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Loans To The Agency By The Secretary Of State

Volume 890: debated on Monday 14 April 1975

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

I beg to move Amendment No. 24, in page 7, in first line of Clause 5(1), leave out "subsection (2)" and insert "subsections (2) and (3A)".

With this we are taking Amendment No. 26, in page 7, after Clause 5(2), insert:

"(3A) Interest shall not be charged on any loan under this section except at such a rate and in accordance with such terms and conditions as the Secretary of State may, after consultation with the Treasury, by order prescribe, and any such order shall be contained in a statutory instrument and shall not be made unless a draft thereof has been approved by resolution of each House of Parliament.".

The amendments deal with the question of interest on the loan to the agency. Despite the firm assurance given by the Secretary of State during Second Reading, as reported at col. 1583, and despite the lengthy debate in Committee, there is still nothing in the Bill to make it obligatory for the Government to make loans referred to in Clause 5 interest-free. That is what the amendments are about.

I should like to quote from what the Minister said in Committee on 18th March, because it is important for the House to be aware of his explanation on that occasion. He said:
"Clause 5 envisages that the Secretary of State will make loans to the agency on such terms as he may, with the approval of the Treasury, determine. It provides for repayment of the loans by the agency out of the fund. Rationally, nobody can expect that these terms will fail to specify whether the loan would be interest-free, the date when repayment begins, the rate at which repayment begins, and so on, and, of course, the date by which repayment is to be concluded.
"On Second Reading this is what the Secretary of State sought to indicate as the proposed terms of the three elements of the package about which I have been speaking. First, an interest-free loan. Secondly. there would be repayment beginning from October 1976. This would be at a rate involving half the agency's net income which would be largely drawn from levy contribution. Before any initial loan payments are made we shall have to determine a repayment date. The Government foresee that this can be within a comparatively short period, particularly since the loan will be interest-free. I spelled that out on two separate occasions and I shall use the same words again.
"The rate at which loans are repaid will depend on the other calls made upon the fund. It is hoped that from October 1976 half the net income of the fund, that is the income from contributions and interest less expenses and payments against claims, can be devoted to paying off the loan. In these circumstances, a quite large loan of £7 million to £8 million would be repaid by the end of 1978. As I have said, this timetable is purely tentative as it depends on the future turnover of the air travel industry and the number of claims.
"That is what the Government have in mind. But the effect of the Opposition's amendments would lock into the statute one element of that package. The amendments' supporters purport that they would not otherwise trust the pledge given to Parliament by the Government"— [Official Report, Standing Committee D, 18th March 1975; c. 235–6.]
As the Minister said then, there are three elements of the package—first, the interest-free loan; secondly, the repayment that would begin from October 1976; and, thirdly, that there should be repayment dates. The Minister said in Committee that it would be wrong to legislate simply for the interest-free element, but why should that element not be specified? The hon. Gentleman has also said that there will be no loans after 1977. If that is so, surely there is Ito reason why the loan should not be interest-free, because the loans will run out by then anyway.

It is in those circumstances that the amendment is necessary. If the hon. Gentleman is not willing to write into the Bill that loans shall be interest-free, at least he can con-le to Parliament with an order for parliamentary approval if he finds it necessary to charge interest on the loans at any time.

Because there is nothing in the Bill to bind this Government or any future Government on the question of interest, it should be written into the Bill in the way suggested in the amendments.

We investigated the matter at considerable length and in considerable depth in Committee. The hon. Gentleman has been good enough to quote my remarks on it in Committee, which I think set out succinctly the case upon which the Government rely.

I referred in Committee to the observations made by my right hon. Friend the Secretary of State that sums lent to the agency from public funds would be interest-free, and I confirmed several times that that was the Government's intention. We hope that it will not be necessary for interest to be charged on loans to the agency. If it were to become necessary, we should certainly wish to carry the House with us in making any revised arrangements. We should have to explain the position fully to the House —the circumstances which had made such a change necessary and all the arrangements entered into.

