§ The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke)
With permission, Mr. Speaker, I will make a statement about major changes in the role of the Department of Trade and Industry and its policies.
My right hon. and noble Friend Lord Young and I have been engaged in a major review of the main activities and organisation of DTI. Our decisions are set out in the White Paper entitled "DTI—the department for Enterprise" which will be laid before the House later today.
We conducted this review building on the new objectives for the DTI which we published on 13 October last year. In our opinion, considerable changes in the Government's support to industry will be required to face the challenges of 1992 and to succeed against ever increasing international competition.
In an economy with a GDP of some £400 billion, the main role of DTI, with its budget of £1 billion, must be, in conjunction with other Departments, to influence attitudes and to encourage open markets in order to promote enterprise and prosperity.
We will start by helping young people to learn about business and enterprise. We will work with employers with the aim of giving one teacher in 10 each year some personal experience of the world of business. We will further aim to ensure that every young person will have at least two weeks' work experience before leaving school as part of his or her preparation for employment.
We will help young people to become more knowledgeable about new technology. We shall increase our support for computer aided design and other advanced technologies in schools, further education and teacher training colleges.
We will work in partnership with commerce and industry to improve management education and development and spread awareness of best practices in new technologies. These are essential to the competitiveness of British industry and commerce.
We will help small and medium size firms to improve their performance in marketing, design, quality and advanced manufacturing methods. We are putting in hand forthwith a major new initiative to encourage firms with fewer than 500 employees to take expert consultancy advice in these key management functions. We will extend the programmes in April to cover business planning and financial and information systems. We will provide more than £50 million in the next financial year and some £250 million in total in the three years to 1991 to encourage firms to take advantage of this initiative.
In 1992 the single European market will be completed, ending most barriers to trade within the EC. The opening of the Channel tunnel in 1993 will make us physically a part of this much bigger market for all our goods and services. We will therefore make it a priority to help business prepare for, and benefit from, this great extension of the market within which we must compete.
The need to open up competitive markets is an essential strand in DTI's policies. Competition policy is the key element in that process.
As a result of the review which my right hon. Friend the then Secretary of State for Trade and Industry announced in the House in June 1986, we propose a fundamental 146 overhaul of the Restrictive Trade Practices Act. It has been proved increasingly ineffective in controlling damaging illegal cartels. The new legislation which we are considering would prohibit agreements 'with anticompetitive effects. It would be backed by stronger investigative powers and effective penalties. A detailed Green Paper on this will be issued shortly.
The review also covered mergers. The main but not exclusive consideration in mergers policy will continue to be the need to maintain competitive market conditions. We are proposing two principal changes to speed up the decisions on whether individual mergers can go ahead. The first would be a new formal, but voluntary, procedure for giving advance notice of prospective mergers. This would give automatic clearance for simple cases within four weeks. The second proposal would give more flexibility in dealing with possible competition problems. The Director General of Fair Trading would have the power to obtain legally binding undertakings from the parties to a merger over such issues as agreed divestment as an alternative to a reference to the Monopolies and Mergers Commission.
We are particularly concerned to encourage enterprise in the less prosperous areas of the country and in the inner cities—[Interruption.]—and we are having great success in doing so. We shall therefore be increasing and strengthening DTI's regional office network and expanding its role. The new consultancy initiatives which I have just announced will offer higher levels of grant both in the assisted areas and in urban programme areas outside the assisted areas. Consultancy projects will receive support of two thirds of the cost in those areas compared with 50 per cent. in the rest of the country.
New incentives will be introduced from April this year to encourage the growth and development of small firms in development areas. Their growth will help the full revival of regional economies, which is the aim of our policy. Firms with fewer than 25 employees will be able to apply for investment grants of 15 per cent. towards the cost of fixed assets and innovation grants of 50 per cent. for product and process development. We shall be targeting our help on those firms at a critical stage of their development, those which may not yet have developed the key management skills needed to survive and compete. Our policies are designed to encourage self-generated business development in the regions, both in manufacturing and in services, so that there is a broader, lasting base for economic growth.
Regional selective assistance will remain available in the development and intermediate areas. Unlike regional development grant, regional selective assistance requires companies to show that they genuinely need public money in order to proceed, and that their projects are viable and will produce identifiable and significant benefits. Internationally mobile projects, for example, will therefore be able to benefit from regional selective assistance as before.
We have concluded that this approach to business development will do more to strengthen regional economies than an automatic subsidy to all capital investment. A Bill will therefore be introduced today to end the RDG scheme. No new applications for grant will be accepted after 31 March this year. The Bill will provide for transitional arrangements. These changes will apply in Scotland and Wales as well as in England, and I am speaking on behalf of my right hon. Friends the respective Secretaries of State for those territories. Regional policy 147 will remain based on the existing regional map. Let me make it clear that we are not proposing any reduction in the Government's total regional spending, but we believe that existing resources can be spent more effectively than hitherto.
Inner cities will be benefit from the higher level of grant for the consultancy initiatives. The Government will be publishing a review of their policies for the inner cities in due course and will be taking steps to encourage more private sector involvement in urban regeneration.
We have also reviewed our Department's policy on civil research and development. In future we shall concentrate our help on collaborative research projects and the transfer of technology which would otherwise not take place. The White Paper announces our support for new collaborative programmes in both information technology and superconductivity. Research and development which is at the stage of commercial exploitation should be the responsibility of the private sector. The general schemes of single-company support for innovation are therefore being ended today. We believe that our spending on research and development will he more effectively used in collaborative research bringing different companies and the academic world much closer together.
DTI will be a catalyst for enterprise, innovation and change. But enterprising attitudes will develop only in open markets. We will therefore continue our efforts to cut red tape so that business can concentrate on its primary task of creating the wealth on which society depends.
The proposed changes in policies which I have announced will result in an increase in spending by DTI over the provision that was planned last year. Our proposed expenditure on regional programmes in Great Britain represents an increase over earlier plans. We will also increase previously planned expenditure and support for collaborative research, technology transfer and small business innovation.
The White Paper also announces changes in the organisation of DTI which will enable it to be more effective in the delivery of its services. The enterprise initiative will be marketed clearly and strongly so that business is aware of the potential for action through self-help, and the expansion of our regional network will enable us to get closer to our customers where they live and work.
Furthermore, industry divisions in DTI, which up to now have been seen as sponsoring specific industries, will be replaced by market divisions which focus on the markets for a range of goods and services rather than specific supplier industries. Emphasis will be given in our work to issues which span all industry and commerce, especially in technology.
The changes which are announced in the White Paper are very comprehensive, and reflect the objectives which we set for DTI last year. Real change, to give Britain a lasting basis for prosperity, requires individuals to alter the way in which they manage their businesses and approach their work. The best way to accomplish this is to influence people's attitudes, to help them acquire the skills and information which they need to compete effectively and to give them the scope and opportunity in open markets to compete. The White Paper policies which I have outlined today represent this consistent and co-ordinated strategy for enterprise. DTI — the Department for enterprise—will now carry this enterprise strategy forward.
