Orders of the Day — Co-operative Development Agency and Industrial Development Bill

– in the House of Commons at 4:15 pm on 7th February 1984.

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Order for Second Reading read.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Before we commence the debate I should say that I have selected the Opposition amendment.

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Stockton South

On a point of order, Mr. Speaker. You will recollect that the Government published a White Paper on regional and industrial development and laid it before the House in December last year. The Bill we are about to consider arises from that White Paper. In that White Paper it was clearly stated that there would be consultation with interested parties until the end of May this year. However, the Bill has been introduced before the opportunity for that consultation has taken place.

Many of the points raised in the White Paper for consultation are matters that will be dealt with by Ministers, if the Bill becomes an Act, under orders to be laid before the House in due course. There is no doubt that many of the Bill's provisions pre-empt representations that were to be made by organisations such as the North of England Development Council, the Scottish Development Agency, the Welsh Development Agency, local authorities and many other bodies which have a close interest in this matter. It is therefore premature for the Bill to be introduced today before those important bodies have had an opportunity to make their representations to the Government.

It might have been more appropriate for the Bill to have been introduced by the new procedure that the House has adopted. Representations could be made before the Select Committee so that it could hear all of the views before it was decided to put the Bill on the statute book. I appeal to you, therefore, at this late stage to see whether there is any way in which we can delay the proceedings on the Bill to allow more time for those bodies that have a close interest in its subject matter to make their representations to the Government.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

I have no such power. I am not responsible for the drafting of Bills, or for their timetable. It seems to me that the arguments that the hon. Gentleman has advanced would be proper for the debate. It is open to him, of course, after Second Reading, to move that the Bill be committed to a Select Committee.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames 4:30 pm, 7th February 1984

I beg to move, That the Bill be now read a Second time.

The Bill covers two subjects—first, the Co-operative Development Agency, and secondly, a new system of regional development grants.

Part I of the Bill, I think, is the less controversial, although I am not entirely sure why part II is thought to be as controversial as some Opposition Members suggest. The primary purpose of part I is to provide further Government funding for the Co-operative Development Agency. The agency's initial funding under the Co-operative Development Agency Act 1978 will have been exhausted by August this year. It is therefore necessary either to provide further funds for the agency or to close it down. Whichever course were followed would require legislation. The Government have decided to extend the life of the agency, and we have also proposed to the House certain changes to the provisions of the 1978 Act to assist the work of the agency and encourage it to greater self-sufficiency.

The Government favour increased employee participation in businesses and wider capital ownership. We see co-operative enterprises as an important way to encourage this. They bring together the interests of those working in an enterprise with the realities of making that enterprise succeed. They also offer those people who might never start a business on their own account a way of doing so by allying themselves with like-minded individuals. For those reasons we believe that the co-operation form of enterprise has the potential to contribute to the creation of new businesses and jobs. However, ignorance of the co-operative option and lack of advice have limited that potential. We have therefore supported the agency in order to encourage the development of viable co-operatives. It is not our purpose to subsidise co-operatives. The purpose of the agency is to give advice to bring viable co-operatives into being.

We are convinced that the CDA represents a useful means of promoting employment and is a small but significant addition to our general policy towards small business. We propose therefore to continue the agency's funding, but in providing continued Government support we believe that the agency should be encouraged to maximise its own earning power and to seek increased support from the private sector. For that reason we intend to maintain funding at the present level of £200,000 a year, but at the same time to free the agency from some of the constraints placed upon it by the 1978 Act. We are also anxious to put this funding on a basis that will give the agency and its private sector supporters the confidence to pursue its objectives. We therefore intend that the grants should be made available to the agency for six years.

As I said, we also propose to make changes to the provisions of the 1978 Act. First, the agency is to be given an additional power to make grants or loans, but it will not be able to use grants from my Department or borrowed money from my Department to do so. Secondly, it is to be given the explicit function of providing training courses. Thirdly, we want to take powers to give general or specific directions to the agency. Finally, although, as I have said, we intend that funding should continue for the next six years, provision will be made, for the first time, for dissolution of the agency.

Photo of Mr David Alton Mr David Alton , Liverpool Mossley Hill

May I press the hon. Gentleman on two points? The first is dissolution of the agency. In 1981 the office of president of the board was being wound up. Would that not have been a far less draconian power than the one which appears in this legislation, as it did in the 1978 Act? Secondly, does the Minister honestly believe that £200,000 is enough for the agency to do the work that it is required to undertake? Does the hon. Gentleman not also believe that, if the EEC and others are to make public money available, so should Her Majesty's Government?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

We believe that £200,000 is sufficient. We intend to—

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

On a point of order, Mr. Deputy Speaker. Far be it from me to pronounce on how hon. Members intervene—it is up to Ministers to decide when they give way — but it has become noticeable that some hon. Members, particularly from the alliance, abuse the House by the peremptory way they enter and exit during debates.

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

It is for the Minister to decide whether he gives way.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

If I may attempt to answer the hon. Gentleman's question, assuming that he is still interested in hearing the answer, which I am not sure he is, we believe—

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Stockton South

On a point of order, Mr. Deputy Speaker. I am sorry to delay the debate, but the hon. Member for Dunfermline, West (Mr. Douglas) is making serious accusations against hon. Members, which are simply not true. The hon. Gentleman might notice that not one hon. Member from the northern region—

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

Order. The hon. Gentleman knows that that is not a matter of order.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

If I may attempt yet again to answer the question of the hon. Member for Liverpool, Mossley Hill (Mr. Alton), yes, we think that £200,000 will be sufficient. There are other funds, like the £75,000, which we are giving to Business in the Community, that can be used for similar support. The hon. Gentleman is right to say that the European Community can, through the social fund, make money available for co-operatives. One objective of the legislation is to make it more possible for co-operatives to benefit from that money. I do not think that more Government money is needed. We are enabling the agency to use other people's money.

As I said, it is not our intention that the agency should be wound up, but it seemed anomalous that, whether we wanted to continue it or to wind it up, we should have had to legislate. There is no intention at present to wind it up.

I shall now go through the detailed provisions of part I. Clause 1 raises the limit on the aggregate amount of grants that the Secretary of State may make to the agency to £3 million. The present limit is £1·5 million, which will be reached by August 1984. Although the Bill does not specify an annual rate of funding it will, as I have already made clear to the House, be set at £200,000 a year for six years. Members with a keen sense of arithmetic will note that on this basis an extra £300,000 has been allowed for in the Bill. This is to give the Government flexibility in any future decisions on the funding levels and time scale.

Clause 2 extends the functions of the agency. First, it enables the agency to make grants or loans to promote the establishment or development of co-operatives. But the agency may not use grant money provided under clause 1 or borrowed money to finance such grants or loans. We are giving the CDA grant and loan-making powers to enable it to influence the use of any development funds that may be available for co-operatives.

As I have said, and as the House knows, it is not the policy of this Government to subsidise co-operatives, but it is possible that organisations, institutions or the European social fund will provide development funds for co-operatives. If that did happen, it would be important that we should be able to obtain at least our share of European Community funds. Accordingly, we believe that the agency should be given the necessary powers to take advantage of assistance from the European social fund, or any other that may materialise.

Another purpose of clause 2 is to amalgamate the agency's existing powers to review and recommend training courses with that of an additional power to provide training courses for persons involved in the co-operative movement, and everybody will welcome that. Under its present powers, the agency can undertake training only where to do so furthers its other functions. In providing the agency with wider powers in this respect, it has now been given an explicit training function. Any training undertaken by the agency will be geared to the needs of co-operatives and will not duplicate the work of the MSC or any other Government institutions.

The third important provision in clause 2 is to remove the block on the agency undertaking any commercial activity and forming partnerships. I should say, to make the position absolutely clear, that it is not the intention that the CDA should take equity stakes in co-operatives; that is explicitly forbidden under the parent legislation. Our objective is to encourage the agency to become as self-sufficient as possible. This will not widen the range of functions but, by being free to carry out commercial activity, the agency will be able to charge what the market will bear for its services, and use the profits made from such services for other activities. By removing this prohibition on forming partnerships — for example, a partnership over training — the agency can share in profits for collaborating with others.

Photo of Mr Alf Morris Mr Alf Morris , Manchester Wythenshawe

The hon. Gentleman has ignored the important provision in clause 2(4) which confers on the Secretary of State power to give directions to the CDA. Will he comment on how it is intended to use that power?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

Although I am at present dealing with the least controversial part of the Bill, I have already taken 11 minutes. The right hon. Gentleman is right to say that we have taken power for the Secretary of State to issue directives. Those reserve powers in clause 2 are designed for the unlikely event of the agency, as a publicly-supported body, competing unfairly in the market place. That was one thought behind that provision.

In clause 3 we are including provisions, to which I have referred, to wind up the agency by order. Had we decided to close down the agency, legislation would have been required and, as I explained, this deficiency is now being rectified. The House will note that termination of the agency would be subject to an affirmative resolution of each House.

I come to what I gather is the more controversial part of the Bill, in particular the regional provisions. Last December we published a White Paper entitled, "Regional Industrial Development," in which we reaffirmed our commitment to an effective regional policy. That White Paper put forward firm proposals, and this answers the point of order raised by the hon. Member for Stockton, South (Mr. Wrigglesworth). The White Paper left some matters open for consultation, but on other matters it put forward firm decisions, and it put forward a firm framework for a new, more cost-effective scheme of regional development grants, and the Bill provides for that framework. There will be a period of consultation lasting until the end of May. That will cover the rates of regional development grant, the criteria for assisted area status, the map and the degree of coverage that the map should have in the whole country, but the structure of the grants was firm— it was our intention that it should be—in the White Paper.

The provisions in the Bill are being introduced now so that we can implement all the decisions, including those on which there are to be consultations, in the autumn, after we have received all the representations and views. If we had delayed introducing the Bill, as the hon. Member for Stockton, South suggested, we should not have been able to introduce all the new arrangements in the autumn of this year.

The Government have conducted an extensive review of regional policy because after 50 years of regional policy there were a number of questions that needed to be asked about its effectiveness. It is striking that of many of the areas that were relatively most disadvantaged in the 1930s, some are still among the areas most in need of assistance today. We cannot avoid asking ourselves whether regional policy has helped those areas, whether it really has been effective and whether we should go on having the same sort of regional policy for ever.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

My hon. Friend says that these areas are in need of assistance. Does he resile from his right hon. Friend's principal argument that the purpose of regional policy is now social and that, therefore, the word "need" is inappropriate? Would it not be better to say that they want aid?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

I do not in any way resile from the view that the purpose of regional policy is social, but the means of implementation are economic, through regional industrial policy.

It would be wrong to conclude that regional policy has had no effect. While there is considerable uncertainty about precisely how many jobs have been created by regional policy, it has been estimated that by the end of the 1970s, about half a million net jobs, including those created by multiplier effects, may have been created in the assisted areas as a result of regional policy.

Regional policy has been particularly effective in creating jobs in Scotland, which now has a thriving electronics industry, and in Wales, where there have been a number of major inward investment projects. Indeed, the desirability of attracting inward investment is one reason why we must have a regional policy, and that, no doubt, is why every EEC country has a regional policy. Half a million jobs may sound an impressive number, but it must be set against the considerable cost of the policy. It has been estimated that the cost per net job created in the development areas in the 1970s—

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

I am endeavouring to answer my hon. Friend's questions. I hope that he will permit me to do so, and I think that he will agree with what I am about to say.

It has been estimated that the cost per net job created has been £35,000. Nearly £20 billion, at 1982 prices, has been spent on industrial incentives in the regions in the last 20 years. In addition to that total cost, one must take something else into account. Apart from the cost to the Exchequer, there are the costs of distortion. Regional policy has created many jobs, but some of them might have come into existence in any event in the non-assisted areas.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

Would my hon. Friend care to consider, for example, Linwood? Are the so-called jobs that have been created there included in that total, and does my hon. Friend have any view about the jobs that were taken from the west midlands as a result of the creation of Linwood?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

My hon. Friend put that point to me at Question Time recently, when I agreed that some of the decisions that were made to move bits of the motor industry to the regions, from where they most naturally wanted to go had not worked out well in that they had not created permanent jobs and that that had not necessarily worked to the advantage of the economies of those regions. Indeed, in many cases they have had a disruptive effect.

The worst aspect of distortion was caused by the system of industrial development certificates, which often forced companies, against their better judgment, to go to the regions. As my hon. Friend knows, we have suspended the use of IDCs, and in that way we have reduced one of the worst aspects of distortion. In weighing the costs and benefits, we must also take into account the European regional development fund, the EEC dimension. Last year we received £260 million from the fund. Without a regional policy we would not have received that money.

We are committed to an effective regional policy because we are committed, as we said in our manifesto, to helping those areas with the most acute unemployment. The purpose and intention of regional policy is to reduce the regional disparities in employment opportunities. Regional policy seeks to do that through influencing the location of businesses. But in the past we have, in the Government's view, had a policy that has not only caused too many distortions but has given extremely poor value for money.

The Government believe that the main instrument of regional industrial policy should continue to be an automatic scheme of regional development grants. An automatic scheme means that the availability of assistance can be taken into account at all stages when companies are making investment decisions. It also means relative simplicity of operation, which is helpful to all companies, particularly small firms. But a number of criticisms can be made about the present scheme, and we have concluded that the case for change is compelling.

The present scheme takes no account of jobs and is heavily weighted towards capital expenditure. The higher the investment, the bigger the grant, regardless of jobs created. Large capital-intensive projects, such as Sullom Voe, which may have had no great choice of location, have resulted in grant payments for each job created of well over £100,000. Payments on that project so far have been over £98 million. When measured against the jobs created, this cannot be regarded as cost-effective. Payment of such grants to such projects has been the subject of criticism by many people for a long time.

It is doubtful whether large capital-intensive projects, as I said in answer to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), are beneficial to the regional economy. Therefore, we propose to make the RDG scheme more related to jobs. We propose to introduce a job grant as an alternative to grants on capital expenditure on assets. We propose to limit grant on capital expenditure by means of a cost-per-job ceiling, so that a project will receive a grant only if, and to the extent that, it creates jobs. But this ceiling will normally be applied to small firms. These changes will make the scheme more neutral, as I think is desirable, between capital and labour.

The present scheme also concentrates too much on manufacturing activities. Service industries create wealth and jobs just as much as manufacturing—

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

Just as much. The jobs that have been coming in in the past have been in the service industries. One of the weaknesses of many regional economies is that they lack service industries. That is true of Merseyside, Liverpool and the north-east. The lack a proper industrial structure that includes services. It has always seemed anomalous to many people. I am astonished that Opposition Members, who are so keen on doing things for the regions, do not see this as a welcome advance.

Photo of Barry Sheerman Barry Sheerman Shadow Spokesperson (Education and Employment)

Perhaps the Minister was referring to my comment. The Minister said "just as much". I was not underrating the importance of service industries; I was referring to the fact that the Minister equated them with manufacturing. In his view it is just the same to make and sell a car in Britain as it is to import a Japanese car. They cannot be equal.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

I did not say that. I said that service jobs were just as important as manufacturing jobs, and that in the regions there is a deficiency of service jobs. I have found this every time I have been in the north-west, the north-east or the south—

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

I should be grateful if my hon. Friend would explain how he can take a view about there being a deficiency of jobs of a particular sort. Is he saying that he can decide what sort of jobs can be located where?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

All I am saying is that, were the structure of the north-west more balanced, unemployment would be less serious.

The present scheme also aids replacement investment. This investment does not create jobs and would usually take place anyway without grant being made. We intend to stop paying grant to investment which does not involve a change in the nature or scale of a company's activities. However, in order to protect some modernisation projects that may be essential to safeguard employment, selective financial assistance will be available, and we expect some increase for that.

Another common criticism of regional policy is that it merely shuffles jobs around the country. This may have been a legitimate objective in the days when unemployment was very low in some parts of the country, but when unemployment is high in many areas it makes no sense to use a policy merely to shuffle jobs from one area to another. If 1,000 jobs go in the west midlands now because a company moves to an assisted area, or expands there, the people there are just as much unemployed as those elsewhere.

Many of the jobs that have been created in assisted areas might have been created elsewhere but for regional policy. An effective regional policy should not be about shuffling jobs around the country. For this reason we have announced that relocation projects, where there is no net increase in jobs, will normally be excluded from regional selective assistance. In the case of regional development grant we intend to calculate the number of jobs created by a project as net of any related reductions in employment in the same enterprise in any assisted area. In other words, there would be less assistance for shuffling jobs from non-assisted areas to assisted areas and less assistance through RDG for shuffling jobs within assisted areas. Whatever they may feel about the first, I cannot see that Opposition Members can justify paying money for the movement of people from one assisted area to another assisted area. We believe that these two changes will help remove discrimination against non-assisted areas.

I should make it clear—there has never been any secret of it—that it is the Government's intention that the cost of regional policy should be less, but the total savings will depend not just on the provisions in the Bill but on the map and on the rates of grant, matters on which consultation is necessary. I should point out that the £150 million on which Opposition Members have pounced in the explanatory memorandum will come entirely from savings brought about by the cost-per-job limit and by taking our replacement investment from eligibility for RDG. That figure assumes the same map and the same rates of grant. It also leaves out selective financial assistance that, as I said, would be available in some places for preserving jobs. Therefore, although we intend that there should be significant savings, it is not possible at this stage, in advance of decisions on map and rates of grant, to say what they will total.

The Opposition are keen that we should spend more money on regional policy, but they have jumped the gun, because the only effect of the Bill is to produce savings through the cost-per-job limit and also through taking out replacement investment, something that they would have to do were they in government because it is an EC requirement that happens in every country in Europe. Those are sensible, uncontroversial, obvious savings of which everyone should be in favour. I cannot believe that some hon. Members will solemnly vote against such obvious and sensible ways of saving money.

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Stockton South

As the Minister says, he is getting to the important matters when he refers to the rate of grant and the map that is to be drawn. Earlier he referred to this all being in place by the autumn. Can he spell out when we shall have an opportunity to debate what he has acknowledged as the crucial matters—the rates of grant and the map? These have still to be debated with outside bodies and brought back to the House. Will he provide a day to debate those matters?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

As the hon. Gentleman knows, the business of the House is a matter for my right hon. Friend the Leader of the House. I have just said to the hon. Gentleman that it is our intention to try to get these changes into place in the autumn. We do not want to do it in the recess. There will be an extensive period of consultation.

As I have said, the Bill is the framework. It does not fill in the figures or give details of the map. It does not specify which activities should qualify for regional development grant or what the balance should be between automatic and selective assistance. Also, the map is not touched on in the Bill. However, it is clear that the assisted area map is out of date and not properly aligned to need, if my hon. Friend the Member of Wolverhapton, South-West will pardon that word.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

Will my hon. Friend direct the attention of the House to the transitional elements? There was much discussion as to whether the new proposals would bite upon the Nissan project, even into the 1990s. The effect of this will surely be much diminished if the tapering proposals go into the next century.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

I shall deal with the transitional provisions when I reach the appropriate clause.

I think that everyone agrees that the assisted area map is not properly aligned with the areas of highest unemployment. For example, parts of the west midlands are now facing more acute problems than those faced by other areas with assisted area status. We shall be interested to hear the views of the west midlands and others on future map coverage. We shall take account of such views before reaching decisions on the map.

We must bear in mind that wider coverage would dilute the effect of regional incentives and that resources are scarce. We still have to decide whether there should be three categories of assisted area, with RDG available at different rates in the top two, or whether there should be only two tiers with RDG available in only one of them. One option would be to have a tightly drawn inner tier, with a wider tier where automatic grants were not available, but with selective assistance available, which could qualify for assistance from the European regional development fund. I emphasise that no decisions have been made and we shall be interested to hear views on that.

