§ Order jar Second Reading read.
§ 11.34 a.m.
§ Mr. John Horam (Gateshead, West)
I beg to move, That the Bill be now read a Second time.
In the previous Session we established Development Agencies for Wales and Scotland. In the present Session the Government intend to introduce legislation to change the Northern Ireland Finance Corporation into a Development Agency. There will then be Development Agencies for each of the three non-English development areas in the United Kingdom. My Bill seeks to complement that provision by establishing Agencies for the three English development areas—namely, the North of England, Merseyside and the South-West.
It is the view of my sponsors and myself, and of other right hon. and hon. Members, that the needs of the English regions are just as pressing as those of Scotland, Wales and Northern Ireland. I am glad to say that there is widespread support for that point of view. I am glad to have among my sponsors not only those who are now present but my hon. Friend the Member for Houghton-le-Spring (Mr. Urwin), who was responsible for the Northern Region in the previous Labour Administration, and my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), who was responsible for regional policy in this Government until he resigned at the time of the Common Market referendum.
I note that the news has spread further abroad. The Labour candidate for Wirral has made a proposal for a Mersey-side Special Development Agency. It is a major plank in his platform. I am sure that will bring him the same resounding success as we saw the Labour candidate achieve yesterday in Coventry, Northwest.
Since announcing my intention of introducing the Bill—it has enjoyed considerable interest—I have received correspondence from many who are working in the regional policy sector. Their interest has 1729 been great. Many of them feel that the agency concept will be extremely fruitful and can be used on a far greater scale than the Government appear to have envisaged. It is clear to me from the correspondence that I have had with those working in the institutions operating regional policy in the Northern Region, in Merseyside and the South-West, that they are thinking about regional policy in a creative phase. I hope that the Government will lake that on board, and that they will seek to give a new direction to regional policy.
I have two reasons for introducing this measure. The first and the least important reason is that it is only fair that the facilities for regional development that have been made available to the Scots and the Welsh, and will be made available to the Irish, should also be available to the English. The needs of the English development areas are no less pressing. Taking the conventional measures of the percentage of unemployed seasonally adjusted, excluding school leavers and adult students, the North, Scotland, Wales and the Southwest have all had unemployment varying between 6 per cent. and 7 per cent. in February. Only two regions have had worse unemployment—namely, Northern Ireland and Merseyside. The position in those areas has been considerably worse than that in regions which are to receive all the advantages of development agencies.
§ Mr. Ian Wrigglesworth (Thornaby)
May I reinforce what my hon. Friend has said? Is he aware that on Teesside we have lost more jobs in the steel industry than the whole of Scotland put together?
§ Mr. Horam
That is a very significant point. I am sure that my hon. Friend will enlarge on it if he is able to participate in the debate.
The reason that the Scots and the Welsh have their agencies but the English are still waiting for my Bill is that there has been an insistent demand in Scotland and Wales for devolution and, indeed, for separatism. I do not quarrel with that. I strongly support the Government's position on devolution. In many instances I would go further. I think that the Scottish Development Agency should come under the Assembly rather 1730 than under my right hon. Friend the Secretary of State for Scotland as I have always been a devolutionist. I have long believed that too much in Britain has been centred on London.
§ Mr. Ernest G. Perry (Battersea, South)
I am listening with great attention to what my hon. Friend is saying. It appears that his last sentence was completely out of tune with his penultimate sentence. Does he realise that in London many hundreds of thousands of industrial jobs have been lost in the past 20 years? Does he realise that London is becoming one of the lesser industrial areas, whereas formerly it was the premier industrial area?
§ Mr. Horam
If the Bill receives a Second Reading, that is an omission which my hon. Friend might try to rectify in Committee.
However, in devolution, as in other matters, there must be some equality. The Scots and the Welsh should not have two voices when the English have only one. We have accepted that the Scots and the Welsh should have a voice in the Cabinet. We saw that presence used to great effect in the Chrysler situation. We have always accepted that they have more Members of Parliament pro rata than the English regions. Added to that, there are to be Welsh and Scottish Assemblies and Welsh and Scottish Development Agencies.
That represents a formidable amount of political muscle. It makes those in the English regions, especially in the peripheral regions, very apprehensive. Many of us represent areas in which regional consciousness is extremely strong. That was demonstrated by the survey taken by the Kilbrandon Commission. Voices are already being raised in those areas, and especially as the recession deepens.
A Labour Government draw much of their strength from such areas. In The Times the day before yesterday I read an article about the Scottish situation. It said:… there is a popular demand, for which political expression must be found, for more 1731 direct power in Scotland to provide jobs and stimulate the prosperity of the Scottish economy.That demand is no less insistent in my region, or on Merseyside, or in the South-West, and the Government must pay heed to it.
There is one practical difficulty, apart from the general need to preserve the integrity of the United Kingdom, which the Government must have in meeting demands for new regional institutions. We do not want to change complicated structures, particularly the local government structure, which has recently been changed at colossal expense, amidst great protest. The establishment of Development Agencies in England would leave the local government structure untouched, yet it would give a considerable degree of devolved power to the regions which, by virtue of their geographical position, feel most closely the wind of devolution, and afford it to them in precisely the area of economic development which matters most to them.
There are other aspects of devolution to be discussed when the Green-White Paper or the White-Green Paper is introduced, but Agencies go to the heart of the matter and the needs of the regions at the pheriphery. They require action in industrial, commercial and economic areas of development in a way that does not affect the existing local government structure. In this instance—an unusual state of affairs in politics—the Government can have their cake and eat it. I suggest that, to the distinct advantage of us all, they make a meal of it.
However, I did not come here today to talk about devolution. Therefore, I want to deal with the second reason lying behind the Bill, namely, that of regional policy. I believe that the Government must undertake a thorough review of regional policy. I believe that the Development Agencies could be one of the most useful weapons in the conclusions reached by the Government following that review.
Present regional policy began in the early 1960s, and the emphasis since has been on reducing unemployment. The main measures have been general in character relating to industrial development certificates, investment grants, regional employment premium, and a generally higher level of expenditure on 1732 the social infrastructure in the developed regions and on particular items such as roads. Undoubtedly that approach has been successful. Certainly the Northern Regional Strategy Team, which has examined problems in my area—it has done a very fine job—has shown in one report that between 1963 and 1973, 50,000 extra jobs were created in the Northern Region as a result of these policies—35,000 of those jobs from firms coming into the region, and 15,000 extra jobs from firms already there which have expanded as a consequence of regional policies.
Equally, the economies of regional development areas have become more diversified as a result of this inflow of extra business and jobs; emigration has lessened, and there are fewer people coming South or emigrating from the Northern Region. Items in the social fabric, such as roads, have improved immensely in the last 10 to 15 years. I know from experience that the roads in the South-West are bad and that roads in the Northern Region are very good. That is at least one small gain.
Despite these advantages the fact is that many of the traditional problems remain and many of the most persistent problems have become worse in the last 10 to 15 years, despite regional policy. Unemployment is still high, especially among men. It has been argued recently that the gap between unemployment in the development areas and that shown nationally has narrowed, and I think that is true. But the reason for that narrowing of the gap is that unemployment in non-development areas has become worse. However, I do not think the narrowing of the gap that we have seen in the last 18 months will continue. I believe there is about to be a new deluge of redundancies in many heavy industries which traditionally shed people at this stage of the trade cycle. That may hit the country in the next six months. Therefore, I am not confident that the narrowing of that gap will persist. I do not see any evidence to show that that is a fundamentally new factor in the situation.
Development areas are still very much branch economies. The number of companies with headquarters in the regions has not increased only as a consequence of the regional policies pursued in the last 10 or 15 years. The growth of the service sector in the Northern Region has 1733 often lagged behind the growth of the service sector in the South-East and in London. In the North, for example, there is now a higher percentage of manual workers in comparison with the rest of the country than there was 10 or 15 years ago. There are no signs of a significant upsurge in the quality or quantity of the managerial and technical skills available in the Northern Region. I do not know the situation in the South-West or that on Merseyside, but imagine that it could be similar.
Sub-regional difficulties have increased. In a development area unemployment in one area can be double or treble the figure in another area only five or 10 miles away. All this remains true despite considerable expenditure of public funds. Currently, spending on regional policy is running at £600 million per year, as shown by 1975 survey prices—"funny money" as it is called.
Therefore, the verdict on regional policy is that it has lessened the problems of development areas but has not altered their basic nature. In my view, we must look afresh at our whole approach and must try to achieve a more fundamental and less crude approach than that adopted in the past. This means looking again at the objectives of regional policy and the means by which we pursue them. Of course, jobs remain a fundamental objective, particularly in the present situation, but I believe that that objective must be supplemented by aiming to create more self-sustaining growth—I emphasise the word "self-sustaining"—based on competitive regional economies.
Equally, the means by which we pursue this broadened objective must become less general, and specific. Some money is spent unnecessarily. Why give a regional employment premium to ICI when that makes no difference to the amount of investment made by that company in the Northern Region? Equally, other schemes languish for lack of support. We must have a much more effective, selective and careful approach to money spent on regional policies. The blanket approach must give way to something more discrete and careful. I am glad to see nods of agreement from Opposition Members.
§ Mr. Horam
Indeed, it may be the Opposition want to cut down that expenditure altogether, as we found under the last Conservative Government. I wish to emphasise that there must be a sensible expenditure of money in the regions. There must be an area of discretion and selection in assisting the rôle played by Development Agencies.
I wish to delineate five distinct functions for the Agencies. First, they are intended to act as an investment bank to local industry, providing loan finance and equity. Secondly, they will undertake joint commercial ventures with private companies and launch new ventures. Thirdly, they will provide managerial and financial advice to industry, particularly to small firms. I shall deal a little later with the subject of small companies, for which I know my hon. Friend the Minister of State, Department of Industry has responsibilities. Fourthly, they will provide ongoing economic appraisal of a region's development and pursue general strategies to maximise credit growth in the regions. Finally, in concert with local organisations, they will promote each region as a location for new investment.
Four of those functions are not my proposals; they are governmental propositions. They are laid down in the Government's consultative documents on the Scottish and Welsh Development Agencies. I have added one more function, namely, the point about providing an ongoing economic appraisal, which is an extremely important matter.
As regards the first three of these functions, a Development Agency should, in effect, act like a local State bank. It could loan or make grants on a variety of terms. It could subsidise interest rates, make straightforward grants, soft loans, loans with strings attached, or loans with lower initial payments and higher later payments.
An Agency should be free to set up whatever relationship it wants to with companies that it sponsors. It should be for it to decide whether it merely wishes to take a stake in the equity or have a man on the board. It would be 1735 staffed by economists, accountants, business men and men with experience as trade unionists, whether as officials or otherwise.
I would give an Agency such as this great independence. It should not always have to look over its shoulder at Whitehall. It should have a considerable degree of independence about the way it manages its funds. I believe that as a result it could operate with more verve and imagination than is provided by any of the existing Civil Service machinery.
I would also want an Agency to look specifically at the problems of smaller and medium-sized businesses and, indeed, set out to create businesses. It should always be willing to help a potential entrepreneur who wishes to set up a new business. We desperately need a body acting in this way in this country.
By acting in that way such an Agency could tap the springs of local initiative much more than is done at present. I believe that there is a wealth of local talent in the regions which is not being tapped. The history of this country shows that Britain was at its most successful in many ways when the regions were most vigorous. We must seek to return to that state of health and vigour in the regions.
Nor would such an Agency confine itself to industry. I have talked about the imbalance which exists between industry and services in the regions. We must seek to correct that. Therefore, an Agency should be prepared to help anybody, whatever proposal he has—provided that it is legal—who has a perfectly viable commercial proposition. It should not seek to distinguish one type of activity from another.
An Agency should co-operate with the local office of the Department of Industry in the same way as the Scottish Development Agency and the Welsh Development Agency will co-operate with the Secretaries of State for Scotland and for Wales.
Essentially, I see an Agency as having a more risk-taking rôle, and operating with more imagination than is possible to the Civil Service machinery, excellent job though that does. By operating like a bank it would also improve the quality of provincial financial institutions which have languished as a result of the concentration 1736 over the years by financial institutions on the City of London and also from the fact that the City has concentrated so much on financing foreign trade and to a much lesser extent on financing home trade.
§ Mr. Robert Kilroy-Silk (Ormskirk)
I am interested in what my hon. Friend said about the regional State bank, as I understood him. Would it mean that, if such a regional bank gave money to private industry, it would take an equity share in the company or firm concerned, and would there be public accountability?
§ Mr. Horam
Absolutely. I believe that I made that clear earlier. I visualise the State bank or the Scottish Development Agency or the Welsh Development Agency taking whatever form of control it wished to take. That would be a quid pro quo for financing a private organisation; I would not rule anything out.
Therefore such a body could fill a gap not only in our provincial financial institutions but also at the point where it is most needed—namely, with the smaller and medium-sized companies. Larger companies generally do not have the financing problems which other companies are facing at present. In this respect a Development Agency, in addition to contributing to the solution of a local problem, could contribute to the solution of a national problem.
It has been argued that there has been an investment gap in this area. I am not sure about that—there are arguments one way and the other. However, if there is an investment gap, agencies operating regionally could fill it.
I would draw an analogy with the French system. In France there are about a dozen regional development societies which come under the head of the central organisation for regional policy—DATAR—and which operate essentially to tap springs of local initiative in the regional areas of France by acting to provide additional finance when this is not forthcoming from the commercial system.
The fourth function is essentially one of intelligence. There are plenty of one-off studies of regional problems, but there are very few bodies with central responsibilities in each region for conducting ongoing appraisal which give people an 1737 opportunity to study problems in the region and then to go into a company or firm themselves and perhaps even become executives there. In other words, we want people to be able to have both the ability to research a region's problems and then to play some part in solving them.
That would help to keep local talent in the regions to a greater extent than has hitherto been the case. One of the problems we suffer from is a continual drain of our ablest people from the regions. We could establish a regional organisation which could keep more talent in the regions by giving further encouragement to people who want not only to understand the problems of the regions but also to play some part in resolving them.
I have included the fifth function—helping to "sell" the region—because the Government gave these powers to the Scottish Development Agency and the Welsh Development Agency. However, I would not put too great an emphasis on these powers. Obviously the regions will compete for whatever is going in the United Kingdom as a whole, but I am against regions trying to attract overseas investment on their own. That leads to a rather amateurish approach to a very sophisticated game. I would much rather there were one body responsible for representing all the regional areas abroad and then parcelling out the proceeds of its work.
This is one strand of thinking which has recently led me to suggest the concept of an Inward Investment Board to attract and monitor foreign investment in this country. I know that some of my hon. Friends will not agree with this approach, but it is the only one which makes sense in an increasingly complicated and sophisticated world where, if one is to succeed in attracting investment from overseas, it is necessary to present one's case in a highly professional manner.
In arguing the advantages of Development Agencies to the Government I am preaching to the converted, because it is they who pioneered them. They have already set up Agencies in two areas and intend to do so in a third. How could they possibly argue against setting up Agencies in three English development areas?
1738 One argument that the Government have already used when answering Questions on this subject is that the national National Enterprise Board will do the job. If so, why set up the Scottish Development Agency and the Welsh Development Agency? Why is it that the NEB can do the job in England but cannot do it in Scotland or in Wales? My hon. Friend the Minister of State could not give me a logical answer to that question even if he tried, because there is no logic in the Government's position.
Logic, however, is one thing; practicality is often another. I am a practical man, being a Northerner, and I recognise that the NEB—which is, after all, a fledgling institution, only just set up, hardly staffed—faces enormous problems. It must take on board all the complex problems of British Leyland, Rolls-Royce. the machine tool industry—Alfred Herbert—Ferranti, and so on. Those are all immense national problems.
Is it practical to saddle the NEB as well with complete responsibility in England for the regional dimension? Can it really get the sort of "feel" for an area which an institution operating only in a region could get? Is it not the case with the NEB that once again—I apologise to my hon. Friend the Member for Battersea, South (Mr. Perry)—we have yet another London-based institution managing things at a distance from the heart of the matter?
In saying that, I do not in any way wish to criticise those who will man the regional offices of the NEB, especially before they have even begun their work. On Monday this week, the NEB appointed Mr. Gerald Connolly as director for the Northern Region, based on Newcastle. Mr. Connolly is at present a director of the agricultural division of ICI and he already works in the North. It looks like an imaginative appointment, and I welcome him and wish him well. But if he were head of the North of England Development Agency, as he might be under my Bill, he could do a much more single-minded job and have rather more power and money to do a more effective job.