§ Mr. Tony Blair (Sedgefield)
This is obviously a statement of major importance for the regions and industry of our country, and we trust that there will be a full debate on it before too long. Our view is that it represents the culmination of a process that, stripped of its pretensions, ends today in the effective abandonment of the regional policy of successive Governments over 25 years. Whatever the rhetoric, the reality of these proposals will be devastating in its consequences for the unity of the country and the vitality of our industry.
Will the Minister agree with me that the whole credibility of his package hangs on his pledge to maintain funding? Will he admit that the principal part of regional aid is regional development grant, which is now to be cut, that from 1979 to 1986 a £300 million cut in regional grant occurred, that this year there is a projected further cut of £300 million and that now regional development grant is to be abandoned altogether? Is it surprising that we regard this pledge as an empty promise signifying nothing?
Does the Minister agree with the survey made by his own Department, that regional development grant has saved or created some 600,000 jobs over the past few years—40,000 in the past year alone? Now that regional development grant is to be abandoned, leaving only regional selective assistance, is he seriously telling us that he expects, if funding is to remain level, a fivefold increase in successful applications for regional selective assistance? How many capital projects will now have to be abandoned? How many small firms entitled to automatic help will now no longer get it? The main reason why regional development grant is important is that it provides certainty, stability and international capital — and our own capital demands that.
We welcome any proposal that assists small businesses and any new grants that help them, but why does help for small businesses have to come at the expense of help for large ones? Is not the truth of the matter, as any industrialist will tell us, that regions need small and large businesses to succeed?
The Minister talked about his new business consultancy centres. Will he tell us whether the funds for those centres will be on top of the existing programmes or will come out of that money? He talked of a one-stop shop. We in the north-east have been asking for a one-stop shop for years: it is called the northern development agency. Will we obtain that under his proposals?
The truth is that many of the proposals will cover a wide range of matters, and will require careful scrutiny. Let me pick the Minister up on one in particular--the Government's competition policy. I welcome the implicit recognition that competition policy under the present Government has been a lamentable failure. If the Minister wishes to examine the ways in which he can open up competition policy, he might start with his own privatised industries, British Airways and British Petroleum.
I also ask the Minister — [Interruption.] — With respect, this was a detailed statement, and we are entitled to make a detailed reply.
What is surprising about this document is what it omits, as well as what it puts in. Where is there any recognition from the "Department of enterprise" that we have one of the largest balance of trade deficits in manufacturing industry? Where is the acknowledgment that we are falling behind in science and technology? Why is the only 149 proposal on research and development to chop one part of it? Where are the bold new initiatives, the new seizing of opportunities?
Ultimately, the proposals are nothing but philosophy without cash. Why cannot the Minister understand that what industry wants is not the absence of Government, but their presence in partnership; not a retreat into the attitudes of the 19th century, but a willingness to meet the challenges of the 21st?
§ Mr. Clarke
My right hon and learned Friend the Secretary of State for Scotland, my right hon. Friend the Secretary of State for Wales, my right hon. and noble Friend the Secretary of State for Trade and Industry and every other member of the Government, including myself, are not going to abandon regional policy. We are, however, changing it drastically, because we think that we can make it more effective. The hon. Gentleman had plainly prepared the section of his questions dealing with regional policy before he listened to the statement, and did not follow the statement when I made it.
Certainly regional development grants will be cut. We prefer to concentrate on regional selective assistance, new investment grants for small companies in the development areas and preferential rates of grants for new consultancy services, which will strengthen the quality of businesses in the regions — particularly small and medium size businesses — to ensure that they are genuine, lasting, successful businesses and not just branch-line enterprises.
The hon. Gentleman was right to say that, in the past, we have made claims for the regional development grant, which was a very useful instrument of regional policy. However, we are now changing the nature of the grant because of the change in economic circumstances. Most notably, a huge increase in investment is going ahead in the regions, and unemployment is now falling faster there than in the rest of the United Kingdom. The time has therefore come for a system that gives a grant to any applicant for any capital investment, regardless of whether that grant is needed to make a project go ahead, and regardless of any tests of the viability or commercial desirability of what is proposed.
We shall be able to make use of selective assistance to assist projects which would not go ahead without Government aid, and which are of demonstrated commerical value to the region, as well as introducing the new grants for smaller firms and the new advisory services on preferential terms in the assisted areas.
The Labour party's commitment to the regions is obviously based on being wedded to the traditional policies, come what may. Labour Members do not acknowledge that the Government are making more sensible use of an increased sum over the next three years, compared with published plans, in the light of the improved economic climate.
I am delighted by what I took to be a welcome for the enterprise initiative—the new advisory services for small business. At this late stage, I will not invite the hon. Gentleman to join me and my colleagues on the platform as we launch the enterprise initiative across the country. However, as he supports improved services for small businesses and the strength of small business, I am sure 150 that he will continue to give support to and approval for what we do as we develop and promote the new project that we are proposing for customers in business.
I did not quite understand the hon. Gentleman's comments on total spending. If he examines the White Paper to be published shortly by my right hon. Friend the Chancellor of the Exchequer, he will find that, compared with what was planned in previous years, DTI spending is increased for the next few years concentrating on research and development and regional policy of the kind that I have described.
I am sure that those who examine competition policy in more depth than the hon. Gentleman will find that our proposal is an improvement on the present position. They will rebut the hon. Gentleman's general economic points. He referred to industrial policy in an industrial economy that is now the most successful in western Europe. He referred to changes in policy that I believe will support the continued revival of the British economy, particularly in the regions, and the continued fall in unemployment.
§ Sir William Clark (Croydon, South)
My right hon. and learned Friend should ignore the Opposition's carping criticism because under no circumstances can anyone in his right mind say that the economy today is not in better shape than it was when we took it over, with production up and borrowing down.
My right hon. and learned Friend's statement will be welcomed warmly, particularly by business. The involvement of the education system with the business sector should have happened years ago. Is my right hon. and learned Friend aware that we welcome the change that he has suggested in mergers and the competitiveness of British industry, which is increasing?
The Government have got it absolutely right. Unemployment will fall only if we have more small businesses. Unemployment will be reduced as a result of the emphasis on small business and through the grants that will be given to small business—[Interruption.]
§ Mr. Speaker
Order. I apologise for stopping the hon. Gentleman, but many right hon. and hon. Members wish to participate. Hon. Members must ask questions and not make speeches.
§ Mr. Clarke
I thank my hon. Friend and I agree that it is essential that we continue to improve the links between industry and schools. Pupils and parents want the closer links between business and industry to prepare young people for employment. A great deal is already being done, but we have set ourselves ambitious targets to improve the contact of teachers and pupils with industry. We require the co-operation of industry and the employers now to provide that contact.
I entirely agree with my right hon. Friend's comments about the key nature of small and medium size business. The growth in employment in the economy has been spectacular over the past few years, and almost all of that growth has arisen in the small and medium size business sector. We must concentrate on strengthening it still further.
§ Mr. Tony Benn (Chesterfield)
I have only just had the opportunity to look through the statement. Will the Minister tell the House what references there are to the trade unions in the document?
§ Mr. Clarke
The right hon. Gentleman need not feel disadvantaged. The hon. Member for Sedgefield (Mr. 151 Blair), the Opposition Front Bench spokesman, was present but did not listen to the statement. Therefore, the right hon. Gentleman starts from the same point as his colleague.