If we continue with three categories it could be argued that that allows finer distinctions to be drawn. However, others may argue that such distinctions are overfine, quickly overtaken by events and changing circumstances, and would complicate the policy. That is one of the issues on which we shall consult. Clause 4 permits the designation of assisted areas by reference to travel-to-work areas of the Department of Employment or other areas created for legislative purposes. It also allows the boundaries of those areas to be frozen at a date specified in the statutory instrument. The clause is made necessary because assisted areas are at present normally designated by reference to employment office areas. These make up the travel-to-work areas, which are the nearest we can get to self-contained labour markets in order to judge various areas' needs for jobs. Travel-to-work areas are, however, currently being revised by the Department of Employment, and in future will be made up not of employment office areas, but of local authority wards.

Clause 5 provides for a new framework for regional development grants. That is set out in part 1 of schedule 1 to the Bill, which contains new sections to replace those in part II of the Industrial Development Act 1982.

New section 2 in schedule 1 puts the new RDG scheme on to a project basis. Under the present scheme, the test is only that eligible assets are provided on qualifying premises. These changes are necessary for the cost-per-job limit and to calculate the employment effects of an investment for the job grant. Another consequence of that is that once a project has begun it will not be affected by any changes subsequently made to the assisted areas map or to qualifying activities. That will give investors confidence in the lifetime of a project. They will know that they will receive RDG support and that changes will affect only projects that have not yet begun.

New section 3 provides that regional development grant will be payable only towards projects that provide or modernise capacity, with the result that simple replacement investment—such as I explained earlier—will no longer qualify for grant. It also provides that grant will be paid as either a proportion of capital expenditure or as an amount for each new job created. Applicants will not have to make a choice between the two, they will automatically receive whichever is the more advantageous. I emphasise that this is not a wage subsidy. It is intended to make the grant towards capital expenditure more employment-related. It will remove the bias of the present system which is heavily in favour of capital-intensive projects.

Where grant is paid on capital expenditure, the amount will be limited by a ceiling on grant in respect of each new job created. That is provided for under new section 4. An exception will normally be made to that limitation for small firms, for which we aim to keep the scheme as simple as possible.

New section 4 also provides that changes in rates of grant and the cost-per-job ceiling may be applied to projects which are in progress. That is so that those projects may benefit from increased grant if the Government judge that circumstances warrant it. It is not the intention ever to use the power to make someone worse off.

New section 5 provides that qualifying activities and rates of grant should be set by order. Assisted area map coverage will also be set by order under existing legislation as amended by the Bill. The rates of grant finally set will, of course, have to take account of European Community aid ceilings. I have already made it clear that my right hon. Friend will not make decisions on these matters until after the period of consultation.

We propose to use the power to specify qualifying activities to make regional development grants available to parts of the service sector. We do not wish to pay grant where it is unlikely to increase the level of activity in a given locality. We shall make grant available for services that do not serve only a local market. It would be a waste of money to pay grant to high street banks, building societies or greengrocers' shops. However, there is no reason to continue to discriminate against service industries that are capable of selling their service over a wide area, and also of exporting.

Grants for such service industries would help to improve the industrial structure of assisted areas. During recent years the service sector has tended to be a better source of new jobs than manufacturing. Therefore, making certain service sector activities eligible for RDG will help to bring employment to those areas. That is to what the new regional development grant scheme is aimed. I have outlined the broad principles for extending the grant to services. The precise sectors eligible for grant are matters on which we shall consult.

Clause 7 makes provision for the commencement of the new scheme on a day appointed by order, and for that order to contain appropriate transitional provisions. The Government fully recognise the need for the changeover to the new scheme to be accompanied by transitional provisions. We wish to avoid undermining investment undertaken on the basis of existing incentives. We therefore announced in the White Paper that we intended to allow a transitional period of 12 months for areas that may be excluded by changes, or where the new scheme would result in a reduction in grant payable.

The object of the new regional development grant scheme is to help us to meet our central aim of reducing regional disparities in employment opportunities. The proposals give better value for money and ensure a more cost-effective regional policy with far fewer distorting effects on the economy as a whole and on the non-assisted areas. Making the policy more cost-effective is in line with criticism of the present scheme, including criticism by the Public Accounts Committee.

Opposition Members may consider that more money should be allocated to regional policy than the Government eventually decide. They should remember that many of the jobs created in the assisted areas by regional policy are in fact jobs which would, in the absence of regional policy, have been in existence in other parts of the country. Transferring jobs from one part of the country to another in that way, although it serves the objectives of regional policy, does not reduce unemployment overall, nor does it reduce the cost of unemployment benefit to the Exchequer.

An effective regional policy at a lower cost will help the national economy, upon which the economic health of all areas of the country ultimately depend. A substantial number of the 3 million unemployed are in areas that do not receive regional assistance. Those areas export jobs to other areas. We need to find the right balance. We are aiming for a cost-effective policy with fewer adverse effects. Decisions on the national level—

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

Will my hon. Friend explain the transitional provisions in relation to the Nissan project? It was said that transitional provisions will continue into the 1990s for the second phase of the project, if the company wishes to take them up.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

As my right hon. Friend made clear in his statement, Nissan is covered by the transitional provisions.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

I have spelt them out already. Nissan is covered because it has made an application and received an offer of selective assistance within the time scale. Therefore, it is covered by the transitional provisions that I described.

The outline scheme will give us a far more cost-effective policy. The proposals are simply common-sense. Opposition Members may feel that we should have a larger and more expensive regional policy, but I cannot believe that the Bill by saving money through the cost-per-job ceiling and removing replacement investment, can be regarded as anything other than a sensible and commonsense measure. I am sure that objective and reasonable people considering regional policy must judge that to be common sense.

I cannot believe that the Opposition will vote against Second Reading of the Bill. I appeal to them to withdraw their amendment, and I urge my right hon. and hon. Friends to vote for this sensible measure.

Photo of Alan Williams Alan Williams , Swansea West 5:12 pm, 7th February 1984

I beg to move to leave out from "That" to the end of the Question, and to add instead thereof: this House, while welcoming the decision to continue to support the Co-operative Development Agency set up by the last Labour Government, regrets the limited resources available to it, and declines to give a Second Reading to a Bill which reduces aid to the regions by between £150 and £200 million per annum from Regional Development Grants at a time when the United Kingdom's assisted areas are in greatest need of support.

I found the Minister of State's reply to his hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) rather strange. Therefore, I hope that the hon. Gentleman will explore the Nissan project further. We understand that Nissan has made no firm application for stage 2 of the project. The point of the statement by the Secretary of State was that stage 2 would be contingent upon the success of stage 1 and that Nissan would not make up its mind until it had seen whether the project was working.

I do not want the House to misunderstand. The Government have decided to bend the rules—and to make new rules, if necessary — to enable Nissan to dither and waste time before making a final decision. If that is how they wish to proceed, that is for them. The last thing that I want to do is enter into a domestic row between the Minister, and his hon. Friend the Member for Wolverhampton, South-West.

The Bill is a strange combination of the Co-operative Development Agency and regional development grants. In the past both sides of the House have agreed that such unallied subjects in the same Bill make for bad law and bad practice in the House of Commons. I can assume only that the Department of Trade and Industry, having been allocated one slot, but having two Bills to present, decided to let one go pickaback on the other. We would have given maximum aid to advancing a Co-operative Development Agency Bill. The Secretary of State would have had no problem in securing our support to getting that section through the House.

The link between CDA and RDG has created an interesting and nostalgic experience for me. It is a sign and warning of political longevity. In my first speech on regional policy from the Government Benches in 1965 I advocated to George Darling, then Minister of State at the Board of Trade, that we should abandon the old style blanket development areas, and recognise that some areas within them had massively different problems.

My first task as Under-Secretary of State for Economic Affairs in 1967 was to bring the special development area proposals before Ministers for approval. It is fascinating to come back to that issue. It is not a matter of turning just one circle. By combining the CDA with regional development grants, Ministers have given me the pleasure of turning two circles, as I was the Minister who first brought the CDA proposals before the House. I knew that I had done something unusual and created a strange legislative animal. On the Second Reading of the Co-operative Development Agency Bill, I had approbation both from my hon. Friend the Member for Tottenham (Mr. Atkinson) and from the present Secretary of State for Transport. When I looked at the two of them and realised that, from diverse political positions, they were both wholeheartedly in support of the CDA, I thought that either the rejection symptoms would set in within a matter of days, or that there was a chance of institutional immortality for the CDA. Perhaps it is a sign of the latter that the Bill has been introduced.

I am delighted at the new awareness that the CDA has generated of the potentialities of the co-operative. I know that the Minister would have paid this tribute if he had remembered. I do not mean that nastily. I am sure that the Minister who winds up will do so. I pay tribute to both the chairmen who have held office and both the chief executives for the work that they have done in establishing the agency. The have made a reality of the opportunity that the House gave them in 1978. A measure of that reality is the fact that the work load has increased three and a half fold in the past three years.

That brings me to one of my criticisms, which I am sure the Minister will understand. The £200,000 annual funding does not seem to keep pace with the increase in work load. It is a tribute to the chief executives that they have managed to overcome that financial disadvantage through the use of secondees from industry, so that staff costs fell from £178,000 in 1981–82 to £97,000 last year. As the hon. Gentleman will be fully aware, the difficulty with secondees is that there is a high turnover, so continuity is lost. If the CDA had the long-term quality of staff that it needs, the annual budget would be completely absorbed and probably would be inadequate for providing the appropriate staff. The House owes its thanks to Unilever, the Co-operative Bank and the Co-operative Wholesale Society for providing those secondees, without whom the CDA probably would not be able, financially, to survive.

Photo of Alan Williams Alan Williams , Swansea West

I am grateful to my hon. Friend.

The House should recognise that without that gesture from the private sector, the co-operative movement and nationalised industries, the CDA would have foundered.

I regret, although I think I understand the reason for it, the inclusion of the dissolution clause. I understand the Minister's thinking, but it is worrying that it was in his mind when the Bill was drawn up. However, we have had an assurance from him. I am willing to take it at face value that he has no intention in that direction. I assume that by the end of the six years not only will he not be on the Front Bench but he will not even be on Government Benches. Like some of my hon. Friends, I am also somewhat puzzled about the power to issue directions, but we should pursue that matter in Committee rather than on Second Reading.

Photo of Mr Alf Morris Mr Alf Morris , Manchester Wythenshawe

Overall, the Government's policy seems to be to give the CDA power, but to deny it the means to use that power. Does my right hon. Friend agree that before the debate ends we ought to hear much more about what the Government intend with regard to the power to give grants and loans, the power to engage in commercial activity, the power to enter into partnerships and the power to take a much more active role in training for worker co-operatives?

Photo of Alan Williams Alan Williams , Swansea West

I am sure that my hon. Friend is correct in that respect and since it looks as if the hon. Gentleman in winding up will have something like three and a half hours in which to deal with the debate I hope that he will bear these points in mind. I hope, too, that a certain adviser near this Chamber who is scribbling speech notes like mad will send them down the Bench in time to save him. I do ask the hon. Gentleman, in his winding-up speech, to deal with the matter raised by my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) in his winding up.

Turning to the regional aspects of the Bill, some aspects of the proposals—[Interruption.] I am sorry, does the hon. Gentleman wish to intervene?

Photo of Derek Conway Derek Conway , Shrewsbury and Atcham

Not at all. I was just asking where all the Opposition Members are.

Photo of Alan Williams Alan Williams , Swansea West

If the hon. Gentleman wishes to interject, he is free to do so, but it is the normal courtesy of the House to rise to one's feet in doing so rather than to mutter rather loudly and rudely. If he were to observe normal courtesies, I assure him that as I, too, am a courteous Member of the House I would give way to him.

As I was trying to say in a moment of unusual accord, there are certain elements of this Bill with which we agree or the working out of which we are willing to wait to see. For example, there is the suggestion that different boundaries should be available to a Minister. I am speaking now of boundaries for definition of areas, such as ward boundaries and other administrative boundaries. This makes perfectly good sense, particularly when one considers a metropolitan area and tries to establish what is a meaningful "travel-to-work" area in, say, London. It also makes sense when perhaps suitable sites are just outside an area that is otherwise classified for assisted area status or for a higher grading. That seems to me a logical and perfectly sensible development.

I am not opposed to flexibility, but there exists a quandary touched on by the Minister and mentioned in the White Paper as to how flexibility is achieved without removing predictability. As the hon. Gentleman will, of course, bear in mind, there is always the danger that as flexibility is developed in the scheme of incentives, simplicity is lost. Yet this simplicity is particularly important when one is dealing with inward investment, where overseas companies do not always understand the conflicting advice being received from the various agencies who go out to see them. Predictability and simplicity are important also for the small and medium-sized firm.

The other advantage of predictability is that it ensures that the availability of grants is taken into account at an earlier stage in the investment assessment process. Otherwise, there is a tendency for firms to ignore this availability, make their investment assessments and siting decisions and then to look to see what help is available in the area on which they have already decided. There is, therefore, a hazard in the flexibility that is being suggested.

As we have already seen in relation to Nissan, flexibility can be a deterrent in terms of a project that may be multi-phased. A company may want to start at a low level with a small operation, having in mind expansion after three, five or 10 years. The greater flexibility that the Minister envisages in this Bill throws greater doubt on the availability of grants at phases two and three and, therefore, makes a company more reluctant to take the decision on phase one on the basis of grant availability.

I remind the hon. Gentleman that excluding replacement investment will not make such a significant saving because, with technological change, particularly with the move to the new micro-generation of machinery, there is such a rate of change in capital equipment that it will be a relatively small proportion of what he calls replacement investment that, over the next decade, will not turn out to be covered by the let-out for modernisation.

The hon. Gentleman has said that the Government want to remove the automatic element in certain of the capital-intensive grants. Again, I do not dissent from his policy. I suspect that the Government, as with the exclusion of replacement, will be a little surprised at the smallness of the net saving thus made because, of course, many of these projects are internationally competitive. The multinationals are making their assessments of their investment on a worldwide basis. I think, therefore, that the Government will discover for themselves whether this is done under regional development grants or under section 8, in bidding on many of the capital-intensive projects. The Minister should also bear in mind that many of these projects could be very valuable in downstream activities, helping to give added value to our North sea oil.

There are also major balance-of-payments benefits that lead to grant offer for firms. I think of the example that the Secretary of State for Wales constantly quotes from his constituency: he says that Texaco should not have had regional development grants. Yet the fact is that, at mid-1970 prices, Texaco's investment there was over its life going to yield about £2,000 million on the balance of payments. There was a value to the country in having Texaco investment here rather than on the continent.

I suspect that the Government will find in the end that they will still be using Industry Act money but that it will be given under a different section of the Act. However, I readily accept that the Sullom Voe example is one that we would all have preferred perhaps to be able to deal with differently at that time.

Implicit in what the Minister said is that something will be done for the west midlands. I hope that that is so. Again, I agree that action is necessary in this area. After all, the west midlands has faced under this Administration an avalanche of bankruptcies and closures. While the Government fall back on their defensive position, that at the moment there are more start-ups than bankruptcies, the point must be made that more of the bankruptcies and closures are in medium and large firms and that the majority of start-ups are in very small ones. It is, therefore, a measure of the industrial failure of this Government that we are having to consider a form of assistance to the west midlands. However, it is disturbing that something must be done for the west midlands against a background of reduced availability of resources for the assisted areas as a whole and for any extra help that might be given to the west midlands.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

The right hon. Gentleman said a few moments ago that he thought that we would probably find that our sums on the effects of the cost-per-job limit and the elimination of replacement investment were wrong. I do not think so, but we shall see. Whether they are right or wrong, however, those two things together represent almost all the savings that this Bill will produce. The right hon. Gentleman does not seem to be against those particular savings. Why is he going to vote against this Bill?

Photo of Alan Williams Alan Williams , Swansea West

The hon. Gentleman will find out in a moment, if he will let me continue.

He referred to the service industries and to their need of help. Again, we agree with that. We tried in March, 1979, revamping the then service industries scheme, giving extra incentives—as it happened, not enough—because we had recognised that the service industry would increasingly be the major employer in this country and that it was foolish to pretend that the solution of our regional problems would be met entirely by manufacturing industry. It cannot be done. That does not mean that we do not want a share of the manufacturing industry as well for the assisted areas, but I suspect that the Minister will encounter far greater difficulties than he has implied at the Box in making his definitions of which service sectors will receive help.

The Government show a certain inconsistency in stressing the importance of service industry and at the same time advocating in their White Paper that low pay should be one of the regional incentives, that regions should accept low pay in order to attract industry. As most services and most service industries are essentially a response to local demand, the lower the wages the lower local demand is likely to be for services and the less likelihood there is that the area will be able to sustain a comprehensive range of services.

The White Paper refers to more local generation, and hon. Members will be aware of my interest in that. I agree that traditionally large cities have spawned small firms. However, since the war, for the best of environmental reasons, the seedbed areas have been cleared by our planners and no replacement facilities have been made available. In London for example, the laudable social activities of the planners were responsible for over half the jobs that were lost in the centre in the period up to the mid-1970s. Only 15 per cent. of them were lost because of regional policy or the construction of new towns. The areas of small industry that so characterised Birmingham, Manchester and London disappeared.

The Minister must make up his mind which Department will win the argument in respect of local authorities.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

Will the hon. Gentleman accept, especially in relation to inner London and other major cities, that the inner-city areas have often lost jobs because of the high rates that have been levied on the business community, making it uneconomic for it to be there?

Photo of Alan Williams Alan Williams , Swansea West

It is obvious that the hon. Gentleman is educated in prejudices and not in fact. The overwhelming majority of jobs have gone from inner London because of the planning activities to which I have referred.

The Minister has not addressed himself — I can understand why — to the paradox of the faith of his Department in the role of local authorities and the determination of another Department that local authorities should not have any resources to do anything. It is nonsensical for the Department of Trade and Industry to be paying lip service to the role of local authorities when other Departments and Ministers are trying to bulldoze through the House rate-capping legislation which will ensure that local authorities do not have sufficient resources to carry out the local generation of jobs, which is so central to the strategy that is outlined in the White Paper and which is implicit in the Bill.

Despite the areas of agreement, we oppose the Bill because we feel that it is ominous and penny pinching and has little to do with advancing regional policy. In fact, it has everything to do with cutting public expenditure. That is the fact that has emerged from the Minister's speech. The explanatory memorandum, to which the hon. Gentleman referred, emphasises that regional development grants will be cut by £150 million to £200 million a year. That means that £1,000 million less will go into the assisted areas in the next five years as a result of the Bill. That shortfall will take place before there are changes in the map and in the rates of grant. That, too, is made clear in the explanatory memorandum.

On the estimate in the White Paper that RDGs will amount to about £440 million in the current year, we are talking of a decrease to about £240 million, virtually a halving of the grants as a result of this proposed legislation. That halving of the RDG available will take place, as I have said, before the maps are changed and before the RDG rates have been changed.

That is not, as the Minister has suggested, the pursuit of efficiency. It is an exercise in financial savagery.

Photo of Alan Williams Alan Williams , Swansea West

I shall give way to the Minister in a moment. I am on a good bit of my speech and I want to finish it. If the Minister sits back and enjoys it, he can then make his intervention as he wishes. The reality is that the Government will not make the savings that they have in mind without major amputation. They will find that they have mis-assessed and miscalculated the grant needs of industry.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

Which specific provision in the Bill leads the right hon. Gentleman to decide that he will vote against the measure?

Photo of Alan Williams Alan Williams , Swansea West

The Minister has brought forward a Bill which is an enabling measure. It will be utilised at a later stage drastically to alter the map and, possibly, the levels of regional development grant. It is suggested in the explanatory memorandum that there will be a reduction in the cash injection into the assisted areas of up to £200 million a year. We say that the assisted areas cannot afford that loss of cash. The fact that there might have to be major amputations to achieve the Government's objective is revealed in paragraph 42 of the White Paper, where the Department makes clear that it might consider reducing the categories of assisted area from three to two, with the regional development grant available in only one of the two. Every area that is currently classified as falling within intermediate area status must regard itself as at risk. Every area that is currently a development area must recognise that it is highly likely, on the basis of paragraph 42, in conjunction with the philosophy outlined and implicit in the attitude of the Minister to regional aid this afternoon, that they will soon find themselves without RDGs. Only the special development areas will enjoy the availability of RDGs.

