§ 10.17 p.m.
§ The Under-Secretary of State for Northern Ireland (Mr. David Howell)
I beg to move,That the Northern Ireland Finance Corporation (Northern Ireland) Order 1972 (S.I., 1972, No. 731), a copy of which was laid before this House on 16th May, be approved.The order which the House is now asked to approve has been laid under the provisions of the Northern Ireland (Temporary Provisions) Act, 1972. Hon. Members will see that it provides for the establishment of the Northern Ireland Finance Corporation and gives it powers and defines its functions.
This is a case where the Northern Ireland Parliament had substantially indicated its approval to corresponding Northern Ireland legislation and indeed the Bill had reached its Third Reading in the Northern Ireland Senate at the time when prorogation of that Parliament took place. The order closely parallels the Northern Ireland Bill in every respect save one, as I shall later indicate.
Hon. Members will recall that the decision to establish a Northern Ireland Finance Corporation followed the recommendation of the Joint Review Body on Economic and Social Development in Northern Ireland whose report was published last December. The Review Body found that the Northern Ireland economy had stood up surprisingly well to the combined effects of the general economic recession and the civil disturbances but thatThe situation is likely to deteriorate in the absence of remedial measures".It identified as particular problems the fact that liquidity was being sustained by the running down of stocks and deferment of capital expenditure and that, because of the trouble on the streets, the flow of new inward investment was sharply reduced.
To meet this situation the report recommended the setting up of a Finance Corporation with power to assist, by means of loans, guarantees or share participation, undertakings threatened with contraction or closure but with reasonably good prospects of solvency in the 174 longer term and with a useful contribution to make to the economic life of Northern Ireland. The order now before us closely reflects the detailed recommendations of the report, including the possibility of assisting in the sphere of new investment.
I believe there is a general acceptance of the proposition that one of the problems contributing to Northern Ireland's unrest has been the intolerably high rate of unemployment from which it has suffered for so long. In the past this has been to a large extent the result of the running down of traditional industries, and this difficulty continues. On top of this there come the severe problems arising directly from the violence. Firms which at other times would be in excellent shape now find themselves facing appalling liquidity problems. Orders that in other circumstances would have been forthcoming are postponed.
The solution to the problem of unemployment in Northern Ireland must lie in two directions. We must conserve the economic fabric in the present difficult circumstances. Combined with this, we must attempt to stimulate as much new investment as possible, both by the expansion of established concerns and by the attraction of new industry. The Finance Corporation will be equipped to help in both directions.
I do not propose to dwell at length on the detailed provisions of the order at this stage as I am sure hon. Members will wish to have the opportunity of raising a number of questions and of expressing their own views. I would, however, draw particular attention at the outset to Articles 4 and 9.
Article 4, which provides for the Corporation's functions, is the key provision. It enables the Corporation to provide assistance, in the three forms recommended by the Review Body, to undertakings threatened with contraction or closure and for the purpose of encouraging new investment both by firms already established in Northern Ireland and by new incoming concerns. The Corporation has no power to assist by means of grants; this will remain a function of the Northern Ireland Ministry of Commerce using the extensive and flexible powers it possesses under the Northern Ireland industries development legislation. In practice, the Corporation and the Ministry will 175 certainly operate in close collaboration in working out assistance schemes whether for the maintenance of existing concerns or the establishment of new ones. Indeed, the functions of the two will be complementary.
It will be seen from Article 8 that up to £50 million will be available to the Corporation for the provision of financial aid. It will be incumbent on the Corporation—and here I would expect its special financial expertise to come into play—to form a judgment on the value or potential value to the Northern Ireland economy of applicants for assistance and on their prospects of solvency
The Article also empowers the Corporation to examine the management and structure of companies receiving assistance. Here again I believe that the special qualifications of its members and executive staff will have a beneficial impact on the economic life of the country. The Review Body drew particular attention to the importance of capable management in industry and to the part the Corporation might play in this field.
I should like in coming to the composition of the Board to extend my own welcome to the strong group which is headed by Mr. Charles Villiers; it has already met in Belfast and is getting ahead with decisions about staffing in order to establish an executive of the highest quality.
I will go briefly through the Board as it stands now. There is Mr. Villiers, the chairman; Christopher Bland who is now managing director of Booz, Allen and Hamilton International; Mr. Arthur Brooke, permanent Secretary to the Ministry of Commerce, Northern Ireland; Mr. Brendan Harkin, member of the Northern Ireland Committee of the Irish Congress of Trade Unions; Sir David Holden, Permanent Secretary to the Ministry of Finance, Northern Ireland; Mr. Laurence Kelly, Director GKN International Trading (London) Ltd.; and Mr. Darwin Templeton, senior partner, Price Waterhouse and Co. (Northern Ireland).
The Corporation will be free to consider assistance over a wide range of undertakings. In practice most of its aid may go to manufacturing industry, which was the Joint Review Body's expectation. 176 Assistance to other areas where difficulties are being experienced, for example retailers and hotels, is also possible. It must be left to the Corporation to form its own judgments on deserving cases, provided they can satisfy the criteria laid down by the legislation. It will indeed be essential to its effectiveness that it should have a reasonable degree of autonomy in the consideration of how it is to use its powers.
I draw attention to Article 9 simply because this is the only part of the order to show a change of substance from the Bill considered at Stormont. The change lies in the fact that the order now provides for secondary audit by the Northern Ireland Comptroller and Auditor-General whereas the Bill provided for commercial audit only. This reflects the unavoidable fact that there will be less chance for detailed debate on the Floor of the House here at Westminster than at Stormont. This must be recognised. It also reflects our belief in the need to make bodies of this kind appropriately accountable to Parliament.