There is no mention of the trade unions in the document, but all trade unionists who wish to see a strengthening of the economy and growing prospects for employment will, I believe, support our objectives.
§ Mr. Leon Brittan (Richmond, Yorks)
Will my right hon. and learned Friend accept that the vast majority of his proposals will be welcomed as being imaginative and constructive? Will he also accept that, in spite of the fact that economic growth is proceeding in all the regions, the discrepancy in the levels of employment between the different regions means that an active and vigorous regional policy should remain a top priority of the Government?
Will my right hon. and learned Friend also accept that, although there is nothing sacrosanct about previous methods of assistance, there were real advantages in a system whereby a business man was aware that, if he satisfied a published criterion, he was entitled as of right to regional assistance instead of having to go cap in hand to civil servants or Ministers asking for discretion to be exercised?
Does my right hon. and learned Friend therefore agree that if the Government are to have the necessary support to show that this policy is an improvement in regional policy and not a cut, they will, above all, have to satisfy the country that when all the proposals have been implemented the amount of money being spent on regional policy in real terms is at least as much as it is today?
§ Mr. Clarke
I took pleasure a moment ago in the rapidly falling rate of unemployment in the regions of Britain. I agree with my right hon. and learned Friend that the discrepancies are still excessive. As we change regional policy, we want to ensure that it continues to be effective, and to operate policies which reduce those discrepancies.
My right hon. and learned Friend is right in saying that the regional development grant carried with it an element of certainty. However, that certainty came from the fact that, whenever investment took place at the right place on the map, after the investment decision had been taken, it was possible for any investor to get a public sector contribution, whether or not he needed it, to go ahead with that investment. The time has come, when the economy is doing so well and when so much investment has been spontaneously generated, for us to look at ways of using that money more effectively in the regions, and it is important that we do that.
Particularly valuable are those parts of the policy that concentrate on strengthening the quality of management and business performance in the regions. The regions do not want second-class small and medium size businesses. They do not want an economy dominated by manufacturing at the expense of services. They want an economy as effective as that in the south, and of the same type as that in the south. Moving towards that, the support that we are giving to improving management, quality, design and financial control at preferential rates in the development areas will be of particular value. We must make sure that our policies support the continued improvement of the regions vis-a-vis the rest of the United Kingdom.
§ Mr. Malcolm Bruce (Gordon)
Will the Chancellor of the Duchy of Lancaster accept that there will be considerable dismay in the regions of England, Scotland and Wales that the proposals represent an extension of the stranglehold of central Government on the administering of regional funds? Would it not be more appropriate if the regions were given more discretion and control to determine their own priorities?
Will the right hon. and learned Gentleman accept that one of the problems facing Britain today is the imbalance between the south of England and the rest of the country in terms of control and ownership of enterprise and industry, and that there is nothing in the White Paper to reverse that process? Will he accept that, in spite of his assurances about small businesses, in reality it will he the biggest firms that will have the slickest presentation and will secure a greater share of the grants than is now the case? If he really wishes to help small businesses, will he assist them in their role as unpaid tax collectors and administrators for central Government, as many of them would welcome that?
The Minister's conversion on competition policy will be welcomed on these Benches, but it is regarded, after eight years, as rather late, in view of the Government's record in creating some of the biggest centralist cartels and monopolies in the world, such as British Telecom and British Gas, and his total failure to stand up to the takeover of British Caledonian by British Airways. Will he tell the House—[Interruption.] The hon. Member for Sedgefield (Mr. Blair) gave a detailed response to the statement. I shall do the same. Will the Minister tell the House what is to happen to the regulation of competition provided by those companies in future? There is an urgent need for a parliamentary debate on that matter. There is a great deal in the White Paper and the Government should provide time to ensure that it is fully and properly discussed.
The Minister has not shown that he understands the needs of the regions, or of competition and enterprise.
§ Mr. Clarke
I certainly do not think that the White Paper represents any extension of centralised control. I share the reservations expressed by many hon. Members about over-centralised administration by government in London over the rest of the country. I have announced today—I referred to it twice in the statement—that we are greatly extending the regional network of the DTI and getting closer to our customers, who are the managers of business and commerce in the regions, and we will be shifting the balance of our work to the regions to deliver the new policies. Nothing that and my right hon. and noble Friend are proposing will intrude on the considerable amount of devolved power that is already exercised by my right hon. Friend the Secretary of State for Scotland. The Scottish Development Agency will be used as the agency for a large part of the policy north of the border.
With regard to large companies taking advantage of the proposals that we have announced, the hon. Gentleman will see that the emphasis is in completely the opposite direction. The new grants in the development areas are concentrated on the smallest firms with up to 25 employees. The new enterprise initiative is aimed at small and medium size businesses across Great Britain with up 153 to 500 employees. Therefore, we are looking in the direction of helping small and medium size businesses in particular.
The hon. Gentleman talked about businesses as tax collectors. Deregulation and the cutting of red tape is also an important part of our policy to help small companies.
On competition, I advise the hon. Gentleman to await our Green Paper on restrictive trade practices and to look in detail at our proposed reforms of competition policy. We are strengthening and modernising that area of policy, and our aim is to make open, competitive markets, which means guarding against monopoly and unfair cartels.
§ Mr. Speaker
Order. I heard the Minister say that a Bill was to be introduced which will allow a debate on the matter. Therefore, I ask hon. Members to confine themselves to short rather than long and rambling questions.
§ Mr. Norman Tebbit (Chingford)
Is my right hon. and learned Friend aware that the general thrust of moving away from automatic grants paid regardless of need or the viability of a scheme will be welcomed, but will he explain how the placing of an excessive load on applicants will be avoided, and, similarly, how he will avoid officials becoming unduly embroiled in taking commercial decisions on behalf of businesses?
§ Mr. Clarke
I welcome my right hon. Friend's support for the abolition of automatic regional development grant. Having been in the Department of Trade and Industry, he will appreciate that if one is against automatic regional development grant, any type of grant that is retained will be selective and some process must be applied. I assure him that we appreciate the need to make sure that that process does not become bureaucratic, onerous for the applicant or gives too much arbitrary power to those administering it. We shall obviously be relying on the Industrial Development Advisory Board, which is composed of senior outside industrialists appointed to advise us on the commercial appraisal of projects, and many outside secondees with industrial and commercial experience who move in and out of the Department are helping us to appraise projects.
We shall be concentrating on the key test, not just rewriting the business plans of an applicant. We shall make sure that so-called additionality—the requirement for grant in order to enable a project to go ahead—will be the key point on which we concentrate. For the smaller firms, all that can be too onerous and that is why we have proposed a special scheme for the development areas. Grants for companies under the ceiling of 25 employees will be operated in a much more streamlined way with just a check to make sure that there is commercial viability. —[Interruption.]
§ Mr. Speaker
Hon. Members on both sides of the House should not shout across the Chamber. The hon. Member for Langbaurgh (Mr. Holt) did so once before, and I did not like it.