The proposition of reducing the aid to assisted areas comes from a Government who have savagely worsened the problems of those areas. If we take the RDG spread in 1982–83 as typical of the areas in which the cuts will fall, the result is as follows: Wales, which has had an increase of 83,000 in its unemployment under this Administration will have a £34 million a year cut, which will amount to £170 million over the next five years; in the north of England an extra 100,000 have been unemployed under this Administration, and it will suffer a £36 million cut a year, or £180 million over the next five years; the north-west has suffered an increase in unemployment of 250,000 under this Administration and it will lose £28 million a year or £140 million over the next five years; Yorkshire and Humberside has seen its unemployment increase by 162,000 and it will receive a £10 million cut in its aid to help it deal with the problem, a cut which will amount to £50 million over the next five years. Scotland, which is of interest to some of my hon. Friends who are now in the Chamber, has seen its unemployment increase by 150,000, but it will lose £80 million a year, or £400 million over the next five years.

These areas are to lose £1,000 million of aid in addition to the loss of £556 million in regional development grant aid—selective aid—which they have lost over the past four years under this Administration. How do the Government try to justify this action? Paragraph 18 of the White Paper explains why it is necessary. It states that expenditure — I suspect that this in part is what the Minister feels— on regional measures imposes a burden on taxpayers throughout the country". The hon. Gentleman nods in agreement, so we have his authority to assume that that is central to the analysis behind the Bill.

If the £200 million burden is lifted from the taxpayer and if the entire sum is returned to him, by how much will he benefit? The answer is one fifth of one penny off the standard rate of tax. That is the central burden of the philosophy of the Bill—one fifth of one penny off the standard rate of tax. There will be jubilation in the pubs tonight when the word gets round. There will be delight at the CBI, asking for relief on what it describes as the £6 billion rate burden, about what this one fifth of one penny will represent for corporation tax. I am sure that it will be the centrepiece of the Chancellor's Budget day proposals. What a derisory excuse for an act of social vandalism, an act that in fact writes off the regions.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

The right hon. Gentleman does not believe a thing he is saying.

Photo of Alan Williams Alan Williams , Swansea West

The hon. Member for Wolverhampton, South-West (Mr. Budgen) does me an injustice. Not only do I believe what I say, but I shall explain why I shall be proved right. In fact, we have been here before, but the hon. Gentleman, in his ignorance, apparently does not realise it. In 1970, the late lain Macleod, in the only Budget that he ever introduced, announced the end of investment grants, for much the same reason as the hon. Gentleman supports the Bill today. Within six months of Macleod's announcement of the end of those investment grants, the amount of new industry going to the assisted areas had fallen by more than 50 per cent. So we have been through it before. Those of us who are in the regions know what it will mean. We know what will happen. What is poetic about it is that, having removed the investment grants and having found that they were wrong — the hon. Gentleman will not remember this — the then Government apologised for their error by bringing back in 1972 the Act that the Government now intend to amend. The Government got it wrong in 1970, and they introduced the Act to remedy it. Now they have forgotten the lessons of 1970–72, and they are repeating the error of the past.

This Government do not believe in regional policy. They say that there is no economic argument for it. What would happen if all the unemployed people in south Wales came to the South-East and said, "Please, we want jobs."? The Government would soon find that there was an economic as well as a social argument for such a policy, if they had to provide the extra social facilities and infrastructure that would be needed. That would cost the Chancellor economic resources.

The Government say in the first sentence of their White Paper that they are committed to maintaining an effective regional policy". What a joke. One gets the impression from that that they had an effective regional policy in the first place. So effective is the regional policy that they want to maintain—although they are not willing to spend any money on maintaining it — that unemployment in Yorkshire and Humberside has risen 147 per cent. As a result of the Government's effective regional policies, unemployment in the north-west has risen 136 per cent. As a result of their effective regional policy, unemployment in the North and in Scotland is 100 per cent. up, unemployment in Wales is 106 per cent. up, and in Northern Ireland it is 103 per cent. up — all because the Government have this effective regional policy, although they are now taking away from the regions even the limited resources that are available to them. Incidentally, those are the unemployment figures that the Government fiddled with on two separate occasions.

However, the Government have alternative and additional policies. In paragraph 9 of their White Paper, they say that the regions should accept "lower wages". They say that that is the way to attract new industries. If that were true, one would imagine that industry would flow into East Anglia—the area with about the lowest wages in the country — but unemployment in East Anglia has increased by more than the United Kingdom average—by 146 per cent. Only two regions in Britain had a higher increase. So much for lower wages.

The other factor that the Government mentioned in paragraph 9 of the White Paper is "natural adjustment" through people moving. That is the White Paper's language for "Get your cycle clips". Where are the people to move to? Where are the jobs? The Minister said that one cannot afford to take industry away from the south-east, because the south-east itself needs it. How can the Government suggest to people in the dole queues in the regions that they should move? When the Minister winds up the debate, I hope that he will tell us where those people are to go. Where are the extra 2 million in the dole queues to look for jobs?

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

The right hon. Gentleman is getting very indignant. Will he point to some objective evidence of the lasting good that regional policy has done for the regions?

Photo of Alan Williams Alan Williams , Swansea West

The hon. Gentleman should look at the evidence that was given by his own Minister, who says in the White Paper that it is estimated that 500,000 jobs have been created. In addition to the jobs that have been created, jobs have been saved by regional policy. At a time of recession, the role of regional policy is often defensive rather than dynamic. It protects the jobs that exist, rather than generating new jobs. So, in addition to the 500,000 jobs that have been created, many jobs have been saved as a result of regional policy. Selective financial assistance is frequently used for that purpose.

The hon. Gentleman asks about the benefit. I come back to the point that I made earlier. Conservative Members fail to understand that a regional policy is not only an assisted area policy. They should remember what happened in the 1930s, when young people and skilled workers had to move out of the old industrial areas to the south-east of England—Slough, Reading and London. If that were to happen now on a massive scale, it would not be welcomed by the south-east, even if it had the jobs to offer those people. Moreover, it would leave behind stunted communities—the sort of communities that we saw in the mining valleys in the 1930s. The centre of Merthyr Tydfil was boarded up. I remember, as a student, going to Merthyr Tydfil in the immediate post-war period when it still had not recovered, and being horrified at seeing a high street which was literally one boarded shop after another. It was not untypical. We do not want to go back to that. We do not want dying communities, populated by the elderly who are left behind, with all the social problems that would result.

There are reasons outside the assisted areas for a sound regional policy. The effect of decisions implicit in the Bill and the White Paper on the old assisted areas will be that unemployed men and women over the age of 45 will know that they will never work again. That is not an exaggeration. If Conservative Members spent more time in the assisted areas, where most of us live, they would know that.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

The right hon. Gentleman keeps saying that he is against the Bill, not because of anything that is in it, but because of what he thinks is implicit in it, or because of some decision that he thinks will be made in the future. The right hon. Gentleman has said that he agrees with the two savings in the Bill—the cost-per-job limit and the removal of replacement investment. However, he proposes to vote against the Bill because he is opposed to the removal of cash from the regions. Does he want an injection of cash regardless of what it is used for?

Photo of Alan Williams Alan Williams , Swansea West

If the hon. Gentleman believes what he is saying, he should ensure that any money saved is used on job creation. There should be a better inducement to people to set up the jobs for which the incentive will be job-related—

Photo of Alan Williams Alan Williams , Swansea West

The hon. Gentleman says that it is not in the Bill. Let us look at the explanatory memorandum. It is clear that there is little or no addition on the selective front. According to the explanatory memorandum, while there will be the cutback—

Photo of Alan Williams Alan Williams , Swansea West

The hon. Gentleman should not shake his head. His explanatory memorandum states categorically that there will be a cutback of from £150 million to £200 million a year in the regional development grants and some slight increase in selective financial assistance. The hon. Gentleman cannot pretend that there is any intention to make a significant change to the level of inducement available by way of selective assistance under the 1982 Act. The Bill is purely a money-pruning operation. It will deprive the assisted areas of £1,000 million. That is what is wrong with it. That is why it deserves our condemnation.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

If that is to be the effect of the Bill, the right hon. Gentleman and I take a very different view of it. Is the right hon. Gentleman not encouraged, however, by the Minister's underlining of the increase in selective assistance? Sadly, from my point of view, the Government will be giving back in selective assistance what they take away.

Photo of Alan Williams Alan Williams , Swansea West

If that were so, our attitude might be different. However, there is nothing in the Bill, the explanatory memorandum or the Minister's speech to suggest that it is so.

Let us consider the manpower implication, and look at the paragraph headed:

"Effect on public service manpower".

It is stated: There will no effect on Central Government or other public service manpower. Being automatic, the regional development grant has a relatively low manpower requirement and a low administrative cost. I believe that the cost is about 1 per cent. That form of assistance is very efficient in administrative terms. However, selective assistance is itself labour-intensive, because every project has to be crawled through. If there was to be substantially more assistance, the Government would need extra manpower to do the work. It is clear from that part of the memorandum, too, that the Government do not intend to spend much more on selective assistance.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

I am sure that the right hon. Gentleman is wrong. To increase the amount of selective assistance would be purely a matter of administrative action. It would not be necessary to refer to it in the Bill.

Photo of Alan Williams Alan Williams , Swansea West

I did not write the explanatory memorandum. If I had done so, it might have been very different. If I had written the Bill, that would have been different too.

The hon. Gentleman must agree that what I have said is consistent with what is in the memorandum. If the memorandum is wrong, the Minister should explain to the House why he has issued a deceptive memorandum. However, like the Minister, I do not believe that he would do such a thing. He believes in what he is saying and in what he is doing, but he lacks the courage to face the consequences of what he is doing.

Photo of Michael Fallon Michael Fallon , Darlington

The right hon. Gentleman is quoting from the wrong part of the explanatory memorandum. He is quoting from part I, which is about the Co-operative Development Agency. In part II, which refers to the regional development grant scheme, the Government admit that there will be an increase in the number of civil servants.

Photo of Alan Williams Alan Williams , Swansea West

I must put on my glasses to see whether the hon. Gentleman is right. I see that there will be increases and decreases in staff requirements. In other words, the effect of the Bill will be virtually neutral.

There are votes to be gained or lost. If the Government had intended to give significantly more in selective assistance, would not the hon. Gentleman have made a point of saying so today? Such an announcement would have successfully neutralised our objection to the Bill. If he had told us that although the money was to be used in a different way it was to stay in the regions, we might have disagreed, but—

Photo of Alan Williams Alan Williams , Swansea West

No, he did not, and nor does the Bill. The memorandum states that there will be a reduction by some £150 million to £200 million a year, and no major increase in selective assistance.

We must therefore ignore what the Minister told us about the effect of the Bill, and look at the Bill itself. Through the Bill, the Minister is destroying the only hope of recovery that the old industrial areas have left. When the Bill is added to the descheduling and grant reductions of 1970, the Government will have created a vast industrial no-man's land which will not have the growth potential of the south-east or the incentive that will be available in some limited areas. The Government offer no hope to the regions. They have a quality of regional abandonment. That is why I moved the amendment.

Photo of Michael Fallon Michael Fallon , Darlington 5:57 pm, 7th February 1984

I am sure that, like me, Mr. Deputy Speaker, you will deplore the absence from this debate of Labour Members from the north-east.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

The north-east of England or of Scotland?

Photo of Michael Fallon Michael Fallon , Darlington

Any consideration of part II of the Bill must begin—

Photo of Barry Sheerman Barry Sheerman Shadow Spokesperson (Education and Employment)

On a point of order, Mr. Deputy Speaker. Does it not ill become an hon. Gentleman who has wandered late into the debate to criticise Opposition hon. Members? [Interruption.]

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

Order. That is not a matter for the Chair.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

On a point of order, Mr. Deputy Speaker. I am sure that matters of concern to north-east England are matters for the Chair, considering the area that you represent.

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

Not when I am presiding over proceedings, as I am now.

Photo of Michael Fallon Michael Fallon , Darlington

I am sure that you will recognise, Mr. Deputy Speaker, that I have been in the Chamber since the beginning of the debate.

Consideration of part II of the Bill must begin with the explanatory memorandum, which was so badly misquoted by the right hon. Member for Swansea, East (Mr. Williams). Although the total amount of aid is reduced by £150 million to £200 million, the number of civil servants required to administer it is expected to increase.

I welcome, in principle, the Government's commitment to a more selective regional policy, but there is a price to be paid for it. The number of civil servants is a pointer to the nature of that price, which will be an increase in decision making by civil servants and their Ministers. The Bill gives great discretion to Ministers and their civil servants, both in the width of the area to be considered when the job element is assessed under paragraph 3(5)(b) of schedule 1 and in the job-cash ratio under paragraph 4(1)(c) of schedule 1. I hope that, before the consultation period is over, Ministers will weigh carefully the points made to them about the exercise of that discretion under the order. I also hope that the Committee appointed to consider the Bill will be able to explore with Ministers their views on the discretion that is to be exercised.

I welcome the much more precise criteria that will be applied in future to the definition of an assisted area. I suggest that the award of a particular status to an area should be dependent upon the co-operation that the Government receive from local authorities and agencies within that area. It seems to me proper that the award of a regional development grant might be made dependent upon the local authority's spending record. Consistent overspending or high spending by a local authority would rule it out of court when it came to applications. The Government are not alone in this. Unemployment has become a situation in which everyone is happy to attribute blame, but for which no one is prepared to accept responsibility.

When local authorities are trying to attract fresh investment and they tell potential investors that regional development grants are available, they must accept their responsibility for developing their areas and keeping rates down for businesses within them.

I hope also that in defining areas and designating them under the new scheme the Ministers will take account of areas such as Teesside which are now all relatively homogeneous in terms of road infrastructure and that my constituents in Darlington will no longer be at a disadvantage compared to the rest of Teesside or points further east which enjoy development status, special development status and enterprise zones and other distortions which Ministers admit pull jobs away from one area to another.

I wish to deal with the job creation aspect of the Bill. I welcome the emphasis away from the capital-intensive projects and purely replacement investment. I should have preferred there to be emphasis on the top limit of jobs per cash rather than ratio. It seems to me, to develop the Government's policy to its absurd limit, that a policy that is simply labour-creating is not reconcilable with a policy that is labour-saving, and with other Government measures that encourage industry to be more competitive and to reinvest and produce on its own the jobs of the future.

In that respect, I notice a slight difference which may be accidental between the White Paper and the Bill. Whereas the White Paper refers in paragraph 31 to job creation, the Bill, in schedule 1, refers to job provision. I wonder whether it is intended that under the new scheme the extent to which a project safeguards rather than creates jobs will also be taken into account. If so, I would welcome it, because it means that the new scheme and the new grants to be made under it would recognise the extent to which industry itself is trying to become more efficient.

I notice also in schedule 1(3) that the purposes for which a project might qualify for a regional development grant include a project which might effect a change in the product or in the process of producing it. I hope that that provision will be widely construed by Ministers when they assess an application, and that they will not rule out projects which might make processes more energy-efficient, for example, or more capital-efficient—one does not oppose the more efficient use of capital, even if one is opposed to projects that are simply capital-intensive — or projects that improve the quality and standards of products.

I want to deal with the extension of the range of activities that might qualify for regional development grants and the inclusion of service as well as manufacturing activities. I hope that, whatever activities are selected to be added to those that are of purely manufacturing, Ministers will recognise that in the service sector it is important to assist not just the small and medium-sized service industries but those in their second or third years of life and those that have the potential to create more jobs relatively quickly.

I have a further suggestion for my hon. Friends. I wonder whether they have considered making the awards conditional— rather as they have made the enterprise allowance conditional — on the take-up by service industries of the various Government schemes and promotions available for training, marketing and other counselling services.

The Bill allows Ministers wide discretion when considering applications. It makes it more important for Ministers to consider the element of predictability that will in future underlie the scheme. I welcome the White Paper's provisions dealing with the transitional arrangements. It is plainly vital that companies should know, or have a reasonable understanding of, what projects might be entitled to assistance under the regional development grant scheme. It is equally vital that job-seeking agencies and industrial development agencies should know what type of projects will qualify and are likely to be favoured by civil servants in the advice that they tender to Ministers. I suggest that, when orders are made under schedule 1, some guidance should be provided perhaps in the form of some "highway code" so that the ground rules underlying the decision that is likely to be made in respect of one project as against another are made clear.

I believe that it was my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) who pointed out that regional policy is now, essentially, social policy. Perhaps he is right to be sceptical about that aim. It might have been better if Ministers had not made that admission, but had reconciled themselves to the expenditure of a great deal of public money, and concentrated, as they have, on making that expenditure more cost-effective, and had described their policy not as a social policy but as a wealth-creation policy which is being applied to those areas where, through no fault of our own, the rundown in our industry is much faster than in others.

Photo of Mr Laurie Pavitt Mr Laurie Pavitt , Brent South 6:08 pm, 7th February 1984

I immediately declare that, although I have no pecuniary interest, as the House will know, I am sponsored by the Co-operative party. Therefore, most of my comments will deal with that part of the Bill. When my right hon. Friend the Member for Swansea, West (Mr. Williams) was speaking on that section of the Bill I regarded him with nostalgia. In 1975, 1976 and 1977, we were associated in putting the original Act on the statute book. I pay tribute to the amount of assistance that he was able to give from his position in the Ministry during the Act's early years and its teething problems.

I have listened to the discussion on regional development with a great deal of interest. I accept the point made by the Minister that he does not want just to transfer jobs from place to place without creating more jobs. I had a thriving industrial area in my constituency 20 years ago. I now have an inner city area. It was not the regional policies but centralisation and rationalisation by people such as Lord Weinstock that caused jobs to be shifted from place to place and one part of the country to be played off against another.

I hope that the hon. Member for Darlington (Mr. Fallon) will forgive me if I do not follow his comments. The Minister should remember when he is drawing maps that maps cannot be drawn just for inner city areas, because they are pockets within a much wider area. Although the urban aid programme provides a little help in other spheres, the Bill should look at the social deprivation that is a consequence of economic rundown. I accept what my right hon. friend the Member for Swansea, West said in his careful analysis of the Bill, but unfortunately it seems that little in part I will help those in inner city areas.

I shall concentrate entirely in part 1 on the Co-operative Development Agency. The Bill amends the Co-operative Development Agency Act 1978 and affects one of the most important changes during the past 20 or 30 years in economic and social organisation throughout the whole of Europe. The co-operative movement, which supports me, and the Co-operative party are part of a consumers' movement which began in Rochdale in 1884. More than any other economic organisation operating for ordinary working people, the consumers' movement gave improved standards of living, suggested ideas on thrift and so on. From the end of the last century to the second world war that movement was perhaps one of the greatest contributions to the working class movement.

Times have changed, and the impact of the costs of bread, butter and milk on family budgets has changed with it. Even before the 1978 Act was passed, the industrial co-operative ownership movement made representations to the House. I am pleased to see my hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards) in his place, because no one did more in that respect than he did.

I am worried that an exciting change in economic organisation is almost being damned by faint praise. The Bill is saying some of the right things, but the Government are not putting their money where their mouth is. The Minister has said some kind words about the importance of strengthening and not diminishing the Co-operative Development Agency. I ask him to put those words in the context of changes in Europe and compare what we are doing for the CDA with what is being done in other countries.

In France, under President Mitterrand, a third sector has developed comprising industrial, service, wine, insurance and mutualist co-operatives. That sector is regarded as being so important that the council administering the co-operatives is chaired by the Prime Minister. The same developments are occurring in Scandinavia and Spain. Countries are adapting to changing circumstances as rising unemployment brings more social problems to be tackled by co-operatives. Confederations of different co-operatives are being formed. The Co-operative Development Agency and the industrial co-operative ownership movement were taking steps in a similar direction. Those steps must be given further support.

