§ 3.12 p.m.
§ Report received.
§ Clause 1 [Increase in limit on grants to Agency]:
§ Lord Graham of Edmonton
moved Amendment No. 1 Page 1, line 13, at end insert (".of which £1,500,000 shall be paid into a special bank account under the control of the Agency to be drawn at a rate of £200,000 per annum plus any other amount to compensate for inflation, such amount to be determined in consultation with the Secretary of State.").
The noble Lord said: My Lords, in moving this amendment. I should like to draw particular attention to page 1 of the Bill. It will be helpful in explaining the amendment if I also introduce to the House the words that it seeks to amend. We are discussing the continuation of the life of the Co-operative Development Agency. I think that the Minister would accept that there is general agreement in the House of its appreciation of Government decisions which have continued the life of the CDA beyond the period that was authorised prior to this Bill. In other words, we are grateful for the support that the Minister and his colleagues have given towards the continued activity of the CDA.
We are talking in this amendment about the funding of the CDA. Clause 1(2) states that:For the words from '£900,000 or such greater amount' to the end of the subsection there shall be substituted the words '£3,000,000'The amendment proposes that of that £3 million, £1.5 millionshall be paid into a special bank account under the control of the Agency to be drawn at a rate of £200,000 per annum plus any other amount to compensate for inflation, such amount to be determined in consultation with the Secretary of State".The Minister, who is in his place, will recall the agitation on this Bench in seeking to discover that it was the Government's true intent that the life of the CDA would run for the six-year period for which the funding had been made available. The Minister will note that there is no suggestion that the funds that would be made directly available to the CDA for spending on an annual basis would be more than the sum that the Minister has felt is proper, that is, £200,000. The prime difference which the Minister will have perceived is our suggestion that instead of the money being held by the Treasury and then released in tranches of £200,000, the whole of the money should 989 be released to the CDA and then only authorised to be spent at the rate that the Government have felt proper. We consider that the CDA would be strengthened in its ability to convince people—organisations and individuals—that it has a life if the funding could be seen not merely to be available but in effect in its hands in that it authorised it to be spent. We believe that this amendment attempts to provide a formula that will guarantee the CDA the six years life that the Government have promised.
We shall come to later amendments dealing with our concern about the words of the Minister at a previous stage when he tried to illustrate to us the benign nature of the powers that the Government have taken to terminate the life of the CDA at any given time. I shall not say that this would be at the whim of the Government or the Minister. The Minister pointed out that the powers to terminate its life before six years had elapsed were hardly likely to be used and gave illustrations to show this. We shall come to that matter in a moment. Ministers in this House and in another place have been fairly generous in pointing out the purpose of the funding. I remind the Minister that he said at Committee stage that,the Bill provides for six years' financing and, as we have emphasied here and in the other place so very many times, that is the Government's intention".The intention is to make the funds available for six years at the global rate and also at the annual rate which contains a little flexibility. Six times £200,000 is £1,200,000. A small reserve means that £300,000 can be drawn upon in special circumstances if necessary. The provision has been made. However, the Minister went on to say:Nevertheless it would he an imprudent Government which did not make provisions for unforseen circumstances. Therefore, it is prudent to have available the powers of dissolution, no matter how unlikely it is".We shall come to later amendments concerned with the necessity for those powers. If we simply stick to the willingness of the Government to contemplate the availability of £1.5 million in additional sums of money, we are saying that it should be available to the CDA in the way I have described. We were alarmed to hear the Minister say at Committee stage that two unforseen circumstances had sprung to mind only that morning:The private sector may want to take over the agency, or the agency itself may want to change its format, or indeed its role. For example, it might want to go to the private sector. Who would we be to deny it that?—[Official Report, 30/7/84: col. 569].It is the complete antithesis of the whole raison d'être and philosophy behind the creation of the Co-operative Development Agency even to contemplate the possibility that in some circumstances it could be privatised. We know that the Minister and his colleagues in Government are dab hands at selling public sector institutions that one would never have thought would be privatised. Yesterday, we were debating the privatising of the small arms factories and ordnance factories of our country. So this is not so surprising today as it might have been a month ago.
We know that the Government are capable of considering the possibility of changing the basis of hitherto accepted public or co-operative sector institutions so that they become private. We believe that that would be an alarming prospect indeed. We hope that 990 the Government will confirm that this kind of illustration—the possibility that the CDA could very well go private in some way or another—was really just a figment of the Minister's imagination at the time and that there is no need for us to give any further thought to it because it was very hypothetical.
We believe that this tendency to make statements like that requires a safeguard to be introduced. That is the purpose of making available to the CDA, in the manner proposed by the amendment, the sums which the Government are willing to vote. At the same time, it would still provide the block that the money would be used only over the six-year period, would not be dissipated, would not be expended in the earlier years with nothing left at the end. In other words, what we are seeking to assure the outside world is that the Government mean what they say; that they envisage not merely a possibility but are working towards the reality that in six years' time the CDA will not merely be in existence but will have been encouraged and supported and expanded in the way that we are considering.
We regard this as a very modest amendment. Of course, we think that £200,000 will not be sufficient to fund the activities of the CDA, but to support that view we have other amendments concerning commercial activities. I would simply say that the Minister needs to look very carefully at what is happening to the size of the CDA. In October 1983–about 12 months ago—the CDA had 15 staff, and yet 12 months later we learn that it has only 12 staff. The Minister can say, quite fairly, that the 12 may very well be capable of doing the work of the 15. We are anxious to make sure that anyone who looks at the Government's serious intent to sustain the co-operative sector in this way—it is a very modest way—can get some reassurance by the acceptance of this amendment. I beg to move.
§ 3.23 p.m.
§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)
My Lords, I recognise the concern re-expressed, if I may put it that way, by the noble Lord, Lord Graham of Edmonton. However, I am surprised that in his opening remarks he paid some tribute to the Government's continuation of support for the Co-operative Development Agency but then suggested that in some way that is suspect and has to be bolstered by a tranche of money being put in the bank.
As he knows, I always listen to him very carefully, but I have to say that in listening to his explanation I heard him say nothing to alter the fundamental unacceptable nature of this amendment. I have said before—at our Committee stage and at Second Reading—and I expect I shall say again, that one of the prime hopes of the Government is that the agency should improve its financial base to such an extent that eventually it becomes self-supporting. The noble Lord, Lord Graham, quoted me quite correctly; his quotation was accurate; mine was from memory but I am sure it was absolutely right. There is no difficulty in envisaging the sort of situation, perhaps in five, six or seven years from now, in which the agency might well develop. If it does improve the financial base I can well 991 see it going that way. If it becomes self-supporting it will not need the governmental intervention, the governmental funding to meet demands.
The amendment is unacceptable because it weakens the public accountability for the grant that is payable to the agency. It is the Government's practice to pay grants only on evidence of need. I am sure all noble Lords will agree that that is a sound and sensible way of managing public funds. We have to ensure that taxpayers' money is not wasted and that it is paid out only when needed. The more the Government can improve their practice in this respect the smaller the burden on the taxpayer will be and the less pressure there will be on public sector borrowing requirements.
The amendment effectively will require the whole of the Government's support to the CDA of £1.5 million, spread over the six years, to be paid in this financial year. The noble Lord explained how he sees it going to the agency over the six-year period. But of course the total public expenditure consequence would be right now and I can see no reason to add this additional public expenditure pressure. In terms of the national account as a whole, £1.5 million may not be large. Indeed, the noble Lord made a small criticism of the amount of money being advanced and of the £200,000 per annum. We could always argue over that amount. Perhaps one might say that it could never really be enough.
If the expenditure is incurred this year it would either be a charge to the public sector borrowing requirement or else my right honourable friend the Secretary of State for Trade and Industry would have to accommodate that piece of expenditure, probably by cuts elsewhere in other activities where we aim to support industry and enterprise in the country.