§ Mr. Barry Jones (Alyn and Deeside)
The right hon. and learned Gentleman's statement is nowhere near as good as he makes out because it completely ignores the real terms cuts in regional aid since 1979. Does he 154 guarantee that large British companies seeking to locate and expand in Wales will not be worse off as a result of the statement? Is it not the case that the Secretaries of State for Scotland and Wales fiercely resisted the proposal to abolish regional development grants? Is not today's statement a real body blow to the hopes of Wales to build on the ashes of unemployment and to make a new economy?
§ Mr. Clarke
In making the comparison with 1979, the hon. Gentleman is going back to the first stages of regional development grant when grant was paid automatically regardless of its effect in creating jobs. Sometimes grants were given to huge capital intensive investment which replaced employees in firms receiving the grant. That is why when we moved, I think three years ago, to the second stage of regional development grant, making grants subject to a cost per job limit and linking them to labour intensive parts of the economy, it was generally welcomed. That inevitably resulted in some worthwhile savings in public expenditure because the money previously expended was not going on the chosen objectives. It is certainly not true to say that there has been any competition between the territorial Departments. My right hon. Friends the Secretaries of State for Scotland and Wales agreed with the policy and will derive benefit from it.
On regional development grant and regional selective assistance alone this year, the Department of Trade and Industry looks like spending £254 million compared with a planned spend in last year's White Paper of £225 million. By 1990–91 that will have gone up to £264 million, compared with the figure of £232 million based on the last White Paper. Therefore, there is an increase in expenditure on previous years' approved plans. However, it is not the level of expenditure in which I really take comfort, but the more intelligent and sophisticated use of the money which bears more relation to today's economic circumstances of growth, expansion and rising employment in the regions already.
§ Mr. Michael Heseltine (Henley)
Will my right hon. and learned Friend accept that we support his attempts to obtain better value for money from the existing regional programme, but will he recognise that overlying regional policy and far more damaging to the regions are the present tax regimes which have the effect, through their capital nature, of destroying family businesses, and, through the subsidies that flow to the pension funds and financial institutions, of draining far more money out of the regions than any other regional policy can ever replace? Will my right hon. and learned Friend consult his right hon. Friend the Chancellor of the Exchequer so that we can try to introduce some fiscal neutrality between the regions and the centre which could enable small businesses to grow in the provinces and remain locally based and controlled there?
§ Mr. Clarke
I shall certainly consult my right hon. Friend the Chancellor of the Exchequer, who is in his place on the Front Bench. I think that my right hon. Friend the Member for Henley (Mr. Heseltine) will concede that the Government have made great advances in easing the burden of capital taxes on small businesses, and business start-ups in particular. We now have the lowest rate of corporate taxation in the EC, an important stimulus to business and to profitable business in particular. In 155 addition, I cannot help mentioning that the unified business rate will bring enormous advantages to the north of England in particular and will represent a massive shift of public resources from the south of England to the north when it takes full effect in 1990.
§ Mr. Ernie Ross (Dundee, West)
Since Ford's decision to locate in Dundee would not have been made without regional development grants, can the Minister assure us that the one-door approach used by the Scottish Development Agency, Dundee district council and Tayside regional council to attract industry to Dundee will not be affected by the changes that he has announced this afternoon?
§ Mr. Clarke
I will refer the hon. Gentleman's point about Dundee to my right hon. and learned Friend the Secretary of State for Scotland. I think that he is telling me that it will not be affected.
I agree that regional development grant has played a major part in getting us to where we are now, but I am now explaining the need for change to make better use of the sums of money about which we are talking. We have the support, for example, of the Scottish Council (Development and Industry), which recently reported to my right hon. and learned Friend the Secretary of State for Scotland on enterprise development—the next stage in the evolution of regional policy. Section 3(5) on page 4 said:Despite the division of opinion on direct intervention in investment decisions the balance of opinion favours some form of grant aid, albeit on a selective rather than automatic basis.That is the position that we are now contemplating.
§ Mr. Kenneth Warren (Hastings and Rye)
While I applaud my right hon. and learned Friend's initiative in seeking to link Government sponsorship of research with market opportunities, may I ask him if he will extend that initiative and examine the opportunity that presents itself for the Government to examine their own position as a customer in the market place and to try to co-ordinate some of their public purchasing policies to achieve a stimulus of research in return? In that context, will he comment on his further views of the Alvey follow-on programme and the space programme?
§ Mr. Clarke
I thank my hon. Friend for his opening comments on research and development. We need to examine how we can use Government money most effectively in those areas. By and large, we seek to improve the climate so that industry itself can put more of its resources into research and development. Industry is likely to do that when projects are nearing the market place. That is why we are concentrating on collaborative research bringing together universities, higher education institutions and industry at an earlier stage.
On public procurement policy, we certainly look at the impact that we have on British industry and we shall continue to follow those policies. Today's White Paper includes the announcement of some further help for the information technology industry, although not in the previous Alvey form. The time has come to move on from that very successful policy. If my hon. Friend studies the White Paper, he will find that we have chosen objectives that will further collaborative research, bringing together partners who cannot be expected to come together without 156 the stimulus of Government money. Other companies can proceed on their own on the basis of what they have already derived from the Alvey initiative.
Our present commitment to the space programme and the substantial expenditure that we incur on it will continue and we shall remain full members of the European Space Agency. So far, however, we have declined to take part in optional programmes in which British participation would have been minimal and whose scientific and commercial advantage to this country did not justify the expenditure proposed.
§ Mr. Bruce Millan (Glasgow, Govan)
Is the Minister aware that the abandonment of regional development grants will be disastrous for industry in Scotland and similar areas? Is he further aware that anyone who knows anything about regional policy will not believe for one moment that his proposals can possibly maintain existing expenditure on the regions, even at its considerably reduced level following Government cuts in recent years? Expenditure is bound to decrease and there is not a single figure in the White Paper to sustain the Minister's claim. This is bad news for Scotland and for every other region.
§ Mr. Clarke
I hear what the right hon. Gentleman says about regional policy, given that he has considerable standing and experience in these matters. With respect, he is concentrating on the ending of one form of grant and is failing to take on board the substantial new measures and the change in emphasis in our policies. The right hon. Gentleman's views are not shared by the Scottish Council! or the Scottish CBI, which supports our proposal. I can only repeat that the sums in this White Paper are substantially higher than those in the 1987 White Paper. The figures do not anticipate a fall in expenditure over the next three years—quite the reverse in the near term. The debate on that can be continued more sensibly when the White Paper is published shortly and the figures are available.
§ Mr. Michael Grylls (Surrey, North-West)
Does my right hon. and learned Friend accept that the move away from excessive paternalism and automatic grants is welcome and that his determination to achieve value for money spent in the regions will be popular? Very few people accept that we have had good value for money from all that we have spent on the regions over the years. My right hon. and learned Friend's determination to help small and medium size firms will be widely welcomed—particularly the toughening up of anti-competitive practices laws, which most people accept have been very weak. Such firms need a fair market in which to operate successfully and, as my right hon. and learned Friend said, they will bring wealth and jobs to the regions.
§ Mr. Clarke
I am grateful for my hon. Friend's remarks about automatic grants, and plainly I agree with them. My hon. Friend is something of a specialist on small firms policy and I am grateful for his support of our moves to offer consultancy services to small firms to improve their performance in key areas of business such as design, marketing and financial control.