It is right that I should let the House know that I have the assurance of the Corporation's chairman that it is the firm policy of both the Corporation and the Board to aid the Province as a whole without any question of favour to this group or that. This must be made clear. The aim is the restoration and improvement of the economic fabric of Northern Ireland—and that means applying its effort and support to all, without regard to differences of creed or geographical location.
I would ask the House to give this Measure its support.
§ 10.26 p.m.
§ Mr. Merlyn Rees (Leeds, South)
We welcome this order from this side of the House and if there are very few of my hon. Friends present, particularly those who show a close interest in Ireland, it is because a delegation is visiting Northern Ireland today and tomorrow. We welcome the order because, while the question is not perhaps as simple as is sometimes thought, we agree with the Minister that the economic problem of Northern Ireland is one of the underlying reasons for the unrest in that part of the United Kingdom and particularly for the decline in the traditional industries.
177 I make this point also, having read through the original Bill, the order and the Cairncross Report, that while general elections are fought in this country, foolishly in my view, as if the economic argument is one between Karl Marx and Adam Smith, in practice this is not the case. Only today the Secretary of State for Trade and Industry pointed out proudly, that the amount of money being made available to the private sector was far larger under the present Government than under the previous Administration.
The Northern Ireland Finance Corporation is not just a special case; it is part of the interventionist trend of modern Governments. It is similar in philosophy to the Industrial Reorganisation Corporation which it was one of the first acts of the present Government to end. Both Governments—no doubt with some disagreement among Members opposite—are committed to interventionist policies. The Minister has explained the one respectin which the order is different from the Bill which went through the Northern Ireland Parliament. He explained that that Bill achieved its Third Reading in the Senate and therefore it is appropriate that the procedure under which we debate these matters for one and a half hours should be used. But with future orders of this kind which are so sweeping in character, that procedure may not be appropriate.
I wish to make a few comments on paragraph 4 of the order. Is it a way of helping manufacturing concerns which have been bombed or is there another route by which such firms can obtain money? The Minister said that this matter had to be seen in the context of Northern Ireland and the effect of the bombings on trade. Is this a way of giving money to firms which have had their premises destroyed?
I ask, too, what is the criterion used to decide solvency. Taking into account article 4(1)(a), (b) and (c), what is the criterion that the Corporation will have to apply? In so far as there are to be equity holdings, is there the expertise among those responsible to this House, through the Minister, for the Corporation? I should ask this question if the Corporation were being set up on this side of the water as well. What is the aim of the Corporation when it lends money through equity holdings? Is it 178 profitability? Is its aim, like that of the joint stock public company, to maximise its profits? Will the money be given with that in mind? Harland and Wolff, for example, is a joint stock public company in which the Secretary of State holds 47½ per cent. of the equity capital on behalf of the Government. Would it be appropriate that money from the Corporation should be given to Harland and Wolff?
Article 4(2) deals with loans:The Corporation may in exercising its functions under paragraph (1)…(b) make loans…What is the criterion which the Corporation will bear in mind when it is lending money out of the £50 million that the Government are making available?
It is worth looking carefully at paragraph 4(5):The Corporation shall have power to do anything which (a) after consultation, where it appears appropriate, with the Ministry of Health and Social Services, the Corporation thinks desirable to promote and encourage the good management of any undertaking seeking or receiving assistance…I go back to the beginning.The Corporation shall have power to do anything…That may be desirable, but it is putting great power in the hands of the Corporation.
Then I notice that the moneys for the Corporation are to come out of the Consolidated Fund. Perhaps it is not an admission that one ought to make, but I make it freely. The niceties of where money comes from when it is given to Ministries or to organisations such as this are not matters about which I am an expert. But does not it mean that because this money comes out of the Consolidated Fund and not through the Estimates, which is the normal way in which money is made available, there will be no chance of debating it on the Floor of the House? If not, I put the question the other way round: why is it done through the Consolidated Fund? I do not think that that was done with the various organisations set up under the previous Administration.
In any event, what parliamentary control shall we have over this organisation? Taking what I said a moment ago a little further, it would be naive to expect to have the right to ask parliamentary Questions about it, but what 179 rights shall we have in the House? Is there, at the least, to be an annual report to the House? I know that there is to be a financial report, but that is different. Will there be any justification of the uses to which the money is put? Shall we be told why money has been invested in Belfast, or Newry, or Strabane or Londonderry? Will there be any justification of the philosophy which would justify the spending of more money west of the Bann and may be under those circumstances playing down the profit motive which is implicit in the case of joint stock firms in which the State, through this organisation, will have equity holdings?
I notice that the order refers to the Comptroller and Auditor-General of Northern Ireland. Does this mean that the Public Accounts Committee of this House will have no rights to investigate what the Corporation will be doing with the £50 million which we are making available in the first instance? If what has happened in other areas is anything to go by, it will not be long before we are asked for a sum of money in addition to this provision of £50 million. That may be desirable, but my point is that there is a need for control by this House over such large sums of money.
Under the heading "Borrowing" on page 4 the order says:The Corporation may, with the approval of the Ministry and the Ministry of Finance, borrow moneyCan the Minister give us some idea of what the Government have in mind there? Given the background to the situation in Northern Ireland, and given the great problems there because of the disturbances, where will the Corporation be able to borrow money on the open market? What do the Government have in mind?
I should now like to put to the Minister one aspect of the economic development in the North of Ireland that is of value. One has only to read the utterances of people in both the majority and minority communities to know that there is a great division on the question of political unification, and nothing that has happened in the last few months has altered that. But during the last few months I have found surprising agreement between people in the North and 180 the South, and between people in the majority and minority communities, on economic co-operation between the North and South. Indeed, that is one of the things that I found remarkable when I first took a detailed interest in the affairs of the North during last year.