There is a second reason for my finding the amendment unacceptable. This is because it would remove the Secretary of State's direct control in respect of assessing the needs of the agency, which are to be met by the annual £200,000 draw-down. It would also remove control over the amount that may be added to that £200,000 to compensate for such issues as inflation—the £300,000 reserve amount to which the noble Lord referred. The amendment requires the agency to consult with the Secretary of State on the latter but there is no compulsion at all for the CDA to abide by the Secretary of State's wishes. I am sure noble Lords agree that this is not an acceptable position.
In regard to the annual draw-down, there is not even a requirement in the amendment to consult the Secretary of State on the use of these funds; and, as I explained earlier, it is the Government's policy that the grant payments should be against need. Under Section 4(2) of the 1978 Act it is the Secretary of State's responsibility to exercise control over payment of the grant. If we accepted the amendment it would remove that control; and, again, I do not think that that is in keeping with the best principles of management of the taxpayers' money. It would also negate the Secretary of State's direct responsibility under that Act for the funding.
With that explanation, I hope that the noble Lord opposite will see that in what I have said there is no 992 diminution in the support which the Government aim to give to the agency. In rejecting the amendment there is no wish to circumscribe the activities of the agency over the next six years. In essence, it is a matter of good housekeeping and prudent money management. In the light of that I would invite the noble Lord, Lord Graham, to withdraw his amendment.
§ Lord Graham of Edmonton
My Lords, I am grateful to the Minister for his careful explanation. I point out that it was not exactly a "try on". We recognised that there was an unusual feature about the proposal. However, in view of the fact that the Minister appoints all of the members of the CDA, we believe that he shares our very high regard for the performance and stature of the two principal officers—Ralph Woolf the chairman, and George Jones the chief executive—and all other members. We have supreme confidence not only that they are responsible, but also that they would want to take fully into account anything that the Government said.
The Minister is quite right: he who controls the purse strings can virtually dictate how it is done. If the money were handed over and for some reason which the Minister could not define the Minister wanted to say to them, "Don't spend or use the money in this way", it is possible for the Minister to be thwarted. However, we have confidence in the people who have been placed in those positions by the Minister. Some of them have come directly from the co-operative sector, while others have not, but all are imbued with a desire to see the success of the CDA.
When we come to later amendments we shall be interested to know whether the Minister is prepared to translate the oft repeated phrase that we want to see the CDA becoming more self-supporting and eventually entirely self-supporting. We believe that that can be achieved by supporting some of our amendments, which are designed to provide for other money-raising and money-making activities by the body. If we simply have the type of restrictions and the type of observations which the Minister made during the Committee stage, which inhibit the ability of the CDA to do precisely that which the Minister wants, we shall look upon the situation with dismay.
We take a different view from the Minister. We think that the sum of money involved— about £250,000 every year—is absolute chicken feed. Not for a moment am I saying that any penny from the public purse should be given away easily. But in the context in which the CDA is able to influence, and successfully to prove that it has influenced, the creation of societies by advice, guidance and restrictions, is able to make sure that people can work together and is able to provide work at a cost which is infinitely smaller than the public purse might otherwise have to bear, we are honestly saying that the continuation for six years of expenditure of £250,000 a year is absolute chicken feed. However, the Minister has had to say what he has said. We acknowledge that this was a method of trying to demonstrate that we did not promise six years life. The money was there for six years life and was in the hands of people who we believe would be responsible as regards its use. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn. 993 Clause 2 [Extension of functions and control of Agency]:
§ Lord Graham of Edmonton
moved Amendment No. 2: Page 2, line 23, after ("(2)") insert ("shall be omitted and there shall be substituted the words "The Agency shall have the power to carry out commercial activities and charge for its services only in pursuit of its functions as defined by section 2 and devote the surplus generated to any of those functions as it sees fit.".").
The noble Lord said: My Lords, I beg to move Amendment No. 2 which deals directly with the final point that I made on the earlier amendment; namely, to what extent are the Government prepared to write into the Bill the commercial activities which the Minister has said— unless he has some other means of finance—are the only means whereby the present monies can be augmented?
The effect of the amendment is to allow the CDA to engage in commercial activities and to charge for its services, but only in pursuit of its purposes as defined by Section 2 of the 1978 Act. At this stage let me point out that the current Bill is amending the 1978 Act and so whenever sections of the Act are referred to we are referring to sections of the 1978 Act, as amended by the current Bill. We want to have a situation whereby the CDA would be free to devote the surplus generated to those purposes—that is, those purposes which are defined—as it sees fit. In other words, we want to encourage the CDA to raise additional funds. There are a number of ways in which that could be done.
As I am sure the Minister is aware, this is a less ambitious version of the amendment which we tabled in Committee. I hope that the Minister will accept that this is a genuine attempt to find a middle way in which to carry forward our joint aspirations to provide these opportunities.
In Committee the Government refused, on a technicality, to accept our amendment relating to commercial activity. On 30th July at col. 557 the Minister said:the amendment will allow the agency to carry out any commercial activity whatever. I am advised that the power to carry out commercial activities would almost certainly be regarded by the courts as being limited to activities within the functions set out in Section 2 of the 1978 Act".If in fact the words of the amendment which talk in terms of "any" commercial activity are suspect, then I would say that this amendment is trying to define the type of activities; that is, those which are authorised by Section 2 of the 1978 Act.
Naturally, we wish to see the CDA have the funds to pursue the wider powers which are provided for in this Bill, because in another place, especially in Committee, there was great disparity between the words contained in the Bill and the actual reality of how the CDA was going to measure up to what the Bill said it was capable of doing in the future. We think that the Government have been somewhat tardy in providing the powers to raise the money in that particular way.
When we talk about commercial activities we must remember that the funding of the CDA is the crucial issue in this debate. The Government, quite rightly, have limited the CDA's commercial activities to those within its objectives. In fact the noble Lord said at col. 561 on 30th July: 994I do not think that I said that the agency would engage with the local authorities. I do not think that the Section 137 point arises".Perhaps the Government can elucidate precisely what they mean by providing opportunities to engage in other activities. When we on this side—my noble friend Lady Nicol and the noble Lord, Lord Oram, also made contributions—alluded to the possibility of services being provided by the CDA to local authorities, the Minister said:I do not think that I said that the agency would engage with the local authorities".
Let me tell the House the current situation. In the four years 1980, 1981, 1982 and 1983 80 per cent. of the additional income that the CDA has raised has come from the local authorities. In those four years local authority projects brought in £43,000 out of a total of £53,582. So the relationship between the CDA and the local authorities is very real indeed. We want to see it expanded; but we think that at the last stage of the Bill the Minister spoke somewhat tardily about the local authorities being recipients. The Minister might recall that I was making the point that in view of the restrictions by the Government as regards Section 137, under which many of the CDA enterprise organisations get their fundings, there was difficulty and some of the sources could very well begin to dry up. The Minister must be much more specific in telling us how he sees coming forward the additional money which will either augment the £200,000 a year or replace it. When we raised this particular point about commercial activity we asked from where was the money to come and how much the Minister had in mind. On 30th July at col. 558 the Minister said:I could not say what the amount would be, and I do not think anyone could, because hitherto the agency has not had that opportunity".The Minister has the responsibility, not least to the officers of the CDA, to tell the House what kind of activities there will be and how much he thinks they are likely to earn if this amendment is not written into the Bill.
The third important provision in Clause 2 is to remove the block on the agency undertaking commercial activity and forming partnerships. The underlying objective here is to encourage the agency to widen the range of functions which it is empowered to undertake. By being free to carry out commercial activity it can charge what the market will bear for its services. Of course, we were astounded when the Minister said on 30th July at column 558:I do not even know whether it has made an evaluationof the amount the CDA can earn. We think that that is a staggering admission. The Government want the CDA to become self-supporting but have made no attempt to evaluate either the kind of activities or the amounts that can be raised. I think that the Minister should certainly make some comments on that.
