In opening this debate, it would be useful if I were to outline the background against which the Finance Bill which we are discussing was framed. Senators will recall the economic conditions which prevailed when we assumed office last year. At that time, the economy was still only taking faltering steps on the road to recovery from the slump of the mid-1970's. Output had not recovered much beyond its pre-recession peak. Unemployment remained intolerably high and, in fact, was showing signs of rising again. Indeed, this time last year, the seasonally adjusted number on the live register was not far short of the worst level it reached during the recession. Employment, which was only showing an anaemic response to the hesitant revival in output, was way below the previous high-point it had attained. Moreover, the rate of increase in consumer prices was running at an annual rate of almost 14 per cent and seemed likely to stay around that level. On top of all that, the external environment was none too good. Growth in the economies of our trading partners was tardy, and appeared to be slowing down.
Faced with this situation, it was obvious to us that, as stated in our election manifesto, decisive action had to be taken quickly. And that was done. Immediately on assuming office we instituted job-creation schemes and took direct measures to cut the rate of inflation. Within a short time we had mapped out an even more detailed strategy to combat our economic ills and this was set out in the White Paper on "National Development 1977-1980".
The budget, which is reflected in this Finance Bill, was consistent with this strategy in that it embodied all the immediate steps necessary to raise employment and output and to curb inflation. We must be clear about that because it has been said that the budget represented nothing more than a redemption of pre-election promises, lacking any economic rationale. This is not the case. On the contrary, the budget was a carefully thought out package of measures directed at lifting the economy on to the high growth path necessary to remedy our unemployment problems. Even a superficial glance at the main provisions of the budget should be enough to demonstrate this. We need only consider these measures under two broad headings, namely, increased public expenditure and generous tax concessions.
Combined Government non-capital and public capital programme expenditure in 1978 is estimated at £3,134 million or 20 per cent more than the £2,617 million spent in 1977. With the inflation rate now in single figures, there will be a significant increase in the volume of expenditure in 1978 in line with the Government's strategy of providing a strong initial public sector impetus to set economic recovery and job-creation in motion.
The major emphasis of the 1978 public expenditure allocations is on jobs. The 1978 public capital programme at £766 million shows an increase of 16 per cent on the 1977 programme. Building and construction investment, which has a high job and a low import content, was given a high priority in the allocation of resources in this year's programme. Four hundred and fifty-eight million pounds has been allocated under this heading—or 23 per cent more than was spent during 1977.
Non-capital expenditure in 1978 is estimated at £2,368 million. This is some £410 million more than expenditure in 1977. Ninety-four million pounds of this increase is, however, in respect of the increased cost of servicing the public debt while a further £63 million is attributable to the assumption by the Exchequer of financial responsibility for local authority expenditure formerly met from the rates. The basic orientation of the balance of the increased resources available—apart from provisions necessary to meet the cost in the public sector of pay increases negotiated under national agreements—has been towards job-creation and improved provision for social welfare recipients.
The Government are pressing ahead rapidly with the job creation programme which I announced in my budget statement. Under this programme, a total of 22,860 jobs will be created—11,250 in the public sector, 6,610 on building and construction schemes and 5,000 on special employment schemes specifically targeted at young people. Already nearly 8,000 extra public sector posts have been authorised and arrangements have been made for filling them as quickly as possible. Work on building and, construction projects is also progressing satisfactorily and it is expected that the jobs target will be met.
Youth employment schemes were slower than had been anticipated in getting under way because of organisational and other difficulties but these are being surmounted. Work has now commenced in many local authority areas on environment protection schemes. The work experience programme is expected to come into full operation after the summer holiday break. The Department of Education have recently been allocated an additional £0.5 million to enable approval to be given for more projects under the temporary grant scheme for youth employment. The total allocation now available for these schemes is £0.8 million and it is expected that they will provide temporary employment for more than 1,000 young people.
As well as creating jobs directly in areas dependent on public funds, the increased public expenditure will also contribute indirectly by boosting domestic demand, thereby enabling our producers to raise output and employment.
The personal tax concessions which I made are relevant also in this context because they will underpin the growth in demand through their beneficial effects on disposable incomes. Indeed, with the help of the much improved tax allowances, coupled with the fall in the rate of inflation, wage and salary earners can look forward this year to the biggest increase for a long while in their living standards.
