§ Mr. William Hamilton
asked the Secretary of State for Scotland whether he will now make a statement concerning his inquiries in connection with the Cadco development at Glenrothes.
§ Mr. William Ross
The House is aware that, following the bankruptcy of the Cadco Building Company in November, 1964, I asked my hon. Friend the Joint Parliamentary Under-Secretary of State to examine in detail with Glenrothes Development Corporation the way in which the project had been handled by the Corporation and by my Department. The conclusion he reached, which I endorse, is that more searching enquiries into thebona fides of the promoters at an early stage would most probably have led to an earlier suspension of expenditure from public funds.
In the light of the experience of this case, I gave detailed guidance to Scottish Development Corporations in May, 1965 107W about the investigation of future projects. They were instructed that, where a development requiring a non-standard building was dependent on Board of Trade assistance, commitments should be deferred until completion of the investigation of the project by the Board of Trade Advisory Committee. For other difficult cases they were provided with a checklist, based on B.O.T.A.C. practice, and they were advised to seek expert advice including that of consultants, where they thought it necessary to do so. These arrangements substantially meet the recommendation of the Companies Act Inspectors that, where more than one Government agency is concerned, machinery should be devised whereby one investigation could be carried out on behalf of all interested parties. Where in exceptional cases these procedures cannot be followed the Departments concerned will give special consideration to the means for ensuring an adequate investigation into Development Corporation projects and for avoiding unnecessary duplication with the B.O.T.A.C. inquiry.
In his report to the House in February, 1966, on the 1964/65 Accounts under the New Towns Act, the Comptroller and Auditor-General drew attention briefly to the course of events. A fuller account is now available in the report published today by Board of Trade Inspectors under the Companies Act. My only comment on that account is that the Board of Trade was in fact aware of the original intention of the Development Corporation and my Department that the viability of the project should be judged in the light of the decision of the Board of Trade Advisory Committee. It is, I think, also fair to say that, while more meticulous investigation at an early stage would in retrospect have been desirable, the outcome of this case is unique among the large number of similar cases dealt with by New Town Development Corporations in Great Britain; and the steps subsequently taken by the present administration should, in my judgment, adequately guard against any recurrence.
The extent of the loss suffered by the Development Corporation cannot yet be determined. The cost to the Corporation of the Cadco buildings was about £1.1 million. Of this total £626,000 was spent 108W on standard factory and office accommodation; four-fifths has already been let at economic rentals and it can reasonably be expected that the remainder will be disposed of before long in a similar way. The balance of about £468,000 was spent on piggeries; these specialised buildings will involve some loss, which cannot be quantified at this stage. Negotiations for their disposal are proceeding; alternatively they may be converted at some additional cost into normal factory units for sale or letting in due course.