The Minister explained last night what was the extent of the changes with regard to this Bill but, so far as I could hear him, he failed to give us any reason for the main change which is being brought about by this measure he introduces. First of all, I should like to refer to some of the matters that are not the subject of any important change. Recently, I saw, in relation to this Bill, an advertisement in a partisan newspaper that there were £1,000,000 being given for industry. For the sake of accuracy, it might have been added that it was the same old million, with very little exception, and, secondly, it might have been added that, whereas, previously, there had been a guarantee year by year as measures went through that, if the million pounds had been used for industrial purposes, there would be no hesitation in providing other sums, the so-called million that is being provided now is over a five-year period.
The Minister made a certain amount of play with the change which, apparently, he considered an important one, so far as the new Bill is concerned, that, for the future, individuals rather than corporations or rather than, as the old Act had it, bodies corporate or incorporate, can get loans or guarantees. I do not know if he has been advised, as he said he was on that point, that any difficulty had arisen because my experience of the working of the previous Acts was that there was no difficulty whatever when a good individual came along with a good proposition, in having him associate himself with other people sufficiently to enable him to come within the four corners of the old Acts and to become a body corporate or incorporate in order to secure the facilities that were offered. There was, however, as the Minister pointed out, quite a good reason for having an association rather than an individual, when that matter could be so easily arranged, the beneficiary under the Act and it was that you had a continuance and, secondly, that, as you could get two or three people to join rather than a single person, it did mean that you started off with, prima facie, a better case than if there was only a single individual and that you got, when that could be secured, a sharing of the liability and you got, where it was a matter to be looked to, an increase in the security that was being looked for under the previous Acts.
An additional change to which the Minister drew attention was that there was to be a new type of advisory committee. We are to have, for the future, a permanent chairman and there is to be a panel of business men. It is quite possible, if there is going to be a rush of applications, or, rather, a rush of good applications, under the Acts, that it is better to have a larger number from whom to draw than the old limited committee, but even that benefit has its disadvantages because, undoubtedly, the people who served before got to know, after a certain amount of experience, what were the types of cases likely to be brought before them. They had no difficulty in associating them in the different categories, which could be ruled easily enough, in certain numbers, so that even although, in the end, that may be an advantage it will not, if there is going to be a number of applications, be a completely good thing.
The Minister has told us that another of the changes is that, for the future, no loan under £500 can be granted and his explanation was that, previously, it was difficult to explain to individuals why a loan of under £500 could not be granted. Certainly, he found it very difficult last night to explain to the House what was the benefit in having the upper limit of £500 put on the loan. It seems to me that there are cases where even a small loan might be an advisable thing, and, if the Minister feels that the explanation given to the House last night was sufficient to get the House to pass the upper limit of £500, it ought to be sufficient for the individual applicants likely to come before him looking for loans. I do not think there is much case to be made for the £500 limit and I think that very few serious cases will come before this new committee where the money sought is under the £500 mark. There is a second matter and what it amounts to I do not know. The Minister said that the old type of trust deed is going to be done away with, if, and when, a loan or grant is made, and that the new procedure is going to be something in the way of what he described as an ordinary debenture mortgage deed which he, apparently, thinks will be an easier matter to arrange. I do not know that there was ever much difficulty in drawing up a trust deed. At least, I cannot see what the difference is. The difficulty about a trust deed was that it had to be associated with the particular circumstances of each case. The debenture mortgage deed will also have to suffer certain changes, according to circumstances, and there will be exactly the same delay on the part of the people drawing it up as there was about the old type of deed which was requested.
These, however, are minor points. The big thing is that, for the future, the prohibition on the amount of money, where it was going to be used by way of working expenses, goes and, for the future, the Minister may either give money or guarantee money whether it has against it fixed assets or not or whether it is specially applied for as working capital or not. He put one side the old condition with regard to the exclusion of working capital and he said that, of course, it was recognised that there was something to be said for having fixed assets against the money that was loaned. He pointed out—at least I thought that was the implication of his words—that in fact, in a case which had failed, the amount secured by the fixed assets in the end came to a very small fraction of the money guaranteed, and, remember, that used to be one of the points on which there used to be argument in the House—that there was too much rigidity about fixed assets and that the moneys that were loaned against certain fixed assets were rather circumscribed, rather limited, in relation to the value put on the fixed assets. Anybody knowing anything about the working of this Act must realise that you have to look on a fixed asset not as it appears at the moment when put before you in connection with a scheme that is being promulgated, but how it is likely to appear at the time when the concern is going to be wound up and sold more or less as scrap.
Of course, there is another side to this and it is an aspect on which the Minister gave no explanation. It is not so much the securing of fixed property against the money which the State puts out that was the value in excluding a loan or grant by way of working capital. It was quite a different thing. It was the only hold which the State had on the people who came before them as applicants for their aid to ensure that they would put money of their own into the concern. This disappears and, surely, it is at the base of all this industrial development work. In what circumstances can the Minister envisage an applicant coming before him with a good proposition about which he will not be able to get either his friends or his bank or some of the small investment corporations, either here or in England, to put up the cash?