I agree with my hon. Friend that the time has come to overhaul the law on restrictive trade practices, which is proving ineffective. No doubt in due course we shall hear my hon. Friend's contribution on the Green Paper which 157 will contain proposals as to how we might make the present rules more effective to give better protection to small firms suffering from unfair practices.
Mr. Eric S. Heifer (Liverpool, Walton)
Is it not clear that, without the regional policies pursued by every previous Government, unemployment in the regions would have been much higher than it is now? Is it not clear that all previous Governments have been presented with proposals for selective assistance but that for very practical reasons — some of them explained by Conservative Members—such proposals have been rejected? Is it not clear that the present proposals represent the abandonment of all previous Governments' regional policies, which will not help to solve the problem of unemployment in the regions in the long run? The proposals will have the opposite effect from that which the Government believe that they will have and the Government's policy will end in disaster for those in the regions.
§ Mr. Clarke
The hon. Gentleman makes an extraordinarily broad-brush point in claiming that previous Governments have abandoned the principle of selective assistance altogether and always had automatic grants. Until now we have had both selective assistance and automatic grants and we now propose to end automatic grants and give greater emphasis to selective grants. Regional selective assistance has been with us for a long time; it is quite venerable. I am sure that if one examined the record of the previous Labour Government one would find that their regional selective assistance, combined with their selective assistance under section 8 of the Industry Act, amounted to a greater use of selectivity in grant giving than the present Government propose. Therefore, the hon. Gentleman's broad argument cannot be sustained.
§ Sir Raymond Gower (Vale of Glamorgan)
Can my right hon. and learned Friend confirm that in Wales the cumulative effect of the changes could mean greater flexibility for the Secretary of State for Wales without the diminution of resources? Can he assure us that nothing in the proposed changes will handicap the Secretary of State or the Welsh Development Agency in assembling a package to attract companies from abroad?
§ Mr. Clarke
I can give my hon. Friend all those assurances quite straightforwardly. I am confident that my right hon. Friend the Secretary of State for Wales, too, will give those assurances emphatically and will act upon them.
§ Mr. John D. Taylor (Strangford)
What are the implications of the proposals for changes in Government support for the regions for the operation of the European social fund and the European regional development fund? Under the proposals to change the assisted areas boundaries, will not some firms which qualify for fund support from Europe at present cease to qualify?
§ Mr. Clarke
I think that my statement made that clear, but the right hon. Gentleman may not have been able to hear me. We are not changing the boundaries of the assisted areas. One reason for that is that it is inevitably a protracted process involving consultation on either side of the border. Such a change also has to be cleared with the European Community because it has implications for European Community grants. When we embark on that process, it takes up to two and half years for the map to 158 be fully reviewed. Therefore, entitlement to European grants will not be affected by the announcement. A review is being undertaken in the European Community at the moment to examine the future of the social fund, which will settle matters, including the eligibility of areas, for the next period of the fund.
§ Sir Peter Blaker (Blackpool, South)
My right hon. and learned Friend's statement contained many excellent proposals, but is he aware that it is regrettable that the Government have not set under way a review of the boundaries of assisted areas? For example, Blackpool and the Fylde, which lost its assisted area status and therefore its access to the European regional development fund in 1984, now has an unemployment rate exceeding the average for all the intermediate areas. Has not the time come to set such a review under way?
§ Mr. Clarke
My right hon. Friend is a persistent advocate of the case for Blackpool regaining the assisted area status that it had until three years ago. For the reasons that I have just given, a full review of the boundaries is not a straightforward process by any means. It involves full consultation with all those with views about their status—whether in a development area as opposed to an intermediate area or an intermediate area as opposed to any other area. Such a process must also have the consent of the European Community.
For that reason, it was simply not feasible for us to embark on such a review comparatively soon after the last one, and certainly not since the last election, since my right hon. and noble Friend and I have been at the Department. We do not intend to embark on that, at least not until we see how the new policies settle down.
§ Mr. Stan Crowther (Rotherham)
Does the Minister agree that some of the worst levels of unemployment are found not in the inner cities but in the traditional manufacturing towns and colliery villages in, for example, areas such as the Rotherham and Mexborough travel-to-work area which, according to the Government's own fiddled figures, already has 20 per cent. of its people out of work? The Minister has assured the House that there will not be a reduction in total Government spending on regional policy, but will he assure us that there will not be a cut in aid to any individual development area, such as Rotherham and Mexborough?
§ Mr. Clarke
In future, our aid will be concentrated on selective assistance to those firms that can demonstrate that they need the grant to go ahead in such an area, on the new grant for small firms in development areas and on the consultancy services and the business improvement initiatives that I have announced which, I hope, will raise the quality of business throughout the United Kingdom, and especially in the assisted areas, because there will be a higher level of grant for that consultancy in the assisted areas and in the urban programme areas also.
As I have said, our published plans for 1988 will show increased expenditure compared with what was planned in 1987. We intend to maintain the level of spend in the regions. As some of the measures that I have announced will depend very much on demand, on people coming forward with applications for selective assistance and on small firms responding to the opportunities that we are presenting in the business initiatives, it is not possible to guarantee the level of spend in any particular locality. Our 159 planned expenditure is what we are aiming at. That is why we will market our policies so heavily to those who we believe will benefit from them. —[Interruption.] I hope that the hon. Member for Rotherham (Mr. Crowther) will restrain some of his hon. Friends from denouncing the fact that we spend money on letting the businesses in his constituency know what we have on offer.
§ Mr. Allan Stewart (Eastwood)
I congratulate my right hon. and learned Friend on a sensible and imaginative package of changes to regional policy. Further to the point made by the hon. Member for Dundee, West (Mr. Ross), will my right hon. and learned Friend assure the House that under the revised system it will be possible for us to offer competitive financial packages to internationally mobile projects? Does my right hon. and learned Friend agree that a major factor influencing such decisions is the quality of suppliers and, therefore, his moves to improve that will not only enhance the performance of our regions but improve their attractiveness to inward investment?
§ Mr. Clarke
I am grateful to my hon. Friend for his comments and agree that a key part of our policy is that Great Britain—Scotland, England and Wales—should be able to offer competitive packages of assistance to inward investors in the case of those genuinely mobile projects which, if we were unable to offer a package, might be tempted to France, Ireland or somewhere else. Therefore, we have made sure that that is retained in our package.
As my hon. Friend said, we do not attract investors to this country just by offering them good packages of grants. A growing level of inward investment comes to this country because of the general economic state of the country, the feeling that the quality of component suppliers and support industries is good and because industrial relations are better than they used to be. Our package will help to produce quality in small and medium size companies so that they will give the good quality components to Japanese, American and other businesses which will help to draw more of them here.
§ Mr. Alex Salmond (Banff and Buchan)
Given that the Secretary of State for Scotland, the Walter Mitty of Scottish politics, seems to believe that he is in charge of regional policy in Scotland, would it not have been diplomatic for the Minister to have allowed his right hon. and learned Friend the Secretary of State to read even one sentence of the statement? Given that total regional spending in Scotland has fallen by more than half—from £525 million to £242 million—during the past 10 years, what credibility can we invest in assurances that the budget will not be squeezed further? Given that the Minister has selectively and disgracefully quoted the Scottish Council (Development and Industry), is he aware that that body has been among the most trenchant critics of the Government's dismantling of regional policy?
