§ Mr. Hoy
I beg to move Amendment 44, in page 32, line 24, after 'their', insert 'written'.
The purpose of this Amendment is to bring this subsection into line with the corresponding one in Clause 26.
It has always been the intention that the consents required under this Clause to the application of Schedule 3 to the relevant unit should be in writing as required in the corresponding subsection of Clause 26. This Amendment will 232 ensure that the two Clauses are identical and remove any uncertainty that might otherwise occur.
§ Amendment agreed to.
§ Mr. Deputy Speaker (Mr. Sidney Irving)
With this Amendment it would be convenient to discuss Amendment No. 46.
§ Mr. Hoy
In Standing Committee some hon. Members questioned the need for the Government to be given powers to recover the cost of reinvestment of Government loan monies which are prematurely repaid as a consequence of a breach of Schedule 3 or to claim compensation for any loss arising if the rate of interest obtained on reinvestment of the loan monies is less than that on the original loan. I gave an assurance that I would consider whether some change should be made in the Clause.
I am advised that the charging of a premium or redemption fee when a loan is prematurely repaid to compensate for any loss arising on reinvestment of the monies as a result of a fall in interest rates is fully in accordance with Government practice. These conditions apply, for example, to local authority loans. The basic purpose of this provision, however, is to enable Government loans to be put on the same footing as loans given by the organisations which will be administering them. These will be the Agricultural Mortgage Corporation in the case of England and Wales and the Scottish Agricultural Securities Corporation in the case of Scotland. So far as these organisations are concerned, the charging of a redemption fee when a borrower seeks to repay a loan before the due date is a necessary and justifiable precaution to protect their financial resources.
Nevertheless, although in certain circumstances a borrower wishing to repay a loan prematurely could conceivably be liable on an actuarial basis for a heavy redemption fee, I am advised that these organisations have adopted a very reasonable policy in practice and do not claim the full premium.
It is the intention that Government loans shall be used solely to supplement 233 the loans made by these organisations. If the redemption fee requirement were dispensed with in the case of Government loans, or some less onerous requirement were substituted, Government loans would become more attractive to borrowers, who would seek to obtain the whole of their requirements from the Government.
Since, however, it is not the Government's intention to compete with the A.M.C. and the S.A.S.C. for business, it is clearly desirable that the terms and conditions attaching to Government loans should be on all fours with those of these organisations.
This is one of the reasons why we could not, for example, adopt the suggestion made by my hon. Friend the Member for Merioneth (Mr. William Edwards) that the Government loan agreement should include a variable interest clause.
I can accordingly reassure hon. Members that borrowers who wish to repay their loans prematurely can expect to receive, in respect of the Government part of the loan, redemption terms which are as reasonable as they would expect to obtain on the premature redemption of the private part of the loan. The purpose of the Amendments is to make it abundantly clear that the Minister has a discretion in these matters, and I hope this will meet with the approval of the hon. Members to whom I gave a promise.
§ Mr. Stodart
The hon. Gentleman will remember that our discussions on this matter in Committee were extremely animated. The concession that he has made is a reasonable one, meeting the situation, about which, despite the precedents quoted to us, we felt strongly. This is probably as good a solution as we could get.
§ Amendment agreed to.
Further Amendment made: No. 46, in page 32, line 40, at end insert:
'or such part thereof as the appropriate Minister may determine '.—[Mr. Hoy.]