§ Mr. Michael Grylls (Surrey, North-West)
The hon. Gentleman says that the Minister will find it difficult to argue 1739 against the logic of setting up these Agencies, but there are two ways of looking at the matter. One tends to support his Bill, but there is another which I would be more inclined to support—that the NEB should get on with its job and we should not have a proliferation of Development Agencies.
§ Mr. Horam
I am interested to hear the hon. Member's indication of support for the NEB, though that may not have been his intention. I have answered his point by arguing that the NEB is not a suitable instrument for regional policy. I would divorce regional policy from its functions and allow it to concentrate on national problems where it would serve the country best. It will have enough on its hands dealing with these alone.
The second argument is that Agencies are a good idea, but that we should not overdo them—that three Agencies are enough. It was not I who opened this Pandora's Box. It was the Government, and they should have thought through the consequences before they did so. I do not think it would be harmful to have more Agencies. There are about 12 French development societies operating in the major cities and provinces of France and most regional experts believe they are doing a very effective job. Even if the Government wanted to draw a line, it is more logical for it to be drawn, as it always has in the past, between development areas and the rest rather than between three development areas and three other development areas.
The third argument is the ultimate—the Treasury. It is the argument that we do not have the money. The Government are spending £200 million on the SDA and £100 million on the WDA. I am proposing £100 million for the Development Agency in the North of England, £50 million for the Merseyside Agency and £10 million for the South-West of England Development Agency. These figures have been worked out according to the population of the three areas and are related to the money being given by the Government per head of population in Scotland and Wales. The Government's figures are spread over five or six years. In the Blue Paper on public expenditure, the provision for the SDA and WDA in the current financial year is £12.7 million. In the next financial year, it is £48.8 1740 million, and it goes along at roughly that level in succeeding years. I am asking for half that amount, so that in the year my Agencies are set up I would be asking for £6.3 million, with £24.4 million the next year, and so on.
§ Mr. Robert Edwards (Wolverhampton, South-East)
Why has my hon. Friend excluded the West Midlands, which now has its highest unemployment levels for 40 years and desperately needs a development fund?
§ Mr. Horam
My hon. Friend should read the Bill. He would see that I have specifically allowed for the possibility of existing boundaries of regional development areas to be changed and also for Agencies to be set up in other areas where the case can be proved. If he wishes to follow up that point, I would welcome him on to the Standing Committee, where he can put it with his usual eloquence.
§ Mr. Horam
The question is whether £6.3 million, £24.4 million, and so on, are really such large sums when one considers what is already being given to she Scottish and Welsh Agencies. I would argue that they are not. Also, it is money which falls in the one area of the recent public expenditure exercise where spending is to increase—industry, trade and training. It is planned to have a growth of several hundred million pounds in this area in the next few years. Could we not add this small amount?
If my arm is really twisted—and I have had some experience of a certain amount of that in recent days—I will even say that I am prepared to shave the regional employment premium and to give the money thereby saved to establish these Agencies. There would be no extra expense to public funds. This is a most generous offer, and some of my sponsors might not wish to go as far. However, such is my nature that I cannot resist making this offer, especially since it demolishes the Government's argument on expenditure.
The House should not think from my arguments that I regard Development Agencies as the be-all and end-all of the new phase of regional policy which I would like to see. Far from it; there 1741 are many other things which need to be done.
I would like to see central Government responsibility for regional policy more firmly in one pair of hands. I do not like the system under which the Department of the Environment is regarded, in ambiguous terms, as the "leading" authority in regional policy. It provides the chairmen of regional planning boards, but the most active Department is inevitably the Department of Industry. This division of responsibility must be sorted out.
I should also like to see a regional dimension to public expenditure exercises. There is nothing in the Blue Paper to show where in the country the money is going, as opposed to which Departments are spending it.
We need a stronger effort to attract commercial jobs in the service sector. The last Conservative Government took some measures towards this end, but they were very small and we have heard little of them since. A much stronger drive is necessary because the balance between industries and services in the regions worsens daily. Glittering office blocks rise on the South Coast and in the suburban areas of the South-East, but we see no similar developments in the Northern Region.
A more co-ordinated effort to attract overseas investment is necessary. This country is not doing as well as it could, internationally, in this respect, and a much more concerted effort is required.
These are all aspects of regional policy which commend themselves and which may turn out to make as big a contribution as could Development Agencies. Many of us who think a lot about regional policy, see it in operation at close quarters and have our fingers on the pulse of the provinces, have concluded that these Agencies seem to be a fruitful line of approach.
A new line is needed, building on the success of the past. The Labour Government of 1964–70 did great work in regional policy, but I have not yet seen the same vigour and imagination in this Administration towards these problems. Nor have we seen the developing sense of strategy which is needed so much. Until I see that, I shall continue to press 1742 the Government, as will many of my hon. Friends, in whatever way comes to hand.
§ 12.10 p.m.
§ Sir William Elliott (Newcastle-upon-Tyne, North)
I congratulate the hon. Member for Gateshead, West (Mr. Horam) on his fortune in the Ballot and on the eloquent manner in which he moved the Second Reading. His speech was interesting and fluent.
I was interested to hear the hon. Gentleman say that regional policy was in its formative stage and that some of us tried to keep our fingers on the pulse of the policy and spent a great deal of time thinking about it. That is so. I claim to be one of those; that is why I am here today. In my time in the House I have attempted to follow with care anything to do with regional policy.
The hon. Member spoke about the concentration on unemployment in regional policy. Those of us who were in the House when unemployment first hit the development areas know that in the 10 to 12 years after the war there was no unemployment in the regions to anything like the degree that we began to know in the late 'fifties and early 'sixties. There was not, consequently, the incentive to get on with regional policy—although, even then, many people were thinking about the eventual necessity. When the hon. Member is critical of the yardstick being the maintenance of jobs, he should appreciate that it was essential at that time.
As for self-sustaining growth, ever since I have been interested in regional development, the constant effort has been to introduce new industry which would be self-sustaining. Of course, the time may now be approaching for reappraising regional policy, but to begin with jobs had to be the yardstick.
A new problem is facing us, which the hon. Member for Wolverhampton, South-East (Mr. Edwards) mentioned and which I attempted to raise in the House, as a Member from the same area as the hon. Member for Gateshead, West, in our recent debate on unemployment. The yardstick of jobs was all very well in the development areas so long as there were jobs available elsewhere. For many years in the North-East, Merseyside and the South-West of Scotland there was what we came to call, although we did 1743 not like the term, the "spin-off" of work from the more prosperous regions. But today we have alarming unemployment not only in the development areas but nationally. Not only the West Midlands but the formerly prosperous South-East has a considerable unemployment problem.
However, I do not want to make this into a debate on unemployment. A great deal has been done, however critical one may be of regional policy, by Governments of both parties in trying to put the development areas into economic balance with the more prosperous areas. That is why, when we talk of devolution and setting up yet another body, we are in danger of creating too much competition between regions. The more bodies we have, the more acute the problem will become. But I pay full tribute to both parties. I agree, for instance, that in my time in the House, the roads and infrastructure generally in the Northern Region have greatly improved.
The Bill is one more attempt by a regional Member to place a development area in balance with the rest of the United Kingdom. In this, we are at one. We all want development areas to have self-sustaining growth so that they can stand on their own feet and will not need the level of subsidy that we have known in the past. So the Bill is well-meant.
But two main questions arise. One wonders about the cost, in the context of the cost of regional aid generally. If the Bill is given a Second Reading, will there be a Money Resolution immediately? A considerable sum is involved. Secondly, is the Bill necessary, in view of what already exists? Like the hon. Member, I have studied regional policy in France and elsewhere. I recently read an interesting paper about regional development in Japan.
I believe that this country now has the most comprehensive regional development policy in Europe anyway. Although France has known success, ours is remarkably comprehensive. We have the Industry Act 1975, which created the National Enterprise Board, whose terms of reference were published this week. Before that, there were arms of the Department of Trade and Industry in the regions with advisory bodies, which are very good. I am happy to see that in the 1744 central city of my region, Newcastle-upon-Tyne, we have as an arm of the Department of Trade a small businesses advisory office, which I understand is doing good work and which was opened under the Conservative Government by my right hon. Friend the Member for Worcester (Mr. Walker).
We have the Northern Economic Development Council, the Regional Economic Planning Council, the Regional Economic Planning Board and the English Industrial Estates Corporation. The last, which—after all we have heard of Scottish and Welsh bodies—is an English body, has its headquarters in the famous Team Valley in the North of England—the first development estate established in this country, in the 1930s. We also have the Manpower Services Commission. Yet the Bill now suggests another Agency, to be called the English Development Agency.
Is there any objective set out in Clause 1 which is not already being at least attempted? It is all there in the terms of reference of the National Enterprise Board, produced just this week:… to further economic development, to provide, maintain and safeguard employment, to provide areas of industrial development".There is little to argue with either in the guidelines of the NEB or in Clause 1 of the Bill before us today. We are doing these things already. They are the main stated aims of the National Enterprise Board.
I question what the hon. Gentleman said about the functions of such an Agency and the provision of capital in the form of loans. He was not explicit enough for me about the terms of these loans and the conditions attached to them. Subsection (3)(b) wouldprovide finance for persons carving on or intending to carry on industrial undertakings".Under what conditions?
§ Clause 11 deals with the terms under which these Agencies would be directed to use the powers conferred on the Secretary of State by Section 7 of the Industry Act 1972 with regard to the provision of public finance in general. I recall the countless debates we have had on regional policy. There are lessons to be learned from the past about regional development, and some of them have a bearing on the Bill.1745
§ One of the principal problems of recent years has been the grey areas—those areas adjacent to development areas which did not enjoy the benefits of grants and aid in general but had to do their best alongside areas, industrial estates, and so on, which did have them. I would therefore want to know more, in relation to the provision of public finance through the Agencies, about the advantageous position that such concerns, individuals, entrepreneurs, and small, medium and large businesses would have compared with the conditions and terms that a business not enjoying such aid would have in borrowing money through normal existing channels.
§ The hon. Gentleman said that within the regional development areas we have sub-area problems. That has been a development. But I see those problems increasing should one business have aid from a Development Agency such as he suggests, whilst another business in the same area is, perhaps, unable to meet the criteria and does not get the aid. Would not this lead to unfair competition? I am most anxious that the country should avoid having unfair competition within its industry generally.
§ This is why some of us voted down the West Midlands County Council Bill and the Greater London Council (General Powers) Bill, and why we shall vote down the Tyne and Wear Bill, now in another place, if it is not amended as we think it should be. We take this view because local authorities are attempting to trade with the support of public finance—unfairly, in the opinion of many of us—and could threaten the continued existence and prosperity of private business. In considering a Bill such as this, let us beware of yet another layer of aid from public funds and a further weakening of the private sector of the economy.
§ It is essential to strengthen the private sector. I pay tribute to the Bill's intentions, but I express concern about its effect on existing employers and producers through the possible functioning of these Agencies. It has been an aspect of regional policies throughout the years that successive Governments have perhaps not given enough consideration to encouraging existing employers—those who have been there in some cases for 1746 generations—and have over-concentrated on encouraging new industries.
§ Mr. Eric Ogden (Liverpool, West Derby)
Perhaps I can allay the hon. Gentleman's fears. Does he agree that the vast majority of financial aid through any regional policy goes to private as against public employers? He has expressed doubt about the need for another layer, on the ground that there would simply be another body operating in an area. Does he not agree that the organisations that we already have, if locally based, are mainly advisory and have little financial "clout", to use a Northern word? If they are nationally based and have some money, the decisions are not made locally but are made at least in the South-East, if not in London. Therefore, the type of Agency proposed in the Bill, for the hon. Gentleman's region or for mine, would be a body to bring together, under local control, local investment, local decisions—
§ Mr. Speaker
Order. The hon. Member for Liverpool, West Derby (Mr. Ogden) is making a very good speech.
§ Sir W. Elliott
I refer the hon. Gentleman to the English Industrial Estates Corporation, which does that very thing to a great extent.
The Northern Region, like all regions, awaits the Government's devolution proposals with considerable anxiety, whether they be contained in a Green Paper or a White Paper or a paper of any other colour—whenever it finally comes. On two occasions I have asked for a conference on devolution in my region to be postponed. I was asked to be chairman. The conference is to consider devolution proposals with regard to the Northern Region. The conference is to take place on Saturday. Those taking part refuse to wait any longer for the proposed Government paper. Nevertheless, we await that paper anxiously to see what proposals it will have about the future well-being of the English development areas.
I agree that these areas must continue to get economic aid that is in balance with the aid given to Scotland and Wales but, as I see it—and I now have some claim to considerable experience of regional policy—any concentration of 1747 decision-making in the hands of a Government agency can lead to inefficiency. One of the bulwarks of free society is the existence of a large number of independent competing enterprises whose survival depends on producing goods and services that people wish to buy.
As an industrial nation, we have an enormous problem in overmanning. It is not easy to overcome, but somehow, steadily, we must move towards forward-thinking again, moving away from straight maintenance of jobs and on to a concentration on producing those goods and services which people require. That is the only real solution for the nation in the long term, however many Agencies or however much subsidisation we have.
We do not need more Assemblies or Agencies; as a nation, we need a return to industrial confidence. It is that which we lack, not an additional Agency. Why has there been such a desperate falling away of investment in the development areas and, for that matter, in the West Midlands, the South-East, London, or anywhere else? It is because there has been a fall in industrial confidence. Through private enterprise and private investment lies our main hope, and what we need above all is lower taxation.
I was interested to see from this morning's Press that during his campaign the successful candidate in yesterday's by-election had strongly advocated a reduction in corporation tax. I appeal to the hon. Member for Gateshead, West—whose considerable powers of persuasion have been ably demonstrated to us this morning—to join his new colleague, when he takes his seat, in persuading his right hon. Friend the Chancellor of the Exchequer in this regard and in the context of lowering taxation generally, as well as lowering the level of Government interference in private enterprise and private business. Here lies the real long-term hope for the development areas.
§ 12.31 p.m.
§ Mr. Michael McGuire (Ince)
I want first to refer to one or two points made by the hon. Member for Newcastle-upon-Tyne, North (Sir W. Elliott). He mentioned the grey areas and their problems, and went on to refer to the greater efficacy of outside national bodies researching into some of these problems. There was a Commission on the grey areas, and it recommended, incredibly, that Liverpool 1748 should have reduced aid status. I am glad to say that the Labour Prime Minister of the day resisted that recommendation. God knows what would have been the position had that proposition been accepted.
§ Sir W. Elliott
I remember the occasion extremely well. The point is that at that time Merseyside's unemployment rate had dropped very dramatically.
§ Mr. McGuire
I am not sure about the figures, but there were strong indications that we needed to keep the same level of aid as we then had, even though it was recommended that it be reduced in order to have a uniform scale in the North-West.
Mention was also made of the anomalies resulting from one business getting aid under the Bill and another not getting it. But that kind of anomaly already exists to some extent, even in my own constituency. Down the road, as it were, one firm will qualify for the higher rate of grant because it is in a special development area, or a development area, and another may not qualify because it is in an intermediate area. Unless blanket cover is given all over the country, there will always be problems and anomalies as to who gets what and when.
The hon. Gentleman made a reasonable case on the question whether we need a proliferation of these Agencies. One of the great benefits of the proposed Agencies is that, if they are given local powers, it will not be as easy as it is now in the regions to blame other people. Agencies will have to back their own judgment and stand by the results. To that extent, although there will be other useful results, the measure will be welcome.
I also congratulate my hon. Friend the Member for Gateshead, West (Mr. Horam), not only on his success in the Ballot—he has been successful in the past, I believe—but also on his choice of subject. There is no doubt that what we are discussing is regional policy and how effective it has been up to now, and I am glad to see the Minister of State here.
I do not know whether there are any hon. Members here from the South-West, but certainly we have a strong contingent of Merseyside Members present. Whatever difficulties other regions may have, my colleagues from the North-West—and 1749 from Merseyside in particular—will be able to say in their own individual way how they view the problems and what they feel are the possible solutions to them..
I want to talk about Merseyside in the North-West context, because it is important. Merseyside is a special development area, and the problems have been very well researched and documented, not least in the Strategic Plan for the Northwest, which we have still not debated after a couple of years. That Report pointed out that, quite apart from the separate problems of Merseyside, the North-West had a bad deal from the Government.