These tax concessions also helped to secure a national pay agreement this year. The agreement provided for higher increases than we would have preferred, but it was on the bounds of the tolerable. The Government place great store in moderation in wage demands because it is crucial to dampening inflationary pressures and to getting the improvement in competitivness on which the growth in our output depends. At present spare capacity is high internationally and competition in our foreign markets, and indeed in the home market, is intense as a result. Maintenance of competitiveness was never more important. Figures which I will quote in a minute show that both the level of recorded unemployment and the rate of inflation have fallen substantially since this Government took office. This is no coincidence, but a clear demonstration that success in the fight against inflation, in which incomes moderation is central, is crucial in solving our unemployment problem.
While I am hopeful that the present discussions about concerted international action to boost economic activity will be fruitful, this will not reduce the importance of competitiveness. If bigger markets are created by concerted international action, there will be a host of foreign producers eager to secure them.
I must emphasise, moreover, that competitiveness is of as much relevance to the home as to export markets. The success of the "Guaranteed Irish" campaign, for which I made provision in the budget, hangs on our remaining competitive in our own market. The campaign and enhanced competitiveness must buttress each other in the endeavour to switch expenditure to home-produced goods, so preventing the budgetary stimulus leaking abroad through increased imports. I might add that, though imports increased in May, the figures for the year so far do not point to any unanticipated import growth.
With domestic demand bouyant, business prospects were good. Nevertheless, the Government considered that more could be done to secure the growth in output which is needed in the coming years. We want to make the climate for business expansion as positive as possible. For this reason, I introduced in the budget a number of incentives to encourage enterprise and growth in the private sector. These incentives include corporation tax reliefs for small companies, arrangements governing a special reduced rate of corporation tax for manufacturing companies which achieve expansion in employment, indefinite extension of the period of operation of free depreciation in respect of capital expenditure on new plant and machinery, free depreciation for industrial buildings and hotels, continuation of stocks relief for a further year and abolition of wealth tax. Certain restrictions on interest relief are being modified.
As economic recovery progresses, it is envisaged that the private sector will assume a predominant role in increasing output and creating job opportunities. In the second phase of their overall strategy, the Government will direct their attention to progressively reducing the Exchequer borrowing requirement from its present level of 13 per cent of GNP to 8 per cent of GNP by 1980. The present high level of Government borrowing is accepted only as a temporary feature of the overall strategy. As it is our aim to keep the tax burden in 1980 below that in 1977, this will entail, as spelt out in the Green Paper Development for Full Employment, limiting the total of the Government's current and capital budgets to 48 per cent of GNP in 1980. Within this reduced overall share of public expenditure in GNP, priority will be given to Exchequer expenditure on job-creation.
The Government will, therefore, pursure a more restrictive approach to public expenditure in general and will be more selective in implementing desirable reforms, which would involve additional spending, than they might otherwise wish to be. As I announced in my budget statement, my Department have in hand a critical in-depth review of public expenditure programmes with a view to reducing or phasing out spending on schemes where Exchequer support is no longer warranted.
To summarise, all the measures in my Budget and in this Finance Bill form a coherent whole. They are designed to reinforce one another in order to raise the growth rate on to a higher path and to reduce the rate of inflation.
Already, there are clear signs that the strategy is being successful. Unemployment, as measured by the live register, is now 9 per cent lower than it was a year ago; the rate of price increase in the 12 months to mid-May was only 6¼ per cent, compared with 14 per cent a year earlier; manufacturing output in the early months of the year was 9 per cent higher than in the corresponding period of 1977; and in the period January-May last cement sales were up no less than 18 per cent on the same period of 1977. All these indications point encouragingly towards achievement of the Government's targets for the economy this year. The budgetary measures will have played no small part in this.
I will now comment on the various measures contained in the Bill. Chapter 1 of Part 1 contains a number of income tax provisions. The most notable of these provisions are the proposed increases in personal allowances provided for in section 6. These increases are of exceptionally large amounts—quite unprecedented in fact—and will be of very substantial benefit to all taxpayers. The largest increase is in the married allowance which goes up from £1,100 to £1,730. The married person's allowance will now be double the single person's allowance which under the Bill is to go up from £665 to £865. The widowed allowance is to go up from £735 to £935. Significant increases in the age allowance are also provided.
Section 1 of the Bill as it now stands was inserted on Committee Stage in the Dáil. It bases the income limit for the purposes of the dependent relative allowance on the level of the old age contributory pension instead of on the noncontributory pension as heretofore. It is the intention that adjustments will be made in future to take account of changes on the pension front.
