Skip to main content

Development Areas (Financial Assistance)

Volume 497: debated on Wednesday 19 March 1952

The text on this page has been created from Hansard archive content, it may contain typographical errors.

6.52 p.m.

I imagine that it will fall to a Treasury Minister to handle this matter, and perhaps one of the Financial Secretary's hon. Friends will make a note of the few questions which I shall put to him before we pass from this Supplementary Estimate. We have heard a good deal in the last week or so about deflation and inflation, but we have spent very little time in considering the basic structure of the troubles which beset our industry, of which the pre-eminent prewar manifestation was to be found in the Development Areas.

It is quite true that the situation has changed and that now very many parts of the Development Areas can be said to be back to normal, but since it is unlikely that one could deal with a deep-seated and long-standing economic trouble even in the passage of the time since the end of the war, it still remains true that the Development Areas, or parts of them at any rate, constitute a potential weakness and, in time of adversity, are likely to be the first affected.

I think the Committee will agree that what has been done in this field is good. Under the Distribution of Industry Act, 1945, upwards of £40 million has been spent and my guess is that something over 100,000 jobs have been found. The provision in the Act by which loans can be made is, I am sure, of great help in that connection. In order to form a proper judgment of the Supplementary Estimate, it is desirable that we should know what are the total commitments at present under Section 4 of the Distribution of Industry Act, 1945—by which I mean the agreements which have been entered into and the approvals which have been given.

Secondly, I think we need to know the amount of the actual advance up to date under Section 4 of the Act. Thirdly, I think it is desirable that we should know what amounts have been written off up to date. In respect of the Supplementary Estimate it is, again, difficult to form a proper judgment about what has been done under Section 4 of the Distribution of Industry Act, 1945, or what is proposed to be done, unless we can also be told what has been done under Section 3 of the Distribution of Industry Act, 1950. I appreciate that we cannot debate that today and I am merely asking for the information in order that we may form a proper judgment of the situation as a whole.

In respect of the Supplementary Estimate itself, I think the Committee would like to know to whom this total sum of £1 million will go, how many firms are concerned—I am not asking for their names—where they are located and what kind of industries have been helped. I think the Committee ought to be given this information in order that we might see how Section 4 is being operated.

There is another matter on which I am sure the Financial Secretary will be able to enlighten us. I should like to know what is the current rate of interest on these loans and the extent to which there have been changes in the interest rates in recent months. In the nature of things, it often means that firms which are attracted to the Development Areas are marginal firms, and changes of interest rates obviously are of great importance when we are trying to attract people into the Development Areas. I should like to know from the Financial Secretary, therefore, what interest rates are being charged and what changes have taken place in these interest rates since the new mone- tary policy was introduced by the Government.

Will the Financial Secretary also tell us whether the revised Estimate of £1 million, with the additional sum of £250,000—and I am talking about the item under "Loans"—represents a ceiling which has been fixed or whether it represents the total need which has been shown? Putting it differently, could we be told what applications have been turned down?

I think hon. Members on this side of the Committee would regard it as most important, no less important now than in times past, that there should be no slackening in the helping of firms in Development Areas. As I have said, the Development Areas constitute, even now, a potential source of economic weakness, and it would be a thousand pities if there were any diminution in the help which is being given to firms which are steered in the direction of Development Areas.

I should be grateful therefore, as I am sure would be the Committee, if the Financial Secretary would give us this extra information, about the operation of Section 4 of the 1945 Act in general and, in particular, the details which I have asked in respect of the Supplementary Estimate itself, not forgetting, I hope, the question of interest rates.

6.58 p.m.

I am sure that the Committee welcomes this Vote. I should not like us to leave this Vote without first having paid tribute to the Development Areas Treasury Advisory Committee. From personal experience, I know that they have done excellent work. The members of that committee have gone to great trouble and have shown great wisdom in assisting the Treasury in this work. It is a very good example of the possibility of bringing together prominent individuals working in a voluntary capacity and those in public service. I think its example might be followed in other matters.

Turning to Section 4 of the Distribution of Industry Act, I notice that we are apparently dealing only with loans. I put it to the Financial Secretary that grants can also be made. I do not know of any case in which a grant has been made, and I should like to know whether it is now the accepted policy that Section 4 is to be used only for the purpose of making loans. I would also like to know whether the Nuffield Trust still acts in an advisory capacity and whether advantage is taken of the services of that Trust.

Generally, I welcome the opportunity of this debate, but I think that something should be done to provide more publicity and advice about the work of D.A.T.A.C. in administering these loans. I think it inevitable that a firm seeking a loan should first go to the financial institutions and then the financial corporations and finally to D.A.T.A.C. I do not know what the Financial Secretary will say about interest rates and other arrangements. There may be, I hope there is, additional inducement for going through this procedure. But it is sometimes rather difficult for the applicants and it may save a good deal of time if they know the sort of rules of thumb which are applied.

I realise that this is a difficult matter and that one has to pay particular attention to individual circumstances and particular cases. But it might possibly save a good deal of administrative waste if it was made clear that frivolous applications would not be entertained. It might be of value if some guidance was provided for applicants seeking loans.

Another general point which I would make in support of my hon. Friend the Member for Brighouse and Spenborough (Mr. J. Edwards) is that it is clear—indeed, it is part of the purpose of making these loans—that the firm should be given the benefit of the doubt. It is quite clear that loans are given in circumstances where a financial institution responsible to its shareholders would not feel justified in making an advance. It is in those circumstances, under Section 4 of the Act, that an advance is made. I join my hon. Friend in inquiring how real this risk has proved itself to be; how many failures there have been? I am not raising this in a critical sense, but it does reflect on how advantageous this scheme has proved itself.

I also invite the Financial Secretary to say something about the manner in which control and guidance is exercised after the loan is made. I mentioned D.A.T.A.C. as being something which might prove a useful example in other respects. It may be that the wisdom shown in the administration of these loans, ensuring, in other words, that the loan is used to the best advantage, may prove useful in other ways.