One of the advantages of the devolution debate, in an odd kind of way—and I am in favour of the pronounciation of "devolution" to rhyme with "revolution"—is that it has enabled us to concentrate our minds on other regions, apart from Scotland and Wales. We have heard from hon. Members from Scotland and Wales of the shocking deal they have had—presumably to the benefit of the English regions—but this has concentrated our minds on the fact that we in the North-West have really had the dirty end of the stick. Our colleagues from Wales and Scotland have, on balance, received more benefits than we have received in the North-West. We have a better case, or at least we have a case for equal treatment.
The Strategic Plan pointed out that the North-West has the worst record and is top of the league, though not in the best sense of the term. It has the worst record for pollution, the worst record for infant mortality, the worst record for general mortality, and the least number of children qualifying for higher education. Going through the whole catalogue, the North-West is worse in almost every respect.
The worst part of the North-West is the Merseyside-Manchester belt—especially Merseyside. Merseyside has about 24 per cent. of the population of the North-West, according to the official statistics—about 6,577,000. We have 40 per cent. of the total unemployment in the North-Western Region, which was already a very bad region in this respect. It is true to say 1750 that we are dealing with a special problem in what is already a problem area.
I very much welcome the Bill, because at least it provides us with a glimmer of hope. It may not be the perfect solution. I have no doubt that in Committee, with the help of the Ministers, we shall discover flaws in it which were not suspected. But at least, I emphasise, it gives us some hope for the future.
Due to the local government changes, part of my constituency is in the Lancashire County Council administrative area—the new town of Skelmersdale. The major part of my constituency is in the Greater Manchester area—the old part of the Ince constituency generally. Skelmersdale came into my constituency in 1950. It was once represented by the Prime Minister, when it was included in what is now the constituency of my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk). Another part of my constituency is in the St. Helens metropolitan borough area, but not in the Merseyside special development area. I have, therefore, a rather complicated problem.
I want now to concentrate on Skelmersdale, which is wholly within the special development area of Merseyside, because no town—certainly in the past 12 months—has suffered more than Skelmersdale from the cruel lash of unemployment. Incidentally, it was created by the Conservative Government in 1961, but I do not quibble about that.
It is a town which enjoys the highest rate of grant aid anywhere in the United Kingdom, and yet it has a male unemployed population of over 20 per cent. The figure for women unemployed—not all women register—is about 14 per cent. We are losing jobs almost weekly. Only the other day at a constituency interview I was told that 250 people have been given notice which will expire at the end of this month. That will worsen what are already tragic figures.
Skelmersdale is a town which is looking very much to the Government for a vote of confidence. After all, it is a creature of the Government. The Government created it and they owe a special responsibility to the people they lured to it from North Merseyside and elsewhere. I do not want this promised 1751 land to become a land of broken promise. The Government have a duty to honour that promise. We in Skelmersdale do not expect to be isolated from the stormy blast of the international recession. We do, however, expect some treatment which will give our unemployment comparability with the national average. Male unemployment of over 20 per cent. with a further loss of jobs imminent requires special Government action..
I know that this is not the responsibility of my hon. Friend the Minister of State, but I hope that he will pass on the suggestion that a new hospital should be built in Skelmersdale. It would not cost very much initially, but it would give the vote of confidence, it would fulfil a desperate medical need, and it would give jobs to the unemployed building workers.
The Bill offers a glimmer of hope because it will give local people the chance to use their local knowledge with local industrialists who will be able to back their judgment and to pick winners. I admit that in the past we have been prone to condemn outright the Government's regional policy. Merseyside, as elsewhere, has had its success stories. The key to that success seems to lie in the picking of winners. It is necessary to select industries which have a secure future—as one hon. Member said, that will generate their own growth. The motor car industry is a good example. Ancillary industries spring up around it and feed upon it. Without that we would have been in a bad way on Merseyside.
The Government sent the big industrial concern of Thorn Electric to Skelmersdale. Even without a national recession we would have been in difficulties in about four years' time. To have built the prosperity of the town on an industry which from the start was doomed not to failure but to considerable difficulties, calls into question this ability to pick winners. I say with the benefit of hindsight that it would have been better if Thorn had not come to Skelmersdale, because while we were negotiating to get it there another firm with a more secure long-term future perhaps passed us by and went elsewhere. That shows the importance of picking winners.
1752 The North-West has been shabbily treated, as can be proved by a few figures. Take the disbursement of EEC regional funds. Scotland has had £10 million for a population of just 5.25 million. Wales with 2.7 million population has had £7 million. The North-West with a population of more than 6.5 million has had £3 million.
Another important statistic from Government sources shows that from 1955 to 1970 Scotland had £280 of public investment in new construction per head of the population. From 1970 until the present day that figure was £367 and it put Scotland in first position. Wales was and still is second with £204 and £308 respectively. The figure for the North-West up to 1970 was £158, and we were ninth out of the 10 regions in spite of all our problems. Since 1970 we have moved up a bit with the figure of £261, which, I am glad to say, put us in fourth place.
The North-West has been treated very shabbily in terms of the dispersal of Government jobs. We hear on the bush telegraph that there are moves afoot to stop us getting what we have been promised under the Hardman Report, but even if we got all we were promised, we would still not match the number of jobs per 100,000 of the population that Wales has received so far. Wales will go on to get 640 per 100,000 of the population, which is about three times more than the North-West can hope to achieve.
The Government can help our region by indicating that they will disperse jobs there to provide a secure foundation. Those jobs are not subject to the same fluctuations as industrial jobs. They also give opportunities to our bright young people. The Minister of State must tell the Government that we want a fairer crack of the whip. If the Government want to give Skelmersdale a vote of confidence they should base a Government Department there. Runcorn New Town has one, and Skelmersdale has far worse problems than Runcorn.
Because the Bill gives us the chance to back local judgment and to pick winners it should be given a Second Reading. When Scotland will get about £250 million and Wales will get £150 million, we are talking here of a comparatively modest sum to help cure some of the deep-rooted problems in our area, particularly on Merseyside.
§ 12.48 p.m.
§ Mr. Cecil Parkinson (Hertfordshire, South)
I declare immediately that I am not a Northern Member, but I was born and brought up in Lancaster. My parents and my family still live in that region. Although I now live in the South I am deeply concerned that there should not be a growth of unemployment in the North-West. I care strongly about the region, and my roots are very much there. I share the concern expressed by the hon. Member for Ince (Mr. McGuire) about the rundown state of the North-West. I make clear from the outset that I welcome the objectives of the Bill, because they are quite unarguable. There are problems which need to be dealt with, but I shall oppose the Bill because I do not believe it will do anything to help those problems.
Often the measures taken in this House are necessary to counter measures that we have previously taken. We seem to spend half our time creating problems and the other half trying to create further Agencies to solve those problems. If we were to tackle the problems at the source—in other words, if we were to stop creating them here—many of the Agencies that we require to deal with them would be unnecessary. The more we intervene, the more we need to intervene.
If ever I come up high in the Ballot for Private Members' Bills, my Bill will be a simple one. It will be called the Intervention Agencies Non-Proliferation Bill. It will make it illegal to create any more Agencies to deal with problems. We seem to spend far more of our time creating Agencies to deal with problems, and those Agencies create even more problems, than we spend dealing with the causes of the problems. Parliament's answer seems to be an agency of some kind or other.
The hon. Member for Gateshead, West (Mr. Horam), at the outset, said that Scotland has an Agency, Wales has one, so England ought to have one. He went on to say that areas in England ought to have Agencies—the North, the North-West, Merseyside and the South-West. Then up popped a West Midlands Member and asked, "Will we be able to have a Development Agency?" "Of course", said the hon. Gentleman. If the Agencies are successful, I have no doubt that the hon. Member for Battersea, 1754 South (Mr. Perry), who has had to leave, will then say "As a result of not having an Agency, we are being discriminated against. Therefore, we need one."
When we all have Agencies we shall realise that the problems are still there and that we shall have to create a super-Agency for the regions which had their Agencies first but are being unfairly competed with by the terrible South-Eastern Region, which would then have its own Development Agency.
It may sound extraordinary, but that is how regional policy has worked. We had development areas, special development areas and then intermediate development areas. We now have the West Midlands claiming to be a development area. The hon. Member for Ince said "We have the highest unemployment of the lot."
§ Mr. Parkinson
The hon. Gentleman said "We have the highest unemployment for years, and it is very high indeed." I suggest that many of the problems in the West Midlands have been caused by the Government's bribing companies to do the uncommercial thing by pouring out huge sums of money to get them to go to the regions. Government policies have systematically undermined the industrial heart of the country. We are now finding that areas which traditionally have been extremely productive and efficient, producing many of the goods for export, are desperately weak.
I suggest that the £162 million intervention in Chrysler is almost certainly a by-product of regional development. The Chrysler Corporation is too scattered. It is uncommercial and unsuccessful. Therefore, we are pumping £162 million in to prop it up. Why? We know why. The Government got their pay-off last night. They retained Coventry. That was the principal reason why £162 million was voted by this House to prop up jobs in the West Midlands.
We do not call the West Midlands a special development area. If we did, the nonsense would be revealed. So we are pumping money in in a different way. We are pumping huge sums into Chrysler to prop up an industry that has been undermined to a large extent because it was 1755 foolish enough to take factories up to Linwood, to create productive capacity which it did not need and was too far away from its central base. It is a vicious circle.
I have waited for someone in this House to talk about Parkinson's Law. With a name like mine, it is almost inevitable. It is a tribute to this House that, although virtually everywhere one goes outside some witty speaker thinks that he is making an original remark by talking about Parkinson's Law, such is the standard here that no one has lowered himself to do that.
§ Mr. Giles Radice (Chester-le-Street)
Is the hon. Gentleman arguing that there should not be a regional policy? That seems to be the logic of the position that he has taken up.
§ Mr. Parkinson
I am arguing that, for instance, when Lord Hailsham had responsibility there was a problem in a certain area and he went into it, worked like mad and blitzed it. He saw that there were special problems. That was fine. But if we institutionalise regional policy, if we set up Development Agencies here, there, and everywhere, we shall finish up at the end of the day with the same situation as at the beginning. Every area will have a Development Agency. To quote Gilbert and Sullivan,When every one is somebodee, Then no one's anybody.It is a vicious circle. We would have to create another agency and find more money. So the whole dreary round continues.
Is anybody from my own Front Bench going to claim that regional policy has been a tremendous success? The thousands of millions of pounds that have been pumped into industry have achieved one important thing—the undermining of the industrial strength of the West Midlands, among other places. Areas which should be the central core of our industrial strategy have been weakened.
I believe passionately in the overspill theory, but we must not weaken the strong regions in an attempt to strengthen the weak regions. If we do, we shall finish up with a mediocre prospect for all. That is what both Conservative and Labour Governments have succeeded in doing. We have produced no real benefits 1756 to the regions. Indeed, we have created tremendous disadvantages and problems for the central areas.
§ Mr. Horam
The consequences of that approach would be an ever larger and more highly populated South-East and Midlands, and an ever smaller number of people in the North and Scotland. That would be the simple consequence if no countervailing measures were taken to restrain market forces, which inevitably drag things right to the middle. That has not happened. That was the justification for the policy to which the Conservative Government subscribed. Did that Government destroy regional policy? Of course not, and for very good reasons.
§ Mr. Parkinson
It was fashionable, and the theory was that many people would be upset if that was done. All I am saying is that it does not work. The sooner that hon. Gentlemen opposite stop fooling themselves that the answer will be found in yet another Intervention Agency, the better. There would not be that flood to the South-East about which the hon. Gentleman spoke. I invite him to come to my constituency, just north of London. We have a tremendous housing problem. Young people who want homes cannot afford them. House prices are too high. In the City the cost of office space is also extremely high. People are moving out. The pressures building up in the South-East and the Midlands will ensure that, of their own volition, people will look to other areas. The Conservative Government's basic policy of improving the infrastructure through Operation Eyesore—making the regions more attractive and accessible—is the greatest bequest this place can give to the regions.
We ail accept that there are problems. However, the mouse that crawls out of this mountain of a Bill is yet another State mini-bank of some kind. Does anyone seriously believe that Britain is short of banks and bankers?
§ Mr. Horamrose—
§ Mr. Parkinson
Has the hon. Gentleman not seen the proliferation of secondary banks set up by people who thought that banking was an easy way of making money? Anybody with a dodgy enterprise could get money. But those banks 1757 have gone out of business. There are too many banks in this country already.
§ Mr. Parkinson
It is totally unnecessary to have any more banks, because the one thing of which this country is not short is banking. Banks are already competing with each other. Reference has been made to local bank managers—"home-grown bankers"—who are in touch with the community. Has the hon. Gentleman had any dealings with local banks? Why does he think local bank managers join Rotary Clubs and speak in schools? That is why they are based locally. That is why there are so many branches of banks in every town. Is it suggested that a State mini-bank will have hundreds of branches? Of course not; it will be based in the principal town of a region. Nobody imagines that there will be a proliferation of little branches displaying notices like "Come inside for a soft loan. Easy repayments." Some of the phrases used by the hon. Gentleman were extremely amusing, and I hope that many people will read his speech and have a good laugh.
This mini-bank will not be anything like as locally based as the present banks are. There will be only one branch of the bank in, perhaps, every large town in a region. It will be far less locally based than the present banking network. One of the myths that have sprung up, and that Sir Henry Benson is perpetuating is that there is a shortage of people who are prepared to lend money to entrepreneurs with good ideas. That is an absolute myth. Every bank is looking for such people. There is plenty of money available, and there always has been, for entrepreneurs with good ideas.
The whole nonsense of this debate is exposed in the notion that we shall create a new ultra-sensitive, locally-based banking industry, which will have access to economists, accountants and business men who will be able to back winners. It is a fallacy to believe that out of the blue one can create an Agency which is able to spot winners and solve all the problems that exist in the constituency of the hon. Member for Ince. Such a bank
1758 would find itself faced with a long queue of would-be borrowers, most of whom would have been turned down, quite properly, by the commercial banks some time before. We must not allow the myth to be perpetuated that there is a shortage of funds for entrepreneurs with good ideas, and that all we need do is create this ultra-sensitive instrument. There is at the moment a far more sensitive instrument, namely, the Big Five, with branches in every town and, indeed, in almost every village. They are competing with each other for business. They have far more sensitive antennae than any Agency that this House could create.
The people of whom the hon. Gentleman spoke are not interested in working for some State Agency. Such people—the economists and accountants—if they are good at their jobs, will be employed already and will be receiving a great deal more than they would from a State mini-bank. What is more, they would know that they would not be subject to political interference, as they almost inevitably would if they were part of a State bank. They would be subject to pressure. For example, someone might say "We have unemployment in Ince. We have promised to create thousands of jobs. Let us have £50,000." The Government are already in the process of creating a State mini-bank. They have introduced legislation, unwisely, to extend the Giro. The Treasury is in the process of creating what I would call a major mini-bank. The Trustee Savings Bank is extending its activities into the banking business. We already have more banks than we need. The Government are sponsoring two more. The hon. Member for Gateshead, West says that the answer to his region's problems is to have yet another—that wonderful State mini-bank which will dish out soft loans.
I admit that there is a problem, but the creation of this Agency will do nothing to solve it. It will be just another wasted bureaucratically-controlled, well-meant nonsense. The sooner the hon. Member stops thinking that the answer to our problems is the creation of such an institution, the better it will be. I said at the beginning of my speech that the creation of an Agency was an excuse for not looking at the problem. One would feel that one was doing something about the problem, but, in fact, 1759 one would be doing nothing. Indeed, one would be creating another potential problem.
It is astonishinig how fashionable small business men have become. Even the right hon. Member for Bristol, South-East (Mr. Benn) exempted them from his criticism of British industry. We sing their praises so often in this House that if we are not careful we shall make them swollen-headed, and they will feel that they need far more help than they do. Of course, small business men will say "If we can have an agency that will give us money on cheap terms, that will be an enormous help." That would take the risk out of risk-taking. If State money were made available to the entrepreneur he would not be taking the risk. The State would. We would, in fact, be creating a new breed—the non-risk-taking entrepreneur, which is a contradiction in terms.
The average small business man will, of course, say "Any Agency that will give me easy money will be extremely welcome." But he will go on to say that the thing that is really crippling his business is the tax system. He will talk of the high rates of corporation tax, capital gains tax, capital transfer tax and personal tax. He will point out that if he succeeds in doing all the things that he is required to do in building up his business, his reward will be a battery of taxes with a top rate of 98 per cent. on one of them. He will ask himself "Is it worth taking that risk?" It may be worth taking the risk with somebody else's money, but even so he would not keep the reward of his efforts.
