide for the possibility that other similar bodies may be supported in this way, for the benefit of other regions in future. I should stress that the clause makes no change to existing policy. It simply regularises the parliamentary authority for the existing expenditure. As your Lordships will be aware, neither the Comptroller and Auditor General nor the Public Accounts Committee of another place are willing to endorse the use of Supply Estimates and the confirming Appropriation Acts as the sole authorisation of expenditure of a continuing nature.
Clause 3 is different. Its object is to write-off debts of £13.4 million owed by Zimbabwe to the Consolidated Fund. The debts stem from obligations contracted by the Government of Southern Rhodesia towards Her Majesty's Government before the unilateral declaration of independence in November 1965. The debts included liability to reimburse the Government for payments made out of the Consolidated Fund under Treasury guarantees when Rhodesia defaulted on five loans from the International Bank for Reconstruction and Development.
Following independence, Mr. Mugabe stated that his Government intended to honour these obligations. However, discussions were held in May and June 1980 about Zimbabwe's capacity to service debt obligations in the light of prospects for the country's economy, and under the terms of the Zimbabwean debt settlement which was announced in Parliament on 2nd July 1980 the Government agreed to write-off the sums owed in respect of three of the five guarantees. On 7th November 1980 the then Financial Secretary stated that it was our intention to provide for this by legislation in due course. This is necessary because the debt is an asset of the Consolidated Fund.
730 Clause 4 widens the range of financial liabilities of public bodies which the Treasury may guarantee under its existing statutory powers. At present these powers generally extend only to guaranteeing the repayment of principal and interest on a loan, although there is a considerable disparity among the industries. The bodies covered are listed in Schedule 2 to the Bill. The Bill does not add to the number of bodies covered, nor should what is proposed add to the cost to public funds—indeed, rather the opposite.
Lenders offering attractive terms to our public bodies have occasionally insisted on additional obligations beyond the undertaking to guarantee the repayment of principal and payment of interest. For example, they may ask for repayment of certain fees in respect of a loan. It is clearly in the taxpayer's interest to guarantee these additional obligations if this is a way of ensuring that the best terms can be obtained, especially as this can be done without the guarantee adding significantly to our liabilities. Clause 4 permits that. A guarantee will be given only if the Treasury considers that the loan is worth making on the terms demanded. This is exactly what happens now. Thus, we shall continue to ensure that the best possible rates are obtained, with minimal liability for each loan that our public bodies take on.
Clause 5 amends Section 3(2) of the Crown Estate Act 1961 so as to extend the maximum statutory period for which the Crown Estate Commissioners may grant leases from 100 to 150 years. The background to this is that the commissioneers are not normally in a position to be able to finance major site developments as they have no borrowing powers. They therefore look to institutional investors to finance commercial projects. However, in the field of commercial property nowadays institutional investors favour leases of 125 to 150 years' duration, because that allows sites to be redeveloped about half-way through the lease—after 60 years or so, which is reckoned to be the life expectancy of a building.
The commissioners judge that their present inability to grant leases for periods as long as 150 years means that they cannot make the most of the earning potential of the Crown Estates. The revenue surpluses from the estates are surrendered to the Exchequer in accordance with the Civil List Acts. I hope that your Lordships will agree that we should not tie the commissioners' hands unnecessarily and should therefore extend the period of leases, as the Bill proposes.
Clause 6 gives the Treasury the power to redeem, upon the payment of compensation, certain small periodic payments at present charged direct on the Consolidated Fund or on Votes under old legislation. These payments are expensive to administer, and it has therefore been decided that it would be sensible to discontinue them, subject, of course, to the payment of reasonable compensation. The compensation is to be so calculated that if it were invested in an appropriate Government stock it would provide an income equivalent to the redeemed annuity.
The Treasury is already empowered under the Consolidated Fund (Permanent Charges Redemption) Act 1873 to agree that any perpetual or non-life annuity charged on the Consolidated Fund or Votes should be redeemed on certain terms and subject to 731 certain conditions. In the years immediately following the 1873 Act, redemption terms were agreed for many annuities. In some cases, however, this proved impossible, and the annuities have continued at increasing administrative cost. The new clause will empower the Treasurey to redeem unilaterally small annuities which have been payable since before 1873, or, to put it another way, in 1873 the Government of the day took powers to deal with these matters where a voluntary agreement could be made. We are now in 1983 and hoping to take power to deal with those where voluntary agreement has not been possible.