If the Minister is not prepared to accept this side of the House as an authority on the need of the CDA to raise money, perhaps I may quote in aid what George Jones, the Director of the CDA, said in an interview in the journal of the Co-operative Party called Platform in March 1984. He said:We have the potential to get the means but it will take a couple of years to build; it will not come quickly. I want to build up the resources, in particular finance, but I realise that this cannot be done overnight.995Training will provide a major opportunity for us and I am pursuing this via the Local Authority Associations, associations of professional teachers, and the Manpower Services Commission Training Executive. Secondments and EEC grants could bring at least £150,000 a year. Extra money could come in from various kinds of commercial activities.
I do not wish to weary the House. I believe that the case for the amendment has been made in a reasonable form. We want the Government to be helpful and less inflexible in the wording of the Bill. If they want to provide the CDA with the means to raise money, they must recognise that that kind of provision needs to be much more specific in the Bill.
The Minister will perhaps be able to indicate some of the ways in which the CDA should carry out its responsibilities. One of its responsibilities is to be a source to provide ideas for training, for creating schemes and for transforming novices running co-operative enterprises into competent and professional workmen, whether it is as technicians, general managers, secretaries and the like. All that needs money. Therefore, we want an assurance from the Government (which can be given simply by the Government accepting this amendment) that the CDA can get on with the job which we believe the Minister wants it to do. I beg to move the amendment.
§ 3.43 p.m.
§ Lord Taylor of Gryfe
My Lords, I have a certain amount of sympathy with this amendment, largely because I am a great supporter of the idea of the Co-operative Development Agency which is promoted in the Bill. Indeed, one of the misfortunes of the co-operative organisations of this country is that they have become affiliated to one political party when the co-operative idea is a much broader idea and cannot be contained within the limits of one political organisation. So the Alliance has, and I hope others on the Conservative Benches will have, a certain amount of sympathy with the amendment proposed by the noble Lord, Lord Graham of Edmonton.
I very much welcome the fact that, even in today's climate of free market economies, private enterprise and privatisation, the Government have seen fit to give a guarantee of continued existence to the Co-operative Development Agency, although in fact the extent of that support and that promotion is hardly consistent with the great need for the extension of the co-operative sector within our total economy. I do not propose to make a Second Reading speech, but today I find that many people think that large organisations tend to dominate our economic life. There is a reaction against that and there is a feeling among communities that they would like to run their own activities in such a way that they feel intimately concerned with the running of their own businesses.
The Government's desire to stimulate small businesses should not be confined simply to individual initiative and individual effort. There is a desire for co-operatives to come together in small units in order to encourage a sense of responsibility and community among people who are doing this. Therefore, I believe that the idea suggested by the noble Lord, Lord Graham—the extension of the provisions of the Bill such as he is promoting— is desirable because it 996 provides a stimulus for the people in the Co-operative Development Agency so that they are not regarded simply as a Civil Service department going to the Treasury every year for another release of £200,000. There should be a stimulus to them to enlarge their operations not only in an advisory capacity but even to engage in some business. Therefore, I hope that the idea of an incentive to these people who work in the CDA, which is provided for in the amendment, will stimulate the CDA and encourage a broader acceptance of the co-operative idea in our economic life.
§ Lord Grimond
My Lords, I rise very briefly to support what has already been said by the mover of this amendment and by my noble friend Lord Taylor of Gryfe. I also rise to ask a question which arises out of the debate we had on this matter in Committee. I left that debate not entirely clear as to what, in the Government's view, the co-operative agency could do. Perhaps I may ask the Minister to look at columns 561 and 562 of the Committee stage debate. At the bottom of column 561 the noble Lord, Lord Lucas of Chilworth, said:Yes, [it can engage in commercial activities] but not any commercial activities".At the top of the next column the noble Lord, Lord Lucas, said:I think that I have described them as those that flow from the functions, as distinct from, for example, operating a ferry-boat".From that I understand the Government's view to be that the agency could charge—I think that this is common ground—for advice, for consultancy, and for suchlike, but that it could not enter into any partnership, it could not encourage one of its members to join the board of a co-operative. Is that so? Is that really a valid distinction?
If the Government expect the agency to be self-supporting at the end of six years, as apparently they do, is it really right that the agency should be entirely shut out from these commercial activities? I quite appreciate that there may be some limit on the agency, but I should have thought that it was not beyond the bounds of possibility for the Government to have devised a limit so that the Bill need not be quite as restrictive as it now is. The noble Lord, Lord Graham, has already pointed out that this amendment is narrower than the one moved in Committee. Therefore, I think we may ask whether it does not satisfy the Government's criterion. This seems to be quite a different matter from any direction as to what the agency should do with the profits. That is a separate matter and I am not talking about that.
I ask the Government to look again at the question of the powers of the agency to engage in commercial activities, bearing in mind their own hope that it will be self-sufficient. Now that there is a certain restriction upon the original amendment as moved in Committee — and possibly the Government may have a better amendment than that in the name of the noble Lord, Lord Graham—I hope that at any rate they may see their way to coming at least some way to meet us.
§ Lord Lucas of Chilworth
My Lords, let me say at the outset that I do not think there is really any very great difference between the Government's intentions 997 and the views expressed by noble Lords opposite. Perhaps I may dispose of one very small point made by the noble Lord, Lord Taylor of Gryfe. I may have misunderstood him and, if I did, I am sure that he will accept an apology in advance, but I was surprised that he introduced into his remarks the notion that there was some party political alignment or influence at work with regard to the Co-operative Development Agency.
§ Lord Taylor of Gryfe
My Lords, I was referring to the fact that the Co-ops in the United Kingdom, unlike the Co-ops in any other part of the world, have a direct political affiliation which inhibits the general appeal which I hope will be reflected in support for the Bill in this House.
§ Lord Lucas of Chilworth
My Lords, I am grateful to the noble Lord for making that clear. I need not pursue that at all. I recognise exactly the concern that the noble Lord, Lord Graham, and others have expressed in support of the amendment. But I think that all noble Lords who have spoken harbour some doubts about the effect of the Bill and its ability to empower the agency to carry out this commercial activity which we all so want, and of course to apply its profit from such commercial activity towards any of its functions. I believe that this concern is groundless. I cannot emphasise enough that once this Bill before us is enacted it will clearly empower the agency to act in a commercial manner if it so wishes, but only in the course of carrying out its prime functions.
It would be as well if I explained that at some length. Section 2 of the 1978 Act sets out the functions. In that Act, Section 3 empowers the agency to do anything which will facilitate or assist the discharge of its functions, or is incidental to them, subject to certain limitations. One of the limitations is a ban on commercial activities. That limitation is set out in Section 3(2) of the 1978 Act.
The Bill before us this afternoon removes Section 3(2) from the 1978 Act. The prohibition on commercial activities will therefore be removed. The agency, once this Bill is enacted, will then be free, if it wishes, to engage in commercial activities, but in pursuit of discharging its overall functions. This is the fundamental point—and this is the point that the noble Lord, Lord Graham of Edmonton, asked me to underline: were there any limitations, and, if so, what were they, on the commercial activities? The limitation is that the commercial activity has to be associated with the prime functions as set down in the original Act. That is probably quite clear. It is in keeping with the Government's policy to encourage the agency to become as self-sufficient as possible.
This takes me to the point raised about additional monies—the earning ability. The noble Lord, Lord Graham, chided me a little for not being able to produce a list of suggestions as to where some of these monies might be earned. In a way it is perhaps not my function to tell the agency in which direction they should look. That is exactly the function of the agency. The noble Lord, Lord Graham, has paid tribute—and I endorse his tribute—to the honorary officers and the other officers of the CDA. The last thing they want is for Ministers to come barging round and saying, "I 998 want you to go into this, that or the other activity". It is for them to determine how those facilities which they have at their disposal, within the budget limitations, can be exploited. It is for their commercial judgment to determine how they are going to proceed.