Finally, on the Development Area policy generally, I feel that these loans have served a most useful purpose. I do not wish to appear too pessimistic, but there are signs, as my hon. Friend has said, that in particular parts of the Development Areas there is quite substantial redundancy. This, I know, is largely a matter for the Board of Trade, but I hope that the Financial Secretary can assure us that in pursuing the Development Area policy much more regard is now paid to the different needs of the different parts of the Development Areas and also that in making available these loans particular attention is paid to that.

7.5 p.m.

I would emphasise what has been said by my hon. Friend for Sunderland, North (Mr. F. Willey) about the excellent work done hitherto by the members of D.A.T.A.C. I note that under the Vote we are discussing the expenses of administration have increased by £3,000. I take it that that is due in the main to the extra burden of work which has fallen on this voluntary body and to the increasing scope of their activities. It would be well if the hon. Gentleman could give the names of the present members of this body. I think the public should know the valuable public-spirited work these people are doing in a quite voluntary capacity.

As regards the increase from £750,000 to £1 million in respect of loans to industrial undertakings, every one of us welcomes the fact that that has been made possible. We are all conscious that at the present stage there may be a change of climate in the Development Areas. We seem to have reached the position where firms in the Development Areas have increasingly to struggle in order to maintain their existence.

Many of the firms which came to our help when the first call went out for firms to come into the Development Areas may be in considerable difficulty. It may be that these are the very firms which in the past, or during this year, have received a loan from D.A.T.A.C. on the understanding, as the Treasury note goes, that there are good prospects of them ultimately being able to carry on successfully without further assistance.

I should like to know if any firms which came into the Development Areas a number of years ago are included in this figure—whether they have had to make, as it were, a second call on Treasury resources. I ask this particularly because recently a firm on a trading estate in my constituency was closed and the vacant premises are now being considered for re-allocation. It was a consumer firm, not engaged on armaments, and not particularly engaged on exports either to dollar or non-dollar areas.

When these firms first came we were anxious to get any kind of firm which would provide employment. It was later that restrictions came into force in that respect. But it is these very firms engaged in consumer goods industries which are in need of assistance, and I would seek some assurance from the hon. Gentleman that in the increase of the figure by £250,000 some regard has been paid to the consumer goods industries. I am really asking whether he can confirm that the work of D.A.T.A.C. has not been entirely restricted by the original terms of reference, which confined it mainly to dollar earners and dollar savers or firms engaged on re-armament work.

It would seem to me that now, with a growing unemployment problem in the Development Areas and the possibility of redundant factory space, this committee should be freed to some extent to give their consideration to the type of firm about which I have been speaking. It has already been emphasised that we should know exactly how many enterprises are covered by this £1 million and, what is more important, to be told, if possible, how many have applied—either existing firms in Development Areas or firms who wish to come to Development Areas—how many have been refused; and how many have actually been turned away from Development Areas and prevented from expanding at all.

The major point we must consider now is the changed circumstances arising from the greater difficulty of industrial firms in obtaining credit through the normal channels. In the terms of reference of the committee it is clearly stated that undertakings can be assisted only if they are unable to obtain capital on reasonable terms commercially. We immediately disagree on what are reasonable terms.

It may be that the hon. Gentleman considers 4 per cent. reasonable. Some of us would think that unreasonable. Last December when the rate was not 4 per cent. but, I think, 2½ per cent. I asked whether that policy had resulted in there being a restriction upon Development Area firms and whether there had been any kind of decrease in the number of loans it had been possible to make. The answer I got then was that so far no significant change had been noticeable.

A few months have passed in which it has been possible to go into this question. Is it becoming more apparent now that firms in Development Areas are finding it more and more difficult to get loans or credit to carry on their activities? Are they coming to the notice of D.A.T.A.C. and, because of the committee's restricted terms of reference, are they being refused by them? It would be a sorry state of affairs, when we are facing difficulties about employment, when we want all the work we can get in the Development Areas to prevent them from slipping back into the condition they were in the past, if certain consumer goods firms were forced out owing to temporary difficulties about capital.

I ask the Minister, if necessary, to give some instruction to this Committee that they should not be quite so strict about the terms and standards which they apply to firms seeking help from the Treasury. At the same time as they are giving consideration to firms already existing in Development Areas, will they still go ahead with a policy of trying to induce more firms to come in, especially firms which employ men and which will engage in heavy industrial or engineering projects of one kind or another?

It is a sad fact that when there is a danger of a recession throughout the whole of our economy, it is precisely these light and more diversified consumer industries which are the first to suffer. It would be unwise if the Development Areas had to suffer the brunt of that when, by a wise application of policy, we could get a more stable state of affairs, with factories employing more men in these areas.

I conclude by expressing appreciation of the work which has been done. If the Minister still feels that this £1 million is not enough to satisfy all the demands, I hope that he will not hesitate to ask for a further increase.

7.12 p.m.

The hon. Member for Sunderland, North (Mr. F. Willey) made a tentative reference to the possibility that some of the applications made for assistance under these provisions might be frivolous. I am not in a position to discuss the merits of such a situation as that, but I claim to be in a position to discuss the merits of a different propositon which is a matter of deep concern in my constituency in the heart of industrial Lancashire.

In this part of Lancashire there is a local authority, namely, Westhoughton, which has been scheduled as a Development Area since 1946, for reasons which appeared to the authorities at that time to be good and sufficient. At no time during the interval of six years has any new industry whatever been introduced into the area. I have taken some trouble to pursue this question and to make the inquiries which are open to any Member of Parliament. I have received the most courteous attention from hon. Gentlemen opposite who have discussed the matter with me.

I understand that when this certificate was granted to Westhoughton, six years ago, it was because of the disastrous industrial background of this area and its uncertain outlook for the future. There are in this division no fewer than 19 coal mines all of which were closed down between the wars due to flooding. There is a displaced population of miners, possessing all the native skill that one expects from such a community, who have had to travel long distances to find similar work elsewhere or who have been driven out of the industry because it has ceased to operate in the locality.

