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Highlands And Islands Air Services (Scotland) Money

Volume 980: debated on Tuesday 4 March 1980

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Queen's Recommendation having been signified

Motion made, and Question proposed.

That, for the purposes of any Act of the present Session to make provision for assistance by way of grants or loans in connection with air services serving the Highlands and Islands, it is expedient to authorise the payment out of money provided by Parliament of any expenses of the Secretary of State incurred by him in consequence of any provision of the said Act.
And that it is expedient to authorise any payment into the Consolidated Fund under the said Act of the present Session.—[Mr. Lawson.]

10.25 pm

It is necessary for me to speak on the money resolution because, as a result of the terms of that resolution, new clause 1, in my name and those of my right hon. and hon. Friends, has been ruled out of order.

The money resolution lays down that assistance under the Highlands and Islands Air Services (Scotland) Bill will be by way of grants or loans; whereas new clause 1 was designed specifically to cover the existing situation that prevailed in the Scottish Development Agency Act 1975, in which provision was included for the acquiring of shares or stocks in a company if assistance was to be given to an airline in that way.

Obviously there is a variety of ways in which assistance can be given to Highlands and Islands air services. It was the feeling of the House in 1975, when the Scottish Development Agency Act went through, that provision should be made for the acquisition of loans and stock. It is significant to note that no move was made by the then Opposition to vote against any of the provisions of the Bill as it stood at that stage. Therefore, section 21(3) of the Act provides that assistance should be given based on the acquisition of loan stock or shares. There seems to be no reason why this part of the pre-existing statute should have been missed out, other than a doctrinaire fascination of the Government, hostile and opposed as they are to any form of intervention.

This would be of only academic interest to the House if it were not for the fact that the majority of the assistance that we are discussing and the majority of money that we are voting under the money resolution was to go to one company—Loganair Ltd. That company is a wholly owned subsidiary of the Royal Bank of Scotland, which, in its turn, is part of the partnership that makes up the National and Commercial Banking Group.

One of the fundamental principles in banking is that when one makes a loan one makes sure that one takes full security for it. The move by my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) in 1975, when he moved clause 21(3) of the Scottish Development Agency Bill, was to make sure that whatever public assets were to be disbursed to the airlines affected by the measure, the public interest in these loans or grants was to be secured by means of equity shareholding. That was followed by the tradition established by the Industry Act 1972 which introduced for the first time the idea that public equity could be taken in return for loans. I remind the House that that Industry Act was a Conservative Government measure and a creature-child of the U-turn of the right hon. Member for Sidcup (Mr. Heath).

Had the money resolution been framed in a more flexible and reasonable manner it would have been possible for new clause 1 to be in order and for the preexisting flexibility that existed in the Scottish Development Agency Act in this regard to have remained within the Bill and given the Government a slightly more flexible way in which to deal with the question of subsidies to Highlands and Islands airways.

10.28 pm

I, too, regret the fact that the money resolution has been confined in the way that my hon. Friend the Member for Hamilton (Mr. Robertson) has mentioned. In 1965, in the Highlands and Islands Development (Scotland) Act, the then Government omitted to take comparable powers for the Highlands and Islands Development Board to enable that board to invest in industry for the benefit of the Highlands and Islands by means of taking equity shareholdings. Subsequently it proved necessary to move an amendment to the parent Act by way of a Private Member's Bill, which I promoted in 1968.

That was a necessary amendment, which had not been foreseen by the Government of the day. The issue had not directly arisen. By analogy, the Government would have been wise to recognise that although the powers that existed under the original Act had not been used during the past five years it might prove helpful to have them in future. Circumstances may change.

The situation in respect of carriers in the Highlands has changed since the Bill was originally promoted. The role of Air Ecosse has extended. That may prove to be a future candidate for financial assistance under the terms of this Bill. I support the remarks made by my hon. Friend the Member for Hamilton. For totally doctrinaire reasons, the Government have deprived themselves of a means of offering assistance to air carriers in the Highlands. Such means may prove necessary in future.

10.30 pm

I am slightly surprised that the hon. Member for Hamilton (Mr. Robertson) has raised this subject under the Money Resolution. Clause 4 deals with that specific issue. It might have been more appropriate to raise the subject in a clause stand part debate. However, as the hon. Member for Caithness and Sutherland (Mr. Maclennan) pointed out, although this provision was included in the Scottish Development Agency Bill it has never been used. There it has had no effect on existing policy.

There is a more important reason why that power is inappropriate. The Bill would provide aid to specific air services. It would not provide assistance to companies, as such. If the Secretary of State were to take equity in a company it would give him power to influence a whole range of that company's policies and activities. He would be able to influence other services that might not be subject to any public subsidy. The only form of subsidy being provided is a form that will be limited to a particular service or services. That is as true of Logan-air as of any other company that receives such assistance. To take equity would seem to be a particularly inappropriate way of exercising responsibility.

The House will be aware that there is provision for loans or grants to be repaid under certain circumstances. The Government may provide help by other means and ensure that the money is usefully spent. However, the form of equity suggested by the hon. Gentleman was not used by the previous Government, for the reasons that I have given. It is inappropriate to give help to the individual services of a company.

Question put and agreed to.