We have talked about training, about training consultancies, about marketing and about other services. So supportive are we of the agency that my honourable friend the Secretary of State for Trade and Industry recently appointed a new board. It included the previous chairman, Mr. Ralph Woolf, and a number of colleagues, and they are joined by Mr. Fotheringham of North Eastern Farmers Limited and Professor Tony Eccles of the London Business School, and we expect that that board, bringing with it a wealth of experience both of co-operatives and of other business activities, will be able to give some further impetus to that aspect of the agency's responsibilities. Having said that, noble Lords may ask me why, if we are in so much agreement, I will not recommend to your Lordships acceptance of the amendment, which I might just as well say here and now I am not going to recommend to your Lordships. The reason is that I am advised that, from a legal viewpoint, it is regarded as undesirable to highlight one among a number of implied powers contained in a piece of legislation. The agency can carry out a number of activities such as commissioning publications, holding seminars, and so on, and perhaps one or two of the others I have just mentioned, in pursuit of its functions, and, with the deletion of Section 3(2) of the 1978 Act, this will include undertaking commercial activities.
Further to amend the 1978 Act as proposed by this amendment would make specific mention of the agency's ability to undertake commercial activity when that facility is already implicit in Section 3(1). It may well have the effect of casting doubt on the extent of the other powers contained in Section 3(1). I think noble Lords across the House would agree that we need, within the limits defined in the 1978 Act and to the extent that those limits are amended by this Bill, to leave the agency free.
Finally, the amendment before us refers to the surplus generated by commercial activities. Again there is no difference between us in substance. The agency will be free under the 1978 Act, as amended by this Bill, to use any surplus. That really takes care of the point made by the noble Lord, Lord Grimond, with regard to the profitability of undertaking these other activities. Of course they are unlikely to undertake any of these other activities unless there is a profit or suplus. They can use this surplus as they see fit, always of course in pursuit of the primary functions. Again there is no need to specify this in a further amendment.
I said at the outset that I did not think that there was really anything between us, and that it was perhaps a question of the manner in which we were reading the opportunities open to the agency under the Bill. The amendment is unnecessary. If we accepted it it would have a somewhat subversive effect of implying further limitations, in areas we have not yet identified, on the CDA's powers. With the foregoing, I would invite the noble Lord opposite to withdraw this amendment.
§ Lord Graham of Edmonton
My Lords, I am grateful to the Minister. I have often said that if the Minister says something does no harm, there is no reason why we should not accept it. I listened to what the Minister said. When I read the Official Report tomorrow I shall find that in fact he has accepted this amendment in various ways in the earlier part of what he has said. He said that that was why there was no need to write in the amendment. In effect we shall find in the Official Report that he says that all this amendment seeks to do the Bill is capable of doing.
What we are saying here is that the agency shall have the power to carry out commercial activities. That will be done by the Bill we now have. It can carry out commercial activities. We also say it shall have the power to "charge for its services". Clearly if it is commercial it is going to charge for its services. The Minister said to us earlier in his speech that any commercial activities the agency can carry on must be in accordance with the functions as outlined. There is a list of them. We have had a useful debate and when those who have great concern in these matters read the debate they will be satisfied that, although the words of the amendment are not written into the Bill, the spirit of the amendment, in the light of what the Minister has said, is perfectly capable of being carried out.
I am grateful to the Minister and I withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [Power to dissolve Agency]:
§ 4 p.m.
§ Lord Graham of Edmonton
moved Amendment No. 3.Page 3, line 1, leave out ("The Secretary of State") and insert ("If it appears to the Secretary of State that no functions, as defined by section 2, remain to be discharged by the Agency he")
The noble Lord said: My Lords, Amendment No. 3 seeks to ensure that the CDA cannot be wound up unless its functions have been fulfilled. We come to the point that I made on an earlier amendment. I accept completely that it is not in the mind of the Minister that the life of the CDA shall be fewer than six years. We can see at least six years' life ahead. We were repelled by the power that was taken in the Bill to enable the Minister or his colleagues to wind up the CDA in certain circumstances. The Minister will know that this matter was vigorously debated at all stages in another place and was raised by my noble friends Lady Nicol and Lord Oram and others when it was debated in this place.
At the Committee stage in replying to our concern the noble Lord far from assuaged our fears in this matter. I am afraid that when we read what he said that made our fears even worse. We asked him to give us some precedents upon which the form of words which have been inserted in this Bill had been inserted in other Bills—bearing in mind that we were seeking assurances that the words did not mean a great deal and the likelihood of their being used to wind up bodies was remote indeed. In order to reassure us that is not likely to happen, when it is written into the Bill the Minister listed the following in col. 573 of Hansard of 30th July: the National Water Council, Section 3 of 1000 the Water Act 1983; the National Ports Council, part III of the Transport Act; National Film Finance Corporation, Schedule 1, paragraph 8 of the National Film Finance Corporation Act; and the British Film Fund Agency.
We and others outside were expected to rest on the assurance that those were the kind of bodies into whose statutory provisions the right to wind up had been written, but which were not likely to have any effect. We do not know whether it was intentional, but the National Ports Council was wound up on 1st October, 1981. The National Water Council was wound up on 1st January, 1984. The British Film Fund Agency is to be wound up in 1985: the Government announced that in July this year. The National Film Finance Corporation is also to be wound up during 1985. If we are considering the precedents for the significance of these words the Minister must understand that we cannot have any assurance at all that what happened to those bodies is not only capable of happening but is likely to happen to the Co-operative Development Agency.
In our amendment we are asking the Minister to accept that the winding up shall only take place if it is seen that no function, as defined by Section 2 of the 1978 Act, remains undischarged by the agency. In other words, as long as there is work to be done and as long as some of the money is left which the Government have provided for the agency, then it should continue to exist. We believe that that is a reasonable way of assuring the men and women who have their livelihood at stake—I stress that. We feel that this would be a modest move by the Minister, and he has yet to make his first modest move in these matters, to satisfy people outside that we still have some powers in this House and that the Minister is capable of recognising very late in the day after the Bill has gone through another place that we are capable of coming up with improvements in the Bill. We are suggesting that this amendment will not take away the powers of the Minister to wind up and we also accept an assurance that where there is work to be done the body shall continue. I beg to move the amendment standing in my name.
§ Lord Lucas of Chilworth
My Lords, the noble Lord, Lord Graham, would credit me with being less naïve than to accept all he has carefully dressed up in the requote of what I said on earlier occasions. He knows very well that this amendment will totally prevent the Secretary of State or his appointed Minister from using any winding up power.
If one examines Section 2 of the earlier Act, that defines the functions of the agency and those functions are pretty widespread. In so far as individuals continue to get together to form co-operatives, those functions will in a sense remain to be discharged. Advice will be needed, training will need reviewing and co-operative practices will have to be studied.
The Government would not dispute that these needs might well remain but we are concerned with a potential situation—it is only potential—in which there is no purpose in continuing with the CDA. The noble Lord opposite will, no doubt, say, "Tell me one". I cannot tell him one, because I cannot see one 1001 at present. I would have to guess or produce some hypothetical situation. That might be the best way of describing why we feel it is essential to keep a winding up power in the Bill.
Perhaps one might envisage a situation where the funds authorised in this Bill—the £200,000 per annum plus a small amount—have been fully taken up, yet the agency has been unable to develop other funding from other sources to support its activities. The Government might then in certain circumstances consider it inappropriate to ask Parliament to provide yet more public money to fund the CDA. It would be unsatisfactory for the agency to continue in existence without any means of carrying out its activities. In such circumstances the Secretary of State may then want to wind up the CDA.