I should have thought that that was abundantly clear from the statements I have already made, and I should have hoped that the hon. Gentleman would accept the position as I set it out. But Conservative Members are anxious that the intention should be written into the Bill. For the reasons already mentioned, we say that that is not acceptable.

I repeat that it is our firm intention that loans to the agency should be free of interest. If circumstances arose in which it became necessary to charge interest, we should feel bound fully to explain the reasons to the House.

I hope that in the circumstances the hon. Gentleman will feel it appropriate to withdraw the amendment.

I must emphasise to the Minister once again the extraordinary situation in which he finds himself. On Second Reading his right hon. Friend the Secretary of State said clearly that the loan would be interest-free. We went through most of the Committee stage under that impression, but at a late stage in Committee the Minister suddenly cast some doubt on that, and it is now apparent that in certain circumstances he might decide, contrary to what was said on Second Reading, to charge interest. It seemed right to us to suggest at that time that the position should be made absolutely clear in the legislation.

12.45 p.m.

It is no good the Minister saying that we have his assurance. One of the main reasons for the Bill is that a Minister gave an assurance to the House which was not subsequently fulfilled. That is why we need to have the assurance written into the Bill. Nothing could be more reasonable than an amendment which provides that if the Minister decides to charge interest he should obtain a resolution of the House to that effect

Yet again, the Minister said that if the Government decided to charge interest they would come before the House to explain why. The amendment seeks to ensure not that the Government can charge interest but that they should get the support of the House for so doing. I do not understand why the Minister cannot agree that it is a perfectly reasonable amendment and accept it. As he will not, we shall indicate in the Division Lobby that we do not agree with the view he has expressed.

Might I put to the hon. Gentleman what he said in speaking of the affirmative resolution procedure? He said:

"if the Government of the day, of whatever party, resist this kind of amendment it lessens the legislative burden for the Government who follow. If the hon. Gentleman would like to introduce a Bill accepting all the motions for positive resolutions ever made by his Government when they were the Opposition we should be happy to accept that, but I suspect that the Chief Whip, not to say the Leader of the House, would probably have a fit.
I feel bound to say also that the Conservative Government, when re-elected will probably reverse the procedure. This is not a party point, but it is important that we do not burden the House with positive resolution procedures. However, we are grateful to the Minister for his assurance."—[Official Report, Standing Committee D. 13th March 1975; c. 197.]
That assurance was dealing with another matter. Now the hon. Gentleman has to reconcile himself to his own argument.

It is not necessary for me to reconcile myself to the argument. It is perfectly sensible to provide for the affirmative resolution procedure on a matter of importance. Having regard to the assurance that was given that no interest would be charged, it is not un-

Division No. 169.]AYES[12.49 a.m.
Atkins, Rt Hon H. (Spelthorne)Jessel, TobyRost, Peter (SE Derbyshire)
Biffen, JohnKing, Evelyn (South Dorset)Sainsbury, Tim
Brotherton, MichaelKnox, DavidShaw, Michael (Scarborough)
Bulmer, EsmondLawrence, IvanShelton, William (Streatham)
Butler, Adam (Bosworth)Lawson, NigelShepherd, Colin
Chalker, Mrs LyndaLester, Jim (Beeston)Shersby, Michael
Clark, Alan (Plymouth, Sutton)Lewis, Kenneth (Rutland)Silvester, Fred
Clarke, Kenneth (Rushcliffe)Macfarlane, NeilSkeet, T. H. H.
Cooke, Robert (Bristol W)McNair-Wilson, M. (Newbury)Spicer, Michael (S Worcester)
Cope, JohnMarshall, Michael (Arundel)Steen, Anthony (Wavertree)
Costain, A. P.Maxwell-Hyslop, RobinStradling Thomas, J.
Durant, TonyMayhew, PatrickTebbit, Norman
Dykes, HughMorgan-Giles, Rear-AdmiralThomas, Rt Hon P. (Hendon S)
Fairgrieve, RussellMorrison, Charles (Devizes)Townsend, Cyril D.
Fisher, Sir NigelNeave, AireyVaughan, Dr Gerard
Fowler, Norman (Sutton C'f'd)Nelson, AnthonyViggers, Peter
Fox, MarcusNeubert, MichaelWalder, David (Clitheroe)
Gilmour, Sir John (East Fife)Newton, TonyWeatherill, Bernard
Glyn, Dr AlanParkinson, CecilYoung, Sir G. (Ealing, Acton)
Goodhew, VictorPercival, Ian
Grylls, MichaelRenton, Tim (Mid-Sussex)TELLERS FOR THE AYES:
Higgins, Terence L.Rhys Williams, Sir BrandonMr. Anthony Berry and
Hunt, JohnRoberts, Michael (Cardiff NW)Mr. Spencer Le Marchant.