Section 2 relates to premiums on life assurance policies. It provides that in the case of all policies taken out after budget day the fraction of premiums qualifying for tax relief will be a uniform one-half. Previously, for many years, a fraction of two-thirds applied in the case of policies with Irish companies while a fraction of one-half was allowed for other policies.
Since 1974, however, those other policies had the two-thirds fraction allowed to them in respect of the excess of tax rates over 35 per cent. This concession to them was made in the context of the 1974 restructuring of income tax which involved allowing relief on life assurance policies up to a taxpayer's marginal rate. The then Minister for Finance acceded to representations by the non-Irish offices in that context that the differential would be widened in cash terms if it extended to the excess of higher tax rates over 35 per cent. In effect, then, policies with non-Irish companies had a mixture of the one-half and the two-thirds fractions from 1974 onwards. In a sense one might view this on a move towards uniformity.
In order to implement full uniformity of treatment, the Government had a practical choice between adopting the fractions one-half, or two-thirds, or some other new fraction or formula. They decided that in all the circumstances relief at one-half would be adequate and appropriate. The cost of life assurance relief to the revenue is already substantial. The tax treatment of life assurance might be regarded as generous in the sense that, while relief is given in respect of part of the premiums, there is no taxation of the lump sum benefits which eventually result from the policies. I remain confident that, as I mentioned at budget time, life assurance may be expected to remain an attractive means of saving and family protection.
The principle of complete uniformity of relief derives from several factors. The differential was introduced many years ago when the Irish companies were struggling to achieve a better share of the market. They now account for more than 60 per cent of premium income. On the other hand, we have the position in which investment in the Irish economy by the non-Irish companies has increased over the years and now exceeds 90 per cent of their liabilities. Those companies made this welcome increase on the understanding that removal of the differential in tax treatment would follow. Another factor in regard to the continuance of differential treatment would be the possibility of difficulties in the context of our membership of the EEC.
Section 3 changes the basis of separate assessment of spouses. The section provides that where separate assessment has been claimed or is claimed in future, the allowances and reliefs of the married couple will in general be divided equally between them instead of in proportion to their incomes as has been the case up to now. Where reliefs relate to particular outlays, for example, mortgage interest, the relief will of course continue to be divided by reference to the amounts borne by each spouse.
The right of each married person to choose to be assessed to tax separately from his or her spouse—without, of course, affecting the total liability of the couple—was not widely availed of in the past. At my request the Revenue Commissioners recently issued to married women with incomes of their own a leaflet explaining their entitlements under tax law and, also, a simple form by which a married woman can claim separate assessment if she wishes.
Section 4, together with Part I of the First Schedule, provides for removal of the money limits which heretofore applied to premiums paid by people who are self-employed or in non-pensionable employment in order to secure retirement annuities. These money limits were £2,000 in respect of the taxpayer's annuity and £650 for annuities for spouses or dependents. The existing percentage limitations, 15 per cent and 5 per cent respectively, will continue to apply to these premiums. This corresponds with a similar provision for superannuation payments by employees.
Section 5 repeals certain provisions introduced in 1976 in relation to employees' benefits-in-kind derived from the private use of cars provided by employers. Those 1976 provisions imposed a minimum charge of £300, or 15 per cent of the cost of the car, whichever was the higher, irrespective of the amount of the employee's private use of the car. The repeal will restore the former long-standing basis of assessment of such benefits by reference to the facts of each particular case. In future, therefore, the assessment will take full account of relevant circumstances, including, for example, the actual amount of private mileage as compared with the total mileage, and the amount, if any, of expenses reimbursed by an employee to his employer.
The effect of section 7 is to exempt from income tax the income derived by thalidomide children from the investment of the tax-free compensation moneys received by them.
Section 8 provides some new interest reliefs designed to encourage investment in businesses by people working in them.
In the budget I announced that unrestricted relief would be allowed to any individual in respect of interest on borrowings made to enable him to acquire shares to any extent in a private trading company, whether he is full-time or part-time with the company. The Finance Bill makes provision accordingly. It also goes further by providing extra relief—up to £2,000 interest—to full-time employees or directors of public trading companies in respect of interest accrued on borrowings to acquire shares in those companies.
Following representations about the position of holding companies I introduced amendments in the Dáil to allow similar reliefs, confined to full-time employees, in respect of similar investments made by them through the medium of holding companies.