As I have said, this amendment prevents the Secretary of State from using those powers. The noble Lord, Lord Graham, quoted a number of the points which I made on a number of the Bills in which this winding up power had been used. I gave some precedents at that time. I explained then that provision for winding up had been included in these Acts, but the circumstances in which such powers were introduced had varied. In some cases there was a clear intention to use these powers. The Government made no secret of their intention eventually to dissolve the bodies concerned. For example, this was the case with the Transport Act 1981, which provided for the dissolution of the National Ports Council. The Water Act 1983 provided for the dissolution of the National Water Council. The noble Lord, Lord Graham, mentioned the National Film Finance Corporation, which is to be wound up at the end of next year. This is not money voted by Parliament. It is an income determined by statute but raised through the cinema-going public through the levy. When that ceases, the functions of that body cease and it will have to be wound up.
The situation with the CDA, I suggest to your Lordships, is somewhat different. The Government's intentions have been made abundantly and repeatedly clear. We are making provisions for funding to extend over six years. Nobody is disputing it. The noble Lord opposite does not dispute it. We are extending the range of activities that the CDA can undertake and we are encouraging the agency to develop a sound financial base independent of central Government support.
Surely, my Lords, these are the actions of a Government committed to supporting and strengthening the CDA role. As a result of this Bill, they get this amount of money for six years. As I have suggested on an earlier amendment, part of the board has been reappointed and new members have been appointed particularly to strengthen it to fulfil the current functions and the aims which we see this Bill as enabling them to carry out. I think that this demonstrates a commitment to the CDA. We would not do that if we had an intention in a year or so to wind up the CDA; but it is absolutely prudent that we have the ability so to do in the event of particular circumstances arising.
I can give only one (I admit, very poor) hypothetical situation that might arise where wind-up is necessary. 1002 But, in any event, the Bill now requires the Secretary of State to consult the co-operative movement before exercising the wind-up powers. That provision, as I reminded your Lordships at Committee stage, was specifically added to the Bill in another place. It was in recognition of the arguments then advanced by the Opposition. I refute the necessity for the removal of this provision. I am reluctant to accuse the noble Lord opposite of being mischievous— perhaps "naughty" might be a better word to use. He must accept our clear intention but he must also allow us to have this reserve power. I cannot see any situation in which we would want to use it but it would be a sad thing if the necessity arose and we were not able to do that.
§ Lord Graham of Edmonton
My Lords, I am grateful to the Minister for his concluding remark that he cannot see any circumstances in which this power would need to be used. Earlier in his speech he sought to give us an instance in which it might be used. It was very interesting. He asked us to suppose that the CDA, in pursuit of its functions, had spent its £200,000—that year's tranche—and had other work to do that it was unable to fund. In those circumstances—and I think the Official Record will show that the Minister said this—the view could be taken that it was unable to carry out its functions and would therefore be a candidate for being wound up. Frankly, if the CDA is doing its job so effectively that it is fully committing and using satisfactorily all of its money and is so successful that there are other projects that it would like to fund but cannot, then those cannot be grounds upon which the use of the words "to wind up" could possibly apply.
Yet, with respect to the Minister—and, of course, we can all make mistakes—I believe that that was the illustration of a situation where, he said, this power could be used. It is those kinds of phrases, careless or otherwise, that the Minister is using, that are giving grounds for concern outside this place. However, we must take them alongside the other words used by the Minister—words which I repeat—that he cannot see any circumstances over the six-year period where this power is likely to be used.
I accept what the Minister has said, that some of my earlier illustrations related to bodies where it was quite clear that the intention was that they were going to be wound up. But this Government have a record of seeking to bring to an end the life of bodies whether or not they are carrying out their functions. Other bodies are being wound up and legislation taken. We are still concerned about the ease of mind that ought to exist, particularly among the professions—and I do not just mean the professions in the CDA but the hundreds of others employed by local enterprise agencies and boards which get sustenance from the central CDA. I think that they will read the words of the Minister with even more care than they might otherwise have read them. There are other stages in this Bill at which we may very well return to this matter. I am grateful to the Minister for trying to be helpful to us. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ The Deputy Speaker (Lord Aberdare)
My Lords, I have to point out that in Amendment No. 4 the words 1003 "of the 1978 Act" should appear after the words "under Section 4".
§ 4.16 p.m.
§ Lord Graham of Edmonton
moved Amendment No. 4:Page 3, line 13, leave out ("Any sums") and insert ("The residue from any grants made under Section 4 of the 1978 Act.").
The noble Lord said: My Lords, this was noted after the initial drafting and I am grateful to the Minister and his advisers for recognising that this is a technicality which was taken on board. In the extremely remote possibility that one of the amendments might be carried, it would be even more significant than it is academic at this particular time. What we are concerned with here are the two amendments Nos. 4 and 6. Amendment No. 5 comes in between. Perhaps they might have been taken together but we understand that we are now discussing No. 4 and with it Amendment No. 6.Amendment No. 6: Page 3, line 18, at end insert (", except that funds received by the Agency other than under Section 4 of the 1978 Act, as amended, shall be used to meet the liabilities entered into with respect to those funds, and any residue from those funds shall be applied to purposes corresponding to the functions defined by section 2 of the 1978 Act, as amended.").
§ Lord Lucas of Chilworth
My Lords, as I understood it, with the agreement of the noble Lords opposite, we are taking No. 4 and No. 6 together but No. 5 is not to be moved.
§ Lord Graham of Edmonton
My Lords, it has not been moved but it will be moved separately later. We are taking Amendments Nos. 4 and 6 at this stage and then there will be a brief reference to No. 5 in order to be technically clear and correct.
The effect of Amendments Nos. 4 and 6 is to ensure that the residue from the Government's grants goes into the Consolidated Fund but that the private funds will be used only to meet corresponding liabilities. The alternative amendment (No. 6) that we have tabled lays down what should happen to the surplus from those funds. Quite properly, the Minister has drawn attention to the willingness of the Government in the event of considering a dissolution to have consultations with the co-operative movement—that is, the bank, insurance and all the other bodies. In Committee, in discussing the disposal of the funds of the CDA in the event of it being wound up, the Minister in our view did not deal adequately with the question of private funds.
At the end of the day, whatever the reason for which the Government decide they are going to use the trigger which is contained in the Bill to wind up, there will be assets. They will be primarily, perhaps, financial but could be otherwise and they will not all arise wholly as a result of Government funding. There will be other monies, not governmental monies, that in the event of dissolution would be applied by the Secretary of State to purposes corresponding to the agency's functions.
We believe that it is important to be clear about this, because our interpretaton of the wording of the Bill suggests that in the first instance these funds could be 1004 used to meet the general liabilities of the CDA if those are not adequately covered by Government funds. We believe that this interpretation will inhibit the provision of private funds. In other words, we are in the business over the next few years of having the CDA supported. Of course, the bedrock is the Government grant but we are trying to get other monies. What we are concerned about—not that we are envisaging wind—up, but we have to be practical—is what will happen to the funds in the event of a wind-up. What we are trying to do in this amendment is to have clearer wording which will provide the assurance that private funds will be used only to meet corresponding liabilities and that there is no danger whatever of any private funds being used to meet general liabilities or being paid into the Consolidated Fund.
The noble Lord the Minister said earlier that verbal assurances that this would be taken care of ought to be enough. I repeat that we are not chary of either the integrity or the intentions of the Minister; but Ministers come and Ministers go—I have heard no news, by the way—and also Governments come and Governments go: the complexion of the same Government may change. We are anxious at this stage, without burdening the parliamentary process with amendments and so on, to get this matter as right as we can.
As politicians we are prepared to accept the Minister's assurance, but as non-politicians we suggest that charitable funds, co-operative organisations and even private companies may very well, on advice from their financial advisers, feel that money given to the CDA is money well invested. We are suggesting that the Minister ought to look very closely at Amendments Nos. 4 and 6. I beg to move.
