I move that the Bill be now read a Second Time. Since 1924 there has been legislation enabling the Minister for Industry and Commerce to provide guarantees for loans to assist in industrial development both for new industries and for established concerns wishing to expand their activities where the granting of guarantees was calculated to promote employment. The legislation also provided for the actual grant of loans for similar purposes.
As a preliminary to the guaranteeing or granting of any loan under the Trade Loans Acts it is necessary to consult an advisory committee, representing industrial, commercial and financial interests and the sanction of the Minister for Finance is also required before facilities can be granted by the Minister for Industry and Commerce.
The first legislative provision was made in the Trade Loans (Guarantee) Act, 1924, which provided that guarantees or loans might be granted to companies and public authorities for the purpose of meeting expenditure on buildings, plant and machinery and other fixed assets. The operation of this Act was limited to five years, but by a series of amending Acts from 1925 to 1932 inclusive the Minister's powers were continued.
In 1933 the scope of the trade loans scheme was extended by the Trade Loans (Guarantee) Act of that year which enabled loans to be guaranteed or granted to meet cases where the expenditure to be incurred related to working capital in addition to the acquisition of fixed assets. At the same time individuals, as distinct from companies, became eligible for trade loan facilities.
The duration of the Trade Loans (Guarantee) Act, 1933, was limited to five years and on its expiry the Minister's powers in regard to trade loans were continued for another five years by the Trade Loans (Guarantee) Act, 1939. This Act also fixed £1,000,000 as the total of guarantees and loans which might be granted. On the expiry of the Act of 1939 the powers of the Minister were further continued for a period of five years by the Trade Loans (Guarantee) Amendment Act, 1944. The purpose of the Bill now before the House is to continue the powers of the Minister to guarantee or grant loans for a further period of five years.
It is very desirable that some machinery should continue to exist to enable the Minister for Industry and Commerce to afford financial assistance for industrial development which might not in the ordinary way appeal to the banks or to the Industrial Credit Company Limited. The advantage of the trade loans guarantee system, as compared with ordinary commercial banking facilities, is that it provides a fixed long-term period of repayment for which industrialists can budget in their costings. Banks normally require loans to be repaid over a short period, usually less than five years, whilst the Industrial Credit Company affords financial assistance to industry mostly in cases where large amounts are involved and where public issues can be arranged.
Under the Trade Loans (Guarantee) Acts, 1924 to 1944, guarantees were actually given in 101 cases involving a total capital sum of £1,616,711. In 70 cases the loans, totalling £721,471, were fully repaid by the borrowers. In 25 cases, involving guarantees totalling £585,240, it was necessary to appoint receivers, and some of these companies ceased to operate. Repayment to the Exchequer in cases where receivers were appointed amounted to £149,170.
The Minister proposes to continue the powers given under the Act of 1939, under which the aggregate sum guaranteed was £1,000,000, and guarantees have been given to the extent of £446,000 under that Act. I should say that there have been numerous inquiries as to the financial facilities available for industrial development, either for an expansion of existing industries or where promoters contemplate starting new ones. I am satisfied that the trade loans guarantee system should be continued as proposed in this Bill. The guarantees under the Act of 1939 were availed of to the extent of £446,000. It is not considered necessary to extend the limitation of the amount of £1,000,000 prescribed under Section 7 of that Act. This Act provides that the overall limit of the amount guaranteed will be £1,000,000. In view of our experience in the working of these Acts and the inquiries which have been received recently there is evidence for a continuation of these powers, and I recommend the Bill to the House.