The first three clauses do not show a deep appreciation of the importance of the co-operative sector. Work has been done by such people and organisations as Lord Brown—on industrial relationships in Glacier Metals—the John Lewis co-partnership and the Quaker firms in relation to co-ownership. Professor Fauquet's book "Co-operative Sector" published by the International Labour Organisation, provided a good deal of the philosophy behind the co-operative idea. When that book was being written 30 years ago, a former Conservative Prime Minister, Mr. Harold Macmillan, travelled the same path in a book entitled "The Middle Way".

The Co-operative Development Agency is the body in the middle, between capitalist enterprise and state organisation and control. It is a means of mutual co-operative organisation in industry, services, housing and other fields. Through it, people can control their destiny and have responsibility, which is not passed on to some functionary or bureaucrat elsewhere, at whatever level.

The CDA, since it was formed until July 1980, has had a proud record. Although in 1980 about 300 societies operated under the CDA, in January 1984 there were 950 co-operatives employing almost 10,000 people. The first chairman of the CDA, who was a Labour and Co-operative party Member, was Lord Oram, who did a tremendous job. The present chairman, Mr. Ralph Wolfe, and the director, Mr. George Jones, deserve more encouragement than they are receiving from measures in the first three clauses.

Since 1980, a threat has loomed over those people when deciding how far they can go. There has been no encouragement and it is possible that further entrenchments will be forced upon the organisation. Although the Bill has received support from all sections and all parties, I suggest that the first three clauses reveal that the Government have only a half-hearted commitment to co-operatives.

I draw attention to some of the activities of the CDA and ICOM. The London borough of Brent in my constituency has a local CDA. Unemployment in the past three years has trebled, and the CDA is making small inroads into the problem. About £200,000 has been spent on an exciting co-operative industrial project. As an example of co-operation, the black citizens in my area refused to take the action that was taken in Brixton and Toxteth. Instead, they took over a London Transport bus garage and established about 20 co-operatives.

They are proud of what has happened. That project needed funds to get it off the ground — £1 million in capital loan from my local borough, £600,000 from the Department of the Environment, £500,000 from the EEC social fund and a further £500,000 from the Greater London council—and provide the basic infrastructure. That project has transformed what was almost a ghetto into an area that is looked on with great pride.

I put in a brief commercial to the Minister. I hope that, because of his interest in this matter, he takes time on 21 and 22 February to visit Kensington town hall, where a co-operative fair will last for two days. At least 100 co-operatives will be exhibiting their products. Joe Grimond — I am pleased to see that the Liberal Benches are occupied—was influential in bringing the attention of the CDA and the people of this country to the Mondragon experiment in the Basque territory. Information on that experiment will be part of the London fair. I urge the Minister to ensure that he and his staff look at what is being done.

I welcome the Government's decision to fund the CDA and to widen its powers. The CDA has already established beyond any doubt its right to an improvement. Consistently over the past five and a half years, against almost impossible economic odds, it has made bricks with very little straw. The number of inquiries from people wishing to start co-operatives is rising rapidly. Between the last quarter of 1982 and the last quarter of 1983 the figure rose by 70 per cent. A record like that demands real backing from the Government, but the Government's policy seems to be to give the CDA powers but to refuse it the means of exploiting them to the full. I hope that as a result of today's debate and the discussions in Committee the Government will give a clearer statement about their intentions on how the grant and loan-giving power is to operate. The Minister mentioned the CDA's power to encourage commercial activity, but he did not spell it out in firm terms. He also mentioned its power to enter into partnerships. I hope that fuller information will be given in Committee.

The Bill refers to the necessity for training and the CDA's role in that respect, but unless the money is provided, that will remain an empty possibility and not a probability. Education is a long process. Moreover, a co-operative is a social organisation, so it is not sufficient merely to train accountants and the like. The philosophy of the co-operative movement involves mutual responsibility. People of the calibre required to run co-operatives cannot be created merely by propaganda. It is a long educational process. The Government have given the CDA power to undertake training. They must now provide the resources so that that can be implemented.

I am, of course, extremely unhappy about the dissolution clause. I hope that the Government will be able to lose that in Committee, on Report or in another place. Despite the Minister's assurances, the axe is there. No further powers need be taken. It requires only a statutory instrument. The devoted people giving up time and energy to make maximum use of the few resources available may find themselves out of a job without more ado because the dissolution clause requires no more than a statutory instrument to activate it. That is not the best way to secure good staff relations, good organisation and an enthusiastic group of people trying to explore the new avenues that this country so greatly needs.

At the heart of the CDA and ICOM there is idealism and practicality. I assume that the Bill will be probed in Committee, but the Government should cease to be ridden by caution and procrastination. They should try instead to generate a little enthusiasm and to support the success already achieved. If they will do that, the greatest scourge of my lifetime, worse even than 1931—the people who come to my Saturday morning surgery bereft of their jobs and with family tragedies — will be helped to some extent by the practical efforts of the CDA and ICOM.

The Government should introduce not three clauses to deal with the CDA but a whole range of new provisions to give more power to its elbow.

Photo of Mr David Harris Mr David Harris , St Ives 6:24 pm, 7th February 1984

I am sure that the hon. Member for Brent, South (Mr. Pavitt) will forgive me if I do not follow him in his expert knowledge of the Co-operative Development Agency. Personally, I believe that there is a role for co-operatives, but I do not wish to see a plethora of new agencies. Indeed, I know that the hon. Gentleman does not advocate that. I wish to deal with the second part of the Bill.

If we are honest about it, the attitude of every hon. Member towards regional policy is forged by the circumstances of the constituency that he represents. When I was a member of the Greater London council my views were perhaps more akin to those of the hon. Member for Brent, South than they are now that I have the honour to represent the most westerly constituency in England. I well recall that when I was European Parliament spokesman on regional policy I attended a Back Bench Committee upstairs in this House at which I received the same kind of reception from my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) as he gave the Minister toZday. If, as we all expect, the west midlands is given assisted area status it will be interesting to see how many hon. Members change their attitude to regional policy. I am, of course, sure that my hon. Friend the Member for Wolverhampton, South-West will not change.

We are rightly conditioned by the circumstances of our constituencies. I cannot overlook the fact that male unemployment is 32·7 per cent. in St. Ives town, 27·7 per cent. in Penzance and 24·3 per cent. in Helston. I must take that into account in formulating my views on regional policy.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

The hon. Gentleman rightly says that hon. Members are influenced by the situation in their constituencies, but is he aware that Conservative Members regularly vote against any increase in funds for regional policy and indeed in favour of decreases, but that when the areas to be included in the assistance map are discussed they are the first to knock at the Minister's door asking him to include their areas? Is that not hypoc — I am not allowed to say that word, but is that not very strange?

Photo of Mr David Harris Mr David Harris , St Ives

I acknowledge the hon. Gentleman's point. It brings me to my own attitude to the Bill. I am glad that my hon. Friend the Minister used the term "cost effective". I have never believed that it makes sense to throw money willy-nilly at any region or problem. In considering funds available from Europe or under the Industry Acts we must be careful to use the money to the best effect. I therefore support the principles of the Bill. Clause 5, of course, raises many questions which will remain unanswered at least until the autumn.

With regard to the assisted area map, we are dealing not just with industrial development grants but with something far more important—infrastructure grants and especially those available from the European regional funds. As European Parliament Member for Cornwall and Plymouth, I believe that the money from the regional fund is beginning to be significant in that area. In my Westminster constituency, too, various infrastructure grants have undoubtedly had an impact.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

The hon. Gentleman could create one job by giving up one of his two constituencies.

Photo of Mr David Harris Mr David Harris , St Ives

I can deal with that straight away. I shall not be seeking re-election to the European Parliament.

I wish that the right hon. Member for Swansea, West (Mr. Williams) had been at a seminar on regional policy which was held last week. Many right hon. and hon. Members and some leaders of industry attended it. I was delighted to hear some of the leaders of industry emphasise not so much job creation and various grants as infrastructure. In my part of the world it makes much more sense to put the lion's share of available money into good infrastructure. The House has heard much about the wretched A30 which is probably one of the biggest drawbacks to sensible industrial development in Cornwall. It would make much more sense to build a decent dual carriageway along the A30 than to spend the money on some form of industrial grant.

Photo of Eric Forth Eric Forth , Mid Worcestershire

Can my hon. Friend say how, in his words of praise for infrastructure and regional policy, he can possibly explain the lack of a proper road linking the west midlands to the east coast ports unless he argues that successive Governments have been so obsessed by peripheral regional policy that they have completely ignored the needs of a vital area in the heartland of England such as the west midlands?

Photo of Mr David Harris Mr David Harris , St Ives

My hon. Friend will argue his own cause if he catches your eye, Mr. Deputy Speaker. He mentioned the word "peripheral" which brings me neatly to my next point. Despite my hon. Friend's intervention, perhaps I might in all modesty commend to my hon. Friend the Minister a report which appeared before the European Parliament—I think that it is called the Harris report—and deals with the problems of peripheral maritime regions and islands. I read the White Paper with some care but, unlike the supporting blue document which has been supplied by the Department of Trade and Industry, it does not put sufficient emphasis on the difficulties which face some regions because of their remoteness. It is the problem of peripherality. I return to the question of that wretched road the A30. The tidy criteria which the Department of Transport has drawn up to decide whether a road should be built as a dual carriageway, a super single carriageway or a single carriageway do not put sufficient emphasis on remoteness or take it sufficiently into account.

Someone who travels from Penzance to London finds that it is the start and the end of that journey which are the killers, perhaps in more senses than one. Lorry drivers, tourists and the rest find it hard work. The fact that the distance is so great makes the case for the road being built to a decent standard. If firms in my constituency are to have a chance of survival, they must have good communications.

Rail links are also important. Unusually, I travelled from Truro yesterday. It took me three hours to get to Taunton, which is regarded as being almost in the far west by regional planners. It then took another two hours to get to London. It is not just a case of distance. The further one goes from London the more difficult the journey becomes. I beg Ministers to take account of that when considering the problems facing such regions.

The blue document rightly draws attention to the hope in some regions that modern communications —telecommunications—will help to overcome some of the problems. I welcome the interest that is being shown in what is known as the SWAN scheme—it is an enhanced telephone network for the south-west which I strongly hope will come about.

Photo of Barry Sheerman Barry Sheerman Shadow Spokesperson (Education and Employment)

The hon. Gentleman said that the Opposition welcome the massive commitment to public expenditure which he is urging on the House. We hope to see him in the Division Lobby with us several times in the future.

Photo of Mr David Harris Mr David Harris , St Ives

The hon. Gentleman should remember what I said at the beginning of my speech. I said that I wanted public expenditure to be used properly. The fault of many Opposition Members is that they want to spend public money irrespective of its effects. I want public money to be used well, not least under the Industry Acts and through the European regional development fund.

One aspect of the Bill which I welcome is the extension of help to some sectors of the service industry. However, the Government will face great problems about that, especially when deciding which service industries are to be included. They will have a major headache and my guess is that they will have to make rather arbitrary decisions. That will cause trouble because people in some service industries will say, "Why on earth did you include this one and leave ours out?" I have no hesitation in nominating my candidate for inclusion in such a scheme —the tourist industry. It amply meets the criteria that have been laid down.

I was glad to hear my hon. Friend the Minister say that he believes that the service industries which should be included are those that can attract jobs and not purely local custom. If I might be allowed to elaborate on what he said, he also said that they should be capable of earning foreign currency. I therefore have no hesitation in nominating the tourist industry and confidently expect that my hon. Friend the Minister will put it at the head of the list.

There is anxiety about what areas will be included in the assisted areas map. I am not ashamed to tell my hon. Friend that, whatever else he must do, he must ensure that the south-west assisted area retains its status.

Photo of Mr David Alton Mr David Alton , Liverpool Mossley Hill 6:38 pm, 7th February 1984

I shall not attempt to follow the hon. Member for St. Ives (Mr. Harris) too far down the A30. I was in the Chamber last week when my hon. Friend the Member for Truro (Mr. Penhaligon) raised that matter on the Adjournment. I concur with much that was said then and again today. Having visited the hon. Gentleman's constituency two years ago to speak at a meeting in Helston, I was much taken by what he said about unemployment in his constituency. Coming from an area such as Merseyside, where we have learnt to live with massive unemployment—there are areas where it can be as high as 50 per cent.—one forgets how high unemployment can be in parts of the country which are customarily regarded as prosperous and with which high unemployment is not associated.

Photo of Mr David Harris Mr David Harris , St Ives

I am grateful to the hon. Gentleman for his sympathetic comments. Perhaps I might point out that high unemployment has unfortunately always been a fact of life there, especially in winter.

Photo of Mr David Alton Mr David Alton , Liverpool Mossley Hill

I understand fully what the hon. Member said about the tourist industry in particular, and the Minister touched on service industries in opening the debate. To that part of the Bill I give a warm welcome, because it will help people in service industries.

It is unfortunate that two separate Bills—one dealing with the Co-operative Development Agency and one with regional grants—have been linked. They are unrelated measures. Parliamentary convenience and timetabling should not have been the criteria in drafting a Bill which is inevitably a hybrid. Many hon. Members will feel obliged to oppose parts of the Bill but they will do so reluctantly, knowing that other parts are advantageous and helpful.

Many hon. Members on the alliance Benches will have profound misgivings about the motives of the Government in bringing the Bill in now. We see the provisions relating to regional development grants as a cut dressed up as a rational review. I shall return to that subject later. I wish initially to refer to the Co-operative Development Agency. I am happy to follow the remarks of the hon. Member for Brent, South (Mr. Pavitt) who spoke eloquently about the role that co-operatives can play. He paid tribute to the work of the director of the CDA, Mr. George Jones, the chairman, Ralph Wolfe, and members of the board. I associate myself with those remarks.

Since the inception of the CDA in 1978, the number of industrial and service co-operatives has risen from 180 to 1,000 people. In 1978 my hon. Friend the Member for Colne Valley (Mr. Wainwright), during the agreement between the Liberal and Labour parties pressed for this measure to be put on the statute book, and we were happy at that time to offer support. We are pleased to know that some 10,000 people are now employed in service co-operatives. The number of inquiries to the CDA has risen this year to approximately 1,200 and next year is expected to rise to some 2,000. In that context we are pleased that £200,000 has been made available to the CDA over the next six years and that a guaranteed life has been given to the CDA. However, we do not believe that this sum will be adequate for the CDA to carry out its anticipated work increase. We welcome the extension of the powers of the CDA. We have long pressed for the right of the CDA to make grants and loans, particularly after the problems in Hartlepool of Cyclone Ltd. in 1982. We welcome clarification given on the training and trading role of CDA.

Nevertheless, we have some reservations. In some respects we think that the Bill does not go far enough. Our first reservation must be about the £200,000 budget. It is no secret that the CDA asked for more. I believe that initially it asked for £250,000. Nevertheless, the director of the CDA reckons that it would take some £400,000 for him to be able to discharge his responsibility and the duties of the CDA effectively. He would compare the funds given to the central body of the agricultural co-operative with the provision made for the CDA. The central body of the agricultural co-operative is to receive some £2 million this year alone. Agriculture covers approximately 2·5 per cent. of the working population, the farmers, in a highly protected sector. The target of the CDA in my view should be ten times that percentage, yet it is to receive only one tenth of the amount received by the agricultural co-operatives.

We see the co-operatives as having great scope for expansion, although we accept also that they are not a panacea and that by themselves they cannot cure Britain's unemployment problem overnight. As a significant statistic in terms of the country's economic activity, co-operatives still remain way below their potential. In Italy, for example, co-operatives form some 7 per cent. of their economic activity and in France some 5 per cent., yet in this country they are not even a measurable statistic. We believe that the target should be to employ 100,000 people in the co-operative sector. Thus we would seek more realistic funding; but we have other reservations.

Clause 3 empowers the Secretary of State by order to wind up the agency. This would require the Secretary of State to bring in an order and the House would probably be allowed a one-and-a-half hour debate, but hon. Members know that there are sufficient votes on the Government benches to make such a debate semantic. Indeed, tradition has it that the upper House would automatically pass such an order without reservation. We on the Opposition benches would have no chance to amend such an order and we therefore believe that this is an unnecessary draconian power.

Three years ago there was a precedent to which I alluded earlier. When the Government decided in 1981 that they wanted to change the way in which the CDA was developing, they decided to change the board. We think that would be a better way to proceed. That is why we hope that the Minister will remove this draconian power in Committee and will accept that we are understandably suspicious of the Government's reasons for including the clause.

I deal next with the other reservations. While we do not favour the over-provision of soft money because it can lead to soft habits as in the case of Meriden, we think that money should be available for the stimulation of more co-operatives. In many ways, Meriden—£16 million-worth of Bennery — discredited the concept of co-operatives. While we on these Benches see that co-operatives have a role to play we do not believe that money should be pumped into sunset industries as a way of trying to bail them out. We should like to see more money available for feasibility studies so that the CDA has the power to examine an enterprise to establish whether it can be turned into a co-operative. The money for the feasibility study could then be written off if that should prove necessary. That provision is not made in the Bill and we shall accordingly seek to include those powers in Committee. We believe that this would be a cost-effective way of proceeding.

Similarly, we would prefer the development of a loan guarantee scheme to support commercial investment in employee-owned enterprises. In the long term, co-operatives might join together to form banks on the Mondragon model, to which the hon. member for Brent, South referred earlier, and which my noble Friend Lord Grimond has consistently advocated in this Chamber and now in another place. We should also like co-operatives to be relieved of some of the corporation tax they currently pay during a start-up period. The Government might investigate offering anyone who wishes to establish a co-operative and who has become unemployed the chance of claiming six months' unemployment benefit in advance, and granting some benefit entitlement in the early months of the establishment of the co-operative. Those are examples of the stimuli that we should like to see.

We think that the Under-Secretary of State does not go far enough when he says: What I am doing is giving the Agency the power in general terms to make grants or loans, but I am not providing the finance for it. I would not rule out the possibility that commercial organisations and charitable institutions in the private sector may provide funds. If member states so agree, then the European Social Fund of the EC may also provide funds. But I must emphasize that no such funds are presently available nor are there any present proposals.

We believe that there should be proposals. If it is good enough for charities to provide money, if it is proper for private enterprise to provide money and if it is right that public money from the European Community should be used to stimulate co-operatives, then why is it not right for Her Majesty's Government to make some contribution?

I refer the Minister to an article that appeared in The Guardian in February this year dealing with the Instant Muscle co-operative established by a group of young unemployed people. In the article Polly Toynbee referred to the occasion when Mr. Peter Raynes went to see the Minister to try to get encouragement for the establishment of Instant Muscle co-operatives to help young unemployed people. She said that the Minister was most enthusiastic—but he offered no money to help. The article continues: Considering the Minister's concern for getting his gate mended, Peter Raynes had hoped for something more. He was shunted along to a junior Minister who also expressed enthusiasm, but passed him over to the Manpower Services Commission. Last week the MSC sent a local officer to see him, with no authority whatever for funding. That seems to be the story of the lives of so many co-operatives, and although the principle of co-operatives seems to be subscribed to by the Government and all parties in the House, the funding and tangible help is inadequate. However, we recognise that in this measure the Government have gone some way towards recognising our objectives.

