Clause 1 - Increase in limit on selective financial assistance
Industrial Development (Financial Assistance) Bill
8:55 am
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
I urge the Committee to reject the amendments, although I appreciate that they are probing amendments, as the hon. Member for North-West Norfolk (Mr. Bellingham) said. We want to strike a balance between retaining the concept of parliamentary control and bringing the limits in the Industrial Development Act 1982 up to date to take account of the growth in the economy since 1982 without making the process too burdensome for Parliament. The limits proposed in the Bill reflect that objective.
Let us consider the background to the proposal. The Industry Act 1972 had a limit of £150 million and four further tranches of £100 million; in 1976 the limit was increased to £600 million and four further tranches of £250 million; and in 1982 there was an increase in the limit from £600 million to £1.9 billion—more than treble the limit under the previous Government—plus four further tranches of £200 million. We propose to increase the limit to £3.7 billion, which the amendment would reduce to £3 billion. That would increase the limit by only £300 million the £2.7 billion limit that was provided for 20 years ago, which has been reached. That is the same increase as was introduced 20 years ago, when the 1982 Act raised the limit allowed under the Industry (Amendment) Act 1976 when it reached its capacity of £1.6 billion and increased it by a further £300 million. I presume that that is the logic of the amendment tabled by the hon. Member for Sevenoaks.
The hon. Member for North-West Norfolk asked me to repeat my explanation. The Treasury rolled the limit forward by 20 years using the GDP deflator of 2.5 per cent., which produced a new ceiling of £4.5 billion. We felt that it would be too long before the matter had to be considered by Parliament, so the limit was reduced to the proposed £3.7 billion, with further tranches of £600 million. That is the logic behind the proposal.
We left in place the part of the Act that provides for parliamentary approval to be needed if it is proposed to spend more than £10 million. Although the £10 million limit was introduced in 1982, we have not sought to increase it because it is important that Parliament scrutinises projects that exceed that amount.
We have been consistent in saying that there should be four further tranches and that those will be considered by Parliament. There was an argument
for our coming back to Parliament only twice or three times, which recognised that the issues are not hugely controversial and that Parliament has spent little time on them—broadly, it has been satisfied with the way in which the scheme has run. However, we have left the position as it is: we will need to come back to Parliament four more times before the limit is reached.
Amendment No. 2 proposes that the tranches remain at £200 million, but prices have more than doubled—by a factor of 2.2, to be precise—since 1982. The amendment would require the first affirmative order to be made in less than two and a half years' time; the three subsequent orders would be needed every 12 to 15 months after that. That is based on taking the average of the forecast spend for the current financial year and for the following three years, and the assumption that the rate of spend of £185 million per year remains constant in subsequent years. That is not a proper use of Parliament's valuable time. New primary legislation would be needed in six years' time.
Section 8(8) of the 1982 Act already provides Parliament with the opportunity to scrutinise the larger uses of section 8—exceeding £10 million—and we have no plans to change that threshold. This is a sensible measure that accords with what previous Governments have done to bring this part of the Act up to date and into line with today's prices. I ask the Committee to reject the amendments.