Chapter II deals with farmer taxation. The provisions of this chapter are designed to encourage agricultural development, to ensure that farmers are taxed fairly and to secure a more equitable tax contribution from the farming sector. They implement the manifesto commitments concerning the retention of the notional basis as an alternative to the accounts basis, a single payment date at the end of the financial year, a deduction for contractors' fees on the notional basis and the granting of a credit against a farmer's tax bill for rates.
The Bill provides for the lowering of the threshold for liability from £75 rateable valuation to £60 RV, thus bringing an additional 7,000 farmers into the tax net. However, it should be remembered that the majority of these newly liable farmers will not have to pay their full tax as marginal relief is being made available for those between £60 RV and £69 RV. Another measure designed to achieve a more equitable contribution from farmers is the raising of the multiplier from 65 to 90.
Sections 12 to 17 give effect to the changes I have mentioned as well as to some other provisions. These are described in detail in the explanatory memorandum and I need only make a brief reference to a few particular points. Section 14 provides for the substitution of five new sections for the existing sections 19 to 21A of the Finance Act, 1974.
The new section 20 provides for the retention of the notional basis of assessment. It also requires that farmers remain for three years with whichever option they choose. Representations have been made to me that this requirement could cause hardship to farmers on the notional basis who might find themselves in an exceptionally difficult situation due, for example, to disease striking herds, so that they might be taxed on an income they did not have. I have arranged that discussions which are taking place between the Revenue Commissioners and the farming organisations will include this problem. If a suitable solution emerges from these discussions provision can be made in next year's Finance Bill that those who opt for the notional basis in 1978 and find themselves in such an exceptional situation will not be committed to continue with that basis.
The new section 21 involves the granting of a deduction on the notional basis for contractors' fees in addition to the existing deductions for wages paid to employees. The requirement that employees be registered for social welfare purposes has meant that farmers on the notional basis could not get deductions for sons or daughters working on the farm, since such employment is generally not insurable. However, I introduced an amendment on Committee Stage in the Dáil which will allow for a deduction on the notional basis for wages paid to family members who are employed full time and who are paid the minimum agricultural wage. I feel that this will meet the needs of the farmers concerned and will preclude the type of abuse which necessitated the previous restriction as to registration for social welfare purposes.
The new section 21 also provides that where all the partners in a partnership are already separately liable for income tax the anti-fragmentation provisions of section 17 of the Finance Act, 1974 will not apply. This means that in such cases only a farmer's proportionate share of the land occupied by the partners will be taken into account for the purposes of an assessment on the notional basis. The new section 21A provides for the granting of the preceding year's rates as a credit against the tax bills of full-time farmers.
Section 17 provides for the situation which would arise under the Finance Act, 1977 whereby certain farmers are liable for interest on overdue tax in 1977-78, which interest would be calculated by reference to a notional assessment later found on appeal to be an over-assessment. The section provides for the calculation of such interest by reference to the actual tax due. It also provides for the extension announced on 21 October last of the period before which interest is charged on tax overdue by farmers in 1977-78. This gave farmers up to 31 December 1977 to pay the instalment due on 1 September 1977.
I now turn to Chapters III and IV in which are included some valuable tax incentives relating to significant areas of the economy. First, in order to encourage rapid growth in agriculture and fisheries in the national interest, section 18 restores tax exemption for co-operatives in those sectors. The Second Schedule to the Bill gives details of the co-operatives' transactions which will benefit. The restored exemption will operate as from 1 April last. Care has been taken in the drafting of those provisions to take due account of the legitimate interests of other traders.
Second, with a view to bringing forward the creation of employment in manufacturing, section 20 makes a number of improvements in regard to the special 25 per cent corporation tax incentive for manufacturing companies. In order to qualify for the incentive in 1978 or 1979 the companies will have to expand employment by 3 per cent during the year before but it will not be necessary to pass an output test in either year. To save unnecessary computational work, companies can opt to have the increase in their 1977 output tested by reference to the value of their 1976 sales increased by 19 per cent rather than by the more complex method outlined in the 1977 Finance Act.
The incentive is now also open to manufacturing companies which began to trade since 1976 which was the latest year of establishment for the incentive in 1977. While it will be some time yet before precise information is available about the extra employment resulting from the incentive, from statements made by a number of public companies it would seem that significant extra employment will result. The present estimate of the cost reflects this. The improvements in section 20 may well cost £10 million in a full year, and this sum together with the original annual cost of £6 million would bring the total full year cost of the incentive to about one-half of the present annual cost of exports tax relief. That surely is a very generous encouragement to manufacturers to develop their share of the home market.