§ Lord Lucas of Chilworth
My Lords, I am again grateful to the noble Lord, Lord Graham of Edmonton, for having explained so clearly the purpose of these amendments. I am also grateful to him for agreeing to take Nos. 4 and 6 together. It appears from what he has said that the basic design is to separate the agency's funds in the event of a winding up so that the moneys obtained by the agency, other than grants from the Secretary of State, could only be used to meet liabilities entered into with respect to the moneys or for purposes corresponding with the functions of the agency. I think this is probably a point introduced here to cover that which we discussed in Committee.
I can understand the aim behind these amendments but I have to say that we really cannot accept them. The amendments assume that a simple separation can be effected in the agency's accounts between grants made by the Secretary of State and other funds received by the agency. The distinction between the two may be clear at the time they are paid into the agency's account, from whatever source, but if after a period of time it came to determining how much of the balance could be attributed to the grants made by the Secretary of State or to other resources matters could then become extremely complicated.
It is, of course, quite possible to instruct the agency to keep formal separate accounts so that the distinction could be made, but I would put it to noble Lords opposite—and the noble Lord, Lord Graham, reminded us that staffing was at the level of 15 a few 1005 months ago and is now at 12—that the detailed accounting procedures that would be necessary in those circumstances would place a very significant burden on the agency. There would have to be detailed decisions on every single item of expenditure, charges and appropriation made against different revenue sources. I think, really, that for an agency with this relatively modest grant of a quarter of a million per annum, plus any other funding which they are able to obtain, this would place an unnecessary burden upon them.
Of course, I can sympathise with the notion that funds from the private sector should be used to meet liabilities or commitments related to the receipt of those funds or, if there is no remaining liability, then the residue should be used for co-operative activities. But this does not necessarily apply to some of the other funds. Where moneys received by the agency are derived from the taxpayer—and I think noble Lords will want to know that grants by the Secretary of State may by no means be the only source of public sector support because I have mentioned at earlier stages sources which include the European Community—there is no reason why in appropriate cases such funds should not be paid into the Consolidated Fund.
Even so, I do not think that life is really that simple. Some commitments may be related to private sector contributions but may also in part be the justification for some of the Secretary of State's grant. For example, the grant might be used in part to develop and fund a course. If private sector funds were available and used to extend that course, one could easily see difficulties if there had to be a precise allocation of costs. Really, such arguments would be endless.
What worries me is the obsession which the noble Lord, Lord Graham, has, together with some of his noble friends, regarding the possibility of a winding up and with all the detail that might be involved. I cannot really underline sufficiently heavily our belief that that fear is unfounded. I will not repeat it but will just draw noble Lords' attention to the fact that twice already this afternoon I have set out the areas in which we have given support in fact to deny the thought of a winding up.
The Government, as I have said, cannot totally ignore that winding up might be necessary at some stage, but, having included general powers on winding up, it is really unnecessary to go further. To legislate in order to have a precise allocation of residual funds if the improbable event of wind-up occurred would create an administrative burden, if not a nightmare, out of all proportion to the problem which the amendment seeks to solve.
I stated during the Committee stage that as the Bill is drafted it gives the Secretary of State discretion in deciding how to apply moneys arising from a winding up of the agency and I now use this opportunity to assure your Lordships that, in exercising his discretion, the Secretary of State would have regard to the source of any residual agency funds, in so far as it may be identified, and of course to outstanding liabilities or commitments relating to received funds.
The Secretary of State would properly be expected to dispose of such funds in the most equitable manner; and in so far as any residues after meeting liabilities 1006 could be identified as deriving from non-grant or non-public sector sourcing, then the Secretary of State would undoubtedly seek to ensure that those funds were used for co-operative activities. That, I think, is really quite important. The Secretary of State, as I say, would undoubtedly seek to ensure that these private funds—the funds that are left unused that could properly be identified—were used for co-operative activities. He would want to avoid placing such residual funds in the Consolidated Fund.
There is one other point associated here, and that is that once a winding up was complete, if liabilities remained then these would have to be met by the Secretary of State out of moneys provided by Parliament, so there cannot be any question of reserves being made to meet some untoward happening. The agency have the right and the proper power to use the funds in pursuance of their functions, and there cannot be any setting aside of funds from one source or another.
I believe that the existing provisions are sufficient to meet the proper concern that prompted these amendments. I would leave them by saying that the co-operative movement really must see the underlying good faith in the Government's promise of six years' funding and of there being a small reserve in addition to the annual amounts, and indeed in the appointment of a new board and the other support that the agency is going to get.
§ Lord Howie of Troon
My Lords, I am greatly impressed by the arguments raised by the Minister, except in the early part of his speech. I am concerned not with what he said about winding-up, which is a particular matter, but with what he said earlier on when he was speaking in more general terms about the co-operation idea, which used to be a very sound idea and an idea which was spread about throughout our industrial and professional activities a good deal more widely than it now is.
What surprised me a little in the very sensible reply of the Minister was his remark early on that co-operatives might not be too precise in their financial dealings. Perhaps I misunderstood him, and I am not sure about that. My understanding about the co-operative movement, extending over very many years, is that is has been very meticulous at all times in its financial dealings and in the way in which it has dealt with the winding-up of organisations and so on. If the Minister would look back at the early part of his speech, he might think that, perhaps, he was a little less generous to the idea of co-operation than he might have been and, having considered this hinted lack of generosity, might he not look more favourably at my noble friends' amendments?
§ Lord Graham of Edmonton
My Lords, I am grateful to the Minister for taking the opportunity time after time, when we raise the spectre of winding-up, to point out that he has no intention of winding-up, except in exceptional circumstances that he cannot envisage. The more often we raise it and the more he says it, the more satisfied ought to be the people outside. But we cannot get him to say it unless we raise it, and, having raised it, he keeps on saying it. I certainly accept that the spirit of what he has said is fully understood, and I shall not pursue the matter. 1007 I accept some of the practical problems in separating completely. At the same time, I think the Minister acknowledges that those who are responsible for raising funds for the CDA are, in effect, canvassing their integrity and an assurance of the life of the CDA. People will say, "We will give you the money", "We will invest", "We will loan" or whatever it is, and will then ask the question, "In the unlikely event of winding-up, what will happen to our money?" There will have to be a fencing of words. Commitments must clearly be met and discussed.
The Minister also alluded to the need to consult the co-operative movement. I am bound to say that so far that consultation has not been very fruitful, because the co-operative movement, once removed, was consulted about whether it wanted Clause 3, which covers the right to dissolve, in the Bill at all. The co-operative movement, through its representatives in another place, and my noble friend Lady Nicol and myself, who have a strong identity with the co-operative movement, were consulted about that. We expressed our view that we did not want it, but it did not mean a great deal.
The Minister should also take on board the disparate nature of the co-operative movement. The noble Lord, Lord Taylor of Gryfe, sought, in my view gratuitously, to introduce the political nature of the co-operative movement. I have to tell him—though really I do not need to—that the co-operative movement is made up of very many independent retail co-operative societies. It is a consumer movement. Once a year in our consumer movement in Enfield, 65,000 members are asked at a meeting whether they want to be affiliated, not to the Labour Party but to the Co-operative Society. There are only four or five individual co-operative societies which are directly affiliated to the Labour Party, but these are democratically taking decisions in a disparate way.
The problem we have, which is partly our fault, is that when we talk about the co-operative movement we are unable to find one voice or one forum, so that any Government—this and the previous one—are able to say, "We are speaking to the co-operative movement". We have to get our own house in order in that way. But certainly the Minister has satisfied me as to his intentions and, in those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 5 and 6 not moved.]
Clause 4 [Designation of assisted areas]:
§ 4.36 p.m.
§ Lord Lucas of Chilworth
moved Amendment No. 7: Page 4, line 6, leave out ("Nothing in the substitution effected by this section") and insert ("This section has effect subject to any provision of the commencement order under section 7(1)(b) below with respect to any description of financial assistance dependent on the designation of areas under the said section 1 and, without prejudice to the generality of the foregoing words, nothing in the substitution effected by this section").