It is the aim of the Administration here to go into the EEC. There has been a referendum in the South of Ireland which has shown that the people agree with their Government on going into the EEC. The hon. Member for Banbury (Mr. Marten) has left, but I suppose that even he would agree that there is an even chance that by later in the year both the United Kingdom and Eire will be in the Common Market, with a common regional policy.
I ask therefore why there is not more discussion, particularly over the setting up of this Corporation, about across-the-Border activities. When the Secretary of State announced this, I said that, in the minutes of evidence of the Expenditure Committee on Wednesday, 8th March, my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) asked Sir Alec Cairncross a question concerning possible assistance for those firms engaged in across-the-Border economic co-operation, to which Sir Alec replied:I think you have a point there. We had meant to say something about firms engaged in operations on both sides of the Border, and we would have liked to commend these for assistance, but somehow it got left out. That was in our minds.There is a battery of incentives in the North based on the scheme in this country. In the South, there is the Industrial Development Authority, which gives 60 per cent. grants, and 40 per cent. of the recipients are United Kingdom firms. They also have the Industrial Credit Company Ltd., which is an investment bank, and another organisation, called Foir Teoranta, which helps firms in temporary difficulties. In these circumstances, when we are setting up this Corporation, should not more thought be given to encouraging joint economic activity, particularly in Londonderry, Strabane and Newry? This would be much more fruitful than discussion of constitutional changes.
Were it not for the fact that it has already gone through practically all its stages in Stormont, I would have to point out that there is not enough time 181 to debate an order as important as this. In general, we welcome it as an earnest of the Government's intention to help economic activity in Northern Ireland, which is of great importance.
Questions asked at this time of night are usually best answered later, but I hope that the Minister will set our minds at rest about accountability. We are setting up an organisation with £50 million, which will get involved with private industry in a way of which there is little experience in Government Departments, under any Administration. Accountability matters. Otherwise, we welcome the order.
§ 10.43 p.m.
§ Mr. James Kilfedder (Down, North)
It is amazing that, once again, in a debate on an important order, the representatives of the Republican parties in Northern Ireland are not present. Perhaps this shows the interest which these hon. Members have in parliamentary democracy now that they have ceased to use this place as a platform for all sorts of wild allegations about Northern Ireland and democracy there.
I welcome the establishment of the Northern Ireland Finance Corporation. This is a development that I have been advocating for a number of years. The Joint Review Body under Sir Alec Cairn-cross recommended it last December and it has been generally welcomed in Northern Ireland. The urgency of setting up the Corporation was stressed in the report, and it is a sad commentary on direct rule that its implementation has been delayed for about two and a half months. It is strange that it has taken all this time to bring the order before the House.
No one would disagree in principle with the proposals, but some of us may have certain reservations on a number of practical aspects.
§ Mr. J. Enoch Powell (Wolverhampton, South-West)
My hon. Friend is quite mistaken in supposing that no one would disagree in principle with the proposals.
§ Mr. Kilfedder
I have fallen foul of my right hon. Friend by making that general statement. I note what he says. I agree with my right hon. Friend on so many other matters that perhaps I shall be forgiven for disagreeing with him on this point.
182 Over more than 20 years the Northern Ireland Ministry of Commerce has made great efforts to attract new investment and industry, particularly under Mr. Brian Faulkner, who established his dynamic reputation in that Ministry. Over 40,000 new jobs have been created and more than 115 new industries have been set up.
With the birth rate so high that it is proving almost a social disaster—I mention this because my hon. Friend the Under-Secretary talked about the break-up of the old industries on which Ulster's industry was based in the 1920s and 1930s—the creation of new jobs has made much less impact on the numbers of unemployed than was hoped for. I do not remember a time when the Province had less than 7½ per cent. unemployed. We generally have 10 per cent. or more and, in addition, a high level of emigration to England or abroad.
Regional development in the United Kingdom as a whole is in the doldrums. Many of us believe that joining the Common Market will not make the position of the outlying areas such as Northern Ireland any easier. I hope that my hon. Friend will be able to reassure the House that the principle behind the Finance Corporation will not be in conflict with the European Economic Community's rules and regulations.
Perhaps my hon. Friend will also tell us what progress has been made in restructuring the Ministry of Commerce in Northern Ireland to cope with the new industrial development work. If the public service is to give of its best in the fight to bring prosperity to Northern Ireland, it must be staffed by more men and women of ability and experience. I pay tribute to the present staff, which is too small in number and who have been putting up with tremendous difficulties.
For far too long the dead hand of the Ministry of Finance in Northern Ireland has squashed initiative from the Civil Service and the Departments. I am glad that the Finance Corporation will not be subject to control by the Ministry of Finance more than is absolutely necessary. Mr. Charles Villiers, the first chairman, would be well advised to clear the decks by having his tussle with the Ministry of Finance at the beginning. He should get the guidelines agreed well in advance, 183 otherwise he will face endless, irritating, penny pinching interference by the non-experts of the Treasury, who will want to poke their noses into everything that he and his directors on the board do. The Finance Corporation is too important a proposal for the prosperity of Ulster to be decimated by bureaucracy.
My hon. Friend said that a new section is added to the order—it has been added by the United Kingdom Government—making the Corporation accountable to the Comptroller and Auditor-General. This is a policy which was advocated by my hon. Friend the Member for Antrim, North (Rev. Ian Paisley) in Committee at Stormont and which was resisted by the Stormont Government on the grounds that the Corporation was an independent organisation.
The fear which I and many others have is that the bureaucratic Comptroller and Auditor-General procedure will blunt the speed of decisions, curb the flexibility of the Corporation's action and be wholly inappropriate. The Cairncross Report recommended only independent auditors. I should like to hear what my hon. Friend the Under-Secretary has to say about that.
§ Mr. Kilfedder
Perhaps we could deal with that matter later. In saying that to my hon. Friend, I am not ignoring what he says, but I have to be brief and there are other matters I wish to mention.