Third, small companies are being given further special encouragement which may cost the Exchequer more than £1 million in a full year. Section 21 more than doubles the threshold at which the 35 per cent rate of corporation tax ceases to apply and the threshold at which the 45 per cent rate of corporation tax begins to apply. The new thresholds will apply to profits made from 1 January 1977. Even if they do not qualify for the special 25 per cent corporation tax rate, small manufacturing companies—and indeed all small companies—can of course benefit under the section.
There are also some further incentive measures. Section 22 extends for an indefinite period the operation of free depreciation for new plant and machinery. This measure was announced in the budget. I also announced at that time the proposed introduction of free depreciation for expenditure by industrialists on their buildings, and this is provided for in section 25. However, section 25 goes further in that it also extends free depreciation to those engaged in the trade of hotel-keeping for expenditure on their buildings. In order to meet a point raised during the Dáil debate, the provision here now confines the concession for hotel-keeping to premises which are registered by Bord Fáilte.
Section 23 provides for the withdrawal of the old shipping investment allowance which was introduced before free depreciation became available but has not operated for a number of years. Withdrawal is a corollary of the indefinite extension of free depreciation.
Section 26 enables capital allowances to be given in respect of contributions to capital outlays of local authorities on control of effluent. Firms are, of course, already entitled, when computing taxable profits, to make deductions in respect of outlays directly incurred by them on the control of effluent resulting from their industrial operations. Such costs are a necessary expense of the enterprise. The section ensures that a firm shall not be denied the appropriate relief where, in effect, it incurs the capital outlays indirectly by contributing to a local authority scheme. Section 27 provides for the continuation of stock relief for a further year as announced in the budget.
Before leaving this Part of the Bill I feel that it would be helpful for me to comment on section 28 which deals with tax credits attaching to company distributions made on or after 6 April 1978.
As Senators will be aware, the basic principle of corporation tax is that double taxation of Irish companies and their shareholders is mitigated when the shareholders are being assessed to tax by crediting them with a fraction of the corporation tax on the company profits out of which they received their distributions. This tax credit was fixed at 35/65 of the cash distributions when the main corporation tax rate was fixed at 50 per cent in 1976. The amount of the tax, credit is of course paid to recipients of distributions who are exempt from tax, or below the limit of taxability, and in other cases it operates to reduce tax liability. Thus, there is a real cost to the Exchequer because the tax credit applies even in cases where the profits out of which the distributions are made bore little or no corporation tax because of accelerated capital allowances or stock relief, for example.
The purpose of the section is to protect the Exchequer from an excessive rate of tax credit which 35/65 of distributions would be with a maximum corporation tax rate of 45 per cent operating since 1 January 1977. The proposed tax credit of 30/70 will substantially maintain the fraction of the corporation tax to be credited to recipients of distributions. The 30/70 tax credit will be allowed for distributions out of company profits enjoying the special 25 per cent corporation tax rate for manufacturers or the reduced corporation tax rate for small companies, to which I have already referred.
The 1977 cut in corporation tax rates has made investment by companies and by shareholders in these companies more attractive than it would otherwise be. As a result of that cut companies have more cash both to invest and to distribute. How much they distribute is of course a matter for settlement between each company and its shareholders. If distributions are maintained at the same proportion of post-tax profits as before recipients will be better off. I am satisfied that in all the circumstances the provisions of section 28 are reasonable. Given the tax incentives available, investment in Irish companies rather than in others is very highly favoured.
Part II of the Bill deals with customs and excise matters. Section 29 provides for the application of customs law to EEC levies and charges on agricultural produce, whether payable at importation or exportation, and for placing them under the care and management of the Revenue Commissioners. Section 30 confirms four orders relating to excise duty matters which were made by the Government under the Imposition of Duties Act, 1957. Details of these orders are set out in the explanatory memorandum.
I might refer here to another customs measure in the Bill, which is a repeal of an earlier enactment. The effect of this repeal, in Part II of the Fourth Schedule, is to abolish the remaining part of the rebate payable to brewers using home-roasted, home-flaked or home-malted cereals. This is being done in response to a formal complaint by the Commission of the European Communities that the rebate is incompatible with the EEC Treaty.