The disastrous history of unemployment in this part of Lancashire has presented one of the most terrible pictures of privation and suffering in any part of the British Isles. In one small township within the boundaries of my constituency—

I am wondering when the hon. Member intends to link this up with the provisions in these Estimates.

May I put it in this way? I raise this matter from the point of view that this sum of money has no doubt been well spent on worthy districts elsewhere, but I say that my constituency has a claim to a share. I say without apology that not only do I regard the conduct of hon. and right hon. Gentlemen opposite as less satisfactory than I would wish, but—and perhaps if I say it now it will avoid argument later—I do not excuse the previous Administration from some responsibility.

This district is now a Development Area without any actual development taking place; and in one part unemployment rose to as high as 90 per cent. in the bad years with which hon. Members are familiar. In Westhoughton itself there is no industry, apart from four cotton mills. It is all very well to say that the workers can travel elsewhere to find work but, as soon as cotton falls on evil days and a recession occurs—as, I am unhappy to say, is now the case—then the district can lie prostrate. Emergency measures will have to be taken if conditions get worse.

I do not want to exaggerate, but the Lancashire and Cheshire Development Associations, whose meetings I have been privileged to attend on a number of occasions, long ago agreed that there is no satisfactory diversification of industry in this part of Lancashire. The Ministry know that. They have considered the problem from time to time without being able to take any practical action.

In this district facilities are available in the shape of adequate land and suitable sites for industry. There are two railways with two railway stations. The main road to Scotland—

I do not think that the hon. Member can go into the details of this argument. He can make the point that his constituency is not getting a fair share of the fund, but I do not think that he can go into the general question of employment.

I will try to keep in order, Mr. Hopkin Morris.

After the district was scheduled as a Development Area, the local authority went to considerable expense to make those preparatory arrangements which any prudent authority would make if it anticipated industrial development on any large scale. It expended large sums of public money raised from the rates on new sewerage schemes, new water storage and on a new road to a site which had been promised for a pilot factory. That road ends in a field. Nothing further has been done about it.

The local authority pursued a vigorous housing policy in anticipation of this development but, from a practical point of view, all these efforts proved fruitless.

The hon. Member is not taking notice of what I have said. I have already pointed out that I do not think that he can go into the detailed argument. He has made the point that his constituency is not getting a fair share from the fund. He is not entitled to go into the whole question of employment in his division.

Very well; I will try to keep in order this time.

I do not feel very tolerant about this. I have not been in this House for many months, but I have already learned a good many things. One of the strangest things I have learned in the last few days is that the control of the Development Areas is in the keeping of the Secretary of State for Overseas Trade, which surprises me very considerably. I am not saying that in any critical sense, but seems to be a very peculiar facet of the administration of government.

I want to mention one or two of the economic consequences of the failure to develop the Westhoughton district.

That is a point which I have already told the hon. Gentleman he cannot develop on this Vote.

I do not wish to be unfair about this, and I commend the good work that has already been done in developing industries in other parts of the country which badly needed new industries, and I am making my protest tonight, I hope temperately and fairly, because my own district has had the label of Development Area put upon it but has not had any of the goods delivered which we were entitled to expect. [Interruption.] I do not know whether the hon. Gentleman wishes to help me with that argument, but if he wishes to intervene I will give way to him.

The cotton industry is now established in my district on a small scale, and I think this will be in order. [Laughter.] Well, it is almost impossible to link this up directly with this particular question. Here am I pleading tonight for the introduction of some industries to develop the Westhoughton district, and, at the same time, I understand that, at a high level in the cotton industry, there is a very widely held opinion that it is not desirable to bring other industries into competition with the cotton industry for the available labour supply, which is needed by the cotton industry when cotton is booming. In that case, I think it is a matter for inquiry by the responsible Minister, because this is something which is entirely opposed to the economic interests not only of Westhoughton, but of the country as a whole.

I want to say a few words about the failure, by the Government machine, regardless of its political complexion, to carry out, in the sense in which they were intended to be carried out by this House, the provisions of the Distribution of Industry Act, 1945. In spite of everything that was said by authorities competent to speak on these matters at the time, it is true that great cities like London, Manchester and Birmingham continue to grow like great octopi without apparent restraint.

The hon. Gentleman cannot discuss that question on this Supplementary Estimate.

The final point which I would like to make, if I am permitted to make it, is that of linking up this question of the introduction of badly needed new industries in all these areas with a wider question, which is a matter for the Government to consider at the appropriate time. The wider question is the chronic state of overcrowding in great cities like Salford, which is some miles from Westhoughton, and from which 20,000 people are expecting to be removed to Westhoughton. I say that it is no use bringing people to industrial deserts unless we take the work there for them to do, and make it possible for them to earn their living when they are transferred to these areas.

7.25 p.m.

I think we all sympathise with my hon. Friend the Member for Westhoughton (Mr. T. Price), who has managed, after all, to develop a very comprehensive argument about the whole question of Development Areas in general. I think we all sympathise with him, because we all have very many of these problems in our own constituencies, and because we well understand my hon. Friend's anxiety that they should be voiced.

I think we all welcome the introduction of this Supplementary Estimate as a sign of the desire of the Government to carry on the work that was developed during the past six years, and perhaps our only anxiety tonight is whether the sum provided is really adequate to meet the demands which are made upon it.

I do not know whether the hon. Gentleman is going to suggest an increase, but, if so, that would be out of order.

I shall be very careful to insist that, while I regard this particular Estimate as low, I am not making any proposals to the Committee that it should be increased

I want to ask a certain number of questions, and hope to receive some information, about the application of the money—£250,000—provided for in this Estimate for the particular area with which I am chiefly concerned—the northeastern area of England. I am particularly interested to find out to what extent these grants are made available to industries that are going into Development Areas, but not necessarily on to the trading estates themselves.