The noble Lord said: My Lords, Clause 4 of the Bill removes the power to designate assisted areas by reference to employment office areas. That is the main 1008 basis on which the present map is drawn. This is because travel to work areas, which are customarily used for assisted area purposes, are no longer built up of employment office areas. A consequence of this change is that the present map, which is based on employment office areas, cannot be preserved for any purposes after the appointed day, except in the cases of regional development grants, where the present map can be preserved by means of Clause 7 of the Bill for transitional purposes, and of orders under the Derelict Land Act, which are expressly preserved by Clause 4.
However, an offer of regional selective assistance under Section 7 of the Industrial Development Act 1982 must reflect the status of the area in which the project is to be carried out on the day on which the offer is made. If an application is made when the area is an intermediate area and negotiations are based on the level of assistance available in that area, but during the course of negotiations the area is downgraded, the changed status of the area would make it unlawful for the Government to proceed with an offer. Should such a situation arise, the companies concerned would surely believe that the Government had broken faith with them.
Consequently, in order to avoid industry having to negotiate in a vacuum and the uncertainty which this would cause, the Government have decided that it is desirable, for the purposes of Section 7, to preserve the existing map for a period of four months following announcement of the changes to enable offers to be made in respect of applications received prior to the announcement. This amendment enables the present map to be preserved in this way. I am sure noble Lords will agree that this is a desirable and sensible addition to the regional development grant transitional provisions which are proposed in the White Paper and which I must emphasise are not affected by this amendment. My Lords, I beg to move.
Lord Bruce of Donington
My Lords, the House will be grateful to the noble Lord for having extended the scope of this enabling part of the Bill. When I saw the amendment down in the name of the noble Lord, I thought he was going to use the occasion as an opportunity to reveal what are the Government's plans. We have repeatedly said, throughout the debates that have taken place on Part II of this Bill, that it is purely an enabling Bill and that, aside from giving an indication as to the type of criteria that will be applied by the Government in the administration of regional aid, it provides no clue whatsoever as to what are the Government's plans.
All we have been debating is an enabling Bill. Nearly three months have elapsed since the Committee stage of this Bill was concluded in your Lordships' House. One would have thought that during that time, and making all due allowance for the vacations to which even Ministers are entitled, their departments would now have produced a revised map—whether it was based upon travel to work areas, or whatever it was based upon. One would have thought that the Government would also be prepared to tell the country—because the country is interested in this matter—how much Government funding there was going to be once this change has taken place, taking 1009 into account or not taking into account, as the case may be, the aid that will be received from the European Development Fund.
We heard nothing at all. All the Government have done is present us with an enabling Bill, in respect of which any amendment in order to clarify it has been received with the cry from the Government that it is a wrecking amendment. There is nothing to wreck. At the moment, the Government have taken powers within certain limitations set out in Schedule 1 to do exactly as they please.
We shall be debating regional affairs again on the occasion of the Third Reading of this Bill, which will take place next week. Also, somewhat oddly, we shall immediately thereafter be debating a weighty and detailed report on the Regional Development Fund from your Lordships' Select Committee on this subject. Therefore, I will not detain the House more on this point, except to say that while the noble Lord or his department has been waiting to make up their minds about what they are going to tell the public about the future of regional development aid, events have not stood still. Going through all the regions and the points I was able to put to your Lordships about regional unemployment in the course of the debate last year, they have all—with only two exceptions—become worse.
Indeed, in the case of the West Midlands, matters have become significantly worse, and the West Midlands is not even an assisted area. The present position is that even on the basis of the noble Lord's new category of some 325 travel-to-work areas designated at the moment, and which are published in the Department of Employment's gazette, no fewer that 140 of these have unemployment at a level above the average. Some 46 of the travel-to-work areas have unemployment running at rates of about 17 per cent. Of those, some 20 travel-to-work regions have above 20 per cent. unemployment.
These are the continuing developments. These are factors now being experienced by people. Does not the noble Lord think that he might well have used the occasion of the moving of this amendment to give the House some information as to just what the Government propose to do? If he cannot do that this afternoon, will he give an undertaking that by the time of Third Reading we shall know more about what this wretched little enabling Bill is all about?
§ Lord Lucas of Chilworth
My Lords, if I did not know the noble Lord, Lord Bruce of Donington, better, I might easily be prevailed upon to give the undertaking for which he asks; but he does not expect me to do that and I think that his was a rhetorical question. In his opening remarks that Friday afternoon in the early summer when we had the Second Reading of this Bill, he asked me why it was necessary to have this Bill, why there was undue haste, and why the matter was being debated on a Friday. I told him that it was because this Bill provides for the detail of the new scheme to be set by order. I explained that it was necessary to get this enabling legislation through so that funding for the agency could continue. In fact, it is only because officials in my department 1010 and in the Treasury have come to some short-term accommodation that the system has been able to continue.
I explained at Second Reading that we had embarked upon enabling legislation so that we could consult on the detail and without delaying the implementation of the results of that consultation. Both Houses will have the opportunity to debate those orders. I suggest to the noble Lord that I might well be prevailed upon at that time to provide some of the answers for which he has asked me this afternoon. I beg to move the amendment.
On Question, amendment agreed to.
Schedule 1 [New regional development grants]:
§ 4.46 p.m.
§ Lord Grimond
moved Amendment No. 8: Page 8, line 2, after ("plant") insert (", Coastal Vessels operating to or from a development area,").
The noble Lord said: My Lords, I am well aware that this amendment is defective. It is probably defective in itself in that it ought to specify more clearly the type of vessel to which it applies; and it would certainly be ineffective without further amendments to the Bill. But I move this amendment partly to give the Government an opportunity to explain in public a very interesting letter which the noble Lord, Lord Lucas of Chilworth, has written to me and for which I am very grateful, and partly as a probing amendment.
At Committee stage, I put down a probing amendment to discover whether the word "plant" included vessels, and the noble Lord, Lord Lucas of Chilworth, replied:yes to the question contained in his first amendment, plant includes vessels"—[Official Report, 30/7/84; col. 599]During my short and rather inglorious career at the Bar, I learnt that if a judge agreed with you, it was a very dangerous thing to go on arguing with him. So I accepted at once the quite clear assurance from the noble Lord, Lord Lucas, that the word "plant" included vessels. Then, as I said, he was kind enough to write to me. His letter makes it clear that his explanation was quite accurate. I was a little surprised that it was accurate because none of the dictionaries I have been able to study says that plant includes vessels. I was also given to understand that for the purposes of regional grants, vessels have been held to be ineligible. But there we are—a Minister of the Crown assures me that plant does include vessels, and what is the Oxford Shorter Dictionary or indeed common sense in the light of that? As we know, like Alice in Wonderland, the Government can make words mean whatever they like.
The noble Lord, Lord Lucas of Chilworth, went on to state in his letter that while plant included vessels, it only included those vessels operating in a development area. Clearly, the only vessels which are likely to operate in a development area are barges, and it was not barges that I had in mind. What I had in mind were coastal vessels; such vessels as operate out of the smaller ports of this country. I hoped that they might be eligible for grant. Let me make it clear also that I 1011 was not referring to fishing vessels. The noble Lord was kind enough to refer to them but I know quite well that they receive grants under different Acts.
It is apparent that in practice vessels will not be eligible for grants under the Act. I would have thought there was a case for including at least smaller coastal vessels. First, some parts of Great Britain are islands and they are as dependent upon coastal vessels as other parts of the country are dependent upon lorries. I do not see why a vessel trading between Orkney and Shetland, say, should be excluded. I believe that I am right in saying that a lorry would be eligible in a development area.
Secondly, it seems to me very important to do something for our Merchant Navy. There is very great concern about the steady decline of the Merchant Navy, and here is a small opportunity, perhaps very small, for giving it some assistance. Thirdly, in many parts of the country it is important to encourage trade with the smaller ports. Again, in development areas this is a matter of some importance. They give some employment and I should have thought there is a case for including them in the Bill. Therefore, I still maintain that plant should include vessels in an effective way and that not only barges but also small seagoing vessels should be included.