§ Mr. Clarke
If the hon. Gentleman, who represents the Scottish National party, is going to criticise the division of responsibilities between English and Scottish Ministers, with respect I advise him to discover what those responsibilities are now. The Department of Trade and Industry is and always has been the lead Department for regional policies. On the other hand, my right hon. and learned Friend the Secretary of State for Scotland has considerable devolved powers which he exercises through 160 the Scottish Development Agency and other bodies. There is no doubt that details of regional policy remain our responsibility and this policy does not change that.
I have already given reassurances about the figures and suggest only that the hon. Gentleman raises the same point during the debate on the Autumn Statement and especially when he sees the White Paper on public spending which will confirm what I have said about spending in all parts of the United Kingdom.
§ Mr. Robert Hicks (Cornwall, South-East)
Although I welcome the retention of the Plymouth travel-to-work area as an assisted area, will my right hon. and learned Friend consider allowing that intermediate area to be eligible for the business improvement services scheme in view of the impending significant loss of jobs in the Devonport dockyard? Will he elaborate on the criteria that can be described as being "identifiable and significant benefits" for eligibility for the regional selective assistance grant in the future?
§ Mr. Clarke
The existing business improvement service is a European Community-inspired arrangement which is largely aimed at former steel, shipbuilding and other areas. It was a great success and was heavily over-subscribed in some places. We have drawn extensively on our experience of that in producing the domestic programmes that we have announced today. Large parts of the business and enterprise initiative that I have announced, which will give support to small and medium size firms, are very much drawn from the business improvement scheme. My hon. Friend's constituency will be one part of the country that will be eligible for the higher rate of grant for those companies that wish to have access to the enterprise initiative—[Interruption.] I shall not give in detail the criteria for RSA now because if I do I shall be accused of filibustering by the hon. Member for Bolsover (Mr. Skinner).
We are not changing the essential criteria or the statutory basis for regional selective assistance, but we shall put emphasis on additionality and making increased provision for RSA because we believe that some people who did not previously apply will apply now because the regional development grant is not available.
§ Mr. Giles Radice (Durham, North)
Is the Minister aware that Opposition Members remain deeply sceptical about the Government's commitment to retain the same amount of money that is given to regional aid, first, because the Government have already cut regional aid by £300 million, as the Minister has admitted, and, secondly, because changing to aid on a selective basis enables the Government to cut by administrative fiat?
We have heard about the problems of the large firms, but there are also problems for smaller firms. Is the Minister aware that, despite his profession of Government support for small firms, the abolition of automatic grants will be a body blow to small firms because they do not have the knowhow or the time to apply for selective grants?
§ Mr. Clarke
I note the hon. Gentleman's scepticism about our commitment to the regions. I think that he is being over-cautious about a change in the nature of the support given to the regions. I do not know whether the. Labour party, which continually cites figures from 1979. wishes to return to regional policy exactly as it was and to 161 return to increased spending on all projects regardless of cost per job limits. A huge amount of money went into Sullom Voe. That was a desirable investment, conducted by oil companies, at the edge of the Shetlands and employing only a few people permanently, but it was put there because oil was there. The Labour Government's regional policy made a major contribution to that investment to the great benefit of the oil companies but not of the hon. Gentleman's constituency.
Small firms that are disadvantaged by applying for selective assistance are catered for in our White Paper to a considerable extent by the fact that the new grants that have been announced for the development areas will make it easy for firms with up to 25 employees to receive the grants that I announced for investment and innovation. The simplicity of the scheme aims, in part, at meeting the hon. Gentleman's point that it can sometimes be difficult for the smallest firms to go through the machinery of selective application.
§ Sir Anthony Grant (Cambridgeshire, South-West)
Can my right hon. and learned Friend confirm that the effect of his new regional policy will be to stem the migration of people from the assisted areas into high growth areas such as Cambridgeshire, where the pressures have become intolerable?
With regard to the welcome new initiative of linking small firms with the universities, will my right hon. and learned Friend please study the important initiatives of the company Cambridge Robotics, which have been referred to his Department and which are extremely interesting in this respect?
§ Mr. Clarke
For my own reasons, which coincide in part with those of my hon. Friend—I do not represent an East Anglian constituency, so our reasons are not wholly the same — I want a south to north flow of business and jobs, and therefore of people, if that reduces pressures on land prices, house values and planning applications in my hon. Friend's part of the country and in many others. To do that, we must encourage the continued growth of the northern economy and strengthen its quality of management, to ensure that the north performs at the best levels of marketing, quality, design and the other things that I have already mentioned. I trust that this policy will have the effect that my hon. Friend wants.
I shall certainly examine the case that my hon. Friend cited as an example of good links between industry and the universities. Cambridge science park and most things around Cambridge university are excellent examples of how British universities can catch up with the American practice of forging such links.
§ Mr. Joseph Ashton (Bassetlaw)
Does the Minister agree that anyone with £100,000 to invest three or four years ago would have been better off buying a house in London, watching its value double, and getting a tax incentive to do so? Why do the farmers in the fat south receive protection and subsidies, and the defence industries get handouts; yet when it comes to northern industries, all they get is a dab of lipstick on the face and their crutches kicked away?
§ Mr. Clarke
The answer could lie in the late 1970s, when northern and midlands industries found that they 162 were surviving on nothing but a diet of protection, subsidies and handouts. That did not turn out successfully, and I do not think that that was an alternative policy to which we are likely to return.
§ Mr. Michael Fallon (Darlington)
Does my right hon. and learned Friend agree that industrial development in the north-east has been fossilised by purely automatic grants that have gone to the same old companies year after year — companies that have been shedding rather than recruiting labour? Does he accept that small businesses in the north will be cheering his announcement tonight?
Will my right hon. and learned Friend confirm that the general effect of his proposals will be to reduce distortions between assisted and non-assisted areas, within assisted areas, between development areas and intermediate areas?
§ Mr. Clarke
I agree entirely with my hon. Friend's analysis. As he said, some firms became expert at obtaining grant because they knew it was available in a locality, and some larger firms relied openly on it. Skilled consultants, or their own employees, were successful in working the system and obtaining grants. We must make use of the money in the most effective fashion.
As regards distortions, there will be still a clear distinction between development areas, intermediate areas and the rest, but the abolition of regional development grant for example, will, to some extent, remove distortions as between intermediate and development areas.
§ Mr. Jack Thompson (Wansbeck)
In the time that the Minister took to present his statement, did he realise that he extended the division between the north and the south significantly? Does he recognise that, particularly in the north of England, there is a dearth of small businesses? When he talks of improving small businesses in such areas, does he accept that greater incentives than those that he has suggested are needed? There is also a need for support for larger industries in the north.
I was interested to hear the Minister's points about the links between industries and schools. They seemed to smack a little of a risk of returning to the position in the 1920s and 1930s, when industries were closely linked with schools. The coal owners in my constituency were the school governors, and if children did not go into the coal industry their parents lost their houses and the children became almost industrial clones. There is a distinct possibility of that happening again.