I have in mind, for example, certain sites on both sides of the River Tyne that are at the moment undeveloped, and for which there are claimants, if suitable loans could be made available, and I would hope that cases of that kind, both in my own division in Newcastle and on the other side of the river in Gateshead, could be dealt with within these figures provided in the Estimate.

I am not clear whether that would be ruled out because they are not proposing to develop within the trading estates themselves, and therefore, would not come within the particular field of the North-Eastern Trading Estates Company, which has done such valuable work with the use of funds provided in these Estimates.

I should also like to know, concerning the firms referred to in the last Report of the North-Eastern Trading Estates Ccmpany—certain firms in process of development on trading estates, and also certain firms making inquiries for factory space—whether, in the view of the Financial Secretary to the Treasury, this particular Estimate will enable these schemes to go forward. There is a great deal of anxiety in the North-East on whether there is to be a further damping down of new development work and of the introduction of new firms into that area.

I would emphasise the comments made by at least two of my hon. Friends, and would say that certainly we in the northeast—and I am sure that this applies to other Development Areas—do not feel very safe with the industrial provision which exists at the present time. There is a heavy concentration of heavy armaments work, and we are anxious lest, if that work is fairly quickly completed and we have to reduce that heavy concentration of armaments work, it will be possible to get the benefit of the more diversified industry which is being provided on these trading estates, and that there should not be any holding back of that work because of the very real doubts which we all have in our minds concerning the future prospects of some of the major heavy industries in that area.

I would also slightly expand the point raised by my hon. Friend the Member for Brighouse and Spenborough (Mr. J. Edwards), who asked the Financial Secretary whether he could give any information about the rates of interest on loans. I gather that the higher rates of interest which are now charged have had the effect of turning away a number of firms who previously had intended to develop.

I should like to know from the Financial Secretary whether he has any information on these lines. I hope he will recognise that there is very strong feeling in the north-east that we cannot rely on the armaments trade which is being provided at the present time for the future balanced development of this area. I hope that we shall get an undertaking from the hon. Gentleman tonight that there will be no diminution of encouragement to firms coming into these areas to try to ensure their future stable development.

7.31 p.m.

I want to emphasise the point just made by my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop). We are living in very acute financial times, but I hope that the Board of Trade will always see that they get from the Treasury all the money necessary to carry on the good work done in the Development Areas since 1945. If the Board of Trade are anxious that that work, for which they are largely responsible, should bear full fruit, then it is necessary for the new Government to do what the late Government did as far as the distribution of raw materials in short supply is concerned.

It is of little purpose to erect factories unless the raw materials are available. The late Government always saw that firms in Development Areas received a special allocation of any materials in short supply. That was necessary because many of the firms in those areas are what one may term subsidiaries of parent companies in another part of the country. If they do not get special preference in the supply of raw materials for being in those areas, then there is the danger that in times like the present some of them will close down and will transfer any available material to the parent company outside the Development Area.

That would be catastrophic because it would mean that the pre-war fears, anxieties and experiences of those who have to work and live in the areas would return. I hope, therefore, that besides seeing that this development work continues, the Board of Trade will take the necessary action to ensure that the raw materials are made available to manufacturers in these areas.

I want to raise the question of a factory which was to be built in Jarrow. I put down a Question to the Treasury on this matter, but as it comes under the Board of Trade I would like to raise it today. Due to the fact that unemployment in Jarrow has remained heavier than in any other part of the country, despite the good work done by the late Government in this respect, we have never had less than 4 per cent. unemployed. Some 12 or 15 months ago the Board of Trade promised that a further factory should be erected in my division, but I am afraid that the claims of re-armament have stepped in and that we are not now to get that factory.

However, I should like to be able to assure my constituents that as and when the opportunity presents itself for a relaxation in re-armament the firm undertaking given to me by the Labour Government will be honoured by the present Administration, and that facilities will be provided for that factory to be erected.

I believe that of all the work that has been done for the industrial benefit of the country during the last six years none has been more important than that carried out in the Development Areas. Therefore, I hope that the new Administration will maintain the same lively interest in these areas as that shown by the late Government.

I believe that is essential for good industrial relations, because unless the people in these areas really believe that they will never return to the bad old days, any misgivings they may have on that score will not be confined to their particular areas but will spread throughout the country. Having regard to the need at the present time to maintain the maximum production of our industries, this matter deserves the Government's constant and sympathetic attention.

7.36 p.m.

The point raised by the hon. Member for Jarrow (Mr. Fernyhough) is precisely the point I wish to put to the Committee. I, too, hope that the work that has gone on during the last six years in the Development Areas will be sustained and encouraged by the new Administration. It is not quite right to imagine that this work of special area development only began in some period since 1945, although it is certainly true that what has been done since then has been good and ought to be maintained and encouraged.

I think the hon. Gentleman opposite will agree that what we are discussing today is what happened since 1945, because we are discussing Section 4 of the 1945 Act.

It is exactly to that point that I want to draw the attention of my hon. Friend who will reply to this debate.

Today, these areas cover a very high proportion of the total industrial area of the country, and a sum of this kind, which, I fear, I cannot propose should be increased, may not be sufficient to fulfil the demands made upon it. That being so, I hope my hon. Friend will not have the slightest hesitation in asking for a further Supplementary Estimate of even larger proportions if that proves necessary.

These funds are made available to industries which find difficulty in raising their finances in other ways. That brings me to a point which is of great difficulty to certain small firms of the type which are or may be attracted to these areas. I want the Minister constantly to satisfy himself that the conditions attaching to such loans, while necessarily stringent, are not so severe as to discourage industry from approaching the Treasury for funds when they feel able to use them for development and for the provision of further employment in these areas.

If my hon. Friend is satisfied that the conditions are sufficiently attractive to the small industries to enable them to take advantage of them, then I am sure that this Committee will support both this Supplementary Estimate and any others for which it is thought necessary to ask.

7.40 p.m.