Clause 7 is designed to amend the provisions of the Local Government Act 1972 so as to provide a greater degree of flexibility to local authority members when making use of the option that is available to them under Section 24 of the Local Government, Planning and Land Act 1980 to receive financial loss allowance when they perform the approved duties of the council, instead of the attendance allowance which is generally offered.
At present, the legislation provides that councillors can make this choice, or revert to receiving attendance allowance after making an earlier choice to receive financial loss allowance, only three months prior to the beginning of a financial year—or, in the case of newly-elected councillors, at their election or re-election. This created difficulties for those councillors who have chosen financial loss allowance and who lose their jobs during the year. Under the present arrangements, such members would presumably not be able to show financial loss, yet they would be unable to receive attendance allowance instead until the next financial year. That could mean a prolonged period—possibly up to 15 months—without any allowances other than those for travelling and subsistence expenses. I think your Lordships will agree that this is a very desirable adjustment to the existing arrangements. The proposal has been pressed by the local authority associations, which welcome the change.
In conclusion, the Bill contains seven measures, some to tidy up or modernise existing arrangements and the last one to remedy a hardship caused by the operation of the present rules. All can be justified on their merits. I commend the Bill to your Lordships. I beg to move.
§ Moved, That the Bill be now read a second time.—(Lord Trefgarne.)
§ 3.20 p.m.
§ Lord Cledwyn of Penrhos
My Lords, we are grateful to the noble Lord for explaining this Bill to us. It is well entitled "miscellaneous" and although its Explanatory Memorandum tells us that it is not expected to have any material effect on public expenditure in the long term and should provide minor administrative savings in public service manpower, it would be a great mistake to assume that the "miscellany" is unimportant. The Bill covers matters of the utmost significance, as the noble Lord himself indicated in his opening speech. I think I should say at the outset that we support the Bill and welcome a number of its provisions. Some of the clauses do not call for extensive comment and I will first deal with those.
732 Clause 3, which deals with the debts of £13.4 million owed by Zimbabwe to the Consolidated Fund, is an equitable measure. It would not be right to saddle Zimbabwe with the burden of debts on which the Rhodesian Government had defaulted after UDI. However, perhaps the Minister will deal with one point. I understand that, although Clause 3 specifically mentions three debts, there are, in fact, five debts and the two that are not included in the clause are greater than the three that are specified.
We all in this House hope that Zimbabwe will develop into a stable and prosperous country and that the current unhappy divisions will soon be resolved, but it does need economic help and this is a small additional contribution. Perhaps the noble Lord will say something about the other two debts which remain.
We support Clause 4, which enables Treasury guarantees to be provided in a more flexible way. I believe that there is still an area of some uncertainty as to whether the guarantees do, or do not, form part of public expenditure. This has obvious implications for the public sector. I believe that the noble Lord referred to the Public Accounts Committee. As I understand it, the Government are considering this question at present. When the noble Lord winds up, by leave, perhaps he will give us some guidance as to the way in which this is now being interpreted by the Government. Are these guarantees regarded as part of public spending?
On Clause 5, and the Crown Estates Commissioners, I assume I am right that their leases and tenancies are subject to the Rent Acts. I have no comment on Clause 6, which seems to be desirable. I warmly welcome Clause 7, which resolves the anomaly whereby councillors can lose their allowances if they become unemployed during their tenure. There has been a great deal of pressure for this, especially as unemployment has risen, and I am glad that the Government have taken the necessary action.
I must now return to Clauses 1 and 2. In the context of unemployment generally and of the rural areas in particular, these are of great significance. In a sense I wish that these clauses could have been introduced in a Bill of their own, because I believe that they are sufficiently important to be considered apart from the other matters in this Bill. Anyone who reads Clause 1 and Schedule 1 will appreciate why I say this.