I urge the hon. Member for Gateshead, West to direct his pressure, as Secretary of the Manifesto Group, to reforming the tax system and not creating new Agencies. If he did so, the small business men in his constituency would be much more encouraged than by the news that a new State mini-bank is to come into existence. The hon. Gentleman could then write to the Secretary of State for Employment and point out that that great battery of measures which he has been putting on the statute book in response to trade union pressure, giving the trade unions more privileges and more protection than ever before, is having a major disincentive effect on employers. One of the most insane things 1760 that an employer can do now is to increase the size of his labour force. People are troubled, and the Government are busy increasing those people's troubles by statutory means. A huge disincentive effect is built into so many of the measures introduced by the Secretary of State for Employment—a disincentive that discourages employers from employing any more people.
§ Mr. Ogden
The hon. Gentleman claims that the industrial and industrial relations legislation passed by this Government during the past two years has had an adverse effect on business of all kinds. Did he not hear last week that his right hon. Friends on the Front Bench made it clear that they are not prepared to make any changes in that legislation?
§ Mr. Parkinson
One of the joys of speaking from this Back Bench is that I speak for myself. I hope that the hon. Gentleman does, too. Perhaps I should have declared an interest, since I run my own group of businesses. All I say in response to the hon. Gentleman's question is that, wherever one goes, people will say that things are now becoming impossible, with all the crazy rules about having to employ people, having to keep open jobs for women who have had babies, and so on. They have to be careful all the time. They say that they must keep their labour force down to the minimum, because if someone is made redundant and anything goes wrong, huge problems follow.
I am not saying that in any sense of wanting to fight the trade unions; I support the spirit of what my right hon. Friend said last week in Manchester. But we are talking here about the small entrepreneur, the chap whom the hon. Member for Gateshead, West identified as the great white hope of the regions, as the winner we should back.
The truth is that the tax system has an enormous disincentive effect, and the activities of the Secretary of State for Employment have made the employment of people a rather unattractive proposition. That cannot be right. At a time of high unemployment, it cannot be right to create a state of affairs in which there is a reluctance to employ.
I hope that we shall see a more prosperous North-West Region, North-East 1761 Region and South-West Region. I have no quibble whatever with the hon. Gentleman's wish to pursue that objective. My quarrel with him is quite different—that the measure which he proposes will do nothing to solve the problems that he has so well identified.
§ 1.12 p.m.
§ Mr. Arthur Bottomley (Middlesbrough)
My hon. Friend the Member for Gateshead, West (Mr. Horam) deserves all our thanks for his choice of subject, and he is to be congratulated also on having devoted a great deal of time and careful thought to the contents of his Bill.
The hon. Member for Hertfordshire, South (Mr. Parkinson) questioned whether regional policy had been successful. At least the old depressed areas of Wales, Scotland and the North-East would say that it had. It is clear that our regional policy has a part to play, and the Development Agencies proposed in the Bill would have a part to play within that overall policy. Nevertheless, we should do well to recognise that these Agencies can flourish only if the economy as a whole is prospering, and, with that in mind, I wish to say a word at the outset about what is needed. We have to concentrate our investment in essential industries to use raw materials to the best advantage and to secure the maximum exports, which are vital if we are to pay for the substantial quantities of food and raw materials which we have to import.
We must recognise also that the trade unions today are a powerful force, possessing the same bargaining power that management had in the past, and we have to say to them that, in order that we may make our country prosper, they should not use that bargaining power in a way which could harm the economy.
I was Minister for Overseas Trade in the first post-war Labour Government. When the trade unions were strong enough to force any Government to carry out their will, they responded to the appeal of the Government of the day and exercised wage restraint. In 1951 the economy was really getting on to its feet. However, after the trade unions had had 13 years' experience of "You have never had it so good" and "I am all right, 1762 Jack", it is little wonder that today we find it difficult to get them to accept the same standards that they accepted immediately after the war. Nevertheless, thanks to a Labour Government, the trade unions are co-operating, and they are doing all they can at this stage to help to overcome the economic difficulties which confront us.
It is acknowledged by all nowadays that our immediate problem is inflation, but I regard it as an oversimplification of our problem to say that it is a case of jobs versus inflation. One cause of inflation is excessive demand for goods, thus forcing up prices, and the other occurs when wage increases and higher prices for raw materials bring about a rise in the cost of finished goods. The high cost of finished goods is a contributing factor to the loss of important export markets, and the poor quality of our manufactured goods and uncertain delivery dates also affect our ability to sell.
Obviously, the British economy is affected considerably by international influences as well. The higher cost of imported raw materials, and of oil in particular, has soaked up a higher proportion of our domestic purchasing power for goods produced at home. The United Kingdom's inflation rate has been significantly higher than that in most other industrial countries, and this has meant that our exports have become less competitive abroad, while at home some imported goods become more attractive than those home-produced.
The Government's new National Enter-price Board will be able to make its contribution in meeting some of our problems, but, as my hon. Friend said, in addition to establishing the NEB, the Government have thought it right, presumably after serious consideration, to set up the Scottish Development Agency and the Welsh Development Agency, which will help to make it easier for the National Enterprise Board to achieve its objectives.
The Government have said that the purpose of the two Development Agencies already established in Wales and Scotland is to further economic development, to promote industrial efficiency and international competitiveness, to provide, maintain and safeguard employment and 1763 —this also is important—to further the improvement of the environment.
With those objectives in mind, I argue that an Agency in the North-East established on the lines proposed by my hon. Friend could play its part, too. People tend to forget that the North-East has been a neglected area. In percentage terms, admittedly, it can be said that the region has at times experienced an improvement compared with rest of the country, but it has to be recognised that the North-East was the cradle of the Industrial Revolution, and much of its industry and local services—housing, sewerage and the like—were laid down in those early years, with the result that in due course they became hopelessly inadequate. Circumstances in the North-East are therefore quite unlike those in the South-East or in new towns, which have up-to-date installations, supplies and services which do not need the drastic overhaul which is needed in the North-East today—in some cases, indeed, to an extent equal to what is done in the building of new tewns.
Unemployment levels in the North-East have been consistently higher than they have been anywhere else in the country. The male unemployment rate in my constituency of Middlesbrough, Teesside, is running at 10 per cent. School leavers are finding it extremely difficult to get work. But I am glad to say that we have a careers officer, who is chairman of his association, who is constantly prodding Members of Parliament and Government Departments to help school leavers in Cleveland who find that they cannot get jobs.
I shall restrict my comments to Cleveland, but they apply to the North-East as a whole. There is continuing investment in the infrastructure, which is phased so that over the next 15 years Cleveland and the North-East will be brought up to a standard equivalent to the better developed parts of the country. If we are to capitalise on the improvements that have already been carried out, the momentum of action must be kept up. Economies should not be made in that part of the country if industrial development in the area is to be continued. Such development makes the best contribution to the economic prosperity of the whole country.
1764 As many of my hon. Friends have said before, the major need of the North-East of England is to diversify industry, to get away from heavy industry, for which we have a high reputation, and to try to attract manufacturing and supportive services to the area. In that way the area would be made viable and have a wider industrial spread. We need to be poised to capitalise on the benefits from oil producton in the North Sea.
It would not be exaggeration to say that the North-East has been deprived for far too long. Education is essential, and perhaps more important than anything else. If we do not provide the best schools and knowledge the country will not be able to hold its own in the world. Children want the best education, and it is difficult to get it in my constituency, where there are more children to every teacher than anywhere else in the country.
The area has a lower-than-average standard of living. Fewer people in my constituency have cars than anywhere else. National surveys show that households without cars spend less each week on rail fares than car-owning householders but that poor-income households spend more on rail fares for pleasure. It is unfortunate that there is no direct link between the area and London, and it is suggested that still further railway cuts should be made in the area.
The Laing offshore venture in Cleveland is one of the undertakings that help to make North Sea oil development a success. It is the only venture in the country concerned with the building of major production platforms for the industry. Its record to date cannot be faulted. The expertise and experience developed at Graythorp, in Cleveland, could be dissipated if further orders do not arrive in the near future. This is not a matter of a gradual run-down in employment or a switch to other types of production; it is a matter of almost instant unemployment for a group of highly skilled workers in the area—something that we can ill afford. The problem is immediate and it could have consequences not only for the North-East but for the country as a whole.
Cleveland does not have a university. If the Bill is passed it will enable the emphasis to be put on the need for such 1765 institutions, and provision could be made to work closely with industry.
When I took part in a debate on the North-East in 1973 I said that, due to automation, it was inevitable that there would be fewer jobs in the country, and that we should all be thinking about conditions that will not only spread the opportunities of employment more widely but enrich and improve people's way of life.
We must have shorter working hours, longer holidays and a shorter working life. Further education must concentrate on helping people to enjoy their increased leisure. We must ensure that the North-East ceases to be the poor relation and that the people of the area are able to enjoy the same conditions and opportunities as those who live in more favoured areas of the country. The Bill will help in making this possible, and my hon. Friend deserves support.
§ 1.26 p.m.
§ Mr. Eddie Loyden (Liverpool, Garston)
We owe my hon. Friend the Member for Gateshead, West (Mr. Horam), who introduced the Bill, a debt of thanks because, if nothing else, he has brought to the attention of the House many of the problems that exist in the regions. He has given the House an opportunity to look at the problems and discuss them in the quietness of a Friday debate. We have heard the contradictions in the general argument about what can be done about the areas of industrial poverty, all the social consequences that it brings and what measures can be taken to deal with it. In such a debate it is natural that hon. Members will raise their own constituency problems. Because they can be seen in the context of the national problem I think that there is nothing wrong in raising matters concerning the localities.
We must not lose sight of the fact however that unless we have the position absolutely correct from the central Government point of view, the regions will never get the situation right. The hon. Member for Hertfordshire, South (Mr. Parkinson) made it patently clear that parliamentary power in that sense and the ability of Parliament to deal with the question must be examined. He showed that in looking at what forms of 1766 legislation are passed, no matter what sort of budgetary policies are introduced by the Chancellor of the Exchequer, the real power lies outside Parliament. The real power is economic power, which is controlled by the people who own and control the wealth of the nation. The arguments must be presented to those who have that power so that they can examine the problem of the regions and accept their responsibility for achieving a better balance.
We are not talking about a new situation when we speak of private enterprise. History, and the movement of industry away from the old industrial areas of the North towards more prosperous areas, has been influenced by Government and private enterprise.
There is no doubt that private enterprise has had scant regard for the regions' problems. The concentration of wealth has moved from the regions to the South-East. That has created a tremendous imbalance in the regions' economic and social conditions. It is not possible by means of an Agency Bill to effect a change in that situation. There are already sufficient regional institutions to bring about a greater degree of power in the regions. That would be possible if, when the opportunity presented itself, we formed democratically elected organs to be responsible and accountable to the people of the regions.
We have seen institutions, such as water boards removed from the control of local authorities. We have established bureaucratic boards rather than democratic boards reflecting the aspirations and objectives of the people. There is a tremendous argument to be adduced for more power being given to the regions. That transfer will not be achieved if we pretend that the establishment of another Agency is the solution. In the end, these matters depend on resources. We have not seen a sufficiently positive movement of resources towards the regions.
I shall resist the temptation to become parochial, but I believe it is necessary to identify some of Merseyside's problems and the way in which they should be tackled. We hear Members from the North-West and Merseyside argue their problems almost ad nauseam. They refer to the lack of employment opportunities, the lack of provision of schools and hospitals, and the non-provision of a 1767 better environment. Those matters all have a bearing on the quality of life.
The measures that have been taken have produced offshoot problems. When a special development area is established the areas immediately surrounding it, and in some instances areas far beyond it, are affected. I do not want to export the problems of Merseyside to any other region, nor do I want the problems of other areas to be exported to Merseyside. If we are to tackle regional problems the situation must be put right at the centre.
An alternative to a Development Agency, and a much more positive move, would be the acceleration and development of the National Enterprise Board. That would enable us to direct resources where they are needed. In the area that I represent resources are urgently required. Nothing apart from the provision of massive resources will resolve the problems facing Merseyside and other areas. I do not see such provision stemming from the Bill.
The Government are using the economic crisis for the most brutal form of planning. When Members representing Merseyside constituencies appeal for Government assistance to prevent closures, it is clear that the Government's overall plan is not to take into account the situation that applies in Merseyside, the North-East, Scotland or elsewhere, but to consider the overall situation of the industry concerned. The Government decide in that context whether assistance shall be given. That is a theory that I go along with, provided it is based upon the ideology of the movement to which I belong.
It is clear that we are lacking a real planned economy. If we introduce further regional institutions we may well be driven, in the end, to arguing that a certain street should have preference over another. It has become apparent that that is not the road that we should be travelling. The main problem facing the area that I represent is the lack of new industry. It has been said that private enterprise would resolve the problem given the opportunity. It is said that if the profitability was right, private industry would be able to assist. After the Barber handouts, when millions of pounds were handed back to private enterprise and millions of pounds were pumped into that sector, we did not see the miraculous 1768 growth of private industry or the increase of investment. There is no evidence that that argument goes any way towards the resolution of our problems.
Although the Bill highlights the problems of the regions, we must look for regional policies that match the problems. In the regions we see a constant erosion of employment opportunities. We must face the fact that if there is a turn-up in the economy in the next 12 months or two years, new jobs in industry will not be found for at least another three or four years. There is a lag between investment and the creation of new jobs. We are talking about a longer period of lost employment opportunities than my Front Bench colleagues suggest.
We must also consider some of the Government's inter-departmental decisions. We are told that in many cases we are dealing with scarce resources. We are also told that we are living through a world recession. We should be considering much more carefully the action that the Government are taking. I am not knocking for one moment the concept of job creation, but in Merseyside, for example, considerable sums may be spent on job creation when another Department, its eyes being blinkered, is following a policy that results in hundreds of jobs being lost every week. The Government must view these matters with a far wider perspective. They must allow overlapping and the intermingling of responsibility and action by the various Government departments involved.
Let us consider the situation at Bear Brand. Job creation opportunities in Liverpool could well be assisted by retaining the jobs that now exist in that company. There is no alternative employment for the trained and skilled work force. If we examine the resources that are being fed into certain areas against the employment problems, we may be able to get these matters on a far better footing.
The problems of the regions will be resolved only by correct policies laid down by central Government. I hope that this debate will highlight the need for the Government to rethink those policies, to encourage the National Enterprise Board, and to remove any limitations on its activities. Until such time as we achieve greater control over economic power and 1769 direct it to those areas in which it is needed, we shall continue to face the many problems that have been outlined by every hon. Member who has contributed to this debate.
§ 1.40 p.m.
§ Mr. Eric Ogden (Liverpool, West Derby)
My hon. Friend the Member for Liverpool, Garston (Mr. Loyden), my neighbour and colleague, will note that at this moment in the House Merseyside Labour Members have a majority. Because many hon. Members still wish to speak in this debate, I do not propose to take up the detailed points mentioned by my hon. Friend. I do wish to underline his knowledge of the needs of Merseyside, and I hope that his many suggestions will be heeded.
As an English Member of Parliament, I am grateful for this opportunity to take part in a debate on English affairs. That is in no way diminished by the Welsh extraction of the occupant of the Chair, or, as I understand it, the Scottish extraction of the British Minister of State, Department of Industry.
§ Mr. Ogden
That confirms how wise the House was to support your election as its Speaker.
Some 45 minutes ago the hon. Member for Hertfordshire, South (Mr. Parkinson) made a powerful, if mischievous, speech from a position below the Gangway, disclaiming any responsibility for what was said by his Opposition Front Bench. After a very short period of time—this must be the quickest promotion ever in the House—not only has he become the only occupant of the Opposition Front Bench but, at times, the only occupant on any Opposition Bench during this debate on English affairs.
§ Mr. Parkinson
There are some basic but not at all significant reasons for my move on this occasion from the Back to the Front Bench.
§ Mr. Ogden
I welcome the hon. Gentleman's continuing independence.
My purpose is to support the aims and objectives of the Bill and to ask the Government to give it their full support. Indeed, I should not complain if the Government 1770 decided to take over the measure. However, I oppose as strongly as I can a proposal for a Merseyside Development Agency, separated from the Northwest and the Northern Region. There is a clear need for Development Agencies in England. I emphasise that the need rests on their own merits, whether or not there are Development Agencies for Scotland and Wales. There is a clear need for English Development Agencies, although if the Scottish and Welsh Development Agencies are to exist they will, to some extent, compete with the English Development Agencies and make the need for the establishment of such Agencies more urgent.