Co-operatives in their own right are worth encouraging, and I particularly draw attention to some words used by Mr. George Jones — indeed, for the reasons that he expressed, we Liberals support co-operatives. He said: The quality of goods manufactured is very high … A pride of ownership seems to come through as the worker realises that bad goods drive away customers … People are sitting on top of a profit and loss account, so they get a rapid education in the realities of business that you cannot get with a traditional workforce. It is quality—the quality of the work and the personal commitment— which impressed Mr. Jones, and those qualities impress us. If people are not convinced by me as a Liberal or by the director of the CDA, I refer them to some words that were uttered in 1974: It is time that we on the Government side did some bridge building by acknowledging that capitalism, if it is to survive, must undergo some major changes … An equity holding in the company will have to be granted as of right to the employees as well as to the investors, and I believe that the employees have a right to representation on the board and at the annual general meeting of the company. How could I disagree with that? At that time it was a mere Bank Bencher who made those remarks, but he is now the Secretary of State for Trade and Industry and it is right that he should be reminded of what he said on that occasion. He added: The gulf between managers, employees and owners has to be closed … Many of my hon. Friends will probably think that I have taken leave of my Right-wing senses and gone Lefty-trendy. But it is long overdue for us to listen to what we do not want to hear instead of perpetually shouting at each other what we think our electors might this week think they want to hear." — [Official Report, 21 January 1974; Vol. 867, c. 1278–9.] He said that in a debate entitled "The Divided Nation".

I do not believe that the nation has ever been so greatly divided as it is today. We Liberals see the co-operative movement, in housing and worker co-operatives, as a way of bringing the people together. We see it as a way of sharing power, wealth and work. Indeed, it was Bacon who observed 400 years ago that wealth was rather like manure: the more evenly it is spread, the more effective it becomes. The even distribution of wealth and work is a principle to which we Liberals subscribe.

I cannot manage even a limited welcome for the second part of the Bill, and my hon. Friend the Member for Stockton, South (Mr. Wrigglesworth) will, if he has an opportunity to take part in the debate, elaborate on our opposition to that. We believe that that part of the Bill is premature. Consultation, following the publication of the White Paper, is still in progress and it makes a travesty and mockery of that consultation for the Government to proceed at this time, without finding out the results of the consultation process.

Nobody seems clear what regional development grant is supposed to achieve these days. One hears dispute about it among Conservative Members, and that lack of clarity is reflected throughout the Chamber and has come through clearly in the debate. The Bill will probably only add to the confusion. For those of us who believe that it is right to inject resources into parts of the regions and who believe in a robust regional policy, find it difficult to support a measure which will probably reduce the funds available by up to £200 million. Therefore we see the Bill as a velvet glove concealing an iron fist.

We accept the need to re-examine the role of regional development grants and assisted areas. Indeed, I commend to the House the work of Fothergill and Gudgin who, in their book, "Unequal Growth" in 1982, wrote: There is evidence that regional policy is now having a much smaller impact as national economic conditions become less favourable and as regional policy itself is pursued less vigorously. Regional policy is necessary because of the large imbalances in the rate of unemployment which now exists. Certain areas suffer rates of unemployment which are many times that of the national average. It is facile to pretend that general economic regeneration can counteract such concentrations. Indeed, the Government admit in their White Paper on regional industrial development that labour mobility, for instance, will not be adequate to smooth out the differences.

That echoes the words of the right hon. Member for Swansea, West (Mr. Williams) who said that it was crazy to expect people to travel from one end of the country to the other in search of work, creating a nation of Dick Whittingtons. The streets of London are not paved with jobs. A genuine regional policy is required to remedy the gross disparities that exist between one part of the country and another.

Unemployment is avoidable in some parts of the country—for example, in those places where it is only perhaps 4 per cent. Unemployment in my part of the world is running at over 45 per cent. in some parts, with more than 16,000 people registered as unemployed and only 150 jobs available at the local job centre. At present, we have a crude system of work sharing. It is called unemployment: 88 per cent. of the people work and 12 per cent. do not. Surely we can devise ways to share the work — as well as sharing the wealth — of the nation more effectively.

The problem with RDGs today is that they subsidise plant and capital investment automatically. Although such investment in up-to-date plant is clearly necessary if we are to remain competitive, it entails the possibility of very large grants being made to capital-intensive industries—the chemical industry is a good example of this—which provide few jobs once the building works have been finished. As it fails to provide jobs, it fails to achieve the purpose of RDGs.

The Bill enshrines the principle that RDGs should be more closely aimed at providing jobs, and Liberals share that belief. We also welcome the inclusion of service industries, as I said earlier, in the remit of RDGs. This is an increasingly important area of the economy and is especially appropriate in areas such as my own in Liverpool, where the establishment of a strong service sector around the port will be most beneficial.

As I said, we are seriously worried about the explanatory and financial memorandum to the Bill, which suggests that expenditure will be cut by between £150 million and £200 million per annum. The Government are clearly using the excuse of restructuring aid to cut public expenditure. That cannot be right, for we are already suffering from far too little public investment in industrial prosperity. Paring it further will only add thousands to the scrap heap of the dole queue.

Similarly, there is the question of the assisted areas map. Again, we welcome the provisions for greater fine tuning, as unemployment can vary drastically within small areas. In one part of my constituency, unemployment is only 8 or 9 per cent., which, in relative terms, is a small amount compared with the 45 or 50 per cent. unemployment rate in other parts of the constituency and other parts of the city.

Whereas there might not be an argument for granting assisted area status to a whole city, there might be specific areas which need extra aid, which is why we welcome some of the provisions in the Bill. However, in reminding the Minister that enterprise zones were supposed to have a similar effect, I must sound a warning note because the use of such provisions can sometimes simply result in a shift of employment — and, hence, a shift in unemployment — from one area to another. Around enterprise zones the experience has been that people have simply moved in to an enterprise zone from outside, creating a desert around a small oasis.

We wonder whether Whitehall is best suited to decide exactly what aid is needed, and where. Surely, this is a need for regional government. [Interruption.] Conservative Members laugh at that. We may not yet have convinced them to accept our way of thinking, but hope springs eternal.

There is also the issue of the exclusion of "simple replacement" from the Bill. Will the Minister explain the difference between modernisation, which will now be available for special aid, and the replacement of machinery, which, we are told, will not? Surely any industrialist or business many expecting to replace machinery will say, "This is modernisation." When will modernisation not be simple replacement?

I question the breadth of the discretion which the Bill give to the Secretary of State and the vast number of gaps that the Bill leaves. We believe that the scheme could become a lottery and another source of patronage for the Government. We see the measure as a curate's egg, and for that reason my hon. Friends and I will support the official Opposition in the Lobby in voting against Second Reading.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West 6:59 pm, 7th February 1984

I hope that I shall be forgiven by the hon. Member for Liverpool, Mossley Hill (Mr. Alton) if I do not follow him in his observations about the first part of the Bill. I agree that it is strange that two entirely separate subjects should be dealt with in one Bill. It is unfortunate from the Government's point of view, because when they published the White Paper on 13 December the House was crowded with those who had thought long and hard about the implications for regional policy and wished to give their ideas of what the Government should do.

On 13 December the Secretary of State said that he hoped that by publishing the White Paper he would stimulate debate about regional policy. The effect of dealing with the two subjects in one Bill is to stifle debate. A high proportion of hon. Members thought that the Bill was principally about co-operative agencies, which may be an extremely important subject but not one of wide appeal. If it had been plain that this was an opportunity for a more general debate upon regional policy, the Government would have had further reflections from hon. Members about the trend of regional policy. Whether or not the bringing together in one Bill of two disparate subjects is good procedure, it is rotten politics and has led to a less vibrant debate than might have taken place had the subjects been properly separated.

My constituents in Wolverhampton have long held one clear view about regional policy: they have noted its vast expense and the distortions that it has effected upon the west midlands. Even when the west midlands was rich and booming, west midlanders doubted very much whether the regional policy, which so sadly became a bipartisan policy, would have the effect that the great politicians from all parties had ascribed to it over the years. I am not a cynical man, but there are some cynical people in the west midlands who say that one should criticise a policy when it is supported by both Front Benches. This is a good principle.

My constituents now note that those areas for which the regional policy was particularly designed, such as Scotland, do not seem to have benefited to the extent that Mr. Macmillan hoped they might when places such as Linwood were set up. Large areas around Glasgow are no richer or happier because of the years of regional policy.

Photo of Mr David Harris Mr David Harris , St Ives

Is my hon. Friend making out a case to persuade the Government not to give regional assisted status to the west midlands? Is that what he is saying?

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

No. This may be wrong because it is the consensus view in the west midlands, but my constituents have a strong first preference: that the regional policy should be scrapped. If that cannot be achieved, they have to consider the second best solution.

I hope I shall not embarrass my hon. Friend the Minister of State when I remind him that in the period 1974–79 he was one of those who helped my right hon. Friend, now the Secretary of State for Education and Science, to put forward a new and distinctively Tory policy about regional aid which was at that time sharply different from the policy that had been advocated between 1972 and 1974. With some sadness we in the west midlands noted that the policy had been changed when the first statement was made in July 1979 by my right hon. Friend, now the Secretary of State for Education and Science. However, we said, "It will all come right in the second term. These are transitional concessions which every great statesman and great Governments must make. The new Jerusalem will come and we shall see a major reduction in regional policy if the Conservatives are fortunate enough to have a second term."

We have been disappointed. Many of my constituents would understand the evident embarrassment with which my hon. Friend advocated the Bill. A large proportion of his arguments were directed against the whole principle of regional policy. Indeed, they were very much in keeping with what my right hon. Friend the Secretary of State for Trade and Industry said on 13 December when he emphasised: Although the economic case for regional industrial policy today is not clear cut, and the economic costs of such policies must be set against the benefits, there remains a social case for regional industrial policy to reduce regional imbalances in employment opportunities."—[Official Report, 13 December 1983; Vol. 50, c. 847.] Therefore, the Conservative party is abandoning the argument that economic good is done by these distorting policies. The Government are advocating the regional policy for understandable social and political reasons. In the west midlands we still retain the hope that the expense and the distortion consequent upon regional policy will be reduced. Therefore, we give perhaps one cheer to the Bill.

There may be—I say only "may"—some reduction in expenditure as a consequence of the Bill. The more one considers page iv of the explanatory and financial memorandum to the Bill, the more obvious it is that the right hon. Member for Swansea, West (Mr. Williams) was exaggerating when he spoke of the reduction in expenditure that would be certain to come from the effects of the Bill. The financial effect is dealt with in one important sentence which covers the whole paragraph: The eventual financial effect of the Bill cannot be specified at this stage. There will be some reduction because grants will be related to the jobs that are at any rate temporarily created. The Government are doing something to reduce the grossest anomalies by which large capital-intensive firms could set up plants in development areas. That is very much to be welcomed. We must also welcome the fact that grants will no longer be available for replacement investment. However, by the standards of Tory philosophy between 1974 and 1979, substantial consessions have been made. Regional status will be extended to the west midlands and a clear promise has been made to include the service sector within that advantage. The Bill states that reduction in expenditure may be offset to some extent by an increase in take up of selective financial assistance.

A further interesting concession has been made to Nissan. The House may recollect that I asked my hon. Friend about transitional arrangements. It is fascinating to note the skill with which the Government have attracted the Nissan project. Paragraph 47 of the White Paper makes it plain that transitional arrangements will apply also to projects for which an application has already been made, or is made by 31 January. Nissan got in by one day. The project was announced to the House on 1 February. Obviously, the transitional arrangements will be jolly useful to Nissan. If it enters into the second phase of its project, the transitional arrangements will be worth about £101 million. It will use taxpayers' money to compete with another subsidised organisation—British Leyland. No doubt when BL finds that it is competing against a subsidised newcomer, it will ask for additional money — of course, only on a transitional basis. There have been substantial concessions even in the possible reduction in public expenditure on regional policy. I hope that my constituents will not be entirely disappointed.

Paragraph 34 of the White Paper makes it clear that the full financial effects of future regional policy will be determined partly by the geographical area and partly by the rate of grant. It states: The Government welcome views on the rates of grant. I wish, diffidently, to offer my view, which is that the rates of grant should be as low as possible. I accept that it is not possible to abolish regional policy, for political reasons. I understand my hon. Friend's embarrassment. I bet that when he read the Conservative manifesto he was nearly as angry as I was when he saw that we had given yet another promise to continue regional policy in more or less its present form.

There is only one way in which the distortions can be reduced, and that is substantially to lower the rates of grant. If it has to exist at all, it must be spread thinly. In that way, the great damage may be reduced. Otherwise, the distorting effects previously felt in the west midlands will be felt lower down the country. Eventually, there will be a cry from the south-east for the extension of regional advantages to that area. It is a merry-go-round from which no one can get off.

If the Government are firm, it may be possible to reduce the extremely damaging effect of the policy by substantially reducing the rates of grant. That is the most important point that I wish to make.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West 7:15 pm, 7th February 1984

The hon. Member for Wolverhampton, South-West (Mr. Budgen) will not be surprised if I do not agree with a great deal of what he says. However, there is a measure of agreement between us that we really have before us two Bills that should have been introduced separately. During the time available in Committee and elsewhere, we cannot deal adequately with the exigencies and difficulties of regional policy, although we shall have an opportunity to reach fairly wide all-party agreement on the proposals for the Co-operative Development Agency.

I wish immediately to declare an interest. I am a Co-operative-sponsored Member of Parliament. For a long time I chaired a commission on employment set up by the Co-operative party to look at the operations of industrial and service co-operatives and to examine in detail the work of the Co-operative Development Agency.

While we have all-party agreement on the operation and usefulness of industrial and service co-operatives, there appears to be a lack of understanding in the community about the effectiveness of the organisations in industry and commerce. It is conceded that there is an evangelical role — I say that with no disrespect to the Co-operative Development Agency—that must be subvented if we are to have co-operative enterprises.

One of the historical circumstances colouring the atmosphere relates to the established co-operative movement. The battle was fought and won by the Webbs in the 1890s. Beatrice WebbBeatrice Potter as she then was— persuaded the co-operative movement that the most effective way forward was the retail movement, so the industrial and service sectors lost a battle.

The other area in which the atmosphere is coloured relates to trade unions. We must be frank about that. The trade union movement needs convincing that there is an effective role for co-operative enterprise in Britain. The Opposition do not do themselves justice if they run away from the dilemma. Many trade unions, with some validity, view co-operative enterprises from the standpoint that individuals who participate put in sweat equity. That sweat equity may undermine established working conditions. Education is needed in that area.

Hon. Members have paid tribute to members of the Co-operative Development Agency, such as Mr. Jones, and it was well merited. I wish to pay tribute to Mr. George Wright, the former secretary of the Welsh TUC, who well understood the effectiveness in Wales and elsewhere of co-operative enterprises.

Education must play a role in the Co-operative Development Agency. The Bill concedes that the CDA should undertake education and training activities. When examining the operations of the co-operatives, we found that if individuals wanted to start a co-operative and consulted experts in the accountancy and legal professions, they were steered—rightly or wrongly—towards creating a small business. The legal and accountancy professions do not really understand the operation of the Industrial and Provident Societies Act 1975 and other suitable legislation for co-operatives. Therefore, the CDA has a role to play.

I join other Opposition Members in criticising some of the powers to be taken by Ministers. I understand why a Minister would want to have powers to dissolve an agency, but it is not the correct approach to say on the one hand, "We are going to assist you," but at the same time to say, "We shall hang a sword of Damocles over your head." We shall seek to change that in Committee. The Government hold differing views about underpinning agricultural co-operatives, and in relation to industrial and service co-operatives.

I am particularly concerned with what has been happening in Scotland. The role of Mr. Cairns-Campbell and the Scottish co-operative development committee in assisting the Scottish Development Agency is a potent force, giving people the impression that, while they are being thrown back on their own resources by the Government's dreadful economic policies, they will have an opportunity to do things for themselves. I also pay tribute to the work of the Highlands and Islands Development Board in helping co-operatives to assist developments in its area.

Having said that, I do not expect that co-operatives of the type we are talking about will be the great answer to unemployment. It is a marginal consideration. When I deal with regional policy, I shall say why that is so. The hon. Member for Liverpool, Mossley Hill (Mr. Alton) said that it is an important qualitative consideration, and can assist in improving industrial relations and the general atmosphere for individuals to own and control their own enterprise. Nor do they outweigh the great contribution made by the "traditional" co-operative movement to employment and the enhancement of the quality of life. I know that there are many difficulties in the traditional co-operative movement, but they are not relevant to our considerations.

Within the orbit of the Co-operative Development Agency, the push and knowledge of the Co-operative Bank, especially the help given by Mr. Lee, has been of considerable assistance to the Department in developing schemes to assist small businesses generally. The Co-operative Bank and its management have played an indispensable role in developing co-operatives, far in excess of usual banking duties. We all wish the co-operatives success, but the touchstone of the Bill's effectiveness will be how far they advance in future.

I see that the hon. Member for Darlington (Mr. Fallon) has left the Chamber, so it may be wrong to refer to him, but he and the Under-Secretary of State for Scotland, who is gracing the Benches, were graduates of St. Andrews university. In the past, largesse from the Exchequer enabled universities, to be set up and that was a form of regional policy. Without St. Andrews university and, perhaps, the golf course, there would be no St. Andrews, which would be a great pity. Oxford and Cambridge universities came along later than St. Andrews university.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

I am delighted to give way to another Scottish Member.

Photo of Eric Forth Eric Forth , Mid Worcestershire

I am grateful to the hon. Gentleman for giving way. Is he suggesting that regional policy goes back so far that it played a part in setting up an institution such as St. Andrew's university?

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

If the hon. Gentleman will bear with me, it is nonsense to suggest that the market will solve all the problems, as the hon. Member for Wolverhampton, South-West suggested. There has always been interference in the market. The great difficulty between the wars was to make successive Governments recognise that the free market system was not perfect. My goodness—how the nation suffered from the misbegotten monetary ideas of the 1920s and 1930s, of returning to the gold standard. Those people said, "We shall face the dollar at $4·866 to the pound." What a crisis of confidence that was. That is what the market dictated. The people of the nation were to suffer because of the market.

However, all the time there have been some people with a little more foresight, not just Labour men but Liberal men such as Keynes, who said that the market did not work. They said that we must interfere with it because they could not bear the terrible unemployment. In the 1930s, there was a succession of commissions. In the 1940s, the Barlow commission considered the distribution of the industrial population. It was said that the growth of the metropolis in the south-east was wrong and had to be halted. That is the touchstone of regional policy.

The Government, by the Bill, the White Paper and their statement on 13 December, are saying that they want to go back to a market situation, if that is possible. The hon. Member for Wolverhampton, South-West let the cat out of the bag. I hope that I am not misinterpreting him. He said, "We would end the regional policy if we could except for political considerations." I discount the view expressed in the statement on 13 December that there was a social case for the regional policy. The real considerations are politics and the fact is that there would be pressure from both sides of the House if the policy were completely abandoned.

The Government are moving slowly by salami tactics of a thousand cuts. That is being done against the background of Europe. The real writers of the policy are the European Commission. The Minister said that we must satisfy the European Commission. On what grounds? Perhaps on narrow grounds, that we shall not give grants for replacement. However, we are not sure about that. We do not know what the replacement of machinery and modernisation mean. Because we are unsure, we are holding back.

If we could be sure that everybody else's regional policy in Europe was transparent, perhaps there would be grounds for going along in that direction. However, the French farmers are supporting the common agricultural policy and undertaking "illegal" actions. The CAP is political. No economist could justify it on economic grounds. It is justified on political and social grounds. The French are willing to take such action in the Community, but our supine Government run away from the implication that we are a peripheral area. The hon. Member for St. Ives (Mr. Harris), who is not here, spoke about the dangers of peripheral areas. Scotland is such an area.

The Minister must take cognisance of what has happened in Scotland. An authority on regional policy is Dr. Gavin McCrone. I shall not quote someone who cannot reply in the Chamber, but I shall take bets, although I am not a betting man. I bet only on certainties such as Glasgow Rangers at the moment. It does very well. I shall take a bet that Dr. Gavin McCrone would not endorse the view of regional policy expressed in the White Paper and the Bill. The reason why Scotland has stood up better under the impact of the present recession is—

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

I am delighted that the hon. Gentleman has come back. The hon. Gentleman would say that he put the oil there. It was not just an act of God but an act of the hon. Gentleman. Mr. Benn, who I hope will return to the House shortly, might say that he put it there.