However, if the Government reject that, which I should regret, I hope that the Minister will now repeat what he wrote in his letter to me because, unwittingly perhaps, I may have given the impression to several people that, according to his statement in Committee, grants would, in fact, be available for vessels, and I am anxious not to mislead people who might have been induced by remarks of mine to think that vessels came within the scope of the Bill. I beg to move.
§ Lord Lucas of Chilworth
My Lords, I am most grateful to the noble Lord, Lord Grimond, for his introduction of the amendment. Certainly I made it clear in Committee that the term "plant" includes vessels. Therefore, any vessels, including coastal vessels, can be eligible for grant if the other requirements of the scheme can be satisfied. That, perhaps, is the stumbling block. It is the other requirements which will determine whether or not a grant is payable.
The Bill is aimed at promoting economic activity in the development areas and for this reason new Section 3 of Schedule 1 requires that assets or jobs to be provided by a project must be situated, used or carried out in development areas. Development areas are, as I said earlier, designated mainly by reference to travel-to-work areas which themselves will comprise the local authority wards. These wards, which will form the basis of the assisted area map do not, except in exceptional circumstances, extend beyond the low-water mark. Therefore, since coastal vessels cannot be situated or used in the development areas, they may well not qualify on that ground.
Secondly, for the amendment to be effective—and the noble Lord, Lord Grimond, has implied that he accepts there is an element of non-effectiveness in it—in practice it would be necessary to make the transportation of goods ("haulage" is the loose term) whether by barge, air, lorry or rail, a qualifying activity 1012 under the new scheme. The noble Lord will know—and perhaps I may remind noble Lords—that haulage does not at present qualify for regional development grant.
As to the future, since to qualify under the new scheme the activity will need to meet the criteria laid down in paragraph 32 of the White Paper, in particular to have a genuine choice of location, it is unlikely, as I see it at this time, that it will qualify. For example, the location of a lorry firm or haulage company is dictated primarily by the source of the product they are hauling, and not vice versa. One would not normally build a factory at "X" because there was a haulage company there, but one might very well locate a haulage company because there was a factory on a site which may be in a development area.
Thirdly, the amendment says "to or from", and that is a little wide. I do not think anyone would think that automatic regional aid should be available merely because a vessel operates to or from a development area.
I sympathise with the noble Lord, Lord Grimond. He made the amendment a platform on which to make an appeal for the coastal vessel industry, in which I know he has a genuine interest. I have no quarrel with him for doing that. Perhaps I may say to the noble Lord that the activities to which he has drawn our attention are already eligible for regional support under Section 7 of the 1982 Act. Grants are available from the European Community towards the construction and modernisation of fishing vessels. Also, my department will provide assistance by way of loan guarantee for the construction or the alteration of other, and different types of, coastal vessels.
Finally, the noble Lord might like to know that my right honourable friend the Secretary of State for Transport is currently considering whether to extend the freight facilities grant scheme to include freight transported by ship between ports in the United Kingdom.
Having stated the real difficulties that I foresee and the other assistance which is available in the area with which this amendment concerns itself, I invite the noble Lord to withdraw it. However, before I sit down, perhaps I may say that I think that in my remarks I have satisfied the noble Lord in his request that I repeat what I wrote in my letter of 12th September. I think that in substance I have done so, but if he feels I have not I am sure he will tell me and I shall repeat the appropriate paragraph from the letter for the record.
§ Lord Grimond
My Lords, I am most grateful to the noble Lord, Lord Lucas of Chilworth. He has indeed repeated what he wrote in his letter to me. I am sorry that the Government do not feel able to extend this Bill. I recognise there would be some extension.
I am again grateful for what he has said about the possibility of aid to shipping in other ways. However, may I say to your Lordships that the plight of merchant shipping in Britain is extremely serious. This may not be the Bill in which to deal with the situation, but it will have to be dealt with sooner or later, and I regret that some small advance cannot be made now. 1013 In view of what the noble Lord, Lord Lucas, has said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ Lord Lucas of Chilworth
moved Amendment No. 9: Page 9, leave out line 21 and insert ("the date when expenditure was first defrayed on the provision of any asset comprised in the project;").
The noble Lord said: My Lords, for your Lordships' convenience and with your Lordships' permission, perhaps I may deal with Amendments Nos. 9 and 10 together.Amendment No. 10: Page 9, line 25 leave out from ("earlier") to end of line 26 and insert ("the date when expenditure was first defrayed on the provision of any asset comprised in the project.")
Both amendments are designed to clarify the references in new Section 3 dealing with defrayed expenditure. New Section 3(3) in Schedule 1 to the Bill is concerned with the qualifying date of a project; that is, the date on which the project has to satisfy the conditions of eligibility for grant. This date is important in that the rates of grant and the assisted area map in force on the qualifying date will be those which apply to the project for its duration, irrespective of any subsequent changes in rates of grant or the map. The only exception to this is where the qualifying date falls in the period which an order changing the scheme or the map has been published but not yet come into force. The effect is that, in contrast to the present scheme, companies will be able to rely on continued regional development grant availability throughout the life-time of an approved project.
The aim in drafting the Bill was to make the qualifying date either the earliest ascertainable date when action was taken under the project or, if earlier, the date of receipt of the application for approval in respect of it. Our experience is that the earliest ascertainable date is the date when the first asset is provided or the date when expenditure is first defrayed, and RDG is payable under the present scheme either when an asset is provided or the money is spent. In Section 3(3) of Schedule 1 the Bill refers to the defrayal, or, as I prefer to call it, the spending of monies on the first asset, but it is not necessarily the case that the first asset provided will be the one on which money was first spent. In cases where buildings or equipment have a long lead-time, and a deposit is paid at the time of the order, money will be defrayed long before the asset is provided, and some other asset may be the first actually provided. These amendments seek to rectify this defect in the Bill, so that in the context of the definition of the qualifying date the first defrayal of expenditure is related to any asset provided, and not just the first. I beg to move Amendment No. 9.
Lord Bruce of Donington
My Lords, we on this side of the House are pleased to support the amendments in clarification that have been put forward by the noble Lord. In the course of his explanation of the clause, he mentioned yet again the map. I wonder whether I may once again prevail on him to say just when we are to see the map or the proposed map. That will enable some flesh to be put on the quivering skeleton of this Bill.
§ Lord Lucas of Chilworth
My Lords, I cannot resist the temptation to respond to such a simple question. I hope that the noble Lord will not press me too far when I say that the answer is, later this year.
On Question, amendment agreed to.
§ Lord Lucas of Chilworth
moved Amendment No. 10:
The noble Lord said: My Lords, I beg to move.
On Question, amendment agreed to.
§ Lord Lucas of Chilworth
moved Amendment No. 11: Page 9, line 44, leave out ("affected by it") and insert ("or in any part of Northern Ireland")
The noble Lord said: My Lords, during our discussions on Second Reading of this Bill I made it clear that one of the principal objectives was to reduce significantly the amount of grant payable in respect of projects which did little more than shuffle jobs from one part of the country to another—particularly those projects which shed labour in one place and created fewer jobs somewhere else. For this reason new paragraph 3(5) in Schedule 1 to the Bill enables the Secretary of State to make allowance for the employment effects of a project on employment in other assisted areas.
Noble Lords will be aware that this Bill does not extend to Northern Ireland, where separate legislation applies. However, it is possible that a project may relocate from Northern Ireland with adverse employment consequences for that Province. As the Bill is presently drafted, no allowance can be made for these adverse consequences. Such a project, if approved, would have to be treated more advantageously than relocation projects from assisted areas in Great Britain. Clearly this is anomalous and the purpose of this amendment is to remove that anomaly. I beg to move.
On Question, amendment agreed to.