I believe that the Government should give the proposal their full support, with all the resources of every Department and a proper allocation of parliamentary time, or even take over the Bill as Government legislation. This is probably the most important Private Member's Bill this Session. The Government may argue that in one way or another many of the powers already operate in the regions, but only in this form shall we have a degree of local power backed by national resources. Therefore, I hope that the Government will allow the Bill a Second Reading, so that we shall have a parliamentary Committee forum for English regional economic affairs. Eventually, the Government must come forward with their own proposals. This matter is of great importance to hon. Members from the regions.
I congratulate my hon. Friend the Member for Gateshead, West (Mr. Horam) and the sponsors of the Bill for the work they have done. It is no easy task to prepare a Bill such as this. I fully support the aims and intentions of the Bill, but there are some changes that I should like to see in it, although they can be dealt with in Committee.
The Bill provides for the establishment of three separate Development Agencies in England, and makes it possible to create others in the future. I agree with the proposals in respect of the South-West and the North. However, I do not agree that there should be a separate Agency for the Merseyside Region, My constituency is in the heart of Merseyside and is enduring the heaviest unemployment in England. Merseyside is the first to be hit by any recession 1771 and the last to benefit from boom. However, to separate the attempts to help that region and its unemployment problems by proposing a separate Merseyside Development Agency is, in my opinion, not the way to provide the help that is needed.
For the past 12 years I have had the opportunity of serving with the North Western Industrial Development Association. This comprised the joint efforts of local authorities, companies, chambers of commerce, industry and the trade unions. They have all worked together, partly supported by Government, but mainly by contributions from their own members in the North-West. The Association has tried to help industry, agriculture and commerce and to bring further employment to the North-West. We have done a great deal for the area, but there is always so much more to be done.
If there is any one primary and fundamental lesson that I have learned in those 12 years of considerable involvement in the industrial and economic needs of the North-West, it is that every part of the North-West Region is socially and economically interdependent. There cannot be prosperity in one part of the North-West at the expense of prosperity and employment in another part of the North-West. We have varying economic, industrial and geographical needs, assets and limitations. Those factors must be taken into account.
The lesson that devolutionists may have to learn the hard way is that all the regions must be interdependent. There are proper and effective ways of giving attention to the different needs of differing areas in the North-West. The needs, for example, of North-East Lancashire may be different from the problems in Fylde, and the problems on Merseyside may be different from those in the South Lancashire area. The development associations have tried to look at the needs of the North-West as a whole, rather than at the needs of any one part of the area. Liverpool led the way in establishing the Merseyside Industrial Development Office in London, which co-operates with other agencies in bringing help to Merseyside.
There are many other organisations in existence in the North-West. We have the North-West Economic Planning Council, the North-West Industrial Development Association and, of course, the Departments 1772 of Trade and Industry. They take regional decisions but have few regional funds. Decisions about the allocation of funds are made in London. Only a regional Development Agency would be able to make local decisions with national funds. Yet to establish a separate Development Agency for Merseyside would immediately create hopes, which could not be fulfilled, because of the very limited size of the area covered and the limited funds available to the Agency. I know from experience that it would cause envy, but certainly no malice, in the rest of the North-West. It would create demands for similar Agencies in Manchester, South Lancashire and North-East Lancashire. If those demands were ceded, we should finish up with a multiplicity of small Agencies which would be too small and too parochial to be effective.
I will give some examples of the difficulty I envisage. Merseyside imports iron ore which is used primarily at the Shotton Steel Works, so the Merseyside docks are dependent to a large degree on the continuing use and the expansion of British Steel Corporation on Deeside. An industrial decision affecting Shotton could not be taken rightly unless it were taken in the context of Merseyside and North Wales.
The expansion of Liverpool Airport has been the subject of discussion. We cannot talk of the use of Liverpool Airport unless we talk also of Manchester Airport and of Leeds Airport. Because of the M62 it is now quicker to get from the north-east of Lancashire to the Leeds-Bradford Airport than to the Manchester Ringway Airport.
Merseyside Docks cannot be considered in isolation from Manchester Docks and from Hull Docks, which are interdependent to a large degree. English Electric and Plessey, in Liverpool, could not be helped directly at the expense of the electrical industries in Trafford Park. Cam-mell Lairds and other ship repairing yards cannot be considered in isolation from yards on the Tyne and the Tees. The headquarters for any such new body ought to be on Merseyside.
The oil and gas resources of the Celtic Sea could not be considered as a Merseyside project or a North Wales project, but only as a project covering both areas. 1773 The difficulties of Merseyside cannot be separated from the rest of the North-West.
There is an obvious demand growing for a Development Agency, but to create a Development Agency for Merseyside alone would be to create a plant that would have no roots from which to grow, for it would have to depend on the other parts.
I ask my hon. Friends to be bold, to think big, to look at the North-West, to look at Merseyside, to look at North Wales, to take a map and look at the industrial regions—not only the River Mersey, not only the M6, but the M6-M62 axis—an industrial region stretching across the Pennines from Merseyside and Manchester, right across to Humberside. It is a growth area. Each part of the area is dependent on all of the other parts. Possibly there should be at least a transPennine Industrial Development Agency from Huyton to Halifax and Hull, from North Wales to North Shields, big enough not only to rival—I was about to say—but to compete with those for Scotland and for Wales—though, those Agencies are independent—and big enough to cooperate on any terms with any other regional agency in the United Kingdom and to hold its own with any other part of Europe. If that idea takes root from the discussion today, we shall have done a good day's work.
§ 1.54 p.m.
§ Mr. Leslie Spriggs (St. Helens)
I assure my hon. Friend the Member for Gateshead, West (Mr. Horam) of my support today. I thank him for his wise choice of subjects, as will any hon. Member with experience of meeting the Department of Industry on matters affecting those he represents, both those in work and these out of work.
The case for a Merseyside Development Agency has been eloquently made by my hon. Friend. I believe that an unrealistically low amount of assistance has been given to Merseyside as a whole. Merseyside consists of townships and villages which were built to attract workers at the start of the Industrial Revolution. We have a multiplicity of out-of-date factories and houses. Many thousands of houses have been cleared and the occupants 1774 rehoused in homes fit for people to live in. Labour local authorities have been especially active in this field.
It has been argued that there are already enough banks in Britain and that the setting up of these Agencies would be tantamount to providing another banking system. If that were so, surely none of us would be speaking on the Bill. However, it is not correct. No one who had my experience of asking the Secretary of State to meet a delegation from constituencies where British Steel Constructions (Birmingham) has factories would be so glib as to criticise the Bill, of which I am proud to be a sponsor.
We met on 2nd February with Lord Melchett in the chair. A City representative representing Law Debenture Corporation Limited prevented Members of Parliament from presenting their case as they had planned. He told the meeting that there was no money to pay wages beyond 4th February. However, the several thousand workers employed in the group will be paid their wages up to this weekend. Liquidity has run out and the City gentleman has been doing his damnedest on behalf of Law Debenture to take out of the group £200,000 which had been lent to the group. When I asked him about the unemployment which would result he replied that he was there, not to consider unemployment, but to ensure that the creditors got their money back. We were there to represent people and to try to safeguard the jobs of full-time workers.
Todd Steel has been in St. Helens for 140 years. It is one of the backbone industries of Britain and I do not understand why City financiers should be taking over firms such as Todd Steel and the nearby Todd Drums. I am told that about 500 adult workers will walk out this weekend with their cards in their pockets. I do not know how long these men in the steel construction industry will be out of work. I hope that what we have said in the debate will have some effect on the actions of the Department and the executive directors of the group.
I am concerned that these men should not be out of work. This is a matter of great concern to the people of St. Helens and the small businesses in the town. It would adversely affect the 1775 already aggravated levels of unemployment on Merseyside. This is an important reason for my sponsoring this Bill. I hope the Minister of State will say that he has been authorised to accept the Bill and to give it the full support of the Government.
If my example is anything to go by, there is a powerful case for setting up English Development Agencies. We should have an Agency in each of the areas mentioned in the Bill with local and regional knowledge and able to authorise local authorities to carry out certain services on their behalf. Nothing could be more democratic.
As a trade unionist who values good management and high skills in industry and wants to see Britain take the lead as an industrial nation exporting goods of whose quality we can be proud, I believe that with the co-operation which this Bill will assist, we shall be able to get management and trade unions working together with the Agencies to bring about a better Britain and more prosperity in the regions where work is badly needed.
I wonder whether the hon. Member for Hertfordshire, South (Mr. Parkinson) has considered how the wealth of this country is divided between the regions. I have been given some figures which ought to be put on the record. In the last financial year, the Northern Development Area received £120 million, the South-West Development Area £6.5 million, the Merseyside Special Development Area £73.5 million, the Scottish Development Area £1435 million and the Welsh Development Area £73.5 million. England has a population of 46,436,000, Wales's population is 2,759,000, Scotland's population is 5,226,000 and the Northern Ireland population is 1,547,000. Why should Scotland and Wales be given democratic and close-to-home Agencies to assist their problems while England is taken for granted? Why is it considered that England should not expect help when we are prepared to vote help for these other areas? I am not pressing for the acceptance of this Bill because its provisions are similar to those achieved by Scotland and Wales. I think the House was right to give Scotland and Wales their own Development Agencies and there will be as much justice for England if the House accepts this Bill.
1776 We should prove to the country that England matters to us. We have been taken for granted in this part of the United Kingdom for far too long. If the Bill fails to get a Second Reading, other hon. Members and I will ballot again and my first choice, if I am successful, will be a comparable Bill. I hope that everyone in the country will learn of what the House has been doing today. We may be few here, but there should be no attempt to expose those hon. Members who are not present. I know why many of them are not here. They would have liked to be here but had commitments in their constituencies carrying out parliamentary duties.
If the Bill is given a Second Reading, I hope that I shall be selected for the Standing Committee. I hope that the Committee of Selection will think me good enough to serve for England.
§ 2.8 p.m.
§ Mr. Robert Kilroy-Silk (Ormskirk)
I congratulate my hon. Friend the Member for Gateshead, West (Mr. Horam) on being fortunate enough to get a high place in the Ballot. I also congratulate him, not particularly for his Bill but for the opportunity that it has given us to debate regional problems.
I was somewhat distressed by some of his comments, specifically on the' contents of the Bill or what he expected to come out of it. He seemed to show a dog-eats-dog attitude, which I hope he did not intend, and is not what most hon. Members on the Government side would support.
The Bill has its origins in the devolution debates which, paradoxically, have drawn attention to the problems of the English regions, which is no bad thing. The Bill is motivated by what many consider to be the potential imbalance of resources devoted to Scotland and Wales. None of us wants to get into the situation of fighting each other and regarding Scotland and Wales as competitors with the rest of the United Kingdom or with the regions of England. On Merseyside, we do not want to export our problems to other areas, but nor do we wish to import problems.
I thought that on the Government side we would have approached the problem in a Socialist way. We on Merseyside insist upon our fair share of economic 1777 resources. We want that and no more. We want our fair share, but do not wish to deprive others. That fair share will be determined by the criteria of need, neglect, dereliction, structural imbalance and all the rest that make up the deprived or disadvantaged area. But I am not prepared, and I hope my hon. Friend is not, to play off one part of the United Kingdom against another.
§ Mr. Kilroy-Silk
It is a very tempting intention, however, and there is easy mileage to be made in succumbing to that temptation.
This is an interesting Bill, if only for having brought up the whole regional issue, but I am not sure that it can achieve the kind of things that my hon. Friend and I want for Merseyside and the North-West. The idea is worth pursuing, but the Bill seems rather strange in terms of boundaries. It includes only three English regions, one of which is Merseyside rather than the North-West. In Merseyside, crucial areas are omitted, such as Ormskirk, Huyton and Southport—the last two of which are coterminous with the Merseyside County Council boundary. But I accept that that can be re-drafted in Committee.
The most important thing is that I am neither a nationalist nor a regionalist. I am a Socialist and a centralist. I want the Department of Industry and the National Enterprise Board strengthened. I am concerned at the proliferation of Agencies, which will be inimical to those two objectives. Such proliferation will weaken the control of the Department over regional policy and the NEB's potential for stimulating regional investment.
The National Enterprise Board is not what many of us wanted it to be, but our object should be to strengthen it and to increase its function and powers so that it can actively and postively intervene in industry, planning and regional policy to extend the range so that we can work from a central position, considering the country as a whole, determining the areas of neglect and decay and allocating resources sensibly and equitably. I do not want either competition with or the fragmentation of that process.
1778 What I want is a planned economy on Socialist grounds, and that can be done only by a central administration. We want more positive discrimination in favour of certain areas. In a proper contribution to the debate, my hon. Friend the Member for Ince (Mr. McGuire) pointed out how Merseyside had been discriminated against. That in no way contradicts my original point that we should consider the whole area rationally and fairly. We have a right and a duty to point out what we believe to be anomalies and injustices in particular areas. My hon. Friend did that admirably in pointing out, in his great array of statistics, the way in which Merseyside and the North-West as a whole have been treated disadvantageously.
Of course we have to make out that case and, where there is unequal treatment and a history of neglect, seek positive discrimination in favour of these areas. One such area—this is not parochial—is Merseyside. It has suffered from a long series of recessions which have nothing to do, structurally or fundamentally, with the international recession.
The indication of Merseyside problems is graphically demonstrated by the hon. Members present. It is interesting that hon. Members opposite are always the first to make political points about the rising rate of unemployment, yet only one or two are here to speak in a debate on English regional policy which concerns their area and the people who are unemployed there. They could be putting forward ideas for reducing unemployment, yet only two have spoken and only three are in the Chamber. There are far more Merseyside Members of Parliament present than there are Members of Parliament from all other areas combined. That is a graphic demonstration of the deep-rooted severity of our problems and our sensitivity towards them and our insistence on getting something done.
§ Mr. Carol Mather (Esher)
Has not the hon. Member for St. Helens (Mr. Spriggs) already explained the absence of Labour Members? He gave what we would accept as a reasonable explanation—that many hon. Members have urgent duties in their constituencies, many of them in the North-West?
§ Mr. Kilroy-Silk
I do not accept that explanation. Parliamentary duties come before everything else. If hon. Members are so concerned as they have made themselves appear to be in the past, their duty is to be here today, but none of them can be bothered. Yet they can be bothered enough to make political points about the rise in unemployment. But that is a minor point. We are used to that kind of humbug and hypocrisy from the Opposition Benches.
Merseyside has more unemployed than Wales and a higher percentage rate of unemployment than either Scotland or Wales. We have 4,000 school-leavers unemployed, a higher proportion than any other area. We have a higher percentage rate of unemployment than any other area. In my constituency, in the town of Kirkby, there is a higher rate of male unemployment—about 20 per cent.—than in any other town in Western Europe.
We also have low wages. Surprisingly, given the reputation for militant trade unionism on Merseyside, wages tend to be lower there than elsewhere. They are certainly lower in the North-West than the average wage in Scotland. These facts belong to the general debate about determining the allocation of resources.
Merseyside as a whole has suffered not only from persistently high unemployment, which has sapped the morale and confidence of the area and its people. It is also suffering from long-term structural decline. Despite all that has been done in regional policy by successive Governments, we have lost about 72,000 jobs in the last decade. Despite the tremendous efforts of this Government by making it a special development area and by means of the regional employment premium, the job creation scheme and all the other forms of assistance, we have still had a net loss of jobs. That loss and decay is continuing and is seriously sapping the morale and confidence of the people of the area and of industrialists who may wish to invest in its future. The Government have done a great deal, which is appreciated, but a great deal more needs to be done.
We need to look at regional policy afresh. I am not convinced that this can be properly done or that a policy can be implemented by setting up regional Development Agencies—certainly not in 1780 the terms outlined in the Bill. It is far better done centrally by means of a strengthened Department of Industry and a National Enterprise Board. But in that process, far more resources than have been allocated in the past will have to be devoted to the industrial regeneration of Merseyside and the North-West.
What I hope the Minister will be able to give Merseyside is, first, something quite simple—a review of the investment and employment prospects of the whole area. Let us sit down and, objectively and dispassionately, examine its structural problems, its future potential and its requirements in terms of new industries and investment, so as to put Merseyside on a sound and stable basis. That is essential.