In Clauses 1 and 2, we are dealing with the problems of the rural areas of England. The Government propose to repeal Part I of the Development and Road Improvement Funds Act 1909 and to set up a new Development Commission for rural England. The composition and powers of this commission are set out in Schedule 1. As the noble Lord, Lord Trefgarne, said, the 1909 Act was one of Lloyd George's imaginative attempts to help the rural areas, but after 1914 the measure was neglected. My right honourable friend Sir Harold Wilson resurrected it when he was President of the Board of Trade in the late 1940s. Rural areas were not included at that time as development or assisted areas, and I well remember that small factories were built in places like Blaenau Ffestiniog and in other remote parts of rural Wales under the provisions of the 1909 Act.
733 We welcome Clause 1 and we wish the new commission every possible success. It is felt by many that there is nothing for rural England which matches the Scottish Development Agency and the Welsh Development Agency. The North of England and parts of the South-West are particularly in need of constructive assistance. There are black spots in the countryside with very high unemployment and where no special assistance is available. In some instances, assisted area status has been withdrawn. We hope that this clause will fill that gap.
I am glad that the Council for Small Industries in Rural Areas—CoSIRA—is to continue its excellent work as the commercial agent of the commission and that the legal doubt which has existed is being removed by this Bill. This council has an impressive record, as anyone who reads the annual reports of the development commissioners will know.
I have one small question about CoSIRA. At present it operates in England, in Wales and in Scotland. It has offices in the three countries. It fulfils a very important function in Wales in that part of the country which is not covered by the Welsh Rural Development Board. That is very extensive and includes, for example, the whole of Snowdonia and Anglesey. Although the commission will no longer operate in Wales—nor will it operate in Scotland, for that matter—will CoSIRA continue to operate in the two countries possibly under the aegis of the Welsh Rural Development Board or the Welsh Development Agency and the Scottish Development Agency, as appropriate? Alternatively, as a result of this measure, will CoSIRA now be confined to English rural areas alone? That is an important practical matter with which the Minister will wish to deal.
There is one final but crucial point. Will the new commission have adequate resources to do its work? I shall be glad if the Minister will tell us what funds it will have available in a full year. Its powers under Clause 1 and Schedule 1 appear to be adequate but it will also need funds and we need to know what they are likely to be. The commission, therefore, needs resources and sufficient independence to take initiatives without ministerial interference.
I have always believed that small industries—and, by "small", I mean workshops, activities ancillary to agriculture and country garages—which employ up to 10 people or so make an enormous contribution to the rural economy. That contribution is far greater than is generally realised. When we talk about industry, we think about big or medium-sized industry employing 100 or more workers. But the countryside relies not only upon our primary industry of agriculture but also on these other small industries that I have mentioned. If every one of those small industries employed one or two more people, it would make a great difference in the rural areas and to the unemployment situation in our countryside. This is where the new commission and CoSIRA can have a fresh impact on rural England.
Clause 2 is in a sense related to Clause 1, and we support this, too. This is a useful provision which enables grants to be paid to the regional bodies mentioned in Clause 2(2). Can the Minister say whether there is any significant area of rural England which is not now covered by the four organisations in 734 this subsection? I note that Clause 2(2)(e) leaves the door open for additional organisations. I think that that is right. I wonder whether this is not the appropriate time to help areas which are not specifically provided for by the Bill as it now stands. There are, for example, parts of East Anglia which are very hard hit in these times.
Furthermore, how is it proposed that the new Development Commission shall operate in relation to these organisations? What will the relationship of the new commission, whose status and functions are described in Schedule 1, be with the four organisations? In some areas there may be four authorities which are potentially interested: central Government, the local authority, the new Development Commission and one of the four bodies referred to. In theory at least, each of these has some funds available.
Personally I should prefer to see rural England carefully covered by an appropriate regional body with the regional commission having a co-ordinating role, but the provisions of Clauses 1 and 2 can be helpful at a crucial time. With the reservations that I have touched upon, we wish this Bill a speedy passage.
§ 3.32 p.m.
§ Lord Montagu of Beaulieu
My Lords, I very much welcome the opportunity to address your Lordships' House today because I speak as a development commissioner. For many the Development Commission is perhaps one of the unknown quangos, but in fact it is one of the oldest in this type of operation. I remind your Lordships that it was set up by David Lloyd George as long ago as 1909. Its job was then, as it is now, to assist English rural areas, and particularly to advise the Government on the spending of the Development Fund—a sum which is voted annually in Parliament. In general terms this money is spent on any project which will benefit rural areas provided that no other statutory assistance exists.