I hope that Mr. Villiers will come to a sensible arrangement with the Comptroller and Auditor-General. The Corporation's financial assistance to industrial undertakings must not be subject to petty scrutiny. It is not in the best interests of the companies or the Corporation that its daily financial transactions should be questioned, because confidence and confidentiality are essential to success, and success is what we want. As the Corporation is to lend money to ailing companies and new companies coming to Northern Ireland, it must be free to act the part of a merchant adventurer. Mere financial speculation is ruled out by the criteria which the undertaking has to satisfy, but the Corporation should not be put off by the possibility that in one 184 or two cases it may not be successful. The gamble must be taken. It is a gamble worth taking. With financial assistance going to so many firms, there are bound to be some disappointments. That is a risk which the Corporation must be prepared to face.
The physical disadvantages of Northern Ireland and its geographical remoteness from the biggest markets must be overcome by greater efficiency, better management, cheaper production and more effective labour relations. The Finance Corporation will find plenty of management problems in Northern Ireland industry where its expert help will be invaluable and where extra money at the right time can make all the difference. Already much has been done and is being done by the industry training boards, the various ministries and the trade unions.
A sum of £50 million has been made available to the Finance Corporation. Can my hon. Friend the Under-Secretary say whether the £2½ million for the International Computers Limited factory at Castlereagh in my constituency is to come under that sum or is in addition to it? The successors to ICL will need further assistance and financial help if they are to diversify and to keep the present work force of 1,700 men fully employed. The Government now have a 62.5 per cent. interest in the ICL factory at Castlereagh. What will be the total cost of this Government action? Will the new firm be handled by the Northern Ireland Finance Corporation? Does not the sum envisaged for ICL at Castlereagh suggest that £50 million may not be sufficient to bring prosperity and full employment to Northern Ireland?
§ Mr. Merlyn Rees
This illustrates one of the points that, whether in this country or in Northern Ireland, we must clear up. If ICL already has equity capital owned by the Department of Trade and Industry and gets money funnelled into it probably on top of that now that there is this Corporation in Northern Ireland, is there liaison between the DTI and the Northern Ireland Department? If the short answer is "Yes", what form does it take? Here is a firm that, not only in a regional development way, can get money from two sources.
§ Mr. Kilfedder
I am glad to hear that the Government have appointed a trade 185 unionist to the board. This is something which the Stormont Government envisaged and announced during a Stormont debate on the Northern Ireland Finance Corporation.
I end on a constituency appeal. Little new industry has been introduced to North Down compared, for instance, with the constituency of my hon. Friend the Member for Antrim, South (Mr. Molyneaux) in particular. It is lamentable that North Down has been deprived of new industries which are needed for that area, when the North Down area plan published recently indicates a substantial growth in the population of the area. Plainly much new industry will have to be brought into the area if unemployment, which is already showing an increase, is not to become worse. We must try to avoid this.
I am particularly glad that one of the key provisions is for the Corporation to undertake new investment and to assist undertakings not yet established in Northern Ireland, and I wish it every success.
§ 10.55 p.m.
§ Mr. J. Enoch Powell (Wolverhampton, South-West)
Clearly this is not the time for a general debate on the principles of intervention in private industry or upon the underlying nature of the tragedy of the Six Counties. Nevertheless, it would perhaps be wrong if, very briefly, a contrary view on both points were not put on the record.
The hon. Member for Leeds, South (Mr. Merlyn Rees) had a little gentle fun with my hon. Friend the Under-Secretary of State on the common acceptance on both sides of the House of interventionism of a kind to which he on his side has more right than has my hon. Friend on his side. The laws of economics and of human nature do not alter when they pass the Irish Sea. The harm and economic loss which ultimately result from public money, raised by taxation or by borrowing on public account, being invested in projects which public bodies and civil servants under various names consider may be profitable are just the same on this side of the Irish Sea and the other. Indeed, since they are harmful, a rather stronger economy is needed so that it might suffer less from their impact. These policies are more harmful and are 186 likely to do more damage in an economy where the difficulties are greater than in one where they are less. Therefore, I cannot join with my hon. Friends representing Northern Ireland constituencies, though I understand the temptations to which they are submitted, in welcoming on economic grounds the proposal which Stormont passed and which will now, of course, be accepted by this Parliament.
Nor can I accept the connection between this proposal and the violence in Northern Ireland. The Review Committee quoted by my hon. Friend put forward the view that unemployment in Northern Ireland and economic change and the consequences of economic change in Northern Ireland had been a contributory factor to the violence and the disturbances. The hon. Member for Leeds, South said that it was one of the underlying causes of the unrest. I totally disagree. This notion is part of the old fallacy that evils such as violence arise from economic causes, that delinquency is due to bad housing, and so on. Nothing could be more uncomprehending in the face of what is happening in the Six Counties than the notion that these are the consequences of unemployment and of economic conditions. They are of political character, of political origin, and they would have occurred if economic circumstances had been totally different. Indeed, it would possibly be easier to argue that they would have been more likely to occur, and would, perhaps, have taken on an earlier and more exacerbated form, if economic circumstances had been more favourable.
Therefore, if we are doing this thing under the delusion that it will contribute to ending violence in the Six Counties, we are flying in the face of all experience.
§ 11.0 p.m.
§ Mr. Rafton Pounder (Belfast, South)
My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) would not expect me to agree with him for I welcome most wholeheartedly the establishment of the Northern Ireland Finance Corporation in the circumstances prevailing in that part of the United Kingdom.
It is particularly sad that when the axe of direct rule fell, the Bill in its Stormont form was literally only hours away from receiving the Royal Assent, 187 but since then two and a half months have been lost before it has come before this House to complete its stages. I do not wish to make a meal of the fact that we have had 10 weeks of direct rule, but this Measure had then almost been completed. It was at the same stage of near-completion as the Prosecution of Offences Bill which came before this House as an order some weeks ago. It is unfortunate that we have had to wait this time for a Measure which both the Secretary of State and the former Northern Ireland Government were agreed was a matter of considerable urgency.