If he fails to get either that man himself or his friends, or the bank which knows him, or some of the small investment corporations to put up the money, what special money of that individual have you tied up with the working of the concern? Quite a number of them depend on individual effort and individual attention. It comes down to what way the business is being run, and the success or failure it meets with depends on whether the man running it turns up at a certain hour in the morning to see how the business is going, whether he attends during certain hours of the day, and also on the energy he puts in and the attention he devotes to the ordinary working of the business. Is he likely to do that better when he has a few thousand pounds of his own involved, or when he has several thousand pounds belonging to his near relatives involved or when he is entirely dependent or nearly entirely dependent on State grants? That is the value of the exclusion of the working capital. It was not thought that we would get the State loss fully met by any fixed assets, but rather that if you threw the burden of meeting it on the individual when you got him to put up the working capital, you definitely tied up his interest with the successful working of the concern. That, to a certain extent, disappears now.
I should have expected that, in proof of the necessity of removing that exclusion, the Minister would have given us one or two cases, known to him, of unsuccessful applications where there was a fair prospect of success and where the only thing preventing the starting of the undertaking was that the individual could not get money of his own or money from his friends or relatives or from the bank. I do not know of any case in the years from 1924 on, in which the previous Acts were working. I knew of many cases where they made that representation to us, but when fully examined there was no case, in my memory at least, where a suitable case was made of being prevented from the successful management or the good operation of a concern because of the fact that the individual had unreasonably withheld from him banking facilities or ordinary financial facilities. We are now taking this step of ear-marking a million pounds put up here under the control of the Minister, either guaranteed or given out, and for working expense possibly, under conditions in which the individual himself will not put up a shilling. I have heard no case made here as to why that very big step should be taken.
The Minister stated, with regard to the old Acts, that they were not availed of to the extent anticipated. That is hardly the correct way to describe it. It was rather that there was not discovered to be present here the circumstances which necessitated this type of thing in an industrialised country. It was not so much here that there were not facilities, but rather that facilities ordinarily available to industrialists in other countries were withheld here. It was simply that there was no great field for the investment of money in this country and, despite all the talk at the beginning, in which I joined myself, as to the neglect of the banks in not giving sufficient facilities to industry, I realised, as the years went on, that if there was any criticism of the banks to be made it was rather that, without sufficient examination into the circumstances, they had given money to individuals who were not likely to make a success of industry because of their lack of knowledge and experience, with the result that when certain industries collapsed the consequent repercussion was very bad. It is my opinion that it would have been far better to have had a tighter rein on such enterprises and a better examination of the individuals who did get money from banks and who eventually lost not alone their own money but the banks' money, because they had not the capacity or experience to run a business successfully.
The results of the old Acts, however, should be viewed from the angle of the question put by Deputy MacDermot last night. There was less than a half a million of the old million pounds used. There was only one loan which was fully repaid of all the loans made, and that was a very small loan of less than three thousand pounds to a co-operative society, which was repaid in less than two years. With that exception, however, there was not what would be called a first-class result from any of the applications granted under the previous Acts. Now, as to what operated against success, it certainly cannot be said here that it was because the particular concerns involved were examined in any light-hearted way or because moneys were granted without pretty good examination of the likely results.
There was certain criticism of the administration of the Acts in this House, but it was almost entirely upon the point that in an Act which set out to preclude the granting of money for working capital it looked as if in certain cases money had been granted for that purpose; but there was never any complaint that money had been given out without proper examination. It was rather the reverse. The complaint was rather that the schemes were gone into too critically; that there was too much delay and that the people had to get too much in the way of financial backing either from their friends or from other sources before the State came in. The complaint was that we required too much in the way of proof of the likely success of a concern before money was granted. Despite this, it can be said quite definitely that if one leaves out the loans that were made to public utility concerns, there has not been a successful loan yet. I think the standard of success is this—has there been any concern other than the two or three concerns who got moneys mainly for the development of harbours, which has been a success so far as repayment is concerned? Has there been a case of a company keeping its commitments up to the schedule first arranged? I doubt if there is a single case. Is there one of the concerns, other than the public utility concerns, where the moneys, for which they guaranteed to recoup the State in the way of repayment of capital advanced and interest on that capital, have been fully paid up to this date? I think they are all in arrear. Most of them, in the earlier years, came in and got a renewed scheme of repayments and some of them even fell behind on the new scheme.
I also informed the House, in regard to these old cases, that in the main the concerns operating on Trade Loans (Guarantee) moneys have had not alone that facility but are also nearly all in tariffed industries. Not only have the concerns involved been engaged in industries specially protected by tariffs but they have had the special facility of the granting of money at a low rate, and yet it is not possible to deny what I have said that with regard to most of the concerns that have been operating on Trade Loans (Guarantee) moneys, there are arrears in the matter of either the repayment of capital or the payment of interest on the outstanding capital on the original scheme, as agreed when the grant was being made.