There are five sections dealing with stamp duty matters in Part III of the Bill. Three of these sections, namely sections 31, 32 and 34, are concerned with counteracting avoidance of stamp duty in a number of areas. These areas are the transfers of leasehold interests in property, transfers on marriage, conveyances or transfers in contemplation of a sale and the making of gifts subject to the retention of a power of revocation in the donor. The matters dealt with in sections 31 and 32 were covered by an order made last year and this order is now revoked by section 33.
Section 35 abolishes the stamp duty on contracts for the construction of office buildings. Subsection (1) abolishes this duty in the case of contracts made on or after 14 April 1978 while subsection (3) gives further relief to contracts made before this date by extending by one year the qualifying period for a refund of some or all of the duty paid. It is hoped that the abolition of this duty will stimulate activity and employment in the construction industry which is one of the country's largest employers.
Part IV of the Bill deals with death duties. Section 36 reduces from 12 to 6 years the period of time in which a charge to death duties remains on real and leasehold property in the hands of purchasers or mortgagees. The purpose of section 37 is to provide a measure of relief in certain estate duty cases where securities passing under the will or intestacy of a deceased person were sold at a loss during a certain period of recession in share values in order to meet estate duty liability.
Section 38, in Part V of the Bill, abolishes the charge to wealth tax in the case of valuation dates occurring on or after 5 April 1978. It also removes any charge to wealth tax in the case of purchases made or mortgages created on or after the same date.
Subsection (3) of section 38 reduces the rate of interest on outstanding wealth tax as well as on repayments of that tax from 18 per cent to 15 per cent and will apply as from the date of the passing of the Finance Act. Similar reductions are provided for under sections 43 and 46 in respect of capital acquisitions tax, income tax, including tax deducted under PAYE and tax deducted from payments to sub-contractors, sur-tax, corporation tax, corporation profits tax, capital gains tax and value-added tax.
Part VI of the Bill relates to capital acquisitions tax. I indicated in my budget statement that I would provide relief from capital acquisitions tax in the case of heritage properties where reasonable public access was allowed to these properties. Section 39 gives effect to this promise and I hope that this measure will both assist in the preservation of this important part of our cultural heritage and facilitate the appreciation and enjoyment of these cultural assets by a greater number of people.
Section 40 alters the conditions for obtaining an exemption from capital acquisitions tax in the case of certain Government securities which are taken by persons who are neither domiciled nor ordinarily resident in the State from persons who are not so domiciled or resident.
Sections 41, 42 and 44 and the Third Schedule provide for the changes in capital acquisitions tax referred to in my budget statement, namely the doubling of the thresholds for liability for three categories of beneficiaries, and the consequential adjustment of the ranges relating to these rates of tax. I am also proposing to double the thresholds for obligatory delivery of returns in these categories and the annual exemption for small gifts.
Finally, I turn to Part VII which deals with a number of miscellaneous matters. Section 47 empowers the Revenue Commissioners to disclose to rating authorities information in relation to the occupation of agricultural land in certain cases. This is for the purpose of administration by local authorities of rates relief under the Rates on Agricultural Land (Relief) Acts. In 1979 a land-occupier with a rateable valuation of £60 or more will not be entitled to rates relief. For this purpose account must be taken of aggregate valuations where a farmer has land in more than one rating area.
Section 48 will remove a doubt which has been raised in recent years in relation to the status of Government guaranteed loans. Section 49 will facilitate the efficient and proper management of the national debt. Section 50 deals with the winding up of the Road Fund with effect from 1 January 1978. The fund was originally based on the principle that all revenue collected from motor taxation would be assigned to roads. That principle no longer applied from 1966 onwards when there were increases in motor tax for general Exchequer purposes. Finally, the abolition last year of motor tax on cars up to and including 16 h.p. reduced even more the proportionate contribution of motor tax to roads expenditure, the balance of finance for roads coming directly from the Exchequer. The entire finance for roads from this year on comes directly from the Exchequer through the Environment Vote. This does not mean any reduction in finance for roads. In fact there is a greater investment in roads this year than for some years past.
Section 51 has been introduced in the context of our official development assistance programme. It is intended to give the Minister power, on the one hand, to guarantee loans given by third parties to developing countries and, on the other, to provide loans, either directly or through international organisations, to developing countries. Such instruments are increasingly being used as a means of adding to the social and economic development of the developing countries. The volume, extent and complexity of our present programme, and its prospects for the future, require that the Minister be able to use these instruments when the circumstances of a particular and project within the overall programme suggests it.
I commend the Bill to the House.