It is possible and perhaps fair to ask how many firms which could have been helped have not been helped during the past two and a half months. I ask this because on 17th February Mr. Bailie, then Minister of Commerce in Northern Ireland, said in Stormont that cases which would fall to be dealt with by the Corporation would be dealt with by the Ministry of Commerce until the legislation was passed. Has this been done, and if it has, how effective has it been?
I am indebted to the hon. Member for Leeds, South (Mr. Merlyn Rees) for not engaging, as so easily and justifiably he could have done, in play about the fact that when the Industrial Reorganisation Corporation was being abolished by this Parliament, the Northern Ireland Government were contemplating the establishment of this Corporation. But there is a distinction to be drawn between the IRC and the NIFC. The justification for the NIFC is purely and simply the assistance it will give to those firms in Northern Ireland which need help because of the damage they may have suffered because of terrorist activities. Herein lies the difference between the IRC, which had a blanket economic assistance grant at its disposal and the NIFC.
I welcome that there is provision in the order for financial assistance to new projects. Tragically there are very few new projects in the pipeline in Northern Ireland at this time. But it is nothing short of miraculous that during the past three years, when every aspect of Ulster life has been ravaged by the attacks of terrorists, the economy has been in as good a shape as this. It is a tribute to the grit and determination of everyone engaged in Northern Ireland industry that 188 they have not allowed themselves to be daunted by the gunman and the bomber.
Some months ago the CBI in Northern Ireland conducted a survey of 200 firms which represented about 80 per cent. of the work force engaged in manufacturing industry in the Province. The results showed that 85 per cent. of the firms questioned stated that their order books were as healthy as, or healthier than, they had been a year previously. As my hon. Friend the Member for Down, North (Mr. Kilkedder) said, one of the reasons that the Ulster economy has not suffered more is that it was in fairly good shape up to 1968. It had widely diversified, very largely as a result of the tremendous efforts in the late 1950s and the 1960s by the then Minister of Commerce, Mr. Brian Faulkner.
The reason why the NIFC is so important for Ulster at the moment and is so urgently needed is that the momentum which was gained during that time must not be lost as a result of these disturbances. The Corporation will help to ensure that the economy will be able to ride over this terrible period in our history.
I was not so long ago an auditor in Northern Ireland and I know that many firms there were in extremely healthy financial shape. Many of those firms are now in trouble. Although they have dealt with suppliers in Britain for many years, they are now having their credit arrangements withdrawn and are being asked to provide cash for supplies and yet at the same time are giving credit to their customers. Very few firms can go on for any length of time in that situation. Liquidity problems, acute as they are in certain manufacturing concerns, are of the gravest nature in many retail and distributive organisations, particularly in the city centre of Belfast.
Although there may be some anxiety about the Corporation being given sweeping powers, what must be welcomed is the provision that it shall be a condition of Corporation support that management structures where necessary shall be improved. This is a welcome move because there are a number of firms about whose management qualities one has had reason to be anxious for some time.
I conclude by dealing with the question of public accountability. When this 189 subject was discussed in Stormont there was a sharp division of opinion among Unionist back benchers there. I do not challenge the change which has been made in the original Stormont legislation, but as a member of the Public Accounts Committee of this House I would be hard put to put it to justify such a position. I believe there should be public accountability for any organisation where public funds are employed; personally, I have no doubt about this at all. What concerns me, however, is that in the order the Comptroller and Auditor-General in Northern Ireland is the person to whom the Corporation should report. The Public Accounts Committee in Northern Ireland, to which he normally would be responsible, is now in limbo.
Does this mean that consideration is being given to the establishment of a Sub-Committee to deal with Northern Ireland matters in the Public Accounts Committee in this House? I do not know whether that is being contemplated, but I should have thought there was a case for that to be done. It is surely crazy that in the first year of operation there should be no opportunity for some accountability for the money which will be expended. I very much hope that, since so many exceptions have been made and ad hoc arrangements introduced, as a result of the prorogation of Stormont, we should for this year have in this House a Sub-Committee dealing with Northern Ireland matters, matters which normally would have come before the Stormont Public Accounts Committee.
I conclude as I began by warmly welcoming the order in the light of the present circumstances in Northern Ireland.
§ 11.8 p.m.
§ Mr. Stanley R. McMaster (Belfast, East)
I should like to say a few words in support of this order, which I welcome. I agree with other hon. Members about the urgency of setting up such a Corporation. Although I agree with my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) about the unrest perhaps not having its roots in unemployment, I am convinced that, because many people are unemployed and underemployed, particularly in areas such as Londonderry and Newry, that is to say, in the large border towns of Northern Ireland, this has aggravated 190 the unrest which has plagued Northern Ireland for the past three years.
Therefore, in so far as this unemployment problem can be tackled by the Government by giving support to private industry, I feel the setting up of a Corporation such as this might help to restore law and order in Northern Ireland.
However, it is a fact that civil unrest, in any part of the world, usually occurs not when conditions are at their worst but rather when they are improving, and to this extent I agree with my right hon. Friend. It has been suggested on occasions that conditions were improving so rapidly that the republican elements in the community were becoming apprehensive that unless they acted quickly they would find little support and that it was perhaps this which accelerated the events which occurred in 1969 and led to the present state of anarchy and open rebellion in Ulster.