Archer, PeterEwing, Harry (Stirling)Marquand, David
Armstrong, ErnestFernyhough, Rt Hon E.Marshall, Dr Edmund (Goole)
Bagier, Gordon A. T.Flannery, MartinMorris, Charles R. (Openshaw)
Bates, AlfFletcher, Ted (Darlington)Murray, Rt Hon Ronald King
Bennett, Andrew (Stockport N)Fowler, Gerald (The Wrekin)Noble, Mike
Boardman, H.Fraser, John (Lambeth, N'w'd)O'Halloran, Michael
Callaghan, Jim (Middleton & P)George, BruceOvenden, John
Campbell, IanGolding, JohnPalmer, Arthur
Carmichael, NeilGrocott, BrucePark, George
Carter-Jones, LewisHamilton, James (Bothwell)Parry, Robert
Cartwright, JohnHarper, JosephPavitt, Laurie
Clemitson, IvorHarrison, Walter (Wakefield)Pendry, Tom
Cocks, Michael (Bristol S)Hatton, FrankPenhaligon, David
Cohen, StanleyHoyle, Doug (Nelson)Prescott, John
Coleman, DonaldHughes, Robert (Aberdeen N)Radice, Giles
Colquhoun, Mrs MaureenHunter, AdamRoberts, Albert (Normanton)
Cox, Thomas (Tooting)Jackson. Miss Margaret (Lincoln)Rodgers, George (Chorley)
Craigen, J. M. (Maryhill)Janner, GrevilleRooker, J. W.
Cryer. BobJenkins, Hugh (Putney)Ross, Stephen (Isle of Wight)
Dalyell, TamJones, Dan (Burnley)Ryman, John
Davidson, ArthurJudd, FrankShore, Rt Hon Peter
Davis, Clinton (Hackney C)Kerr, RussellSkinner, Dennis
Deakins, EricKilroy-Silk, RobertSmall, William
Dean, Joseph (Leeds West)Lambie, DavidSmith, John (N Lanarkshire)
Dempsey, JamesLoyden, EddieSnape, Peter
Dormand, J. D.MacFarquhar, RoderickSpearing, Nigel
Douglas-Mann, BruceMackenzie, GregorSpriggs, Leslie
Duffy, A. E. P.Mackintosh, John P.Stallard, A. W.
Dunwoody, Mrs GwynethMaclennan, RobertStott, Roger
Eadie, AlexMcNamara, KevinThomas, Ron (Bristol NW)
Ellis, John (Brigg & Scun)Madden, MaxTinn, James
Evans, John (Newton)Magee, BryanTomlinson, John

reasonable to suggest the positive resolution procedure if changes are made. We gave the Bill a Second Reading on the basis of a statement made by the Secretary of State for Trade—not the Secretary of State for Industry this time—which has turned out to be not true. That is clearly a matter of importance, and I advise my hon. and right hon. Friends to support the amendment in the Lobby.

Question put, That the amendment be made:—

The House divided: Ayes 65, Noes 106.

Walker, Terry (Kingswood)Wise, Mrs Audrey
Ward, MichaelWoodall, AlecTELLERS FOR THE NOES.
White, Frank R. (Bury)Woof, RobertMr. David Stoddart and
White, James (Pollok)Wrigglesworth, IanMr. James A. Dunn.
Williams, W. T. (Warrington)Young, David (Bolton E)

Question accordingly negatived.