Does the Minister recognise that, in my constituency, the closure of Ashington colliery by the end of March will mean 350 jobs coming off the market? What, in his new proposals, will compensate for the loss of those jobs?
§ Mr. Clarke
I agree with part of the hon. Gentleman's analysis of the differences between the north and the south. It is true, in economic and employment terms, that the north still does not have a high enough proportion of people working in small and medium size industry, and that the start-up rate of small businesses is still not adequate in the north. There is a need to ensure that the small and medium size industry that is there achieves excellent standards of management of all kinds. It must be strong to survive and not only a branch line for less successful staff. All the policies that I have announced today are aimed in that direction.
Larger industries will also benefit. They do not need subsidies as much, and they do not need management 163 support. They have spare management capacity to look after their own marketing, design and exporting, but the climate is made more attractive for large firms if there is a good network of high-quality component suppliers. That, as my hon. Friend the Member for Eastwood (Mr. Stewart) said a moment ago, is what we are trying to develop in Scotland. I do not think that coal owners are likely to return to school governing boards.
As far as the loss of jobs in the hon. Gentleman's constituency is concerned, the continued success of the British economy, our ability to stimulate the creation of more small companies, to strengthen small companies that already exist and to carry on building on the success of the enterprise economy that we have already achieved is the best hope for those facing economic changes in his constituency.
§ Mr. Bill Walker (Tayside, North)
Does my right hon. and learned Friend agree that one of the great achievements of the Government has been the reduction —indeed, the virtual removal—of restrictive practices in the unions and the skullduggery associated with them? Can he confirm that his proposed measures will have the same effect in the City? If so, will he confirm that the effect in Scotland will be to the benefit of Scottish-based companies?
§ Mr. Clarke
I agree with my hon. Friend that the improved climate of industrial relations and the fact that we now have the lowest number of strikes for 50 years have been important elements in the revival of the British economy. I agree that restrictive practices are undesirable anywhere. We have tackled them in the trade unions, and in the City with strong regulatory measures, but restrictive practices between large firms in the market place need to be tackled. That is why our Green Paper would ensure that genuinely competitive conditions were maintained, and I look forward to my hon. Friend's contribution to the consultations on it.
§ Mr. Geoffrey Lofthouse (Pontefract and Castleford)
Does the Minister agree that the reasons the Government gave for not redefining the boundaries of assisted areas were ill-conceived when one considers that the boundaries were fixed only in 1984? Does he realise that, since that time, in areas such as my Castleford travel-to-work area the mining industry has been wiped out with no assistance given? Will he tell the House what assistance there is in the Green Paper for areas such as that, or will Government policy continue to victimise miners and mining communities? Is it not time such victimisation stopped?
§ Mr. Clarke
I realise that one of the problems with having a map of any kind for regional policy is that there are always difficulties with boundaries. However, a map is essential for a regional policy, so the boundaries must be reviewed from time to time. That is a long and difficult process, involving an examination of the status of each area.
Such status must be cleared with the EEC and should not be embarked upon too readily. It might be regarded as completely fair to keep moving some travel-to-work areas in, and others out, year in year out, but it would create great uncertainty and diminish the effect of the grants that we offer to attract people to these areas.
I can offer a continuation and strengthening of present policy to areas that do not have assisted area status, and 164 what I have announced by way of the business initiative and the strengthening of small firms will make a valuable contribution to them.
§ Mr. Henry Bellingham (Norfolk, North-West)
Is my right hon. and learned Friend aware that towns such as King's Lynn in my constituency, and other cities and towns in Norfolk, such as Norwich and Great Yarmouth, have consistently suffered as a result of distortions caused by regional policy? In the worst cases successful firms have even been bribed out of the area. Can he confirm that his statement will prevent such occurrences in the future and will be welcomed in Norfolk?
§ Mr. Clarke
There is a downside to regional policy. One of the points of the policy is to attract industry from areas of low unemployment to areas of high unemployment. I do not think I can offer my hon. Friend a reduction in the effectiveness of regional policy, but I can say that conditions in Norfolk and in the south-east—I admit, to a greater extent in the south-east — are being transformed so that complaints about poaching firms are becoming fewer in the parts of the country further to the south in which there are now acute shortages of skilled labour, in which costs of all sorts have soared, and where housing costs are getting out of control. So perhaps the problems will become fewer as we continue to maintain an effective regional policy.
§ Dr. Dafydd Elis Thomas (Merionnydd Nant Conwy)
On a number of occasions the right hon. and learned Gentleman has said that he is speaking on behalf of his right hon. Friends the Secretaries of State for Scotland and for Wales. Is it not time that the House put a stop to this departmental arrogance? We should have statements made from the Welsh Office and the Scottish Office on issues such as regional policy that are crucial to the future of our economy. Can the Minister tell us whether this White Paper has the status of a paper that has the full support of the Scottish and Welsh Offices? Is it a policy paper from those Departments? The Secretary of State for Wales has spoken to us via a press release. We certainly welcome the fact that there will be 30 per cent. additional expenditure over planned figures for the Welsh Development Agency and that, in the coming year, £139 million will be spent on regional policy. However, that is still short of the £300 million, which was the value of RDG to Wales in 1980.
Will the Minister also explain exactly the Government's attitude to regional policy within the EEC? The Government have made great play of the fact that 1992 will mark the advent of the open market. Surely, within that context, a stronger, rather than a weaker, regional policy is required within the United Kingdom. Will the Minister assure us that the Government will stop preventing the EEC from allocating additional expenditure to its social and regional policy funds? What is the position for intermediate firms? We welcome the support for smaller firms, but does the Minister not realise that for the regional economies of Wales and Scotland, as well as for parts of England, the key sector for development is represented by intermediate firms? Will he assure us that there will be support for that type of company?
§ Mr. Clarke
It has always been the practice in this House, where a statement is made on a policy which has been agreed between the territorial Departments and which is to be applied in exactly the same way in England, 165 Scotland and Wales and where the arguments are exactly the same, that the lead Department makes the statement. Of course, it would be possible for my statement to be followed by a statement by my right hon. and learned Friend the Secretary of State for Scotland, followed by Scottish questioners, and for my right hon. Friend the Secretary of State for Wales to make a statement, followed by Welsh questioners. We would all be talking about the same thing. My right hon. Friends prefer to remain within the mainstream of United Kingdom politics and I believe that they are right to do so.
With regard to regional policy within the EEC, we are taking considerable advantage of the social and regional funds. We are engaged in discussions with our partners in the EEC at the moment. We support the continuation of regional policy, but we must ensure that we get our fair share of the funds available and that they are used to good purpose in this country—that remains our main aim.
§ Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)
Does my right hon. and learned Friend accept that regional aids and industrial development certificates did Birmingham much more harm than good? The new Government scheme has much to recommend it. However, will my right hon. and learned Friend deal in more detail with two important points. Under the present system the Ministry acts as godfather. Under the new system it will act as God. The people involved in my right hon. and learned Friend's Department — wonderful though they are — have precious little industrial experience. Therefore, they will need to call upon outside people for advice and many of those people will be heavily involved in the economy of their own areas. How will we avoid a feeling of "jobs for the boys"? How will we sort things out so that this scheme will be run properly and fairly and the money will be spent in the right areas?