I have seen the effects of unemployment in my constituency. East Belfast has been badly affected by the rundown in traditional industry referred to by the hon. Member for Leeds, South (Mr. Merlyn Rees) and other hon. Members during this short debate. I have particularly been concerned with the effects of the mechanisation of the shipbuilding industry. When I became the Member for Belfast, East 13 years ago, 24,000 men were employed in Harland and Wolff, but in the following five or six years that was cut in half and more and is now down to 12,000 or less. But as a result of the vast sums of public money spent on Harland and Wolff the capacity of the yard is much larger than it was before so that, with a work force less than half what it was 12 years ago, it can now produce a far greater tonnage of ships. That is one of the factors which has led to unemployment in shipbuilding, not only in Northern Ireland but in the United Kingdom and throughout the world.
I should like to ask my hon. Friend the Minister to say a little about the service industries. If we are to have any hope in future, in Northern Ireland and the United Kingdom as a whole, of employing the numbers employed in the United Kingdom over the past 50 years, we must pay a great deal more attention to supporting and promoting the service industries. The order refers particularly 191 to manufacturing industry. In Northern Ireland there is little hope that manufacturing industry can be expanded rapidly enough to take up the slack for which it has to cater—in the first place, as my hon. Friend the Member for Down, North (Mr. Kilfedder) said those displaced from agriculture due partly to mechanisation and partly to the high birth rate in Northern Ireland. If these numbers are to be employed in Northern Ireland industry, we must build up the catering and hotel industry and other such industries in Ulster.
I should like to ask my hon. Friend what help is to be given from this sum to the service industries. I should like to ask him to pay particular attention to building up the tourist industry in Northern Ireland. We are, and were in better times, proud of the attraction of our fine beaches and coastline, and there is fishing and shooting, if I may use that word in the present context. I ask whether particular help could be given to the hotel industry which would provide employment for many people in Ulster.
It should be one of the functions of the Government to help spread employment evenly throughout the United Kingdom and I therefore support an attempt, such as that in this order, by the Government, to use public money to support private industry to enable it to function where in ordinary economic conditions it would not otherwise flourish. If it were not for Government intervention in these matters, industry would tend to concentrate more and more in the South-East of England, to the great disadvantage not only of Northern Ireland but of other outlying parts of the United Kingdom. This would produce social problems in the South-East and of course problems associated with unemployment in the rest of the United Kingdom. It is for this reason that I feel that the money proposed in the order may prove inadequate.
I should like to repeat what some of my hon. Friends said. What is the Government's long-term aim with respect to assisting industry, both manufacturing and service, in Northern Ireland? Is the £50 million to last one year or two? Is it to be a rotating sum? What provision is to be made to augment it? What will be the long-term role of the Northern Ireland Finance Corporation?
§ 11.17 p.m.
§ Mr. James Molyneaux (Antrim, South)
At this late stage I shall make but one brief point with regard to the suggestion that the scope of the Corporation should be extended to cover companies operating on both sides of the Border. I remind the House of the difficulties arising from the allocation of largesums of money to areas outside our jurisdiction without proper safeguards. One has in mind the payment by the United Kingdom Exchequer of £10 million per year to agriculture in Eire under the Anglo-Irish Free Trade Agreement. Parliament here has no control over this sum, which in the past has been used in such a way as to bring ruination to the meat packing industry in Northern Ireland. I therefore urge the utmost caution in this respect.
§ 11.18 p.m.
§ Mr. Keith Stainton (Sudbury and Woodbridge)
This clearly is not the time to indulge in polemics or to go into the background of the situation, but there are three specific points about this order I want to raise.
First, the new Corporation has an overall limit of £50 million on the principle of advances. An Order in Council is an unprecedented way of setting up a non-Governmental body with such a large budget. This point should be made clearly and in conjunction with that I should like to say—and I am open to contradiction—that my impression of the whole situation is that this is a £50 million subvention from the taxpayers in England, Scotland and Wales to Northern Ireland. I do not necessarily regret that, but let us please have it on the record that this Order in Council procedure for an amount of this size is without precedent and that this is a subvention out of my pocket and the pockets of others in England, Scotland and Wales to those in Northern Ireland.
§ Mr. McMaster
I draw my hon. Friend's attention to the provisions of the order. Under paragraph 4(2), this money is to be used to acquire shares or to make loans or to give guarantees, but not to give grants. Therefore, in so far as the money spent will be represented in shares and loans, it can hardly be said to be a subvention in the way of a direct gift.
§ Mr. Stainton
That all depends on whether the loans and guarantees and shareholdings come home. Every ship needs a fair wind to get it into harbour. Perhaps we can leave the point at that.
I turn to the question of public accountability. I am not impressed by the argument advanced by various Ulster Unionist Members tonight about the possible inhibitions on this Corporation in terms of activity of the Comptroller and Auditor-General. As I remarked in an intervention, an audit is a posthumous inquiry and there is an essential difference between a commercial audit and the Public Accounts Committee procedure, which is implicit in what is proposed by the Comptroller and Auditor-General's reports.
Nevertheless, I take the point made by one of my hon. Friends about where these reports will lie, whether they will come home to roost in the Public Accounts Committee of this House or some new sub-committee of that body. I do not care to differentiate between the one and the other, but, heavens above, for Cooper Brothers or some similar firm of chartered accountants to inquire where the money has been spent is one thing, and it is quite another for a Committee of the House to inquire into the directions in which the money has gone. I have here a brief which refers to Dr. Paisley—an un-parliamentary way for me to refer to him—but I must compliment him on his insistence that the Comptroller and Auditor General at least should be brought into these proceedings.