During its 70 years of existence the commission has supported a wide range of rural activities. In the early days it was also concerned with afforestation and fisheries, and even promoted infrastructure, such as the improvement of roads. There is here a rather nice family connection. It also set up the Road Board, which is no longer with us but of which my father was one of the first members. So there is some family tradition in my being with the Development Commission. The original purpose of the commission was to reduce depopulation, to improve the economic and social structure in rural areas and to create employment. That remains unchanged. Today, the need is as great as it was in 1909.
Perhaps your Lordships will forgive me if I give a few facts as to what the commission does nowadays. In the current financial year the commission plans to spend over £22 million on building rural factories, promoting small industries, community development and other work. There are, broadly, three main areas of work. There is, first, factory and workshop building, involving some £11 million. These are built in consultation with district councils, and it involves financing small factories and workshops, mainly in small towns and villages which are suffering from depopulation or other disadvantages. These areas are currently termed 735 special investment areas, but the commission is in the process of reassessing them, and in future they will be known as rural development areas.
Wherever possible, existing buildings are utilised. For example, at Buckfastleigh, in Devonshire, an old woollen mill, which closed in 1973 with a loss of 300 jobs, is now being refurbished and adapted for cheese-making and engineering. Three new terraced units have been completed. More than 100 new jobs have been created there, and there are more to come. By February of this year 654 units had been completed in the country, with another 773 units under construction or planned. Of these, 520 have already been occupied or allocated. Then there is £1 million or so spent in 50 per cent. financing to enable more buildings to be converted for use by small firms, particularly in remote locations.
Secondly, there is the assistance to small rural industries, which Lord Cledwyn of Penrhos talked about, through CoSIRA, which I suppose is better known than the commission itself. CoSIRA's job is definitely to assist small firms in rural areas. At the moment there are nearly 13,500 small rural firms, employing 72,000 people. Of these, incidentally, 2,000 are new starters. CoSIRA has a network of 31 local offices which provide a full range of free information and advice to rural firms, and so on. There are 20 business managers, because things like accountancy, costing and marketing are often just as important as giving assistance financially. There are also training schemes which are well known. CoSIRA has its own loan fund for small industries, and works in cooperation with the banks and organisations like ICFC.
I have no doubt, and nor do the commissioners, that CoSIRA's assistance and the commission's factories have a catalytic effect on the community by strengthening the rural economy, which, in turn, leads to more jobs being created in other firms. For example, in North Yorkshire in the village of Hunmanby the rate of unemployment in 1975 was 8.5 per cent., but by 1980, by building a small factory and providing intensive help to small firms, it had been reduced to 3.6 per cent. There is no doubt that this new factory site provides income for the parish council, which has been able to develop its own community centre and sports field. Even a bank is now open three days a week.
Thirdly, the commission also pays great attention to community development work: in other words, financing county-based rural community councils and such organisations as the National Council for Voluntary Organisations and, indeed, the National Federation of Women's Institutes. The commission has a legitimate concern about the level and range of services and facilities available to people living and working in rural areas. It can, by lobbying, influence Government and public and private bodies to have regard to the particular needs of rural areas. Examples of this are the recent discussions that we have had with the Department of Education and Science about school closures and the alternative uses for redundant school buildings; with British Telecom about the loss of telephone kiosks; and with the Post Office over the need to maintain a network of sub-post offices.
736 There must be an increasing level of awareness and increasing initiatives. This is done by the sponsoring of conferences and studies. For instance, the commission acts as a trail-blazer through funding experiments. Our most recent one, which I am sure your Lordships will be interested in, is to reimburse part of the cost of travelling to hospital in remote rural areas for people who otherwise could not visit their relations.
The commission and CoSIRA are currently concentrating the bulk of their resources obviously on their special investment areas. These rural priority areas were originally designated by the Government, but following a recent Government review the commissioners have now been given the task of designating their own areas. This is something that we welcome. Naturally, the Government have laid down some sensible criteria, such as the level of unemployment, employment opportunities, age structure and so on. But the Government have made it clear that it is not necessary for all the criteria to be satisfied all the time, and this we welcome. The work on redesignating the rural development areas is well under way. We hope that they will be fully designated perhaps by the middle of 1984.