Second, it will be necessary to provide far more aid, selectively, to the area. It is important not just to get new advance factories, of which we have had a great many in the last two years, with many more being built. What we want desperately on Merseyside is new industries and a larger spread and variety of industry, particularly to take up the abilities of the many young people who are educated, trained and qualified but in present circumstances are unable to find opportunities to develop their talents and abilities to the full.
We need a large range particularly of service industries. In this context, I reinforce the point put by my hon. Friend the Member for Ince about the dispersal of Civil Service jobs under the Hardman Report. We desperately need far more of that kind of input into the area than there has been in the past, with the qualification that many of the jobs are not really being provided on Merseyside but are merely being shunted from London and other centres to Merseyside. That does not help much. We want jobs which will be provided on Merseyside.
§ Mr. Spriggs
On the question of the dispersal of civil servants, would not my hon. Friend agree that it would be only fair and proper for the Government to consult the unions and associations representing civil servants to find out whether they are prepared to move out of London into the provinces?
§ Mr. Kilroy-Silk
That is an important point, but it is my understanding that such consultation has taken place and 1781 does take place, and that there has been a considerable degree of resistance, not unnaturally, from civil servants who do not wish to move from wherever they are to wherever it is they are supposed to be going. That is human and understandable. But we are talking in terms of the creation of jobs, not just the movement of, say, 50 people from London to Merseyside. We are talking of the creation of 5,000, 10,000, 50,000 jobs on Merseyside. Moving a Government office, although it helps to provide ancillary services, does not get to the root of the problem on Merseyside.
Something much more positive can be done, and I hope that my hon. Friend the Minister of State will take to heart the idea which has been mentioned many times, not least by my hon. Friends the Members for Liverpool, Garston (Mr. Loyden) and Liverpool, Walton (Mr. Heffer). We have on Merseyside 40,000 building workers unemployed, yet a great deal needs to be done in the area in terms of the repair and renovation of council houses, for example. There is a great waiting list in Liverpool for council houses, while a tremendous number of council houses in Liverpool and Kirkby lie empty because of lack of resources to do repairs. A hospital is desperately needed in Skelmersdale to take the pressure off the hospital in Ormskirk, in my constituency.
These are just two of the many things which could be done. We have the need and we have 40,000 construction workers unemployed. Surely it would not be impossible for the Government to give the kind of selective assistance we are asking for, which could take up the slack in the construction industry and provide very necessary and essential social resources, better housing and a hospital. It would not have a great inflationary impact on the economy as a whole.
§ Mr. Bates
On the question of the building of council houses, which is much needed in Liverpool, would not my hon. Friend agree that it is not the Government who are restraining council house building in Liverpool but the Liverpool Council, which is not getting on with the job that it should be doing?
§ Mr. Kilroy-Silk
That is true. The Liberals came into office in Liverpool 1782 with grandiose promises and tongue-in-cheek remarks about what they were going to do.
§ Mr. Kilroy-Silk
That would be appropriate.
I want to put one final point. We have made an attempt to get a commitment to the establishment on Merseyside of the headquarters of British Shipbuilders. We have missed out on most of the new locations of headquarters developed in the last year or so. Most have gone to Manchester and elsewhere. Merseyside has not done as well as it might reasonably have been expected to do. We have a very strong case for the establishment of this headquarters. Of course, we would like the British Aerospace Corporation as well, because it would be an additional bonus.
Liverpool is Britain's principal export port, in spite of assertions to the contrary. It has its own shipbuilding and ship-repair capacity. It has the commercial infrastructure, developed over the years and closely allied to and integrated with shipbuilding and ship repairing. It has the history and tradition which would make the location of the headquarters of British Shipbuilders appropriate. It is, of course, one of the leading maritime areas of the country. Equally important, it is equidistant from London and all the other major areas of shipping, shipbuilding and ship repairing.
I urge my hon. Friend the Minister of State to give serious consideration to the location of the headquarters of British Shipbuilders on Merseyside. We believe that our case for it is as strong as the cases put forward by other areas. It is a case based on merit. Merseyside would be the most efficient place to locate the headquarters. We believe that our case is supported and becomes unarguable when one puts it in the context of the disappointing and intolerable level of unemployment on Merseyside. On social grounds alone, we believe that there is a case for its location there.
The location of the headquarters on Merseyside would give what is required by an area which has been talked about, talked down, and written down for such a long period, and which has taken severe knocks in employment opportunities. It would give that essential boost 1783 to confidence. It would be a demonstration of the Government's belief in the future of Merseyside. It would be an act of faith on the part of the Government and would be deeply appreciated and welcomed and be greatly beneficial to the area. I hope that my hon. Friend will consider this idea seriously and sympathetically.
But the real solution to our problems of unemployment, whether it be in national or regional terms, is not in the setting up of Agencies, however desirable they may be on other grounds. The true solution is to grasp the reins of power and to draw into the centralising hands of the Government the means by which they can control and plan the economy. Unless we can plan the economy in a rational, fair, efficient and Socialist way, we shall not be able to allocate resources where they should be going to. We shall not be able to develop a vibrant, driving and stable economy, and we shall certainly not be able to solve the very deep-rooted problems of the regions.
§ 2.28 p.m.
§ Mr. Alf Bates (Bebington and Ellesmere Port)
I support the essence of the Bill, which was introduced very ably by my hon. Friend the Member for Gateshead, West (Mr. Horam). I must say that I very much admired the style of the hon. Member for Hertfordshire, South (Mr. Parkinson), who managed to start by saying "My heart is in the regions; I come from Lancaster. I really do believe that the regions have a very good case", and then went on to attack virtually any measure that introduced discriminatory aid in favour of the depressed regions. Those of us who have not flitted off, as he has done, to the South-East—indeed, he has flitted from the Chamber—know that the situation in the regions is somewhat different from the one he outlined.
The problems of regions like Mersey-side is a very long-term one. There has been a long-term rundown in some of Merseyside's basic industries. The problem has not been exacerbated by recent regional policy; it is a much longer-term situation than that. Anyone who goes to Merseyside and looks out over the mouth of the Mersey will be able to observe the fairly dramatic changes that have taken place within less than a generation in the amount of traffic that is 1784 using the port and is vital to its economic existence. At this time there may well be a turn-round in the activity of the port, but it will need a dramatic turn-round to re-establish it as the vital heart of that sub-regional economy.
Equally important staple industries, such as shipbuilding and ship repairing have, for a variety of reasons, been running down over the years. There is a gross world over-capacity of shipbuilding and ship repairing, and, combined with the deplorable lack of investment in those industries over the years, this has meant that areas with those industries within them are suffering severely. That sort of difficulty spreads throughout the commerce and industry of Merseyside and results in the high unemployment problems outlined by my hon. Friends from that area.
It would be churlish not to admit that the Government have taken a number of steps to assist the Merseyside area. It was this Labour Government who created Merseyside as a special development area. We should not forget that and all that it entails.
We ought to be a little careful about quoting the figures of aid going to regions such as Merseyside. My hon. Friend the Member for St. Helens (Mr. Spriggs) referred to the total expenditure going to different development areas. On a population basis, the amounts of money going to development areas per head of population show that in the last financial year under this Government Merseyside received a high priority. The answer that my hon. Friend the Minister of State gave to a Written Question on 9th December last year indicated that Merseyside, of all the special development areas, had the highest expenditure per head of population. We should not, therefore, suggest that the Government have not made serious attempts to assist the Merseyside area in these financial ways.
There is no doubt, as my hon. Friend the Member for Gateshead, West said in his opening remarks, that that sort of regional policy and financial incentive, together with the general regional policy that we have adopted over the years, have had some impact on the regions, but it is quite clear that they have not had the major and overwhelming impact that many of us would have wanted.
1785 Simple fiscal policies of incentive are not sufficient to create major new investment in the regions. We have broadly accepted that now. On the Government side, our reasons for developing the National Enterprise Board and for setting up planning agreements show that we now believe that it is necessary to do more than give financial incentives; it is necessary to have a direct intervention in the economy, and particularly in the economies of the regions.
Although we have a good record in this respect, it is not good enough, and we have to go very much farther in the direction of positive intervention. I have to agree with my hon. Friend the Member for Gateshead, West that the National Enterprise Board has an important rôle to play in some of our major industries, but I believe that it is not in itself the the right instrument for detailed regional policy of the sort that many of us would want to see.
I do not think that this is an "either/or" situation. We need both. We need a strong and vigorous National Enterprise Board which is promoting industry, but equally we need to have the types of Agencies that are outlined in the Bill, working to ensure that we create self-generating industries within the regions. It is not a question of attacking the National Enterprise Board; we have to strengthen it. But we have to have both the Board and the Agencies, because the Agencies have a difficult and equally important job.
We have clearly recognised the arguments as a party and as a Government, because we have set up the Scottish and Welsh Development Agencies, which it is intended shall do this sort of work within Scotland and Wales. Some of my hon. Friends—in particular, my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk)—have suggested that we were perhaps trying to grab something that should have gone to other regions, and were being selfish in particular areas of England. That simply is not true. Throughout Great Britain there are a number of special development areas. There are to be Development Agencies in Scotland, Wales and Northern Ireland. There is therefore no reason why the other special development areas should not have them too.
1786 We might argue—as my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) did—over the precise boundaries of these Development Agencies, but in the main that is a Committee point. My hon. Friend the Member for Ormskirk mentioned Huyton. The reason that Huyton was left out of this is not a churlish desire to make any political point about the Prime Minister; it is that Huyton is not included in the Merseyside special development area. The argument that should be concentrated on Huyton is whether it should be in the special development area, not whether it should be especially outside the special development area but included in the Development Agency. That is the reason behind the precise boundaries, though we may have to go through them in some detail in Committee.
This has been an important debate about regional policy throughout the country. I am extremely grateful to my hon. Friend for introducing the Bill. I hope that the Government will feel able to accept it as part of a continuing and important development of regional policy throughout this country.
§ 2.38 p.m.
§ Mr. Giles Radice (Chester-le-Street)
As one of the sponsors of the Bill, I congratulate my hon. Friend the Member for Gateshead, West (Mr. Horam) on the extremely able and clear manner in which he moved it. The House—and particularly the English regions—owe him a debt for that.
There has been astonishingly little serious contribution from the Opposition, but there have been some notable contributions from the Government side. What has emerged is broad agreement for the idea of a Development Agency for the English regions, though naturally there is strong disagreement over the boundaries. However, as has been said already, this is a Committee point.
It has also emerged that the thinking and the assumption behind the Bill are just as important as the details of it. As my hon. Friend made quite clear, one of his reasons for putting forward the idea of the Development Agencies is so that we may have a more selective approach to regional policy. This is not to decry 1787 what has been achieved by regional policy.
The hon. Member for Hertfordshire, South (Mr. Parkinson) put forward the idea that somehow a free market can solve the regional problem. But that idea has been tried over the last 150 years, and the free market quite patently has not solved the problem.
The strategy team—reference has already been made to its work—has estimated that in the Northern Region, between 1963 and 1973, regional policy created 50,000 extra jobs, and in recent years there has also been a substantial reduction in net migration from the region. So the original policy has achieved something, even in the present recession.
The North of England Development Council has pointed out in its latest economic review that if the region's proportion of unemployment had remained at what it was two years ago, there would be approximately 45,000 more unemployed there than at the moment. That is very little comfort for the large numbers of unemployed in the Northern Region. Of course, in previous recessions the Northern share, like that of other regions, has usually kept pace with the severity of the recession.
One must, however, give regional policies some credit for improving the relative position of such regions as the Northern Region. But though it is right to defend what regional policy has done in the past, it is a fair criticism to say that it is insufficiently selective. There are, of course, the provisions of Section 7 of the Act, the regional employment premium and the incentives, but these are across-the-board handouts and are not selective. Their coverage is too wide. Regional policy must now become more selective.
A major lesson of the past decade has been the importance of looking at each region, whether it is Scotland, Wales, the North-West, Merseyside, the South-West or the Northern Region, as a mini economy with its own industrial characteristics. We have learned that just as in an international context one country may be weaker economically than another, so one regional economy will be uncompetitive as compared with another. This means that it will have slower growth, a higher level of unemployment, lower earnings and so on, and it will 1788 even have a trade deficit rather like that suffered by a national economy. A major factor in that is likely to be a less effective use of investment and, perhaps most important, an industrial imbalance.
In the Northern Region economy the key factor is the structure of the industry. Just as my hon. Friend the Member for Bebington and Ellesmere Port (Mr. Bates) was explaining this problem in the Northwest, so we, too, have that problem. Our industry is relatively capital-intensive, and that means that there is a lot of heavy industry with a relatively higher proportion of unskilled manual jobs. Obviously that affects income levels and the level of employment. The effect on incomes is obvious, but on employment it means that the region has a lower proportion of transferable skills. When there is a rundown in industry there is likely to be far greater difficulty in people moving from one job to another.
A major objective of regional policy must now be not simply to provide new jobs but to provide the right kind of new jobs in the right places. I am not arguing that this should happen at present during the deep recession. At a time like this we must act defensively. But as the upturn comes it will be possible to adopt a more positive and strategic approach, and that is where the Development Agency idea comes in.
I am not in favour of institutions or agencies for their own sake. But the Development Agency gives us a tool which will enable us to look at a regional economy in broad terms, to analyse its needs, and then to act in a selective rather than a blanket way. I do not believe that the National Enterprise Board can do that kind of regional job. I am a strong supporter of the NEB. I should like it to have more powers and finance, but it cannot do a regional job when it already has a substantial problem in sorting out the difficulties of British Leyland, Alfred Herbert and so on.
I do not believe that there is a contradiction between central planning and a regional dimension. On the contrary, successful economies like that of France have a strong central planning tradition but they also have strong regional policies.
The duties of the Development Agency have been clearly set out during the 1789 debate. It must deal with the structural problems of each individual region. For example, in the North we need more service industries. We need to encourage the small companies and to back the successful indigenous industries. We need to look at the special problem areas which exist within each region and where special attention is needed.
The Agency would act as a regional investment bank and would fill the gap which now exists in medium-term finance. There must be a central Government commitment, and here I agree with my right hon. Friend the Member for Middlesbrough (Mr. Bottomley) that there must be economic expansion. It must be a central commitment if regional policy is to work. There must also be a single direction of regional policy. The present confusion of responsibilities between different Departments is unhelpful.
We need a regional dimension of public expenditure, and regional policy must now have wider obligations than in the past. It is a question not just of employment but of the obligation which must now be laid down in regional policy to create self-sustaining regenerating economies. Until we do that, all we shall do is to pump in money which is siphoned away because the regional economy is not basically healthy.
I am a strong supporter of devolution for Scotland. I believe that I was the only English Member to speak strongly in support of it during the devolution debate. There is, however, a fear in the English regions that devolution for Scotland and Wales will mean that the English regions will not get such a good deal economically. We have been hearing a great deal about the need in any plans for devolution not to forget the economic well-being of the English regions. A more effective regional approach such as is represented by the Bill would reassure those regions that they are not being left out in the cold. I therefore add my support to the Bill and I urge the Government to accept it.
§ 2.48 p.m.
§ Mr. Michael Grylls (Surey, North-West)
This has been a useful and positive debate about what can be done to meet the problems of the regions. I was interested in what the hon. Member for 1790 Chester-le-Street (Mr. Radice) said on the need for a more selective regional policy. Many would agree with that.
I was even more interested in the hon. Member's oblique critique of the National Enterprise Board. When he and I served on the Standing Committee which discussed the establishment of that body it was said that it would be the great regenerator of British industry and that it would resolve all these problems. There now seems to be a certain amount of doubt. A similar sort of doubt was expressed by the right hon. Member for Middlesbrough (Mr. Bottomley), although he did not specifically mention the NEB. He was drawing attention to the serious loss of steel jobs in his constituency. I am not convinced that the machinery of the English Development Agencies will resolve these problems. The Opposition agree that there are immense problems in almost every constituency for regional Members, as it were, and that they must be resolved.
I should like to add my congratulations to the hon. Member for Gateshead, West (Mr. Horam) on introducing the Bill in such a moderate, sensible and constructive way. However, he will not be surprised if I tend to disagree a little later. I do not disagree with the tone or intent behind what he said, and if he accepts that as flattery, that is fair enough.
The proposal for an English Development Agency was a predictable reflex from the Scottish and Welsh Development Agencies. Why should we poor English be underprivileged and not have our own show? Indeed, why should not the people of Cornwall—I speak as a Cornishman—have their own Development Agency?
