I am glad to be able to announce that I am informed by the Governor of the Bank of England that discussions, which have reached an advanced stage, have been taking place amongst the banking and financial communities of the country on the financial needs of industry in the post-war period.
As a result, it is proposed to set up two companies. One company, to be named Finance Corporation for Industry Limited, is intended to have a capital of £25,000,000 and borrowing powers of four times that amount. Thus the total resources of the company would be £125,000,000. The capital is to be subscribed roughly in about equal proportions by consortiums of the insurance companies and the investment trust companies and by the Bank of England. Arrangements are being made whereby loan capital is to be supplied to the company by the clearing banks and the Scottish banks. The purposes of this company will be the provision of temporary or longer period finance for industrial businesses of the country with a view to their quick rehabilitation and development in the national interest, thereby assisting in the maintenance and increase of employment. The company's primary purpose will be to provide finance and not itself to reorganise industry.
The second and smaller company, to be named the Industrial and Commercial Finance Corporation, Limited, will have a capital of £15,000,000 and borrowing powers of twice that amount. The capital will be subscribed by the clearing and Scottish banks together with a token subscription by the Bank of England and it is being arranged that the loan capital will be available from these banks in the same proportions as they subscribe for the shares of the company.
The total resources of the company will therefore be £45,000,000 and the object will be to supply medium and long-term capital for small and medium sized businesses of the country in amounts, say, from £5,000 to £200,000; amounts of less than £5,000 can usually be procured in the ordinary way from bankers.
I am informed that it is proposed that both these companies will be managed as units in themselves, entirely independent from the banks, with their own boards of directors and permanent staffs of men experienced in finance, commerce and industry. The larger company will have the assistance of a special Industrial Advisory Panel. In order that the policy of the company may conform to the general economic policy of the Government, the appropriate Government Departments will be kept informed of the nature and extent of all major developments being considered by the company.
I am also informed that the companies intend to conduct their operations on the broadest possible basis consistent with reasonable commercial prudence and it is hoped they will thus become an important and stable feature in post-war financial machinery. These companies will not in any way supersede existing sources for the supply of capital but be in addition thereto.
These two companies are being created on the initiative of the banking, insurance and investment sections of the business communities of the country and in the opinion of His Majesty's Government they will constitute an important and helpful step in the post-war finance for industry. For these reasons I welcome these two projects as being directly in accord with and calculated to help in an important degree the Government policy of full employment.
This is a very important statement and it is obviously impossible for the House to grasp it, in all its details, having just heard it to-day. I would like to ask my right hon. Friend whether an opportunity will be provided for the House to discuss these proposals. I appreciate that formally and nominally, that is not a decision of the Government but of the banks, but the Chancellor of the Exchequer himself has shown that it is very closely inter-related with Government policy, and I would like to know whether an opportunity will be provided for the House to discuss this matter. A minor point that I would like to know is whether, on the industrial panel associated with the larger body, there will be representatives of the labour side of industry as well as of capital.
Taking the last point first, I understand that it is the intention that the management and the labour sides of industry should be represented on the panel. On the first point that my right hon. Friend has raised, that is, of course, a matter to be considered in the usual way. I myself will be glad at any time to take part in a discussion.
Can my right hon. Friend say at this stage who will appoint the boards of the two proposed companies, and will the Government be represented on either of the boards?
No, Sir, this involves no direct Government responsibility in any form but the companies will be ordinary commercial undertakings registered under the Companies Acts.
I did indicate that the smaller of the two corporations is designed specially to provide accommodation for small businesses and would be concerned with the making of loans ranging from, say, £5,000 to £200,000.
In view of the fact that the operations of this proposed undertaking will be very similar to those formerly discharged by the Bankers Industrial Development Corporation, and of the great dissatisfaction felt in industry and in the House of Commons about the behaviour of that corporation, is it intended to have some kind of instrument connecting this House with this corporation by which we can keep its activities under constant review? Furthermore, is it not obvious that the operations of this financing company are bound to affect the whole policy of priorities after the war and is it not, therefore, necessary that we should ourselves determine the policy which should govern the use of these large sums of finance?
There is a very substantial difference between the conception of these companies and between the larger of these two companies and the Bankers Industrial Development Corporation. As regards the second point, of course, these concerns will take their place in the organisation of private enterprise in this country. They are promoted on the assumption, which I certainly make, that there will be a very large field for private enterprise after the war. The existence of these companies will not in any way alter or affect the relations of the Government to industry. As I have said, it is intended that the corporation should keep in touch with the Government so that the Government may be fully aware of what it does.
Surely, my right hon. Friend cannot consider that the operations of the Bank of England are purely private enterprise, considering the very close association now existing between the Bank of England and the Government.
As neither of these companies will help the really small man who wants less than £5,000, will the welcome that the Chancellor of the Exchequer has given to this proposal cause him also to hasten the reconsideration of the Treasury ban upon issues which prevents the formation of these small companies, to which I called attention recently, for the development of local industries? This is only helping the relatively big people, and we want the small people to be helped. Will the Treasury reconsider this matter?
No, Sir, I do not think, with respect to my hon. Friend, that the existing arrangements do, in fact, prevent the establishment of quite small concerns, and I think that the practice has been to allow issues up to £10,000 in a year without control.
May I ask the right hon. Gentleman whether he has taken into account that the formation of these new companies will not provide any additional new capital but merely a new channel through which the savings will flow into industry and, therefore, will have the effect of diminishing all other loans?
As the right hon. Gentleman says that the Government will take no responsibility in the management of these concerns, does it not mean that the criterion by which these industries should get priority in the allocation of this new capital will be financial and not in the national interest, which will be a very serious matter?
Not at all. The Government will be just as free after the formation of these companies as before to influence the direction in which new capital is provided by any means at their disposal.