Of course, the commissioners are well aware of the importance of research where we consider it to be practical in dealing with rural areas. Redundant buildings are something in which, again, the commission has taken a great interest. We are delighted that the Government have recently introduced the 100 per cent. write-off against tax for the construction of workshops. Despite initial doubts, the Inland Revenue have confirmed that the allowances will apply to the conversion of any redundant building, whether agricultural or industrial. This will be a great help. The commission's partnership workshop plan to bring into use redundant buildings is going well. The plan includes former schools, places of worship, farm buildings, and so on. It is indeed a good thing that the grant scheme will be available for all suitable buildings—not just farm buildings.
For some years the commission has supported local housing associations, and it is now particularly concerned with craft homes. These will provide residential accommodation and a small workshop space in a single unit, and will thus enable a small, self-sustaining one- or two-man business to start up and operate from home. We hope that this will bring back skilled craftsmen to rural areas.
As pehaps the report of CoSIRA will show, in recent years there has been a slight reduction in staff, but I can assure the House that this has not been due to any arbitrary cut by Government. We have cut down on the bureaucracy of the headquarters and have put more staff into the "sharp end" of the country, where they are really needed. Therefore, we welcome the assurance given by Government that the commission staff will not be adversely affected by the commission's change to grant-in-aid status, and in fact we shall take on more staff when the DoE gives up some of its staff.
On behalf of the commission I warmly welcome the Bill. It certainly gives the commission a modern, legislative framework. It makes it more flexible, and it removes the doubt which has been expressed about the lending of development fund money to profit-making concerns. The Bill certainly removes existing 737 restrictions, while preserving very wide powers. I believe that it also recognises the commission's advisory role on rural social and economic matters. So on behalf of the commission, I should like to say how warmly I welcome the Bill, and I am sure that it will do much to help us carry out what is a very vital task.
§ 3.42 p.m.
§ Lord Trefgarne
My Lords, I am grateful to your Lordships for your constructive response to the Bill, and in particular to my noble friend Lord Montagu of Beaulieu for his quite full explanation of the functions and role of the Development Commission, speaking, as he does, from a position of very considerable knowledge and experience of these matters.
The noble Lord, Lord Cledwyn of Penrhos, asked me about a number of detailed points. I should like to answer as many of them as I can now, and if I fail to answer any of them I shall be happy to deal with them by correspondence or at a later stage in the Bill. At one point the noble Lord asked me about the coverage of the Development Commission. The commission covers the whole of England's rural areas but, as my noble friend explained, we shall expect it to concentrate its assistance in those areas which it identifies as being in the greatest need. The noble Lord asked me what is the sum of money that we can make available. I understand that for the year 1983–84 it is £21.29 million. It is right, is it not, that when the sum of money is finite it should be concentrated, at least to some extent, on the areas of greatest need, for if it is spread too widely the layer is very thin indeed, and that is not I believe necessarily the best way to spend the funds available.
The noble Lord, Lord Cledwyn, asked me about the operation of CoSIRA. It operates only in England. Nonetheless, the Welsh Development Agency and the Scottish Development Agency have their own comparable organisations which give the same kind of advice as CoSIRA gives in England.
The noble Lord also asked me about two other loans outstanding by Zimbabwe, which perhaps he felt ought to have been included within the provisions of the Bill. I understand that the Zimbabwe Government are continuing to service the two other loans, and therefore the question of writing them off does not at present arise. As for the guarantees which are referred to in the Bill, I am informed that they do not in fact count as public expenditure, at least not at the point that the guarantee is given. If and when the misfortune arises and the guarantee is called, it then becomes a charge on public expenditure.
The noble Lord also asked me about the application of the Rent Acts to the arrangements under Clause 5, where there is a reference to leases granted by the Crown Estates Commissioners. I understand that the Housing Act 1980 provided that, broadly speaking, with perhaps I think one or two exceptions, the Rent Acts should apply to these leases. As I say, that was provided for by the Housing Act 1980.
I believe that those were the principal points, though perhaps not all the points, that the noble Lord put to me. I shall certainly follow up any of the others when I have had a chance to study what he has said. As I say, 738 I am grateful for your Lordships' reception of the measure, which I commend to the House.
§ On Question, Bill read a second time, and committed to a Committee of the Whole House.