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Stockton South

The hon. Gentleman has changed.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

Well, we all change.

Without going into all the reasons why Scotland has held up better, one is the fact that successive Governments —let us be frank about it—have tilted the balance, in terms of IDCs, which have been abandoned, regional development grants, assisted area designation and so on, in favour of Scotland and the north-east. Scotland has gained enormous benefit from that in terms of infrastructure and capital-assisted projects. Oil too has tilted the economic balance of Scotland, but that is another argument.

What we are seeing now is that, because of Government policy, certain places that we thought were good and viable and likely to be successful are in danger. I speak of my own constituency. Until a week or so ago I thought that the Longarret project there would be in no danger for the next 15 to 20 years, but because of the Government's economic activity, the shortfall in demand and a reduction in coal burn we shall probably lose thousands of mining jobs in the area. If it were a question of considering only the cold statistics, the Government might be misguidedly persuaded to remove the current development area status from certain areas of Fife. I hope that that will not be the case. We are extremely worried about the present situation and about the fact that the Government may look at it coldly, because in this area industry is changing rapidly.

The Government must come clean this evening on Scotland. They must say what will happen. As my right hon. Friend the Member for Swansea, West (Mr. Williams) said, there will be a considerable loss in regional development grants. If that is transplanted into loss of capital investment, it will undermine certain important aspects of the Scottish economy.

In addition, if the balance is to be tilted in favour of the south-east, the midlands and so on, the existing imbalance of population distribution in this country will be exacerbated. The population of Scotland has hardly increased over this century because of net migration. Regional policy has a part to play in influencing the quality of life. We Scots come to London and are utterly amazed at what the people of London put up with in terms of travel. Many of them must spend anything from one and a half to three hours in travelling. If one removes the tilting of the past 20 or 30 years one then reduces the social benefits of the present distribution of population and undermines the quality of people's lives.

The Government's privatisation measures again tilt the balance. Communications — telephones and modern electronic circuitry—in this century are just as important as were the canals and railways in the 17th, 18th and 19th centuries, but if we privatise British Telecom and it is drawn by profit margins, the chances are that Scotland may become a peripheral region for that type of development.

While I welcome the parts of the Bill that deal with the Co-operative Development Agency and will seek to probe the Government's views here, I have no welcome whatsoever for the thinking underlying the regional policy aspects. The Minister today gave an outline of his thoughts and told the hon. Member for Stockton, South (Mr. Wrigglesworth) that the Government's mind was still open and that submissions could be received up to May. The suspicion in the House must be that the Government have largely made up their mind. I must ask whether some of the concepts and ideas enunciated from the Dispatch Box were given to individuals or bodies, either local authorities, the CBI or the STUC, who might want to make submissions to the Government. There was a considerable gloss in the exposition today not only of the Bill but of the White Paper. What the Minister is really doing, more than halfway through the consultation period—it started on 13 December and goes on until May—is saying, "This is our thinking now." That is unfair. The Minister ought either to withdraw the Bill or to extend the consultation period because the thinking of the Government is only now being disclosed, as people will find when they read Hansard.

The Government's thinking will be unwelcome because, despite the views of the monetarists on the Government side of the House, this country still needs an effective regional policy, one that is related to the needs of the people here, not one dictated by the European Commission.

Photo of Mr Michael Hirst Mr Michael Hirst , Strathkelvin and Bearsden 7:35 pm, 7th February 1984

I hesitate to introduce a rather discordant note into the debate but it has not slipped my notice, nor probably that of the House—and in saying this I compliment the hon. Member for Dunfermline, West (Mr. Douglas)—that for most of this debate we have had one representative from the Scottish Labour group in the Chamber. I make this point because Scotland is the largest beneficiary of regional aid. Week by week my hon. Friends, both here and in Scotland, have to listen to the rantings and ravings of the Labour party, protesting its support for Scotland and talking about unemployment in Scotland, yet when we have a debate like this it is almost an insult that, of the 36 Members not involved in considering the Rating and Valuation (Amendment) (Scotland) Bill, 35 have chosen not to be here. I compliment the hon. Member for Dunfermline, West but the absence of his colleagues has not passed unremarked.

Photo of Barry Sheerman Barry Sheerman Shadow Spokesperson (Education and Employment)

We have heard nothing but this kind of comment in this debate, based on total untruths. It is true to say that, for most of the time, there have been more Scottish Members on the Opposition Benches than on the Government Benches.

Photo of Mr Michael Hirst Mr Michael Hirst , Strathkelvin and Bearsden

Perhaps I can put the hon. Member in the picture. All but one of my Back-Bench colleagues have been spending time in Committee. I have been here as a representative. I have listened to the debate since it began and I have had a unique opportunity to observe the presence of my colleagues from north of the border.

The absence of hon. Members from the Opposition Benches is both significant and important because Scotland is an area where we have a substantial vested interest in the current policy on regional aid. There has been, by and large, a bipartisan approach to regional aid in the past 20 or 30 years and, as my right hon. Friend the Secretary of State for Scotland said in answer to a recent question, probably 100,000 jobs have been created as a result of regional policy. That was the Secretary of State's estimate of the net gain in jobs.

The recent failures of factories induced to come to Scotland under the regional aid policy should not be allowed to overshadow the broad success of the policy. I need to say that because my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) spoke of Linwood which, I am afraid, history will record as one of the disasters of regional aid. Yet without that aid Scotland would almost certainly have been unable to enjoy the electronics industry, attracted not from elsewhere in the United Kingdom but in a competitive international market. It was attracted to Scotland not just because of the infrastructure, nor because of the pool of talent in the labour market, but primarily because of the money that Scottish Office Ministers have been able to use to bring jobs to Scotland. If they do that, they have my wholehearted support.

It should not go unrecorded that the Scottish Development Agency and the Highlands and Islands Development Board—two quangos which Members on the Government Benches, including myself, viewed with considerable initial suspicion — have done a very valuable job in improving infrastructure in Scotland, thus making it more attractive for incoming industry.

I know, too, that a small industrial estate in my constituency, which I had the pleasure of opening some weeks ago, was established as a result of the Scottish Development Agency's initiative. I saw no other source of provision for these factories coming forward as a competitor to the SDA. I do not intend to say anything about the Co-operative Development Agency because I must confess that when I came to the House this afternoon I was not knowledgeable about it. Having heard so much from Opposition Members about the agency, I believe that it is a relatively minor matter when set against total regional aid and can pass without further comment. I propose merely to make a few comments about regional development grant.

Photo of Mr Michael Hirst Mr Michael Hirst , Strathkelvin and Bearsden

No, it is not arrogance. I respect the right of other hon. Members to make their contributions and, accordingly, I shall be brief. I should like to know the quantum of assistance that will be available under regional development grant and selective financial assistance. I, too, have read the financial memorandum and I note that there is likely to be a significant reduction inplanned expenditure on RDG. I do not disagree with the causes which give rise to that planned reduction. I have read that the reduction may be offset to some extent by an increase in the take-up of selective financial assistance, and I hope that that will be so.

I have had the chance to examine at close quarters the effect of the activities of the Department of Trade and Industry in Scotland. I must place on record my admiration of its work. I have been professionally involved with the efforts that it has made to attract industry to Scotland and I know that it has an excellent record.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

Is my hon. Friend in favour of selective assistance, or is he in favour of the political decision that has been taken to put extra money in the way of Scottish industry?

Photo of Mr Michael Hirst Mr Michael Hirst , Strathkelvin and Bearsden

I am in favour of selective assistance because historically and contemporaneously selective financial assistance is the tool by which our friends, the Ministers at the Scottish Office, are able to enter the international market place and bring factories to Scotland. In so doing, they bring jobs. If the rates of unemployment in certain parts of west central Scotland existed in Wolverhampton, South-West I think that my hon. Friend might be singing the same song as myself.

I seek an assurance from my hon. Friend the Minister of State that, irrespective of the sums that are made available under RDG and selective financial assistance, Scotland's proportion will not be reduced. When my right hon. Friend the Secretary of State for Trade and Industry introduced the White Paper, I felt that the replacement of the indiscriminate system of RDG was a great step forward. I welcomed the introduction of a system which would eliminate the flat-rate grant if a person happened to have qualifying premises in an area which received assistance. I welcome the Government's intention to introduce more selective assistance.

Regional development grant is known in certain business circles in Scotland as Santa Claus money. It is money which has nothing to do with the project but it is there for the taking and is the cream on the cake. That is not a prudent use of resources. The effect of such subsidies, and the other forms of assistance which have sometimes been used, has been, unfortunately, to bring marginal enterprise to areas of high unemployment. These undertakings last for a year or two and when the chill winds of recession come they close down and collapse like a pack of cards. I can see the faults in that system and consequently I do not cast doubt upon the validity of a more selective system that will help to monitor at an earlier stage the enterprises which are worth supporting, which have a viable presence and, we hope, a more successful future.

I welcome the job creation criteria. For far too long I have seen in a professional capacity companies receive large slabs of money merely for great capital expenditure projects. I believe in the criteria and the abatement powers which accompany them. They are long overdue and most welcome. I see that the hon. Member for Dunfermline, East (Mr. Brown) is in his place. Mossmorran is in his constituency, and he and I know that the cost per job at Mossmorran is astronomical. I do not suggest that the Government were wrong to provide assistance for the project, for I believe that it would probably have been implemented in any event. In Garnock valley, where Roche Products has set up a factory, I believe that the company is receiving £85,000 per job. I find that hard to justify. In welcoming what the Government propose to do, I appeal to my hon. Friend the Minister of State to ensure that the threshold of the cost per job created will be a good deal lower than £85,000.

Photo of Gordon Brown Gordon Brown , Dunfermline East

Does the hon. Gentleman recognise that with the present level of regional assistance 1,099 companies have closed in Scotland since 1979 under the administration of a Conservative Government? If the level of regional aid is cut, as he is agreeing to, how many more companies will be lost and how many more jobs will go?

Photo of Mr Michael Hirst Mr Michael Hirst , Strathkelvin and Bearsden

The hon. Gentleman is confusing many things. The first tide of business failures in Scotland was the direct result of the inflation which the Labour Government had inspired. Although the quantum of regional assistance will be less, smaller projects will not necessarily be denied the assistance that they need to succeed. It cannot be right that Sullom Voe should receive tens of millions of pounds in the form of regional development grant when the development was to take place anyway. That is what I call Santa Claus money, and that, to my mind, is a waste of resources.

I seek some clarification from my hon. Friend the Minister of State of the criteria for eligibility. I have read, for example, that expenditure on creating new and additional productive capacity should qualify. However, I have yet to find a business which replaced the asset that it was getting rid of with a like asset. It is traditional in engineering companies to get rid of automatic lathes and to introduce a numerically controlled computer tool. The difference in cost is obviously substantial but there is a modernising element. Productive capacity is certainly greater. Will the enterprise that incurs that capital expenditure receive grant if all the other criteria are satisfied?

My hon. Friend the Member for Darlington (Mr. Fallon) talked about businesses which require to modernise and which, having done so, produce no net increase in jobs. I have had recent experience of a company which was obliged to incur major capital expenditure and which, at the end of the day, had fewer employees. However, if it had not taken that step it would have been uncompetitive. It would have lost its markets and it would have closed. I commend the Government's intention to make job creation part of the criteria for eligibility, but I should like them to provide, in certain circumstances, for firms which need to protect their trade, to modernise or to increase productive capacity, and which end up with fewer employees.

If I have read the explanatory memorandum properly, I believe that there will be powers in such circumstances to provide assistance, but I shall be grateful for confirmation of that. It is important that as much flexibility as possible should be retained.

I make two special pleas to the Minister which are based on my experience of signing hundreds of regional development grant applications. I may be unique in the House in having had that experience. I would not be so impertinent as to ask whether anyone on the Front Bench had signed or even seen a regional development grant application, but I can say that it is a fertile source of income for accountants in Scotland.

I ask the Department of Trade and Industry whether it would be prepared to issue a booklet on the criteria for eligibility. I note that the present booklet on RDGs is a substantial one. Inevitably, the new system will become more complex, and in my opinion it is essential that professional advisers and people who have to make decisions on inward investment, or existing companies that wish to expand, should have clear information from the Department on whether their project is likely to be eligible. Such a booklet is therefore necessary, and I hope that in the consultation process the Minister's Department will include the various professional bodies which have experience of such matters and which are at the sharp end of advising clients on new projects.

My second plea to the Minister involves a system of outline permission to be given to people who have a project. Frequently, entrepreneurs and their advisers go to the Industry Department in Scotland with projects that are not yet fully shaped. They go there to seek advice. At present, with fixed amounts of grants and not much discretion, unless it is with selective financial assistance, it is possible for the promoters of a project to get a quick answer. When there is more discretion—and I accept the need for more discretion — it would help if the Industry Department were able to give an outline indication of whether it viewed the project sympathetically. In fact, it is likely that the promoter will incur substantial financial costs and devote much management time to a project which, at the end of the day, may not get the assistance that it needs.

I am glad that the scope of activities is to be extended. I know of a number of worthwhile service organisations which have to compete in special circumstances. One was a photographic laboratory which did not qualify for assistance because of the nature of its work, and it was being deliberately undercut by a European competitor. I regretted very much that the Government were unable to help, because in my opinion it was a worthwhile project. Service industries often feel that they are a poor relation of manufacturing industries. So I was glad to hear the Minister today accept the importance of the service industries in helping to create wealth.

I accept the need for restraint on spending — if, indeed, the result of the Government's policy on regional aid will be overall savings—but I make a vigorous plea to the Government. In achieving their aim to get the common agricultural policy—that enormously wasteful policy of the European Community — brought under control, I believe that more funds will become available through the European social fund and the European regional development fund to carry out improvements to the infrastructure in Scotland and in many other parts of the United Kingdom. The most effective form of regional aid is not as a subsidy for individual jobs or companies, although I accept that that has to be done; it is to have a superior infrastructure which makes it worthwhile for inward investment. If the European Community has substantial sums of money, I declare an interest, in that I would be much more happy to see the money going, not to subsidise an inefficient French farmer, but to improve the infrastructure in my part of the world.

Photo of Barry Sheerman Barry Sheerman Shadow Spokesperson (Education and Employment) 7:54 pm, 7th February 1984

I shall concentrate on the co-operative development aspect of the Bill, although I shall give some attention—I would be wrong, as one who represents a west Yorkshire constituency, not to do so—to the regional policy aspect of the Bill.

I am a Co-operative-party-sponsored Member of Parliament, and I have had a long involvement with the creation of industrial co-operatives and co-operative development agencies. That background leads me to believe that the Bill leaves much to be desired. I accept that many of my colleagues on these Benches welcome with open arms—half-open arms—the first part of the Bill, but not the second. I understand, too, that anyone looking at the Bill from the outside might think that the Government were doing quite well for co-operatives. I beg to differ. In my view, co-operative development is one of the finest ways of developing our industrial base and skills that we need for the future. It is also a powerful way of stimulating industry, both manufacturing and service industry, in the regions. If we get the proportion right in the Bill, and instead of saving £200 million on regional development policy and giving £3 million to co-operative developments, we put it the other way round and shaved £3 million off regional development and gave £200 million to co-operatives, we should have a much better Bill and a better investment in the future of our industries.

When one considers the devastation that has occurred in our industrial towns and cities since the Conservative party came to power in May 1979, it is as though one was in a dream, considering a measure to put a mere £3 million into co-operatives. In my area of Yorkshire and Humberside, as my right hon. Friend the Member for Swansea, West (Mr. Williams) pointed out, there has been a 147 per cent. increase in unemployment. There has been a record number of bankruptcies. We have seen the west Yorkshire textile industry decimated by the Government's policies. All we have as a reaction to that, is a Bill which does almost nothing about regional policy and does precious little to help the co-operatives, which could be the great hope for industrial development and training in the next 20 to 30 years. As such, it is a pitiful response to 4 million unemployed and to the situation in my region of Yorkshire.

As one who has been active in setting up co-operative development agencies and co-operatives, I feel that the time is ripe to launch the co-operative idea on a greater scale. During the past difficult 10 years, the necessary skills and expertise in co-operative development have been hard learnt. They are difficult to learn. Ten years ago, the people who came into industrial co-operatives did not know what form of constitution those co-operatives should have, how the finances should be organised, or how to organise the basic democratic principle of co-operatives in industry. There was a healthy model in the retail co-operative movement, but there was little expertise and guidance for industrial co-operatives.

The past ten or fifteen years have been a time of hard-won experience, but throughout the country men and women have been determined to form a new basis for productive enterprise. It has been an exciting period. Those involved in industrial co-operatives have seen men and women taking control of their own lives and activities. I believe it to be an essential element of our future industrial activity that men and women should be given the opportunity to control their own environment.

In too many ways, modern industrial society has moved in the contrary direction. The worker and the consumer are becoming ciphers. The consumer is manipulated by the great chains of Sainsbury and Tesco and by the great industrial multinational corporations. Industrial co-operatives offer people an opportunity to regain control of their own lives. One thinks of the Rochdale pioneers of 140 years ago, and of those in Yorkshire who, at an even earlier date, decided to set up industrial co-operatives to gain control of their lives and escape from the control of Victorian capitalists. We have come full circle. Today, in a very different situation, a large body of men and women are again determined to control what happens to them.

The infrastructure of the co-operative movement has been laid down. It is ready for a dramatic take-off. A Government with imagination, enterprise, and a vision of the future could see that, from being a small gross employer, the co-operative movement could become a very large employer. Too often, people think of industrial co-operatives only in terms of small industrial units. It would be possible for many of our people to be liberated if existing nationalised corporations or private corporations were replaced by a better and more humane form of organisation that is controlled by those who work in it. A tremendous increase in the scope of the co-operatives could change the face of Britain in the next 20 years.

The two parts of the Bill are strange bedfellows. On the one hand, it refers to co-operatives that are based on a notion of indigenous investment — investment by the community in itself and for itself. On the other hand, in part II of the Bill, there is the notion of regional development that has traditionally been connected with inward investment from outside—funds from Europe, the international community or a kindly Westminster-Whitehall Government. As we have seen, such a regional development policy leaves much to be desired.

I have listened to many Conservative Members this evening. Nearly all of them have one thing in common. They all believe in regional development so long as it would help their own patch, sort out their own problems and give a boost to their own local or regional economy. Time after time today, I have heard Conservative Members — whether from remote Cornwall or from Scotland—saying that they do not believe in regional development or a regional industrial policy except where it favours their own area. We have witnessed an interesting tussle on the Conservative Benches between ideology and pragmatism.

The only ideology put forward on the Government Benches on regional policy today is that of the advocate of the market economy—the free economy. The hon. Member for Wolverhampton, South-West (Mr. Budgen) made a record number of interventions, in the Minister's speech and his colleagues' speeches as well as speeches from the Opposition Benches. The hon. Gentleman believes that there should be no regional development, there should be a free-for-all market economy, and the international market economy should be allowed to thrive and to have its way with us.

The Conservative pragmatists, on the other hand, defend the interest of their regions. They favour some elements of regional policy, but not a regional policy of a kind that a Socialist Government would introduce, and they pretend not to like the regional policy that this country has pursued over the last 30 or 40 years. Tonight we have heard the two voices of the Conservative party. It has been interesting theatre.

If the CDA were given £200 million, that would make up for the lost opportunity that the Bill represents. The Government have managed to reduce our economy to a state where there are 4 million unemployed, but they are investing only £3 million in the CDA. If anyone had told me, when I came to the House in 1979, that that would happen, I would have taken it for the script of a bad comedy programme.

I believe that in the coming four years, the Government's strategy will destroy much that has been achieved in co-operative developments in the past ten years. The reasons for that are clear. The Government's strategy will rob those agencies that have given most to co-operative developments. They will be hampered, cut back, or destroyed.