Finally, and very briefly, I query with my hon. Friend the adequacy of Article 8 of this order. I refer specifically to theLimit on guarantee by Corporation and Ministry of Finance and sums advanced to the Corporationand the limit of £50 million. Article 8(c) says:the principal of any loans in respect of which guarantees have been given by the Ministry of Finance under Article 6(2)".Under Article 6(1),The Corporation may, with the approval of the Ministry and the Ministry of Finance, borrow money.I suggest that there is a deficiency in the drafting of Article 8(c), and that it should read 194the principal of any loans in respect of which moneys have been borrowed and/or guarantees have been given by the Ministry of Finance under Article 6(1) and 6(2).I take it as quite incontrovertible that under Article 6(1) the Corporation, with the approval of the Ministry, may borrow money. Therefore, the loans are entirely open; there is no guarantee in that at all. It is discretionary under Article 6(2) whether guarantees may be forthcoming or not. I should like to see it embraced in Article 8, so that instead of reading as it now stands Article 8(c) should read,the principal of any loans in respect of which moneys have been borrowed and/or guarantees have been given by the Ministry of Finance under Article 6(1) and 6(2).
§ 11.23 p.m.
§ Mr. John E. Maginnis (Armagh)
I shall not delay the House long at this time of night.
I should like to make one point to my hon. Friend. I represent a major proportion of the canning industry in Armagh, and I am sure my hon. Friend will realise that during the past year or so it has been passing through a very difficult time. The great difficulty in the canning industry is simply that in a year of a good crop the canners have not the finance to can all the surplus apples, and they are, therefore, dumped. That, in conjunction with the competition from Italy, leaves the canning industry in a very poor state indeed.
I hope that my hon. Friend, when he discusses this with his colleagues, will pay particular attention to this very vital industry in Northern Ireland, because this crop is an indigenous one, and 90 per cent. of it is grown in the County of Armagh, and in connection with it a lot of people are employed directly and indirectly. If this industry were to die it would have a bad effect on the rural population. I hope, therefore, that my hon. Friend will pay particular attention to the canning industry when this money is disbursed.
§ 11.25 p.m.
§ Mr. David Howell
I am grateful to hon. Members for the welcome which most have given to this order, which covers a matter that was, as I said earlier, almost completed but for the last stages in the Stormont Parliament, now prorogued. In the time remaining the most fruitful thing would be for me to try to answer some of the questions that have 195 been raised and to make some general observations as I go.
The hon. Member for Leeds, South (Mr. Merlyn Rees) began by asking about bombed firms and whether it was the intention that this instrument should be used to help firms that had received terrorist bomb damage. While it could conceivably be so used if a firm got into difficulty as a result, there are other instruments which are the prime ones for bringing rapid aid to firms disrupted by terrorist activity and which have been specifically bombed, not suffering from the consequences of bombing elsewhere. Those are the compensation payments under the Criminal Injuries Compensation Acts, specific insurance support and "topping-up" by the Minister of Commerce and a number of other bodies, to counter redundancy, and to find employment for people whose jobs are lost as a result of bombing. There is a wide range of measures in the armoury ready to help in this kind of situation, and examples have been seen recently, such as with the bombing of Courtaulds at Carrickfergus. This would not be one of the main aims of this instrument.
The hon. Gentleman asked about criteria. This is of central importance. They are set out in the order but he rightly probed further on the question of the prospects of solvency. What do we mean by that? This is one of those general conundrums, general propositions, to which there is almost any answer that the proponent cares to make. What has to be specified is the exceptional nature of the Northern Ireland situation, the exceptional difficulties into which firms are plunged, not by bad management, not by ill-judgment or investment in products which subsequently cannot be sold with the result that there is no profit, but simply by the icy winds of events which suddenly lead to a situation where their normal customers will not place orders, where all sorts of production difficulties and needs for security interfere with the positive cost structure of a project in which it may be involved. These and many other matters incidental to the general civil disturbances, incidental to other more specific acts of terrorism, are the difficulties which some Northern Ireland firms have had to face, and in some cases they have been very severe. In many cases, despite their severity, they 196 have been superbly and effectively met and overcome.
There have been, are and will be cases where these effects have a direct and temporarily devastating effect on operations, cash available and the smooth running of the firm. It is this kind of situation, where the long-term prospects of the firm in normal times, using reasonable judgment—and this is a subjective judgment—are good, when it is felt it would be a viable firm and could be solvent, that the powers will be helpful. This is the only way in which I can clarify and develop the points made on the criteria.
The hon. Gentleman also asked about financing and asked why it was out of the Consolidated Fund. I am sure he will accept that if every operation, undertaking, move and policy decision by the Corporation were to be a matter of debate and intensive discussion in this House, it would place the Corporation in an impossible position or, at any rate, a position far removed from the precise position in which we wish it to be of having flexibility in helping firms. So there would be an obvious difficulty there.
As for borrowing from outside, I agree that this is a slightly optimistic power to take in the present situation. We do not envisage that the Corporation will be doing much borrowing from outside, certainly not unguaranteed, in the near future. But some situation might arise where it would be useful, and that is why the power is there.
The hon. Gentleman referred to common economic policies with the Republic of Ireland. I do not think that he was suggesting what one of my hon. Friends may have thought, that subventions and aid operations should extend both sides of the border. The Stormont Government were taking steps to examine and develop economic links with the Republic, and we should like to see it go further in a number of obvious areas like tourism, regional questions, energy and such matters. This is a point which was being pursued, and it must be again.
I come, then, to the question of accountability, which was first raised by my hon. Friend the Member for Down, North (Mr. Kilfedder) but also by many others. Also my hon. Friend was unwise enough to claim universal assent for the 197 principle in the hearing of my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). I ought to have warned my hon. Friend that he would not get far in claiming that there was general agreement. As my right hon. Friend the Member for Wolverhampton, South-West made all too clear, he feels very differently on this matter, as on others.
