§ Mr. SHERWELL
asked the President of the Board of Trade (1) if he is now in a position to furnish the House with the details of the modified scheme for the production of dye wares in this country; and whether, before the scheme is finally approved by the Government or public financial obligations are incurred, an opportunity will be given to the House to consider the proposals; (2) if, in connection 263W with the proposed scheme for the production of dye wares, any businesses, buildings, or plant have been already acquired or any guarantee of purchase given; (3) if he can say by whom the expenditure of the proposed grant of public money for purposes of research in connection with the production of dye wares in this country will be determined and controlled; and (4) if the directors proposed to be appointed by the Government to represent their interests on the board of the proposed dye ware company are to have co-equal or restricted powers?
The original scheme for the development of the dye-making industry in this country on a large scale, which was framed by a representative committee of users of dyes in consultation with the Board of Trade, has now been modified, as it appeared that, owing to difficulties arising in connection with some details of the proposal, it was improbable that the amount of capital contemplated would be raised. The new scheme, which has the approval of the enlarged committee of users, provides for an original share capital of £2,000,000, of which, in the first instance. £1,000,000 would be issued. The amount of capital to be subscribed at the outset is thus smaller than in the earlier scheme, but power is taken to extend the operations of the company as occasion may justify. The Government is prepared to advance £1 for every £1 of share capital raised, up to a maximum of £1,000,000; should it subsequently be found necessary, the Government will further contribute £1 (up to a maximum sum of £500,000) for every £4 further share capital subscribed.
The effect of this arrangement will be that, if full advantage be taken of the Government offer, the company will ultimately have a share capital of £3,000,000 and a loan capital of £1,500,000, as in the original scheme. In the meantime, however, the new financial arrangements will, it is believed, be more manageable, and make subscription by those interested much easier. The Government advance will bear interest at the rate of 4 per cent., and be repayable within twenty-five years. But whereas, under the original scheme, the interest on the advance and the requisite sinking fund for repayment were to be cumulative, though payable only out of net profits, under the new arrangement the payment of interest will be non-cumulative for the first five years, and there will be no compulsory 264W sinking fund. On the other hand, the interest on the Ordinary shares will be limited to 6 per cent. per annum, so long as any part of the Government's advance is outstanding. Further, with a view to the promotion of research, the Government have undertaken to make a grant to the company during a period of ten years of a sum not exceeding in the aggregate £100,000, to be devoted exclusively to experimental and laboratory work. The company will be required to show to the satisfaction of the Treasury that the amounts granted from time to time have been expended solely for the prescribed purposes. This is a new feature of the scheme.
The agreement proposed to be made between consumers of dyes and the company has been modified in some respects, and will, it is believed, be more acceptable to consumers than that originally proposed. An option has already been obtained for the acquisition by the company, when formed, of important dye-making works, and negotiations for other options of the kind are in progress, and there is reason to believe that satisfactory arrangements can be made with important producers in Switzerland. The new company will be able immediately on its formation to take advantage of these arrangements, should the directors think it expedient to do so, and to take such other steps as may be thought expedient to develop the supply of dyes, both by the enlargement of the plants of the undertakings acquired and in any other ways. The scheme, like the original scheme, provides for the nomination by the Government, so long as any part of the Government advance is outstanding, of two directors who will have the ordinary powers of directors and also certain special powers to prevent undue preference or encroachment on the business of undertakings not concerned with the making of dyes and colours, but there is not, nor has there ever been, any intention to utilise these powers so as to hamper the business management of the company in such matters as the working-up of byproducts or the giving of priority in supply to shareholders in the company. I share in the belief of the Committee that the new scheme, and the subsidiary arrangements which I have mentioned, will provide both for the immediate and effective utilisation of existing sources of supply and for their expansion with as much rapidity as is compatible with sound 265W development. My hon. Friend will recollect that we have already discussed the question of Government assistance to a national dye-manufacturing undertaking. If my hon. Friend is desirous of raising any fresh point on the revised scheme perhaps he will confer with me.