I think I am right in saying that no hon. Member of this Committee has any objection at all to this Supplementary Estimate, and that most of us, at least on this side, wish that it was even bigger.

I rise, however, to seek information which I hope the Financial Secretary, who presumably will reply, or his colleague the Secretary for Overseas Trade, will be able to give us. The Supplementary Estimate covers the sum of £250,000 which has been loaned to industrial undertakings. 1 should very much value information as to how much of that £250,000 applies to the Birkenhead side of the Merseyside Development Area.

Comment has been made, quite rightly, on the good work done generally in the Development Areas. I am sure we are all agreed about that; and those of us who are connected with Merseyside particularly know only too well that one of the best acts of the last Government was their application to Merseyside of the benefits of the Development Areas plan.

Can the Financial Secretary also intimate to the Committee if there is any change at all in Government policy on Development Areas'? I was very glad to hear the hon. Member for Walton (Mr. K. Thompson) urging that the Government should not only continue this kind of work, which has been done so well, but should even increase it. I am sure that all my hon. Friends will endorse that plea.

Because of happenings in my own division, I am asking the Financial Secretary whether there has been any change of policy. Unfortunately, by virtue of the fact that we have so little land available for new buildings, we have not had the maximum amount of benefit that the people in my constituency would have liked to see. We have had some benefit, but we had just reached the stage when we were anticipating the building of a really big new factory. It is in the highest interests of the country that it should be built since the product which would come from it is one which would go mainly to dollar markets. It is a product which represents a tremendously important industry in which the firm concerned would have a very great advantage if they were allowed to develop.

While we were all looking forward to this new industry coming into the area and to the new factory being built, and when everything was ready for it to go ahead, the new Government came into being and as one of their first acts imposed a ban on new building. As I understood it, that ban was to apply for two months. The present Government have now been in office for nearly five months and we are still in the difficulty that, despite all the representations we have made both directly to the regional offices and, through me, to the Ministers concerned, we can get no satisfaction whatever on this matter.

It is a matter of extreme urgency. The urgency of it has been made apparent to the President of the Board of Trade, but as yet none of us connected with Merseyside, and with Birkenhead in particular, knows what is the answer. All the information we have is that the President of the Board of Trade is apparently in conversation or in contact with his colleague, the Minister of Supply. We go to and fro like this, valuable weeks go by and we still cannot obtain a decision.

I should like the Minister, if he can, to indicate the reason for the failure to make a decision in this case with some degree of reasonable promptitude. I think the Financial Secretary and the Secretary for Overseas Trade will readily agree with me that three or four months are enough time in which to make decision on these matters. Why are we still without a decision, and what is the policy of the Government?

Naturally the firms concerned have their own great difficulties to contend with, and the estate companies also have their own difficulties. There is in this Supplementary Estimate an estimate for £3,000 for extra administrative charges, and I wonder how much of that £3,000 is due to answering correspondence because of the Government's own delay in arriving at a decision. The amount must be considerable. When the ban on new building was imposed, the office staffs who deal with the erection of new factories were held up pending a Government decision as to what was to happen when the two months were over. As far as I know, even now no clear decision has been given to the House of Commons about what the Government are doing after the expiry of the two months.

What happens now to applications for new building licences? Is there to be—as I hope there will be—a different decision about new building in Development Areas? Is it the policy of the present Government still to direct work into Development Areas rather than elsewhere? These are tremendously important matters to all the Development Areas. One would presume that even the present Government would see to it that there was a decision favourable to the Development Areas as against other parts of the country in matters of this kind.

When industrialists, as in this case which I have quoted, are constantly pressing people like myself and others concerned to try to get a decision from the Government, I think the Government should pay some heed and hasten a decision. I do not want to delay the Committee, so I will not now quote another comparable case in my own division. There are two cases about which I have been bothering the Department for a decision.

I am glad to see the Secretary for Overseas Trade on the Government Front Bench. I beg him to get his colleague the President of the Board of Trade to make a decision or if, as in the case of his predecessor in the last Government, he himself has some responsibility in the matter, I beg him to make that decision, unless, of course, we are to hear an announcement indicating some real departure from the policy of the former Government in this matter.

7.48 p.m.

I am very glad this is a non-party matter, otherwise it might be suggested that there is another split in the Labour Party. Here we have my hon. Friend the Member for Birkenhead (Mr. Collick) pleading for Merseyside, though I should like to tell him that there are many people in Lancashire who feel that the Merseyside area has been dealt with much too favourably in comparison with the rest of the county. If he attended meetings of the Lancashire Development Association he would know how true that is.

I make no complaint about what has been done for Merseyside. I think that, generally speaking, very good work has been done under the Development Area plan, and I should like to congratulate the Secretary for Overseas Trade on what has been done. Not very long ago there were 28,000 men unemployed on Merseyside. Now the figure is considerably less, directly as a result of this policy.

But in Lancashire generally, and in the Manchester area in particular, there is a feeling that more might have been done inside the cotton belt itself I am not surprised that my hon. Friend the Member for Westhoughton (Mr. T. Price) was so enthusiastic, because there are parts of his constituency which had 90 per cent. of its insured population unemployed. Those of us who are connected with the cotton belt feel we must take a long view on diversity of industry; and if we are to have diversity of industry we must have the aid of this development plan.

I am sure that taking the short view the Government have been right in saying we (must sacrifice cotton for the sake of dollars, but I am equally certain that, taking the long view, we cannot afford to postpone consideration of diversity of industry very much longer. We cannot afford to do it, because if we do, the alternative is that there will be mass migration from the cotton towns, and the one thing that will certainly follow is that we shall not get the youngsters going into the cotton mills when they leave school, as they are doing at the moment.

I rose really to ask two questions. I want to know from the Financial Secretary what proportion of this £1 million actually went into the Merseyside area and what proportion went into the cotton towns of Lancashire. I am not sure whether the hon. Gentleman will be able to give us those figures, but it would give satisfaction to people in the cotton belt if those figures could be given. If we cannot have them tonight, perhaps we may have them at a later stage.