The question of accountability is one to which my right hon. and hon. Friends and I have been giving close consideration. Defending myself and my colleagues from another criticism which has been voiced, it has been necessary because of this to make some changes and involve ourselves in some redrafting, and this is one of the reasons why the order comes six or seven weeks after the Temporary Provisions Act and not sooner. When hon. Members remember that we had a new Government machine to set up and a new situation to establish, it is not too bad that we have succeeded in bringing forward this order in the time that we have with the necessary changes in it. The one body on which very great credit is reflected by the swift way in which this and other operations have been carried out is the Northern Ireland Civil Service, for which no praise is too high in the circumstances in which it has been operating in the last few months.
On the question of accountability, the change that we have made is that the Corporation is now required to go through not merely the commercial audit but the audit of the Comptroller and Auditor General of Northern Ireland. It is now required to make reports to the Minister on the performance of its functions, and these must be laid, together with copies of its statements of accounts and the Comptroller and Auditor General's report on each annual statement of account, before the prorogued Parliament at Stormont. While it is prorogued, the statutory obligation will be discharged by the reports being handed in to the Votes and Proceedings Office, and copies of reports will be made available on request to Members of the Northern Ireland Parliament.
The question that immediately arises is that that is all very well, but we are talking about a prorogued body. Will Westminster have any opportunity of see- 198 ing the reports? The precise position is that the Northern Ireland (Temporary Provisions) Act does not require the laying of reports under Orders in Council made under the Act before Parliament at Westminster while Stormont is prorogued. There is therefore at present no requirement, strictly speaking, that these reports of the Comptroller and Auditor General have to be laid before this Parliament or before its Committees. However, we recognise the obvious difficulty—the "deficiency" if one likes—that that creates and my right hon. Friend is considering how this might be resolved.
It is a matter in the last resort for the House of Commons itself to resolve and take a view on. If the Public Accounts Committee and hon. Members wish to examine and go into detail on all reports put forward by the Comptroller and Auditor General it might be possible to arrange informally that these reports are submitted, but these matters will have to be considered further. The difficulty is recognised. It is not met by the Northern Ireland (Temporary Provisions) Act, but it is clearly there, and it is a matter to which attention and consideration will and must be given.
I was asked about ICL and the £2½ million purchase of shares which has been made under existing Northern Ireland provisions by the Ministry of Commerce. The hope and intention is that the Corporation will turn its attention to this matter, but the sum of money involved is not included in the £50 million ceiling. It does not come under that. As another hon. Member reminded us, an undertaking was given earlier that the Ministry of Commerce would involve itself directly in specific cases where firms were in severe difficulties arising from terrorist activities and civil disturbances and would do so pending the arrival on the scene of the Corporation. In fact, in one or two cases the Ministry of Commerce has been prepared to help and has been dealing with a number of cases, although not many have arisen.
I was asked about liaison with the Department of Trade and Industry. There has been liaison on this matter, but we are dealing with a wholly exceptional situation in Northern Ireland in which swift measures to deal with a particular area or situation related to the 199 civil disturbances and to the unrest in the Province had to be taken. That was the situation in which the purchase of the shares in ICL Castlereagh took place. It was a move dictated by the circumstances of an exceptional security situation and influenced by civil disturbances. It was in that situation that my right hon. Friend judged that it was right to make this move.
I think that I have dealt with most of the points that were raised.
My hon. Friend the Member for Belfast, East (Mr. McMaster) asked about service industries. I said at the beginning that, although it was expected that the Corporation would look mostly at manufacturing concerns, retailers and hotels are not ruled out. Further legislation to help hotels is being considered by my right hon. Friend, but the service industries are not ruled out. Indeed, as we go along, and as opportunities emerge, they may be the subject of substantial attention from the Corporation. We must leave that to the discretion of the Corporation as it goes along, but it has it in mind that the service industries should receive its attention.
§ Mr. Stainton
My hon. Friend appears to be on the point of extinguishing the flame of his candle. I asked about Article 6(1) and creditors and those who advanced money to the Corporation. My hon. Friend said that he was reaching the end of his speech. I think that the point that I raised is very important in terms of the top limit of £50 million.
§ Mr. Howell
I had not forgotten my hon. Friend. Any impression that I had reached my peroration was false: I will certainly be dealing with his point.
I wanted to deal briefly first with the question of the life of the Corporation. All the Corporation's powers of financial assistance under Article 4 (2) will cease on 31st March, 1975, unless extended by affirmative order. We cannot know now whether there is likely to be a continuing need for the Corporation after that date or whether in its present form it will be geared to meet that need, but if there should be a need to change it, clearly, fresh legislation would have to be promoted. But the order-making provision would allow for extension if it were de- 200 cided that the present powers were adequate and if we are still studying events.
My hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton) rightly said that this is a very large proposition to be tackling by Order in Council. We recognise that fully, but this is an exceptional situation. We are under the Temporary Provisions Act. The matter has been discussed to the last process in the legislative procedures in another Parliament, now prorogued. For that reason, we feel justified in bringing it into being by Order in Council. But do not let my hon. Friend imagine that we can brush aside his proposition that this is a substantial matter.
I have been into my hon. Friend's point about Article 8 very carefully. I have looked not merely at the particular sentence to which he pointed but at the other three paragraphs. I am advised that, taken together, they effectively establish the £50 million ceiling in the way required by the order. I see his point in suggesting different wording, but I would ask him to accept that the ceiling is established.
We are dealing with a wholly exceptional situation. I understand the irresistible temptation of the hon. Member for Leeds, South to make comparisons with Socialist experiments, but I know that he will accept—because his comments on the Northern Ireland situation have been very profound—the exceptional nature of the situation there, the exceptional need to take radical measures to maintain employment and the economic confidence and viability of the province. I think that it can be done net merely with this instrument but with many others and, above all, with the effort and vitality of the people of the Province of Ulster. I therefore commend the order to the House.
§ Question put and agreed to.
That the Northern Ireland Finance Corporation (Northern Ireland) Order 1972 (S.I., 1972, No. 731), a copy of which was laid before this House on 16th May, be approved.