§ Mr. Clarke
I agree with my hon. Friend's first point. When Labour was in office it acted so that people could not invest in Birmingham and it refused industrial development certificates in the fond belief that that would be benefiting the United Kingdom economy and would drive people north. We have put an end to that and other things.
We are not changing the way in which regional selective assistance is operated. As I explained to my right hon. Friend the Member for Chingford (Mr. Tebbit), we shall continue to depend to a great extent on outside industrialists when appraising selective assistance applications. However, an important point touched upon by my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) relates to the business initiative and the provision of consultancies, with 50 per cent. support from the Government, which I have already described. Those business initiatives will be organised and delivered entirely by the private sector. We shall provide the funds, but we shall use contractors to organise the schemes. For example, in the case of design we will use the Design Council and in the case of marketing we will use the Institute of Marketing. The consultants used will be private sector consultants, vetted by those bodies for their effectiveness, and we shall merely contribute to the cost of private sector managers helping other private sector managers to improve the quality of performance in their particular business.
§ Mr. Speaker
Order. I must take account of the business on the Order Paper. I will allow supplementary questions to continue for a further five minutes. That means that Back Benchers will have had a full hour on this matter. Those hon. Members who are not called will certainly be borne in mind on later occasions.
§ Mr. Dick Douglas (Dunfermline, West)
In all honesty can the Minister point to any body of opinion in Scotland that supports the ending of the automatic element of the regional development grant? Can he give us some clear indication as to how the proposals will reverse the current trend of the concentration of small businesses and service industries in the south-east and the midlands?
On the vital matter of research and development, is an inter-relationship between R and D in defence—as such R and D is extremely important—and civil R and D mentioned anywhere in the White Paper? What is the Government's analysis of the £2 billion that has been spent on R and D in defence?
§ Mr. Clarke
On the hon. Gentleman's first point, I can cite support from the Scottish Council and the Scottish Confederation of British Industry, which is not bad, given that I made my announcement an hour and 10 minutes ago. No doubt other bodies of Scottish opinion will also weigh in in support. I agree that it is important to attract into Scotland, with even more success than has already been achieved, more small business and more service industries to achieve a balanced economy. The Scottish Development Agency has already achieved much by using existing measures. Regional selective assistance will be available to continue that work. The new grants that I have announced will be available to small firms in the development areas and the new business initiatives will help to strengthen the quality of existing businesses. I believe that the package is aimed at the objectives that the hon. Gentleman had in mind.
§ Mr. Tom Sackville (Bolton, West)
Is my right hon. and learned Friend aware that business men in my constituency who have found themselves hemmed in on all sides by enterprise zones and development areas will be delighted to hear about the ending of RDG and the fact that large sums of money will not be thrown at firms who do not need that money or simply have the misfortune of being located in Wigan? Is my right hon. and learned Friend also aware that Bolton, receiving hardly any financial aid from his Department, is now experiencing an industrial and commercial boom?
§ Mr. Clarke
I agree with my hon. Friend that the improved employment prospects for his constituents and people in other parts of the country depend above all else on the continuing performance of the British economy, its growth, our improved productivity and the better quality of our products. Those factors will benefit all the United Kingdom.
In so far as we discriminate between areas, I agree with my hon. Friend that there is no point in giving a grant to a firm that happens to be in Wigan and giving it a subsidy simply because it is investing in Wigan if it is competing against a firm next door in Bolton. We shall continue to give grants to firms that want to go to Wigan and can demonstrate that they need selective assistance to do so. The disparity in the unemployment records between most 167 of the assisted areas and the rest of the United Kingdom is sufficient justification for the continuation of that policy.
§ Mr. Gerald Bermingham (St. Helens, South)
Does the right hon. and learned Gentleman accept that there is a repeated inconsistency in much of what he has said. Let us take a simple example in the St. Helens area. Recently, the Minister's colleague permitted the Warrington urban development corporation to develop 586 acres of Burtonwood, on the edge of St. Helens. St. Helens has an extremely high unemployment rate and yet it is not given any development grant. Am I to understand that St. Helens will get preferential treatment when it comes begging for loans to relieve our unemployment rate? Perhaps, at the same time, the Minister could give an assurance that whoever mans the Manchester office, with responsibility to his Department, will learn to pay the grants on time rather than deluge the small businesses in St. Helens with considerable numbers of forms. When those forms have been sent back that office still wants more information. Does the Minister accept that that practice needs looking at?
§ Mr. Clarke
I believe that I am correct in saying that St. Helens is an intermediate area. The abolition of regional development grant will have no adverse consequences on the right projects. As an assisted area it will be eligible for the higher rate of grant under the business initiative. I trust that many firms in St. Helens will take advantage of the various initiatives that we shall be promoting through the medium of television, as well as by other means, during the next few weeks. To some extent, therefore, that preferential treatment for St. Helens will help the local economy.
I take note of the hon. Gentleman's points about bureaucracy in our regional offices. We are extending our regional network and creating more regional offices to be close to the businesses concerned, which should help, but we shall certainly continue to ensure that, as in 99 per cent. of the cases, we operate our schemes with minimum bureaucracy and maximum speed.
§ Mr. Charles Wardle (Bexhill and Battle)
Is my right hon. and learned Friend aware that for many years the chorus from a multitude of smaller companies throughout the country has been that they are simply unaware of what the DTI has on offer? Will he therefore step up the communications effort, not only from the centre but from his regional offices, so that more and more companies are aware of the opportunities?
§ Mr. Clarke
I entirely agree with my hon. Friend. There have been a large number of programmes in the DTI over the years and some have remained a well-kept secret from 168 the outside world. We therefore intend to concentrate heavily on the programmes identified in the enterprise initiative. We shall be marketing them very strongly to ensure that small and medium-sized businesses and their managers are aware of what the Government have on offer. I hope that my hon. Friend's sensible words will be listened to carefully by a few people on the Opposition Front Bench who will no doubt start to complain as soon as we let the public know about these programmes, designed to help them, through television and other media.
§ Mr. Speaker
Order. I am on my feet. I have noted the names of those hon. Members and I shall give them preference on later occasions. Now I shall take first the point of the hon. Member for Bolsover (Mr. Skinner).
§ Mr. Skinner
On a point of order, Mr. Speaker. I have two points. First, you referred to the fairly lengthy period of questioning of the Minister responsible. As you will recall, there was a packed House when we started and many people who were called for questions later disappeared. It is also worth noting that many of there were Privy Councillors who had their little say, then off they went. I think you ought to bear that in mind next time you call people for questions. Some of us stay to the bitter end.
Secondly, there is an important point about responsibility for the tabling of questions arising from this statement. It could well be argued that, if the Minister has removed responsibility away from himself to the Civil Service—
§ Mr. Speaker
Order. That is not a matter for me. I shall deal with the hon. Gentleman's first question. I note what he has said. I take into consideration all kinds of things when calling hon. Members at Question Time. It is a courtesy of the House that, if one is here for a debate or Question Time, one should remain.
§ Mr. Skinner
Further to that point of order. Mr. Speaker. You are responsible for the tabling of questions.
§ Mr. Speaker
Order. The hon. Gentleman has just said that he wants to put a question to a Minister.