I hope—I know that we are dealing with the year 1951–52—that this additional Estimate for £250,000 is evidence of an expansion in development areas and that it will allow the building of more factories and the granting of greater diversity in the Lancashire cotton area.

7.51 p.m.

I would not have taken part in this debate except for the comments which have been made by the hon. Member for Liverpool, Walton (Mr. K. Thompson). I wish to place on record the fact that the reason the Merseyside Development Area scheme was so late in being put into operation was that the Conservative majority on the Liverpool City Council refused to have anything to do with it.

I want to ask two questions of the Financial Secretary. Can he say how many factories have been built in the Merseyside Development Area since the inception of the area? Can he say how much money has been spent and how many people have been employed in the area since its establishment? The area was established because of the very high unemployment figures that we have always had in the Liverpool area, and I should like to know to what extent that unemployment has been reduced since the scheme was put into operation.

I am told that some of the directors of the Development Area are dissatisfied at the small amount of assistance they have received, whereas when the area was first established they had the impression that the scheme would provide considerable development and employment in Merseyside. I should like to know what is the position there.

7.53 p.m.

This increase in the Estimate from £750,000 to £1 million gives the impression that the Government are doing all they possibly can to encourage the Development Areas. I should like to know how the Minister can reconcile this apparent encouragement to these areas with the fact that the Treasury has increased the charges to industry from 3 per cent. to 4 and 4½ per cent.

7.54 p.m.

I wish to intervene to rectify a misleading impression which may have been created by the hon. Member for Liverpool, Exchange (Mrs. Braddock), who said, a few moments ago, that Merseyside had not been scheduled as a Development Area for a long time because of the opposition of Conservative interests on the Merseyside.

The hon. Lady knows perfectly well that Sir Stafford Cripps, in 1948, I think, agreed with the local authority in Liverpool that it would not be appropriate to schedule Merseyside as a Development Area. When, at a later date, the proposition was again put forward and circumstances were rather different, the Conservative Party in Liverpool agreed to the suggestion that it should be made a Development Area.

I rose solely to make it clear beyond any dispute at all that the desire of the Conservative Party in Liverpool was shared and endorsed by Sir Stafford Cripps.

Would the hon. Gentleman not agree that one reason for the lateness of the scheduling of Merseyside was due directly to the opposition of Alderman Shennan and not Sir Stafford Cripps?

This is going rather wide of the matter under discussion. As to which party in the Merseyside local authorities did this or that does not arise from the Estimate which we are discussing.

But with respect, the hon. Gentleman is completely wrong and I do not think this matter ought to be left like that. The hon. Gentleman knows as well as I do—

If the hon. Lady will forgive me, discussion of that matter is out of order on both sides of the Committee and, therefore, it must come to an end.

7.56 p.m.

I can assure you, Colonel Gomme-Duncan, that I will not incur your wrath by seeking to intervene in a discussion on Liverpool politics. I should like to say how agreeable it is for a Minister presenting a Supplementary Estimate to the Committee to have it received in the way in which this one has been received, with the main criticism, so far as I understand it, had the Rules of Order permitted it to be voiced, that the Supplementary Estimate was not big enough. It certainly smooths the path of a Minister whose duty is to commend to the Committee a request for additional funds.

I would say at once how much I appreciate the very proper tributes which have been paid by a number of hon. Members to those public-spirited individuals who carry out the work of what is colloquially known by its initials as D.A.T.A.C. I shall certainly follow the suggestion which was made by the hon. Member for Sunderland, North (Mr. F. Willey) and remind the Committee of the names of some of the members of that body, because in this context I think it is a proper thing to do.

The Chairman is a well known chartered accountant, Mr. Barrie, and the members include a number of business men from different parts of the country. There is Mr. Roney, of London, who, as hon. Members may know, was previously associated with the Nuffield Trust for the then Special Areas, and who has very great experience of the social problems which arise in those Areas. Scotland is represented by Mr. Jackson-Millar, the North-Eastern area by Mr. Summerson and Mr. West-Byng, Wales by Mr. Williams—

The one who is a member of D.A.T.A.C. The last addition to this list—made, I am glad to say, under the present Government—is a former distinguished Member of this House and trade unionist, Mr. Tom Williamson. I should like to express my gratitude to those men for the very hard job they do.

Before I come to answer the individual questions, of which there have been a good many, I think it might assist the Committee if I were to state precisely what this Supplementary Estimate relates to. The sum is £253,000, divided into an item of £3,000 for expenses of administration—and I assure the hon. Member for Birkenhead (Mr. Collick) that it is not for the purpose of answering his letters—and £250,000 for loans to industrial undertakings in Development Areas. The £3,000, in fact, relates to the need for slight additional expenditure in providing technical assistance—engineering and other professional advice in the development of these schemes. It relates to that over the whole field.

The £250,000 loan which it is necessary to ask the Commitee to authorise relates, for all practical purposes, to one scheme only, which I think may be of some considerable interest to hon. Members. The Committee will be aware that the need for sulphuric acid has been very serious during the last two years, and there is a very large project—in fact I am advised that it is the largest project ever undertaken under this scheme—which is being carried out at Whitehaven, in Cumberland, by a firm called Solway Chemicals Limited, for the production of sulphuric acid on a very large scale. The total cost of the scheme will be £1,700,000.

The need to come to the Committee for this Supplementary Estimate of £250,000 arises from the fact that good progress is being made with this scheme and it appears probable that expenditure of this order will arise in the current financial year. Hence it has been necessary to seek Parliamentary authority for this expenditure in this year without waiting for the main Estimates next year.

Will the hon. Gentleman give an assurance that he will not bite into the original £750,000 provided under the original Estimate, to deal with this one particular development? If we thought that the rest of the industries were being deprived of money for the benefit of one firm, I think our views would be different.