Several hon. Members have made the point that we would have a proliferation of Development Agencies. Indeed, the hon. Member for Ormskirk (Mr. Kilroy-Silk) said that he did not agree with a proliferation of sub-agencies within the main English Development Agency. Certainly a powerful point was made by one hon. Gentleman below the Gangway that a Development Agency for the West Midlands would be relevant, because that area has record unemployment of 7.3 per cent. Therefore, the suggestion was for a Development Agency in that area.
1791 This matter, as has been made clear, is slightly infectious. It is rather like devolution. It is spreading. The truth is that this is yet another excuse—this may not be the thought behind the thinking of the hon. Member for Gateshead, West, but it may be the thought behind the thinking of some of his co-signatories—for a Government body to interfere in industry and in the regions for no good purpose.
The most serious element is that this body would quickly, as it were, make thirsty demands on the taxpayers' money. The hon. Member for Gateshead, West said that the annual demand for money by this development agency would, in the general context of money spent in the region, be relatively modest. However, I think that he will agree that the total permitted under the Bill is an annual amount of £240 million. Few hon. Members on this side of the House believe that situation would remain if the Bill reached the statute book. It would feed on itself. The sentiments behind almost all speeches have been that the Agency must have more money, more this, and more that. We see this proposal as not very constructive, but a further interfering arm of Government and bureaucracy gone berserk for its own sake.
Why is this Agency being proposed? I think that it is a reflex action from the general economic failure that has been illustrated by increasing unemployment in the regions. Therefore, the search is on for a bureaucratic solution. I hope later to indicate that there may be a better solution than that.
For the true Socialist, economic success is the enemy of real Socialism. With economic success the problems of the regions are more easily solved, but in a less interfering way. With economic failure, there is a demand for more bureaucratic interference at the expense of the general taxpayer.
If we do not worry about the general taxpayer, which is a point of view, at least we should be concerned about industry. The problem is made worse, because industry pays so much in taxes that it is unable to expand, invest, or create jobs about which we are all principally concerned.
I criticise not the spirit, but the detail of the Bill. I ask the hon. Member for Gateshead, West and his hon. Friend to 1792 direct their considerable energies towards the Chancellor of the Exchequer, because he could do a great deal to help industry and to solve these problems. If economic policy is successful, the regions will automatically pick up. We need to promote profit. One hon. Gentleman bravely and rightly said that we wanted more profit because that in turn would create more investment and jobs. The solution to the problems of the regions is expansion and jobs.
What have we got? We have record low productivity—rather lower than during the three-day working week. We have high unemployment. Some of the figures have been quoted. I should like to quote the figures for the areas which we have been considering today. In a sense, the hon. Member for Gateshead, West could take these figures as support for his general thesis. I should not argue with that.
Taking the whole of the North of England, in February 1974 unemployment was 4.3 per cent. in February 1976 the figure was 6.7 per cent. For the North West, in 1974 the figure was 3.3 per cent. and in 1976 it was 6.4 per cent. In Middlesbrough unemployment is 10 per cent. at present. Merseyside has almost the worst unemployment figures of all. In 1974 the figure was 5.7 per cent. Now it is 10.9 per cent.—just pushing 11 per cent.
I can well understand hon. Members from the Merseyside district, as it were, coming here to express their great concern. The hon. Member for Chester-le-Street told us how worried he was about the situation. He commented that this Government have made a major impact on the region. The hon. Member for Bebington and Ellesmere Port (Mr. Bates)—he will correct me if I am wrong—said that the Government's policy, in the two years that they have been in office, has made a major impact. The major impact has been to take unemployment from 5.7 per cent. to 10.9 per cent.
§ Mr. Bates rose—
§ Mr. Grylls
I concede, before the hon. Gentleman intervenes, that that is not wholly the fault of this Government. But he could not gainsay that if the Government had achieved a general economic 1793 success—I appreciate that world conditions have something to do with our problems—and if they had done a number of the things which we advised them to do, this terrifying figure of 109 per cent. unemployment on Merseyside would not have arisen. To say that the Government have made a major impact on unemployment in the area is to turn truth on its head.
§ Mr. Bates
The hon. Gentleman is somewhat misinterpreting the essence of what I said. I said that the Government started to give a considerable amount of extra help to the Merseyside area, first by creating a special development area—which in that sense is the highest financial priority the Government can give—and, secondly, in the last financial year, by giving it a higher amount of spending per head than any other special development area. I went on to suggest, I think, that that sort of fiscal help was insufficient and that we needed direct intervention of the sort proposed in this Bill.
§ Mr. Grylls
That is perfectly fair. I would not quibble with that. I want to say a word or two in a moment about general regional policy.
It is equally fair to say that the impact has been in the wrong direction. What has come out of it all is that when economic policy goes wrong and when inflation soars to the level that it has reached during the last year we get real trouble in the regions. I believe that if one inquires of almost any firm or business in the regions, one will be told that the most damaging thing to its liquidity is a high rate of inflation. Therefore, one comes back to the central problem of getting the economy right. Given the rather dismal scenario that we have, I can well understand the reason for considering a proliferation of Government bodies, of which this is just one extra.
I do not believe that the Government themselves have any great confidence in the suggestion that Government bodies will resolve the problem. On 18th February 1975 the Paymaster-General said:Any idea"—he was talking about the need for a profitable and vital private sector—that we can substitute for it, that Whitehall can manage British industry, that it can take its investment decisions, its marketing decisions, 1794 its research and development decisions, would be an illusion."—[Official Report, 18th February 1975; Vol. 886, c. 1135.]The Paymaster-General was referring to Whitehall, but I believe that exactly the same thing would apply to any other quasi-Government agency.
I want now to say a word about general regional policy and where it has gone wrong. My hon. Friend the Member for Newcastle-upon-Tyne, North (Sir W. Elliott), who has had to leave this debate and go to his constituency, said that the economies in the development regions were more in balance today. That must be true. Reference has been made to the infrastructure improvements that have been made in the last 20 years. They have been very considerable. The economies in the regions are more diversified now than they have ever been before.
One point that has been stressed by several hon. Members opposite is the need to provide more local industries. I agree that this is very difficult, but I was glad to hear from the Government Benches the suggestion that we should welcome overseas companies to our regions. There has been criticism of the multinational company, but the fact remains that multinational companies have made a great impact in bringing jobs to the regions, and particularly to Glasgow and the Clydeside area. Therefore, I agree that we should welcome and encourage them.
I think that the economic situation generally has made people focus on present regional policy and worry very much about it. Over the years, Conservative Governments have been deeply committed to an expanding regional policy. So, for that matter, have Labour Governments. I do not think it would be very profitable to argue about who had done most, but it is sufficient to say that there has been, by and large, a bipartisan policy on the need to expand the regions and encourage employment to go there, and, as national prosperity increases, to see that a fair share goes to the areas that we are discussing today.
The Conservative Government introduced the Distribution of Industry Act in 1958 and the Local Employment Acts in the 1960s. In the 1960s, 192,000 new jobs were brought to the regions. That is a considerable achievement. We ought to continue with that work. There has 1795 been reference to the Industry Act 1972, the provisions of which are well known and are being used by the present Government. When we have criticised the present Government we have frequently had that Act thrown in our faces. Nevertheless, I make no apology for the 1972 Act. It was a natural development of regional policy that Conservative Governments over the years have been following.
I remind hon. Members that the 1972 Act set up an important institution—the Industrial Development Advisory Board, the main board being in London, with six regional boards in the regions. Quite rightly, hon. Members have today demanded more local power and local decision-making, but we have that power already in the regional industrial development advisory boards.
There is a point of some significance here, because I notice that the hon. Member for Gateshead, West would give his English development agency power to make decisions up to an expenditure of £2 million, whereas over that sum it would have to go to the Minister—presumably, though the Bill does not say so, the Secretary of State for Industry. But the local boards under the 1972 Act have power of decision up to £1 million. The Minister of State will be able to put me right here, but my understanding is that it would not be difficult to raise that limit of £1 million to £2 million without the need to pass new legislation. I shall be interested to hear what the Minister says about that, but, in any case, there is local power of decision already in the regions through the IDAB set-up. I welcome it, and I believe that it should be used more widely.
The hon. Member for Gateshead, West wants to take advantage of managerial advice through his English Development Agency, but managerial advice is already available through the local IDABs, which are made up of trade unionists and industrialists. It is there already, and we should use it more.
The Industry Act 1972 was a sophisticated and flexible measure, and one of its advantages lay in giving power to the local boards. This structure has been accepted by the present Government, and they have developed it further in their Industry Act 1975. When we already have 1796 that structure, it would be not only useless but positively damaging to impose on top—or underneath, whichever way one puts it—yet another bureaucracy. It would probably be slower to react than the present boards are. The present boards are fairly small, and their staff is small. Hon. Members frequently criticise the extent of bureaucracy—I probably do so myself—but the local boards have a fairly small bureaucracy, and one imagines that they can react more quickly for that reason.
If the Government were to propose that the amount of money which the six regional boards of the IDAB can use should be increased, I suspect that they would not encounter many difficulties from the Opposition. But we can see no reason for putting in a new structure.
Let us look for a moment at the existing structure for industrial development generally. I am sure that there would be greater confusion if the present proposals were adopted. We already have the Industrial Estates Management Corporations—one for England, one for Scotland and one for Wales—whose purpose is to set up advance factories and to buy land. We have the industrial development certificate system, and the office development certificate system brought in by a previous Conservative Government. There are also the regional economic planning councils, which try to identify growth points in the regions. We have the industrial task forces, set up by Mr. Christopher Chataway when he was Minister for Industrial Development, whose purpose is to try to identify needs and to improve the infrastructure.
Moreover, since we joined the European Community we have a whole range of European bodies upon which we can call. Some of these have already provided a good deal of money. For example, the British Steel Corporation has had quite a lot from that source. We have the European Regional Development Fund, the European Investment Bank and the European Social Fund, all of which we can use.
Now, we have the National Enterprise Board. It was received with no great enthusiasm among Conservatives, as the House well knows, but it is now in existence and trying to work. In addition, for Scotland and Wales we have the 1797 Development Agencies already established by the present Government.
I cannot see what good would be done by putting on top of the NEB, in the heart of the United Kingdom, yet another body. It would inevitably lead to more expense. We have had some references to money today, and I have already-referred to the total of £240 million. How many staff does the promoter of the Bill assume that his Development Agency will have? I understand that the Scottish Development Agency has 750, and the Welsh, rather more modest, has a mere 450 civil servants. How many civil servants would the hon. Gentleman expect to employ?
What about the Chairman? There has been a good deal of criticism recently from hon. Members below the Gangway on the Government side about paying the Chairman of British Leyland £22,500 a year. How much is it proposed to pay the Chairman of the English Development Agency, and what will the administrative costs be? In the debates on the Scottish and Welsh Development Agencies, administrative costs of between £2 million and £3 million were discussed. I say this only to demonstrate that the Bill involves bureaucracy for the sake of it although I know the hon. Gentleman will not agree with me. It is a bureaucracy that will be expensive and will add to public expenditure generally. Industry will have to pay, through tax, money that it could use for expanding firms and creating more jobs.
§ Mr. Horam
There are so many people employed by the Scottish and Welsh Development Agencies because those two Acts abolished the Scottish and Welsh Industrial Estates Corporations and incorporated them in the new Agencies. My Bill would not abolish the English Industrial Estates Agency, because I think it is doing a good job. The numbers involved in my Agency would be very small in comparison with those in the other two agencies.
§ Mr. Grylls
Although the Scottish and Welsh Development Agencies have taken over the two industrial estates corporations, they have each taken on about 200 extra civil servants. Even allowing for what the hon. Gentleman has just said, there must be administration for the 1798 Agency. My guess is that if one calls it an Agency it will grow rather fast.
§ Mr. Spriggs
I should like to give the hon. Gentleman some idea of the messages that are being sent to hon. Members on the Government side of the House. This week I received a letter about the lack of investment in a huge firm in my constituency. It has out-of-date, unused buildings. The firm has not cleared the site, and yet it is using outside warehousing for storing its products. This is the kind of thing that workers can see going on, and I think that a democratic Development Agency would look at this situation at close quarters and help to solve the problems.
§ Mr. Grylls
Of course there are such problems, but there is nothing which this body could do that could not be done by the wide range of weaponry that we already have to deal with those matters. I do not know the facts of that particular case, but unless the Agency is going to take over the firm, I am not sure what the plan would be. If the firm asked the local advisory board for help to clear the land and put up new warehousing, the power is there under the 1972 Act to resolve the problem. My main point still holds—nothing new is being added.
There is another aspect which could be positively damaging about this sort of body—the unfair competition. The guidelines to the Scottish and Welsh Development Agencies—and no doubt similar guidelines will be set out in connection with this Bill—say that the Agencies must operate on equal terms with the private sector. British Leyland was able to introduce the "Superdeal" because it was Government backed. Many people would say that Chrysler workers in their constituencies were affected by that and that it did Chrysler sales a lot of harm.
A Development Agency, Government backed, with apparently limitless funds, would in the end be unfair to the private sector and would result in the private sector expanding rather less.
I suspect that the hon. Gentleman knows that there is no need for yet another body. The Bill is a perfectly genuine and sincere reflex action not only to the establishment of the Scottish and Welsh Agencies, but to the fact that the regions are now in a very serious state with rising unemployment. However, I believe 1799 that there is a predatory side to the proposed Agencies. They would be locally-based predatory organisations, with the power to take over private companies. They could buy up to 30 per cent. of the voting shares in any company with the consent of the Secretary of State. Under Clause 16, up to £2 million could be invested without the approval of the Secretary of State. They could invest more than £2 million if the Secretary of State agreed.
Much reference has been made to how the system would fit in with the NEB. In recent weeks we have seen an argument taking place between the NEB and Rolls-Royce, namely, the Box-and-Cox arrangement between Lord Ryder and the Chairman of Rolls-Royce. That has been complicated enough, but if we have a plurality of boards there will be a plurality of disagreements, general chaos and confusion.
Sir Richard Dobson was appointed Chairman of British Leyland without the Secretary of State for Industry having seen or met him. What would happen if the Secretary of State had to appoint the chairmen and members of Development Agencies throughout England? If he cannot see the Chairman of British Leyland—the company which enjoyed the largest investment made by the Goverment—what hope is there of his seeing the chairmen and members of the boards?
I shall be intrigued to hear how the hon. Gentleman sees his scheme slotting in with the machinery which now exists. I appreciate that he probably will not have the opportunity to tell me today. However, if the Bill goes to Committee it will be interesting to know how the scheme will operate and how the guidelines will be applied. I suspect that however ingeniously the guidelines were drawn up, the NEB would be chasing after one company while the North-West England Development Agency or the South-West England Development Agency was chasing after another. The result would be no improvement to the job situation, merely a great deal of extra money being spent.
We say that the Bill is unnecessary. It is even undesirable, for the chaos that we believe it would create. It is undoubtedly bureaucratic. I think that the hon. Gentleman must accept that.
1800 The armoury of regional policy inducements that the Government have in their power—many of which were provided by Conservative Governments in the past—are sufficient. The Minister of State should be telling his right hon. Friend the Chancellor of the Exchequer to get conditions right, so that industry can prosper. He should tell his right hon. Friend to create the right economic framework to allow industry to expand. He should sort out the problem of inflation. Although the Government claim that inflation is falling, the damage in the regions has been created in the past year with the high level of inflation that we have seen.
It is that situation that is having an adverse effect on company liquidity. It is impossible for companies to expand. The solution for the regions is, first and foremost, for the Government to get the economic policy right, to reduce the level of inflation and to use the money that is available in a sensible manner. If the Government came forward with further constructive adaptations to regional policy which proposed the sensible spending of money within the general level of public expenditure, I do not believe that the Opposition would oppose it.
There will be argument over the years about whether the country is getting good value for the money that it is spending on regional policy. I believe that my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson) was making that point.
Labour Members have referred to the widespread use of the regional employment premium. They say that it should be given to the firms which need it. This matter is worthy of study by both sides of the House, to ensure that for every pound spent in regional policies we achieve more jobs. That is what it is all about, and we are arguing today only about methods.
I hope that the hon. Member for Gateshead, West will accept my humble advice and agree that the framework that I have outlined is the right one. Perhaps he will pass that suggestion to the Government. If he does so, he will make a major contribution to solving the worries in the regions and enabling the prosperity that we all want to see to be 1801 more evenly spread throughout the country.