Photo of Barry Sheerman Barry Sheerman Shadow Spokesperson (Education and Employment)

The Minister says, "Come on." I have yet to clarify that aspect of my argument.

However, I to turn first to the credits. The pioneer work of the voluntary sector in co-operative development should place it in the first line of awards for achievement. If anyone deserves an accolade for co-operative development, it is that lone group of workers who wanted to run their own industrial co-operatives. To begin with, it was a hard process. Many of those men and women had difficult experiences. Sometimes, the co-operatives failed and they had to try again. Some went through lean times. Some invested their redundancy money or life savings, or mortgaged their houses, in order to start a co-operative with their fellow workers. Their idea is now nearing its time.

The excellent people in the industrial common ownership movement — ICOM — and the industrial common ownership finance group—ICOF—also had an important impact in the days when money was scarce and resources few. They got the co-operative movement off the ground on a basis of enthusiasm and hard work. The local co-operative development agencies have also made a tremendous contribution. The other day I visited GLEB — the unattractive acronym of the Greater London Enterprise Board, which is a fine organisation. I was pleased to hear there that I was guilty of appointing the first or second co-operative development officer to a local CDA some years ago. The local CDAs—there are over 80 of them now—have been responsible for a vigorous injection of ideas and industry in this sector. I pay tribute this evening to the ICOMs, ICOFs and CDAs which have contributed imaginatively and vigorously. I believe that our local authorities are next in line for some praise.

We are all aware of the Government's rather ambivalent response to local authorities. We have seen the legislation over the past four years, and there is more repressive legislation to come. Part of it is on its way. That legislation will mean that local authorities' imagination and vigour will yet again be curbed. We often hear from the Government Benches the old song knocking the local authorities, their expenditure and their enterprise. Considering the co-operative development of the past five years, even the most prejudiced Conservative Member would have to agree that the local authorities have done an excellent job in taking initiatives in partnership with voluntary associations to set up voluntary development agencies in Scotland, Wales and England, put co-operative development officers on the payroll and build the infrastructure of co-operatives.

The local authorities that the Government want to abolish have done a good job in setting up co-operative development and the metropolitan counties and the GLC have led the way in putting money into the future of the people who work in their area. [Interruption.] Conservative Members do not like that. Most people do not like bitter medicine when it is the truth.

I add my voice to the tribute paid to the contribution that the national CDA has made. I have known most of the people working for the agency. They have given their time, whether they are seconded to it or are full-time employees. They have worked excellently in leading the movement and seeking to build a bridge between local CDAs and local and national ones.

The CDA has done a great deal to help with the common problems that co-operatives face. Long may it continue. I only wish that the Bill seized the opportunity to say that, because we have 4 million people unemployed, not 40,000, we need a Co-operative Development Agency that can overtake our competitors and produce some real industrial initiative that would make people in this country sit up and take notice.

I praised local CDAs and local authorities, but if, as we expect, the Bill goes through this evening, the Government will be giving a small sum with one hand—it is much too small—while with the other hand they will be robbing the west Midlands, west Yorkshire and the GLC, the very authorities which have put money and resources into co-operative development. The net result for the co-operatives in four years time will be a ghastly rundown of resources and development.

If the Minister wants to disagree with me, I challenge him to study how much money has been put into co-operatives by the local authorities which will be abolished by the Government and weigh that in the balance with what he will give to the CDA. Co-operatives will be much poorer in the future. That is a sad comment on the Government's willingness to tackle unemployment and our industrial problems imaginatively and positively.

Photo of Derek Conway Derek Conway , Shrewsbury and Atcham

While the hon. Gentleman is going on about the effects that the abolition of the metropolitan counties may or may not have on the CDAs, will he accept that the legislation under which they are enabled to put money towards those projects is the Local Government Act 1972, and that, therefore, the metropolitan districts, which will not be abolished, and which will still exist as a tier in local government, can fulfil the duties of the metropolitan county councils?

Photo of Barry Sheerman Barry Sheerman Shadow Spokesperson (Education and Employment)

I wish that I shared the hon. Gentleman's naive belief that what will replace the metropolitan counties and the GLC will have anything like the far-sightedness, energy and local roots that those bodies have.

I have seen enterprise in west Yorkshire—this goes back a long way — and the ironic way in which the Conservative party, when it is in power, often tinkers with the worst kind of social engineering—mucking around with the Health Service and local authorities. I feel sorry for local authorities. When there is a Conservative Government, local authorities never have a chance to put down their roots and do a decent job. Every time they start work and start producing results, along comes the next Conservative Government with a different leader and a different style, and the basis of the local authorities' work is changed. During the time that the Heath Government and this Government have been in office, it has been a tragedy seeing local authorities prevented from getting on with the job that they know they can do well.

Over the next five years we want the positive and dynamic approach which has been evidenced in the local authorities, the CDA, and everywhere that one looks in the co-operative world. I was part of a deputation last year during the previous Parliament that went, cap in hand, to the junior Minister responsible for this matter. We said, "Please, Mr. Minister, give us £50,000 to carry on the good work of ICOM and ICOF." The Minister said, "It is far too difficult and expensive." How can £50,000 be too expensive to carry on ICOM's and ICOF's work when we have seen the disastrous economic unemployment record over the past four years? I thought that I was in an unreal world, when a Minister would not give £50,000 for an experiment that was producing help and advice for co-operatives.

The West Midlands county council alone gives £320,000 to ICOF, which allows it to carry on with its good work. We now have the Bill. Words almost fail me. The Government, who refused ICOM and ICOF money, are now destroying local authorities' initiatives by rate capping and the abolition of the metropolitan counties and the GLC.

I do not like to remind the hon. Member for Shrewsbury and Atcham (Mr. Conway) about rate capping and the abolition of the metropolitan counties. Some of the democratically elected local authorities will be left, but they will be rate capped. Will that impinge upon their ability to carry on with the work of co-operative development? Even changes in the nature of the urban programme have made it more difficult to start new co-operative initiatives.

I do not welcome the Bill. It will be a disaster for co-operatives and co-operation in the coming four years. The next Labour Government—we must wait perhaps four years for that — [HON. MEMBERS: "Ha, Ha."] — at a maximum—will put money back into co-operatives. We will see that co-operatives in their coming form as an industrial organisation are allowed to take off and start answering the problems of our country's industrial bankruptcy.

I turn briefly to regional development. The present Government have no policy, apart from wanting the operation of market forces. Some Conservative Members have been engaged in more than a flirtation with market forces and have worshipped market forces. Some of the more dangerous Conservative Members believe that we should be ruled by international geo-economic forces and that there should be full and free movement of investment and labour. In an industrial constituency such as Huddersfield, I have seen the lessons of four years of free movement of capital.

Sometimes people say to me that there is no longer a textile industry. There is a healthy textile industry, but it is living in the Philippines, Taiwan and wherever there is cheap labour. It is certainly not living in the places where the Government should protect it as the third largest employer of men and women. The textile industry should be developed, modernised and productive. Instead, the Government, because of their policies on interest rates, the value of the pound sterling and international investment, have been unable to protect the industry from unfair competition. The Government have not seen the interests of the textile industry and have allowed the importation of textiles that Britain could easily make. Our textile industry has been decimated.

On the criteria enunciated by the Prime Minister at the Dispatch Box, my town of Huddersfield has a high standard of skills. I defy any hon. Member to catalogue a list of skills that are higher in quality and standard than those in Huddersfield. Huddersfield has the skills of engineering, fine textiles — the finest worsteds in the world are made in my constituency—and the chemical industry. Conservative Members have mentioned the problems with transport in Scotland and Cornwall. We do not have that problem in Huddersfield. There is a good motorway system and a link between east and west. Huddersfield has many communications and transport advantages and a record, second to none, on good industrial relations. Ironically, at the same time, we have a record of low average pay in our industries. Anyone who knows anything about regional policy will know of Huddersfield's attractions. It is an attractive area in which people can settle down and there is beautiful countryside around the town.

Everything necessary to attract industry is in Huddersfield, but under this Government, there has been a rise in unemployment, the collapse of the textile industry and the closure or bankruptcy of many firms. That is a deliberate act of policy by the Government. I believe that many hon. Members would agree that some type of regional policy is necessary. Conservative Members have said that there have been disasters in regional industrial policy, and of course there have been some. I ask Conservative Members to consider whether those disasters have occurred because of regional policy. Have disasters occurred because of the the policy of trying to develop one region at the expense of another? Has that policy been a disaster? Has there been a disaster because the industries that we have backed and developed have been the wrong type? We must learn from what has happened. That does not lead me to say, as have some Conservative Members, that no regional policy is good and that the policy should be wiped away.

An examination of the geo-economic forces in Europe shows that there has been a tremendously powerful thrust to what has been called the golden triangle — to the south, south-west and the home counties. Governments that abdicate all responsibility for doing anything for regions are saying to Scotland, Wales and the north of England, "You have no future. In future, there will be no industry, growth and jobs for your towns and your children." A great deal has been wrong with regional policy, but the Bill shows an abdication of responsibility for the welfare of people if they do not live in the south and south-west, and I shall oppose it.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

And a long lecture from the hon. Member for Huddersfield (Mr. Sheerman).

The map at the back of the White Paper shows all the development areas. Significantly, more of those development areas are probably represented by Opposition Members than by Conservative Members. In my professional life, I am used to addressing 12 members of a jury. I look hard to find hon. Members on the Opposition Benches and, in fact, I struggle to see two Members of the Labour party present — despite all the carping about regional policy.

Photo of Barry Sheerman Barry Sheerman Shadow Spokesperson (Education and Employment)

There are seven out of 400 Conservative Members here. Well done.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

That is right. The Labour party says to the Conservative Government, "Your regional policy is no good." I do not agree with my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) because I am a strong supporter of regional policy. It has an important part to play in our economy. Some hon. Members represent areas with development status as I do. In my constituency, in Skelmersdale, unemployment has reached 22·4 per cent. We recognise that development regional policy has an important part to play in alleviating that problem.

I shall put the record straight, because the hon. Member for Huddersfield and the right hon. Member for Swansea, West (Mr. Williams) have made the usual blind, doctrinaire speeches about how it is the Government's fault that there are many unemployed people and that the regional policy is not working. The Labour party forgets the worldwide recession and the fact that consumer demand has dropped as a result. The hon. Member for Huddersfield forgets that he lives in a town.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

That is interesting. Obviously, he was fascinated by what I had to say! It is forgotten that, in many of our large towns, industries were built at the end of the industrial revolution. They have not kept up with modern technology and, unfortunately, their labour costs are far higher than the costs of our competitors in the middle east and far east, whose workers are paid wages that we would be ashamed to offer to any working man. Nevertheless, our competitors are producing the same products as we are.

The Opposition forget that the world recession has led to overcapacity in major old industries such as iron and steel and coal. We are putting £1,100 million into the coal industry in the next couple of years. That is good, sensible regional policy. Most of that money will be going to parts of the country within a development area.

The right hon. Member for Swansea, West suggested that the Government's regional policy has been one of financial savagery. In the past 20 years, Governments of both parties have put £60 billion into regional policy, creating 500,000 jobs. That surely speaks for itself. No one with any heart can turn his back on the people of the north of England and of Scotland and tell them that market forces must take their toll and that it is just hard luck if they lose all their jobs. That has not been the Government's view since 1979 and I am glad that it will not be their policy in the future.

We must remember that there are other problems in regional policy. Rates have been mentioned, but if rates are pushed up in inner city areas — London is a fine example — and suck the lifeblood of industry and commerce, businesses will move to more fruitful areas where rents and rates are lower and the inner city areas will suffer. Many Labour-controlled councils — the GLC is but one — must recognise the extent of their own responsibility for the plight of the inner city areas.

The Bill will change the basis on which regional development grant is given. I welcome the statement that jobs will be the criteria, getting away from the replacement and capital bases. The Government are telling the people of this country — I hope that the people of Lancashire will appreciate this—that the grants will depend on the number of jobs that can be created in the area. I am sure that that suggestion will be especially welcomed in Skelmersdale. It is clear from the White Paper that regional policy moves jobs around because people move to areas in which grants are available, but that does not create new jobs. For the first time, the Government have recognised that problem. We want to create new jobs, not just move jobs around the country.

I wish to make one or two points especially from the point of view of the north-west and Lancashire. Paragraph 39 of the White Paper states that the investment capacity of the British Technology Group will be removed. I ask my hon. Friend the Minister to reconsider that carefully, as BTG is an important ancillary to any regional policy and is especially effective in relation to small firms. Many Conservative Members may question the need for a Government institution which invests and takes shares in small firms and then sells the shares back when the company succeeds. If the clearing banks were doing their job properly, it would not be needed, but the banks are failing in their duty to small businesses, especially in the north-west. The average managing director/chairman of a medium-sized firm with 200 employees has to discuss his business with the local bank manager, who has no industrial experience. The bank manager is used to providing facilities for the man in the street — credit cards, statements, cheque books and the like—but he has never had to think out the quality control or transport problems of a small industrial company. I am glad to note that NatWest is now moving in the right direction, but the venture arms of the banks are much too far behind and we still need the BTG and the ICFC. I accept that these functions are now developing in the private sector under the business expansion programme, but the BTG still has a role to play and it is too soon to phase it out completely.

The Opposition have spent a great deal of time attacking the Government about the amount of money being spent on regional policy, but no one really knows how much will be spent in the years to come. On page iv of the explanatory and financial memorandum the Minister candidly admits that between £150 million and £200 million of regional development grant will be removed in a year. The next sentence states: This may be offset to some extent by an increase in take up of selective financial assistance under section 7 of the 1982 Act.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

In normal circumstances I would give way, but I know that some of my hon. Friends wish to speak. The first sentence of that paragraph states: The eventual financial effects of the Bill cannot be specified at this stage. It has been assumed that there is to be a cut in regional development, but people forget the moment that is being invested in the nationalised industries and going into the 108 small firms schemes now under way. All that assistance has been mentioned in passing, but the specific point has not been made. The argument about the cuts is thus clearly unjustifiable, and the weakness of the case is shown by the absence of all but one Labour Member.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

I apologise to the hon. Gentleman.

The people of Lancashire will be grateful for the assistance to be provided by the Government. I am sure that many Conservative Members from the north-west will press them to continue that assistance to Lancashire, Skelmersdale and Merseyside. As for those who criticise the Government's regional policy, last Thursday an Opposition Front Bench spokesman said in effect that freeports were a waste of time. That was a significant comment from the party which attacks the Government's regional policy. I am sure that the people of Liverpool would like to know that the Opposition Front Bench does not support their freeport. Perhaps the Opposition should consider seriously the saying, "Don't do as we do, do as we say." This is a good Bill. It is a step in the right direction. Long may the Government continue in this way.

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Stockton South 8:39 pm, 7th February 1984

I am pleased that the hon. Member for Lancashire, West (Mr. Hind) has not followed the line of argument that some of his colleagues advocated but chose to support the general thrust of regional policy. He drew attention to one of the most outstanding characteristics of the debate — the broad acreage of space behind me on the Labour Benches and the gross discourtesy of the hon. Member for Huddersfield (Mr. Sheerman) who took half an hour of our debate, which he had not attended much before speaking, and then was not in his place for the larger part of the speech that followed his. That is not a habit that hon. Members will want to encourage. I hope that his colleagues will draw that point to his attention after the debate.

We have had no speeches from right hon. and hon. Members who represent several of the major regions, especially my own northern region. We heard from the hon. Member for Darlington (Mr. Fallon), my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) is present and my hon. Friend the Member for Liverpool, Mossley Hill (Mr. Alton) spoke on behalf of the Liberals earlier. However, there are 26 Labour Members from the northern region and it is appalling that not one of them has attended the debate. The northern region has the highest level of unemployment in the country—it is higher than that in Scotland and Wales — yet not one Labour Member from it has spoken about regional aid. So much for them caring about the unemployed.

Photo of Mr Robert Edwards Mr Robert Edwards , Wolverhampton South East

On a point of order, Mr. Deputy Speaker. May I point out that only one Social Democratic Member has participated in the debate?

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

That is not a point of order, but the hon. Gentleman has got his point on the record.

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Stockton South

As the hon. Gentleman knows, there are six Social Democratic Members and three of us have been in the House during this debate. The hon. Member should not interrupt the debate with bogus points of order. I shall press this point because it is a major issue for the regions that are affected by the Bill.

There was recently a statement about Nissan, which is strongly influenced by regional policy. Representation by Labour Members was despicable on that occasion, as is their attitude towards that investment coming to the northern region, bearing in mind the campaign that has been carried on by the North of England development council, the local media and Members of Parliament. It is atrocious that there was so little support for the Nissan project coming to the northern region. There was also a recent statement about freeports. There has been a campaign to get freeports into the northern region. Not one Labour Member who was present then spoke in favour of freeports. The only hon. Members from the northern region to speak were the hon. Member for Langbaurgh (Mr. Holt) and me. It is an atrocious reflection on Labour Members from the northern region that they cannot be bothered to come to the Chamber and do their job on behalf of the region when they are presented with an opportunity to do so. They are letting down the unemployed in the region. More than that, they are letting down the region by not doing the job that they have been sent to Parliament to do. I am sure that people in the northern region will reflect my anger that the people for whom we strive so hard to get jobs are being let down badly by the overwhelming majority of Labour Members from that region.

Like other hon. Members, I think that it is unfortunate that two pieces of legislation should be put together in one Bill. The first relates to the development agency and the other to regional policy. I welcome the first part of the Bill. I am glad to see that the right hon. Member for Manchester, Wythenshawe (Mr. Morris) is present. He will remember that, in the late 1960s as a research officer for the Co-operative party, I drafted some of the original documents which proposed the establishment of the Co-operative Development Agency. It took us a long time to persuade our colleagues in the co-operative movement that state aid was right for what had been a voluntary movement. We campaigned vigorously and achieved it. We persuaded people in the Labour party that it was correct to do that and eventually the agency was established with all-party support. When we put together those plans, we envisaged an agency such as that which is now coming into being. It will have resources to be much more involved in developing enterprises than heretofore. The only regrettable fact is that it would seem from what the Minister said that the main reason for the change is that the Government want to obtain matching funds from Europe to develop co-operatives. The change does not stem principally from a desire to build up the agency and to give it a more comprehensive job. Nevertheless, I welcome the development in the agency's role. I join those who pay tribute to previous members of it and its staff. I pay a special tribute to its former chairman, the noble Lord Oram, who was a Co-operative Member in the House and, with his colleagues, played a large part in getting the agency off the ground.

Although I welcome the general thrust of the second part of the Bill — the changes in the administration of the regional development grant system— I, my party and my colleagues in the Liberal party oppose the Bill because the second part of it cuts the resources that the Government give the regions. The regions have borne the brunt of the recent recession. It is necessary only to go to Darlington and see the wide open spaces where there used to be plant, to see Teesside, Sunderland, Tyneside, the north-west, Scotland, Merseyside and Manchester to see the industrial devastation that has occurred recently. It started before 1979, but it has accelerated dramatically since then. Those areas have suffered most and it is quite wrong that they should suffer the withdrawal of resources proposed in this Bill. Although the change in direction of administration is right, the taking away of £150 million is sufficient ground for opposition.

Photo of Michael Fallon Michael Fallon , Darlington

I am trying to follow the hon. Gentleman's argument. Is he suggesting that he will oppose a policy that gave Britain more jobs for less money?

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Stockton South

Certainly not, but I should like the same resources as have been applied to regional policy being applied under the new administration. By all means change the criteria by which grants are given but do not give less of them, as is proposed. By all means switch from capital intensive grant but do not cut substantially the amount of money that is devoted to regional aid. That is what is proposed. There are other ways in which the money can be given as well as by the method I have described.