I cannot give the hon. Member an assurance in pounds, shillings and pence with regard to the reaction on the main Estimate, but he will appreciate that as we are coming forward with this Supplementary Estimate of £250,000 and this particular project is estimated to cost £250,000, it does show that this scheme will not affect at all materially other projects authorised during the past financial year.

I should like to re-assure my hon. Friend, the Member for Walton (Mr. K. Thompson) and one or two others, who have asked whether we should be prepared to come to the House again if the need were shown, by pointing out that we are within 12 days of the end of the current financial year, and though I shall seek to show very clearly the Government's determination to carry out their policy, it is extremely improbable that there will be any need to trouble the Committee with a Supplementary Estimate between now and the 31st of this month. This matter arises simply because good progress has been made with this scheme. The amounts involved are large, and the expenditure falls within the financial year 1951–52 and not 1952–53.

The hon. Gentleman is talking about the amount which falls in this year and not the total commitment on this scheme?

Exactly. If I may seek to allay any apprehensions which hon. Members may have as to the general application of this scheme, I simply invite their attention to figures which are already available in the Vote on Account. Hon. Members will there see that the effect of this Supplementary Estimate—if the Committee authorises it—will be to raise expenditure under this Vote in the current financial year to a total of £1,008,010, whereas, as appears from the preceding column in the Vote on Account, the estimate for the year 1952–53 will be very nearly double that figure. It will be £1,910,010.

I think these figures should reassure the Committee that this Government, so far from having any intention of abandoning these schemes, are going to make financial provision under this head on a considerably larger scale than was made last year. I hope that will suffice to reassure hon. Members, particularly those who represent the areas which are directly affected, and who are very properly concerned that continued attention should be given to these schemes.

Some hon. Members, including the hon. Member for Birkenhead and the hon. Member for Jarrow (Mr. Fernyhough) gave examples of particular factories or schemes which affected their constituencies. As the Committee will have observed, the Secretary for Overseas Trade, who is the Minister directly concerned with individual schemes, has been in his place throughout this debate, and he authorises me to say that he has taken note of what has been said by the hon. Members concerned and that he would be very glad to discuss with each of them the present state of the matters which they have in mind and what are the possibilities of future action. The Committee will appreciate that that is a matter for him and not for me, and therefore I cannot carry that particular matter any further.

I think it would be convenient if I reminded the Committee—because I think it is not wholly clear to all hon. Members—what is the procedure for the carrying out of particular schemes. I do not think I can do better than remind the Committee of what was said by my hon. and learned Friend the Parliamentary Secretary to the Board of Trade, on the discussion of this issue on 7th December last. He said:
"As the hon. Member is aware the principle on which these advances are made is governed by Section 4 of the Distribution of Industry Act, 1945. In effect, three conditions have to be satisfied: first, that the Board of Trade approves the undertaking as complying with the requirements of the proper distribution of industry; secondly, that the Treasury is satisfied, in accordance with the recommen- dations of the Development Areas Treasury Advisory Committee, that the undertaking has good prospects of ultimately being able to carry on without further Government finance and thirdly, that the undertaking cannot, for the time being, obtain capital on reasonable terms commercially.
Those, as the hon. Member will agree, are the three conditions. So I think that his question to me is how is that now going to work? Well, the policy continues unchanged. With the policy remaining unchanged he may ask, how far will the number of eligible allocations increase or decrease? I can only tell him this, that so far there is no significant change noticeable in either direction."—[OFFICIAL REPORT, 7th December, 1951; Vol. 494, c. 2807.]

The difference is that at that time the Bank rate was 2½ per cent. and today it is 4 per cent. or over. Surely that has some reaction on the demands coming forward?

I understand that that is not the case. The fact is that the Government are making very nearly twice the contribution under this head than was made last year.

The hon. Member for Brighouse and Spenborough (Mr. J. Edwards) asked me a specific question on interest rates. I do not think there is any need for apprehension in that sphere.

It is perfectly true that the Estimates for next year are larger, but I think the Committee would be in a better position to judge the real significance of that if the Financial Secretary would tell us the number of schemes in the two years. If, as I suspect, next year's Estimate is big because of one very big project, it may be that in fact we are not giving help to a larger number of firms.

The number of firms dealt with in any year depends on the number of applications which successfully survive the three processes which were set out in the extract from my hon. and learned Friend's speech which I read to the Committee a moment or two ago. I call the Estimate in aid only as giving tangible evidence that we do not fear the effects which the hon. Gentleman anticipates; but I must say, if he is referring to the decision announced by the Chancellor of the Exchequer last week, that, were that to have any effect, it could not have manifested itself as early as this, and, consequently, it would be quite impossible for me to give him any details in that respect.

My point is that the firms will not now be able to get help in the normal way from the banks and credit houses, and they will have to come increasingly to D.A.T.A.C. for assistance. What the hon. Gentleman was saying bears out the point that more and more firms will be coming to D.A.T.A.C. for assistance, and I hope that the terms of reference will be amended accordingly, so that many of those who have fallen by the wayside in the past will not do so in the future.

I do not see that on the present terms of reference there can be any difficulties arising from that particular source. The hon. Member has expressed his point of view, and it will be noted, and, if necessary, looked into.

I now pass to the hon. Member for Brighouse and Spenborough and offer him my apology for not being in my place when he began his speech. I think that he will appreciate from his own experience that the "usual channels" do not always function with complete punctuality. I have, however, a note of the points he made and I will attempt to deal with them.

First, he asked about the system, and whether the system at present being operated is the same as the system that previously operated. The answer to that is "Yes." Then he asked whether an assurance could be given that there would be no slackening in these developments. The financial figures which I have given have shown that, overall, far from there being a slackening, there will be whatever is the converse of slackening, and I am afraid that my vocabulary does not enable me to provide the precise expression at the moment.

All these schemes, like every other, come within the needs of defence, the export trade and priorities among themselves, and are affected by the shortage of steel. But, subject to that, the intentions of the Government are, I think, made very clear by the financial provision which we are making, and to which I have already referred.