§ 3.21 p.m.
§ The Minister of State, Department of Industry (Mr. Gregor Mackenzie)
I, too, wish to congratulate my hon. Friend the Member for Gateshead (Mr. Horam) on his good fortune in winning a place in the Ballot. During my many years in the House I have been successful only once in the Ballot. My hon. Friend has given us the opportunity to hear useful contributions from both sides of the House. Genuine concern has been expressed about employment problems and problems of regional development. No matter what individual Members may think about the Bill, this debate has given us the opportunity to hear views on the Northern Region, Merseyside and elsewhere.
The powers conferred by the Bill are all powers which we as a Government have already placed on the statute book. The Industry Act 1975 gives the National Enterprise Board all the powers to promote industrial development proposed for the new Agencies and the Board is in process of putting them into operation. With great respect to my hon. Friend, I must tell him that his measure would not achieve anything that it not already being done. It simply provides that where one organisation is performing a certain function in England—the National Enterprise Board as regards industrial development and the English Industrial Estates Corporation which is responsible for Government factory building—in future there would be at least three extra new bodies.
Surely the last thing we want at the moment is to create a patchwork of bodies in England with overlapping functions, or to seek to fragment our industrial policies at a time when the instruments we have fashioned to promote those policies have only just come into operation.
A number of my hon. Friends have asked questions about the National Enterprise Board and its rôle in regional policy. I understand their point of view when they look at the Scottish and Welsh Development Agencies and see new powerful bodies designed to speed up industrial development in Scotland 1802 and Wales. They feel that those new bodies give Scotland and Wales an advantage over parts of England which have problems just as serious. The Scottish and Welsh Development Agencies will indeed be strong catalysts for industrial development, but the interests of England will be fully met by the National Enterprise Board.
The fact that it will have a rôle nationally—acting as State holding company and dealing with industrial development and reorganisation questions best handled on a national basis—will in no way diminish its effectiveness in England. Its other industrial powers are the same as those of the Scottish and Welsh Development Agencies. The creation of those bodies and of the Northern Ireland Development Agency when set up will mean that the Board will be able to devote considerable efforts to industrial development in England.
Our manifesto in October 1974 stated categorically that the National Enterprise Board would act to create employment in areas of high unemployment. We went further in the White Paper on the Regeneration of British Industry, which confirmed that the Board itself would be an instrument through which the Government could operate directly, through commercially sound public enterprises and joint ventures with private firms, to alleviate the problems of areas with high unemployment. The guidelines for the Board's operations, which were placed in the Library of the House a few days ago, also drew attention to this aspect of the Board's rôle.
My hon. Friends the Members for Ormskirk (Mr. Kilroy-Silk) and for Liverpool, Garston (Mr. Loyden) rightly said that the powers of the NEB encompass those proposed in Clause 1(2) for the new English Agencies. It will be a new source of investment capital for manufacturing industries. It will promote industrial efficiency and profitability by assisting the reorganisation or development of an industry. It will be a channel through which the Government may assist otherwise sound companies in short-term difficulties. It may by agreement acquire individual firms in profitable manufacturing industry. It has powers to start new ventures and participate in joint ventures with private sector companies. And it will help to 1803 create employment in areas in which the need for new jobs is most urgent.
The Chairman of the NEB, speaking recently to the North of England Development Council, explained that the NEB will be very much concerned with the problems of under-investment and low levels of activity and will indeed act as a new instrument to promote regional development, supplementing the existing regional measures. The Board intends its role in providing and safeguarding employment in areas of high unemployment to develop in a number of ways. It will seek out proposals for industrial investment which can make a major contribution to improving the efficiency and competitiveness of the companies concerned but which cannot go ahead because of lack of finance. Some companies may need more equity capital and the NEB may be able to help by taking up an issue of additional shares. Other companies may need loan capital which cannot be provided by existing sources of finance in the private sector.
The Board, as many hon. Members will know, has set up an office on Merseyside which has already started work. For example, the NEB's Regional Director, accompanied by the Department of Industry's Director for the North-West, visited Skelmersdale New Town, which was particularly mentioned by my hon. Friend the Member for Ince (Mr. McGuire) and which is of particular concern not only to my hon. Friends but to other hon. Members representing Mersey-side constituencies and to the Government. My hon. Friends will know that the NEB earlier this week announced the appointment of a Regional Director for the North.
The directors of the regional offices will be very senior members of the staff of the NEB and will report directly to a chairman. Their responsibilities will cover the Board's dealings with companies and public bodies based wholly or predominantly in their respective regions. They will be expected to seek out worthwhile proposals for investment by the NEB; to appraise them and submit them to the Board; to negotiate terms; and to secure the efficient management of the companies in which investment has been made. They will be able to draw on expert advice and assistance as necessary, but the Chairman's intention is that they 1804 should be given as much managerial freedom as possible.
The Secretary of State and the Treasury have a statutory duty to ensure that the NEB earns an adequate return on its capital. The NEB will, therefore, be concerned to back only projects with real long-term prospects of success which can make a lasting contribution to the future prosperity of the English regions.
§ Mr. Spriggs
Last month Todd Steel made a profit, but this weekend will be the last time it can pay wages and its employees will be out of work. The firm has a full order book and has recently refused £750,000 worth of orders because it cannot buy the necessary raw material, which is steel. What is the NEB going to do about saving these jobs?
§ Mr. Mackenzie
The company my hon. Friend has mentioned is part of a very much larger group and this project was examined by the Department of Industry over a long period. I am sorry about the difficulties to which he has referred, but no application has been made by the companies concerned to the NEB. I think my hon. Friend is confusing the matters which are causing him genuine concern with what I have been saying in this part of my speech.
The Board has been in operation for barely four months. I cannot believe that my hon. Friends are proposing in their Bill that we should scrap many of the powers we gave the Board such a short time ago. We should allow the Board to get properly under way and not make judgments as early as has been suggested today.
§ Mr. Ogden
We appreciate the Minister of State's deep concern and the great efforts he makes to help and understand our problems. We are not proposing any changes in the Board or criticising its performance, but however attractive a gloss my hon. Friend puts on it and however useful it is for Merseyside to have a branch office of the Board, we want more than that. Ultimately, the big decisions will be taken in London. If my hon. Friend said that the headquarters of the Board was to be situated in one of the regions, that would be some help. We need more than branch offices and subsidiaries. We want the organ grinders, not the monkeys.
§ Mr. Mackenzie
I understand my hon. Friend's concern. Many of us who live in assisted areas have what are referred to as branch factory economies, but I hope that I made clear in my earlier remarks that the Board has a very important rôle to play in regional policy.
The Bill proposes that each of the new Agencies should have power to build factories in their respective areas. The SDA and WDA have such powers which they took over from the Scottish and Welsh Industrial Estates Corporation. But we already have an English Industrial Estates Corporation which would continue to deal with assisted areas.
Therefore, under the Bill's provisions, we would have the North of England Development Agency buying land and building factories in the Northern Region, the Merseyside Development Agency doing the same in its area, and the Southwest of England Development Agency operating in the South-West while presumably the English Industrial Estates Corporation would continue to deal with the intermediate areas of Yorkshire and Humberside, the North-West and the East Midlands. Why do we need four Agencies in England when we already have an experienced English body dealing with all the English assisted areas?
What would the new Agencies do that the Estates Corporation is not already doing well? The Government have already commissioned the English Industrial Estates Corporation to increase the number of advance factories it is building so that space will be available when the economy starts to expand again and it is needed. Seventy new advance factories in England were announced as recently as last November. We have gone as far at present as we consider it prudent to do in committing extra funds to providing new industrial space. We shall do all we can to find tenants for these factories to provide new job opportunities at the earliest possible time. In order to make the best possible use of available funds it makes sense to plan the factory building for England as a whole rather than run the risk of waste by having several organisations working separately. And there is the further danger of wasteful competition for tenants.
Turning to the broader aspects of the debate, I can understand the concern of 1806 my hon. Friends about regional policy. I understand that the underlying purpose of the proposals in the Bill is to increase the proportion of national resources going to the areas concerned. We are all agreed that an active regional policy throughout the United Kingdom—in England, Scotland and Wales—is necessary and justified.
Where this Bill is concerned, I must differ on the means of achieving this. First of all, it is a mistake to believe that more rapid regional development can be achieved by creating new localised bodies. Secondly, I think that the Bill ignores what has already been achieved by regional policy and the instruments already available to Government to promote industrial development in the assisted areas.
We spend over £500 million a year on regional assistance, just under half of which goes to the areas covered by this Bill. The English development areas benefit from high rates of regional assistance—grants on buildings, plant and equipment at 20 or 22 per cent. and regional employment premium, which was doubled in 1974. Up to December of this financial year, 297 offers of selective financial assistance have been made in respect of projects in these regions. The investment associated with these projects amounts to more than £200 million and they are expected to create or safeguard—something which I know is much in the mind of my hon. Friend the Member for St. Helens (Mr. Spriggs)—about 24,000 jobs.
The hon. Member for Surrey, North-West (Mr. Grylls) was right to remind us of the rôle of our own regional officers in this matter. By far the bulk of applications for selective financial assistance are already handled and settled locally in the Department's regional offices. We think that that is right. People who are on the spot, such as our regional directors, are fully appreciative of the problems in the North, on Merseyside and elsewhere.
I pay my tribute to the considerable efforts they make to get around these regions, to make themselves familiar with the problems and to assist in every way they can. I think that my hon. Friend will know that it is not all that long ago that we gave even greater powers to the 1807 people in our regional offices to deal with problems of this kind.
Recession has brought sharply rising unemployment in the assisted areas and some have claimed this as evidence that regional policy is not working. But this is to confuse cyclical and long-term unemployment problems. Unemployment across the country has risen to high levels. The average for the development areas is significantly higher than the national average, but without regional policy I believe it would have been higher still. The overall rates of unemployment are painfully high, but in fact the differential between the rates of unemployment in the assisted areas and the rest of the country has been less in this recession than in previous ones. It is estimated that regional policy creates about 30,000 net new jobs a year in the assisted areas.
We have also seen in the last ten years a significant narrowing in the average weekly earnings in different parts of the country. In 1967 the spread of average weekly earnings ranged from 86 per cent. of the national average to 104 per cent. In 1974 this spread had been reduced to 92 per cent. to 104 per cent.
Regional policy is about encouraging investment and jobs in those areas with long-term underlying problems. If we place responsibility on organisations covering only parts of England, there is a serious risk of undermining regional policy's redistributive effects. It is very much in the interests of those regions which most need help to see that responsibility for regional policy remains at the centre so as to ensure that it is those regions to which most attention is devoted.
During a recession, the regions which get less help and those which are not assisted areas have naturally become pretty restive about the treatment of their needs as opposed to those of the special development areas and development areas. There is, therefore, a risk that hon. Members from all parts of the country, including London, would press for their own Development Agency—
§ Mr. Mackenzie
The answer is simple. We have in the development areas about 43 per cent. of the working population. We all talk much about whether we can 1808 spread the jam more thinly. We should end up with the whole of England as a special development area, with all the Development Agencies involved, and that would be of little advantage to the people of St. Helens or Newcastle or elsewhere.
Another point put to me is whether there should be a comprehensive review of regional policy. One of the major parts of my job, along with my colleagues in the Department, is to ensure that regional policy is kept under constant and continuing appraisal. Its effectiveness is monitored not only by Ministers and officials at headquarters but by our officials in the regional offices. I do not think that a general review is right, and it is certainly not right in the depth of a recession. That would not be to the advantage of the regions concerned. Nor would it give us positive guidance as to what sort of policy we should pursue in future.
Regional policy is intended to deal with long-term underlying problems—problems of persistently high levels of unemployment, loss of job opportunities, outward migration, industrial dereliction. It is not an instrument to deal with the cyclical problems of recession. Indeed, it is during recession that regional policy is probably at its least effective. It works best when the economy is expanding and plenty of new work is coming forward. Moreover, it is important to realise that stability is a positive element in effective regional policy.
Industry will take full account of the regional incentives in planning its investment only if it is confident that they will continue to be available. In my view, chopping and changing can only undermine regional policy. The Report on regional development incentives by the Select Committee on Expenditure supported that point.
The last major change came in the Industry Act 1972, but there have been changes since. The regional employment premium was doubled in 1974, and there has been a change in the coverage of the assisted areas—as when, for example, we made Merseyside a special development area. But the present package of incentives has therefore been in operation effectively for only four years. In my judgment, it is too early to make vast changes. Industry does not like it. It is not good for the areas concerned. All in 1809 all, we should have much less chopping and changing than we have had over the past 15 years or so. In that period there have been many changes which were not to the advantage of all the regions concerned.
Expenditure on regional assistance has increased many times over, and the current gradation of assisted areas has emerged during this period. In 1967 REP was introduced. Regional development grants, introduced in 1972, account for over half of our regional expenditure. Selective financial assistance is available under Section 7 of the Industry Act 1972. In addition, IDC control acts to encourage investment towards the development areas. We already have, therefore, a very wide range of regional measures.
Regional policy has concentrated on providing incentives to encourage industry to invest in the assisted areas, thereby creating or maintaining employment there. The Government have accepted that direct action would be useful in meeting the problems of high unemployment. We have, therefore, created the NEB and the Scottish and Welsh Development Agencies to fulfil this particular rôle.
My colleagues from the North and from Merseyside asked me one or two questions which I hope to answer. My hon. Friend the Member for Ince and my hon. Friend the Member for Ormskirk brought to our attention the importance of the Government's dispersal programme. I say particularly to my hon. Friend the Member for Ince that the Government are pressing ahead with plans to disperse 3,500 civil servants' jobs to Merseyside special development area—one of the principal beneficiaries of decisions following the Hardman Report. I am sure that my hon. Friend the Member for St. Helens—who, I know, is concerned particularly about the future of young people in his area—will appreciate that these jobs will be of considerable advantage to many of the young school leavers in the time ahead.
I also say to my hon. Friend the Member for Ince that there is no lack of resources to help, but the recession has reduced growth opportunities. We plan to make the most of the upturn in the economy. In programmes since mid- 1810 1974, 54 advance factories have been allocated to Merseyside. We are in process of acquiring 100 acres of land for future building and regional land purchase, on the advice of our Regional Office of Development, in the inner areas where unemployment problems are most acute.
My hon. Friend the Member for Ormskirk asked me about the headquarters of British Shipbuilders, and he has already had an answer, in that my hon. Friend and fellow Minister of State in the Department of Industry has indicated that we should like to see the headquarters of such an organisation in the area of one of the shipbuilding industries. This is, of course, a matter which has yet to receive the consideration of Government when the Bill finally becomes an Act.
§ Mr. Michael Heseltine (Henley)
The Minister says that it is a matter for the consideration of Government. Would it not be a matter for the consideration of the new Board of British Shipbuilders?
§ Mr. Mackenzie
I think that the hon. Gentleman has already heard the comments of my hon. Friend the Minister of State in Committee, when he indicated that we in Government are firmly of the view that the headquarters of British Shipbuilders should naturally be in an area which has always been concerned with shipbuilding, such as Merseyside, Tyneside, and places of that sort. The hon. Gentleman has had assurances of that kind.
Many of the speeches have been concerned with devolution rather than with any other issue. I took the trouble to read the speeches of some of my hon. Friends—and, indeed, of hon. Gentlemen opposite—about devolution. The aim of the Government's devolution proposals has been to give Scotland and Wales a greater say in running their own affairs while at the same time preserving the economic and political unity of the United Kingdom. The aim then is to give them a greater share of national resources. The White Paper made perfectly clear that functions cannot be devolved to the Assembly if they affect people in other parts of the country or the well-being of the United Kingdom as a whole. Regional and industrial matters certainly fall into that category.
1811 1 say to my hon. Friend the Member for St. Helens that, as the White Paper makes clear, the Scottish and Welsh Development Agencies' industrial functions will remain the responsibility of the Secretaries of State when the Assemblies are set up. The Agencies will make their recommendations to the Secretaries of State, but there will be an English voice. The National Enterprise Board will be able to make recommendations to central Government about the needs of the English regions.
I well understand the issues which have been raised in the debate and I sympathise with hon. Members in their aspirations for better employment prospects for the people they represent. I do not think that the Bill is exactly the right vehicle for fulfilling these aspirations. The Government cannot help the sponsors with a Money Resolution. Nevertheless, this has been a useful debate and we have taken note of many of the points which have ben raised and will bear them in mind for the future.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40(Committal of Bills).