The hon. Gentleman asked me what would be the rate of interest borne on these advances. The rate of interest in each case is fixed with relation to the normal commercial terms ruling at the time, and as the result of current policies will tend to rise.

I cannot give the hon. Gentleman the figure for two very good reasons, first, because it varies in accordance with different projects, and, second, because I understand that it is not, and never has been, the practice to disclose the rate of interest paid in any particular case. There are obvious commercial objections, not least from the point of view of the firm concerned, to any such disclosure.

I think that there is a great deal in the suggestion of the hon. Member for Sunderland, North, that publicity should be given, not only to the beneficent activities of D.A.T.A.C., but also to the conditions under which advances are made. Those were most helpful and constructive suggestions, and I assure him that very good note has been taken of them.

A number of points were raised by hon. Members, which, I think, I have to some extent covered in the course of my general remarks. Perhaps I may repeat at least two of them. The fact is that this Supplementary Estimate does not relate to the matters which they had in mind; it relates, as I have already told the Committee, to one specific project, with the addition of £3,000 for expert assistance, and, therefore, does not of itself relate to the projects which they had in mind.

I am sorry that I cannot give the figures for which the hon. Lady the Member for Liverpool, Exchange (Mrs. Braddock) asked. They do not affect this Supplementary Estimate, but I have no doubt that if the hon. Lady approaches the Board of Trade on this matter, such figures as are available will be given to her. I am afraid that I cannot give them to her tonight, and that remark also applies to my hon. Friend the Member for Walton.

As for the hon. Member for Westhoughton (Mr. T. Price), who apologised to the Committee for what he described as his inexperience and for getting into difficulties with the Rules of Order, I think that he put his case with the adroitness and skill that Parliamentarians with 40 years' experience would have been proud to have displayed, in that he succeeded in saying what he wanted to say on behalf of his constituents, and which, if I may say so, was very properly said.

I hope that I shall not get into trouble with you, Sir Charles, over the Rules of Order, but as the hon. Member knows, the Secretary for Overseas Trade is familiar with the matters in question. I understand that the hon. Member has been in touch with him on this issue, and my hon. Friend says that he is always ready to continue those discussions with the hon. Member.

As to the future, an aspect which I think was raised by the hon. Member for Stockton-on-Tees (Mr. Chetwynd), I have already gone as far as and perhaps even further than the Rules of Order permit, in giving a clear indication of the intentions of the Government. May I recapitulate them? We are making the financial provision I have mentioned on an increased scale. We are pushing on with the scheme which we inherited from the late Administration. The general working of that scheme remains unchanged, and we accept and indeed endorse what has been said by a number of hon. Members as to the value of that scheme, not only to the areas concerned, but to the community as a whole.

This Estimate, as I have said, gives us an additional figure of £250,000 in the current financial year. I hope that hon. Members will now be prepared, in view of the facts that I have tried to put before the Committee, to authorise us to make that expenditure.

I am advised, although I cannot think so—and perhaps I may be corrected if I am wrong—that the speech of the hon. Member for Westhoughton was a maiden speech. In that case, I must offer my apologies, as must hon. Members who followed him, for not offering the congratulations which are always customary, and, if the hon. Member will allow me to say so, are in this case most richly deserved. I think that he will allow me to reiterate my respectful admiration for his skill with the Rules of Order, and I hope that the Committee and the House may have an opportunity of hearing him on many occasions in future, both in and out of order.

May I associate myself with what the Financial Secretary has just said. I, too, was completely unaware that we were listening to a maiden speech from the hon. Member for Westhoughton (Mr. T. Price), and I am sure that we all congratulate him.

May I press the Financial Secretary on one point. It is true that he was not here when I asked my questions, but I understand that the Secretary for Overseas Trade took a note of what I asked him. Will he tell us how many cases had been dealt with under Section 4 of the Distribution of Industry Act, 1945, and what the total commitments were, agreed or approved? What amounts had been advanced and what amounts had been written off? I think that it would be for the convenience of the Committee if the Financial Secretary would tell us that. I also ask him if he can tell us what happened under Section 3 of the 1950 Act, where provision is made for loans for somewhat similar purposes.

I know that the Financial Secretary is in some difficulty about quoting actual cases, but surely there would be nothing wrong in his giving us the range of interest rates in operation at present, which would help us. Perhaps he will say whether I am right in concluding that the policy of Her Majesty's Government now is to reduce investment in the country as a whole but that there is no intention whatever of reducing the volume of investment in the Development Areas.

I beg the hon. Member's pardon. I had a note of the figures for which he asked and I had intended to give them to him. The amount of principal outstanding at the moment is £2,500,000, further commitments are £1,900,000 and losses so far have been £150,000. On the first occasion, but not on this one, I believe the hon. Member asked for the number of companies involved. They are 25 in England, 22 in Wales and 13 in Scotland. I always hesitate to give such figures because, although they may be gratifying to one section of the Committee, they may be disagreeable to another.

With regard to interest rates, I am sorry that I cannot give the hon. Gentleman a figure which would help him at all. These figures must reflect whatever the general commercial rates may be at the time, and at a time when a certain flexibility is contemplated it is particularly difficult to give a figure which would not be misleading to the Committee. When, on top of that, the figure may, and, indeed, will, vary as between one concern and another, it is very difficult to give the hon. Gentleman a figure, and I am afraid that I cannot do it.

I have made it clear, in reply to the hon. Gentleman's other questions, that, subject, of course, to the difficulties imposed by the overriding needs of defence and exports, which compel a certain discrimination in the matter of particular projects, and subject to the physical difficulties imposed by the limited quantities of steel available—a factor which bears particularly on factory construction, since that involves a very heavy use of steel—the very figures which I have put to the Committee and on which I have already relied several times, answer him. It is desired to maintain these schemes and to expand them.

Question put, and agreed to.

Resolved,

That a Supplementary sum, not exceeding £253,000, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1952, for financial assistance to industrial undertakings in Development Areas, including remanet expenditure in respect of similar assistance in former Special Areas.