Photo of Alan Beith Alan Beith Opposition Whip (Commons)

Would my hon. Friend consider this aspect as well? Consultation takes place at present at the Government's invitation in regional areas that receive Government assistance. How can that consultation be realistic and serious and how can local authorities from areas such as many parts of Northumberland that are outside assisted areas expect a reasonable hearing when they know in advance that the Government have committed themselves to reducing the total amount of money invested in regional aid?

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Stockton South

My hon. Friend has a valid point. As I said earlier to the House, it is sad that these decisions have been taken and that we are moving in this direction as rapidly as we are without adequate consultation.

The changeover to more selective giving of grants and from capital to jobs as a basis for making the grants is a wise move. As has been pointed out by Members on both sides of the House, this puts more and more power and more and more authority in the hands of Ministers and of Government Departments. My hon. Friend the Member for Mossley Hill said that he though we should decentralise the administration and the operation of the grant system. I fail to understand the reaction to the suggestion that the scheme should be administered much more on a regional basis, particularly coming from Conservative Members who have been very much in favour of enterprise agencies. One of the reasons — I see that the Minister nods his head, because he has been a major advocate of this policy, and I strongly support his work — that we have supported the enterprise agencies is that they know their localities best. They know the people, the circumstances, the market, the businesses and the opportunities in the regions. When my hon. Friend the Member for Mossley Hill suggests that the grant system should be decentralised, that is what he is saying, and that is what I say. We should move the administration of these funds away from civil servants, because it should be predominantly the responsibility of the regions that are closer to the businesses and the investment opportunities that the Government wish to support under the new grant system.

Photo of Derek Conway Derek Conway , Shrewsbury and Atcham

I am sure that the hon. Gentleman will accept that, at the same time as we all like to castigate nationally based civil servants, there are civil servants based in the regional offices of the Department of Trade and Industry, particularly those of whom the hon. Member and I have experience, who do a good job for their localities. It belittles the work that they do in the regions to suggest that they have no feeling for the areas in which they work. They are not Whitehall mandarins sitting in London's ivory tower. They are in the regions, and they do a good job.

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Stockton South

As the hon. Gentleman knows, having been active in the Tyneside area before he came to the House, the civil servants working in Welbar house or other establishments of that kind know the regions well. The fact is that they are responsible not to people in Tyneside or in the northern region, but to their masters, their promotion prospects and their pensions, and everything else which is Whitehall-based and is the responsibility of Ministers. They are all civil servants behind the scenes. They are not responsible or publicly known to the local community. They cannot get involved in the local community and the regional community in the way that others responsible to regionally elected bodies could. The same problem arises with the health authority, the water authority and other regional authorities. They are large bureaucracies which prove frustrating to the consumers of services. We are seeking a much closer liaison with the local business community, and a much closer administration of the grant system in the local circumstances than now exists.

There is one other matter that I ask the Government to bear in mind. They have taken some action on this before. I hope that the Government will keep in mind the overlap in job promotion and obtaining overseas investment in the regions. All hon. Members are appalled at times by the way in which local authorities spend money on industrial development in the regions. Promotional agencies spend money on job promotion of one sort or another in the regions. There is a plethora of bodies, such as the English Industrial Estates Corporation, COSIRA and development agencies, that eat up public funds from the pocket of the taxpayer and ratepayer by duplicating the work of other bodies. Local authorities compete with one another at times in a ludicrous way. People overseas find this strange and silly. In my own area of Teeside, for example, one district council with arbitrary boundaries goes off to Norway to try to get business inside its borough boundary. It is ludicrous that boroughs should be spending money in this way.

As another example, Humberside leaps off to Japan to try to get the Nissan investment to come to Humberside. What the Japanese think about local councillors from Humberside arriving on their doorstep, goodness only knows. Many other bodies are making similar representations. It makes us look stupid and, much more important, it wastes public funds. I hope that Ministers will keep an eye on this. I know that the Government have taken steps in giving funds to the North of England development council and other bodies to try to stop the overlap and duplication, and I hope that they will consider taking other action.

In addition to moving regional policy in the right direction, I hope that the Department will keep a close eye on where public expenditure occurs. One way in which the Government can help regions directly is by ensuring that, when public expenditure is allocated, an eye is kept upon the needs of the region. I take as a typical example, and one that I know has been mentioned by the hon. Member for York (Mr. Gregory) the electrification of British Rail. Nothing would help the northern region more directly than investment in electrification of the east coast route up to Scotland. It would generate jobs and wealth beyond our region, and would be an enormous boost to the region. It is as important a part of regional policy as the new system of grant allocation in the Bill.

The Tories stopped the programme of civil service dispersal from London when they came to office. That was a retrograde step because the dispersal of civil servants, where that made sense, to the regions had proved a successful and sensible policy to pursue. Regional development grants are administered on Teesside and the office there will obviously be affected by the changing system that is being introduced in this legislation. Perhaps the Minister will tell me, if not when replying to the debate then later, how the changes will affect the department there and whether they will mean any loss or change of jobs.

It is a pity that changes which, in many respects, are desirable in the regional development grant system have been badly damaged, and possibly their intention even thwarted, by the cuts which, one assumes, the Treasury is imposing on the Department of Trade and Industry by way of the amount of money that will be allocated for regional development.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

The Bill does not determine the total amount of money to be spent on regional development grant. Perhaps the hon. Gentleman should vote against the Estimates or the public expenditure White Paper. Will he explain why he intends to vote against the Bill?

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Stockton South

The Minister seeks to persuade the House that the Bill will not make any impact on the amount to be spent on regional development grant. Like other hon. Members, I draw his attention to the explanatory and financial memorandum to the Bill, which says clearly that the level of expenditue on RDG might be reduced by some £150–£200 million in a full year. This may be offset to some extent by an increase in take up of selective financial assistance under section 7 of the 1982 Act. Because, according to that, we are to have a cut of between £150 million and £200 million, we shall vote against the Bill. I hope that the Government will heed the pleas that we have made and that when, in due course, Ministers return to the House with the details of the levels of grant and the map that is be drawn, they will have won the battle with the Treasury so that we can be told that the amount of money to be given to the regions will not be cut by £150 million to £200 million, as mentioned in the explanatory and financial memorandum. Until we are given that assurance, we shall vote against this legislation.

Photo of Mr Martin Brandon-Bravo Mr Martin Brandon-Bravo , Nottingham South 9:02 pm, 7th February 1984

I had some sympathy with the opening remarks of the right hon. Member for Swansea, West (Mr. Williams) when he complained about the mixed title of the Bill, but that was where my sympathy ended. I shared his worry on that item because, as a new hon. Member, I was puzzled that the right to buy should have been mixed with building regulations. However, I was delighted with the first part of that Bill, not qualified, and did not disagree with the second part.

On inquiry, I was told, in effect, "That is the way we do things here because of limited parliamentary time." I wonder whether hon. Members who on Monday sat in the Chamber until 1.52 am would agree with that. I will merely comment that there have been times when the Whips have gone round trying to find hon. Members to keep debates going. Therefore, I do not subscribe to the logic of what, as a new Member, I was told.

From the right hon. Member for Swansea, West and from the hon. Member for Huddersfield (Mr. Sheerman) we had dismay at the inability of local authorities to contribute from their finances to the kind of investment that has been the subject of this debate. It is a shame that those two Opposition Members are not in their places. In my county just after the 1981 county elections the electorate was immediately faced with an extra £21 million supplementary rate demand. Because there was no rate support grant to go with it, about £11 million of it came from industry and commerce and the other £10 million from the domestic ratepayer.

One month after that horrible missive fell through our letter boxes, we read headlines in our local paper to the effect that the local authority would be spending £500,000 helping to encourage investment in industry. Most of those, like myself, involved in industry wanted to know what had happened to the other £10·5 million.

I have spent my life in the textile industry. In the lifetime of the last Labour Government, under the regional policy that then pertained, I had to negotiate contracts with representatives of a certain chain group in this country who had a mental map, as it were, of that regional grant system as we sat round the negotiating table. It was clear—they were blunt about it — that they expected a few pounds per dozen less from those companies which they knew were in areas that were receiving grant. Therefore, the group made a saving as a buyer. That confronted manufacturers like ourselves with a problem; either we came down to that lower price or we got less business. For me, that was a demonstration of how regional development grants can transfer work from one area to another with disastrous effects.

The right hon. Member for Swansea, West and the hon. Member for Huddersfield were very passionate about the doubling of unemployment under the Government's regional policies. I was puzzled because it was also said that until now there has been a bipartisan policy on regional affairs. If, indeed, the increase in unemployment has been the result of regional policies — I do not suggest it has been — it is incumbent upon the Government to consider the matter again. If regional policy has been so unsuccessful at such enormous cost, then let us try to find a better way of using such resources as we wish to give the regions in a way that will produce jobs.

I am delighted to hear that the emphasis of future policy will be more selective than the blanket grants up to now. In regard to selectivity, I hope that it will not mean the selection of one area against another but selection between inner cities, outer cities and urban areas.

Investment must be made on sound commercial criteria. If not, a project is unlikely to survive for long merely because somebody has grant-aided part of it. As a manufacturer I plead guilty to not turning down grant aid when it is offered, but, as a company, and a director doing my job properly, I must make the investment decision in the first place on the basis that it is needed and that we will have it anyway; the grant would be a bonus and not the reason for the investment. Equally, I was working in an industry which was traditional in the area in which it was sited. I sometimes wonder whether industries that are attracted superficially by the grant money that has been dangled before them take into account the cost of being in an area where the industry does not have traditional roots.

I support what I believe is a right and proper rethink of Government policy. I am sure that all hon. Members feel the same about the tragedy of unemployment. If by being more selective we can alleviate this terrible problem, any step in that direction must be welcomed and supported.

Photo of Mr Eddie Loyden Mr Eddie Loyden , Liverpool, Garston 9:09 pm, 7th February 1984

Most people will accept that unless the national economy is in fine fettle there is little likelihood of regional policies having any effect. It has become clear over the years under succeeding Governments that regional policies have been adopted with the good intention of resolving the many problems that existed in the north but that have now spread into the midlands and parts of the south. Therefore, we are talking about a disease that has been present for almost all the post-war period, and is now a national problem.

Areas such as the north-west, and especially Merseyside, received massive grants from the previous Labour Government to the tune of many millions of pounds so that they could sustain their industrial base, defend and protect their jobs and give some input to a new industrial structure.

What have been the results? Unemployment on Merseyside is now in excess of 22 per cent., despite all efforts; in the docks industry about 14,000 to 16,000 jobs have been lost since the late 1950s and early 1960s; about 11,000 to 12,000 jobs have been lost in ship repairing and shipbuilding. In 1979, the British Leyland plant closed, with the loss of 2,500 jobs. Last year, a second BL plant closed, with the loss of 3,500 jobs. Dunlop closed in 1979 with the loss of 3,500 jobs. I could continue to give a long list of companies that have failed on Merseyside or which have folded their tents and moved away after receiving a great deal of financial assistance from Government.

British Leyland is a classic case of failure, despite Government efforts to inject finance into the industry. My right hon. Friend the Member for Swansea, West (Mr. Williams) is well aware of the position on Merseyside, where factory after factory was closing and the area's industrial base was being decimated day by day.

Nothing in the Bill attempts to remedy that problem. During the five years since the Government took office, 38,000 jobs have been lost on Merseyside. Regional policies, however well intended, will not overcome the massive problem that is endemic in the system and arises from Government policies. People in the north-west are fully aware that the Government's policies have been responsible—if not totally, certainly to a large extent—for the mass unemployment that has developed since 1979 and the decimation of the industries in that area. Firms that have been hit include Tate and Lyle, United Biscuits and British American Tobacco. All that is happening despite the massive investment in Merseyside.

We have witnessed the experimental period of the Government's enterprise zones. That great idea was launched by the Government some years ago. The enterprise zones have made a negative contribution to employment on Merseyside. Indeed, the factory that was once one of the most modern motor car manufacturing plants now houses cattle food, as it is used for mixed storage purposes. That is an example of the decline on Merseyside. Enterprise zones have not realised even the limited expectations of the Government in bringing jobs and industry to Merseyside.

That is also true of the Merseyside development corporation. No one living on Merseyside would deny that we all love gardens and would love to hold a garden festival. In circumstances other than those now prevailing, no one would be opposed to the derelict docks being transformed to hold a garden festival. But at this time the people of Liverpool believe that the more important priorities are jobs and industry. The priority of the Merseyside development corporation to hold a garden festival — welcome though that might be in different circumstances—is not considered important at a time of high unemployment and the decimation of Merseyside industry.

It is very important to state that, while there is an argument for regional development assisting in that way, that argument must stand the test of what has been happening in the regions, not just on Merseyside, but in the north-east and the north, where the same situation is being faced, differing in degree, not in essence.

The northern regions have become areas of high unemployment, with little hope of jobs being created in the future. Many Government policies are merely sops given to people, in the hope that there will be a turning point. Everything that has happened in relation to employment has been projected by the Government as the turning point for those areas, but the test of success on Merseyside, is in the high unemployment figures and the continuing closures. Last Thursday, a freeport was allocated to Merseyside, but on the following day, while that news was still wet ink on the presses, we heard the news that 1,200 jobs would be lost in the British American Tobacco Industries, on Merseyside. That news came before we knew what will happen in the freeports, and what sort of jobs the scheme will create.

I was not in the least surprised that, when the Minister was asked last week how many jobs would be created, with registered dock workers down to less than 3,000 in the port of Liverpool, Conservative Members fell off their seats laughing. That reaction was worth a thousand words. It gave us the answer, because the Government believe that there will be no extension of work for dock workers in Liverpool with the introduction of a freeport. We must accept that it is an experiment, until we have proved that the scheme is merely a sop offered to Liverpool as an alternative to real jobs and a long-term industrial base for that region's economy.

I do not want to appear totally cynical, but I am justified in saying that we have experienced every permutation of regional assistance that can be imagined. The Government have not proved that that is the answer. Until our disjointed economy is put in order, the problems of the north-west will remain, and may even worsen.

When it comes to the question of what to do with financial help to the region, I firmly believe that one cannot plan for what one does not own. The development grants have been going to private enterprise. When the milk has been sucked from the milch cow, the entrepreneurs abandon areas, and move on to greener pastures. That is the history of grant assistance in the north-west, and many other areas. In that sense, we cannot be blamed for looking very cynically at the Bill's proposals.

Photo of Geoffrey Robinson Geoffrey Robinson Shadow Spokesperson (Trade and Industry) 9:18 pm, 7th February 1984

The House will agree that this has been an interesting and wide-ranging debate. It has taken us from St. Ives to the north of Scotland, via the Highlands and Islands Development Board. Hon. Members on both sides of the House have been critical of the Bill, although criticism from the Government Benches was muted.

The Minister, plaintively opening the debate, asked why we are voting against the Bill. The Bill is nonsense. It combines two things that have nothing to do with each other, as the Minister knows well. The part on regional policy is very important, and we shall be dealing with it later in the year when, and if, we are allowed the consultation to which we are entitled. I am sure the House agrees that that measure has not yet been decided or consulted upon. The other part concerns the Co-operative Development Agency.

I shall take part I of the Bill first. Lip service is paid in it by the Government. I do not believe that they are sincere. Perhaps some individuals have experience of co-operatives. It is not easy to run them, particularly those that start from the failure of private management and private capital, and from the unwillingness to invest in products and new machinery and to match international competition. Unfortunately, that is not easy. That insincerity is a characteristic of Conservative Members. We have learnt lessons from it.

Many Opposition Members made it clear that we see a much enlarged and more powerful role for the CDA. We should like answers to the questions that were asked. I am sure that the Under-Secretary will have them ready. Reference was made to the grants and loans that the CDA will be able to make. The most telling part of the Minister's speech was that the Goverment would lend anyone's money but theirs. That shows his confidence in and support for co-operative development. That is how much he believes in it. That is the lip service that we have come to expect from the Conservative party.

We understand the point about partnerships. It is a technical detail. However, what about the CDA's commercial activities? It could have the power to involve not just the workers but all the employees, and equally not just the managers, in the enterprise. Increasingly one is departing from the concept of capital and labour towards a joint venture of labour and capital working together.

We cannot accept part I of the Bill because we know that it is hypocritical and a genuflection in the direction that we should move in, as a country. Other countries have bolder and more successful experiments. I have some personal experience. We had our own, not altogether successful, experiments with worker co-operatives and the general idea of closing the divide between the management, the workers and capital. It is not easy, but in this country above all there is a need to do it. Unless the Government are committed to it, we shall never do it. The Bill takes us little further forward.

We can see the Government's commitment. They have caved in, as any Government without backbone would, to the usual Civil Service demand that they must make provision for the dissolution of the very organisation whose existence they are proposing to extend for another five to six years. Why do that? What confidence would that inspire in any organisation? The Government say, You are doing a good job; we agree with you," but there is the provision for dissolution.

I pay my tribute to the management, the present staff and the executive staff of the CDA. What confidence does it inspire in that organisation if, in the Bill, the Government say that they must, for the first time, make provision for its dissolution? We did not do that. My right hon. Friend the Member for Swansea, West (Mr. Williams) would probably be more punctilious about responsibilities in government than others, perhaps more than me. He never made provision for that arrangement. That will inspire no confidence.

We welcome in a limited way what is being done for the CDA, but so much more could and ought to be done. The Government have not the will, intention or political orientation to do it but, cowards that they are, they refuse to wind up the CDA. So they retain the powers to do so and put them on the table for the first time in the history of the organisation.

Had we tonight been debating part I of the Bill I do not think that we would wish to divide the House. That is self-evident. The most amusing aspect of the whole of the debate today has been the Minister's evident pique that we are having a Division at all. Four times—I counted them—he intervened, twice while my right hon. Friend the Member for Swansea, West was speaking, and twice — it is amazing that he is not here — during the speech of the hon. Member for Stockton, South (Mr. Wrigglesworth) who was so rude about my hon. Friend the Member for Huddersfield (Mr. Sheerman) and, of course, criticised the official Opposition who are very heavily engaged in opposing the industrial relations legislation.

Photo of Geoffrey Robinson Geoffrey Robinson Shadow Spokesperson (Trade and Industry)

No, I will not give way. I am not wasting the available time. I would give way to the hon. Member for Stockton, South, but I will not give way to a surrogate from a mésalliance of totally incompatible partners. We know that his attendance record in consideration of the Bill in Committee, where my hon. Friends have been working and voting, is less than 50 per cent. That will stay in the record book. We on the Opposition side of the House have better things to do than bother ourselves with minor and literally peripheral irritations to the central points that we are debating tonight.

When I use the word "peripheral" I mean it in no geographical sense, because regional policy, whether the Government want it or not, is here to stay. It has been here a long time. We have not debated it in the House nearly often enough. Now the Government are trying to sneak it in — I can understand no reason for it at all — with a totally unrelated Bill. Goodness knows Mr. Speaker, I am happy for you that the hon. Member for Tiverton (Mr. Maxwell-Hyslop) is not here tonight. The hybrid nature of the Bill baffles me. Remembering what he did with a Bill brought in by a previous Labour Government, I simply do not know what he would do with this one. We move from the Co-operative Development Agency and the extension of its powers and responsibilities — lacking as it does any real funds or power to fulfil the obligation placed upon it—to regional policy.

Today's debate is a precursor of the real debate that I hope we shall still have on the vital issue of regional policy. I will say this for the hon. Member for Wolverhampton, South-West (Mr. Budgen) — he has been here and has made several interventions. He has taken part in other debates on regional policy and he has been consistent. Far be it from me to say that he is at odds with his own Front Bench and with Government policy. I suspect that he may also be severely at odds with his own constituents, as and when the policies come out. But at least he shows a certain intellectual consistency even though he is not, if I may say so, intellectually coherent. I take nothing away from him. He has been here, he has intervened in every single speech and we applaud him for that, as others did in the mammoth debates that we had on devolution.

Photo of Geoffrey Robinson Geoffrey Robinson Shadow Spokesperson (Trade and Industry)

No, he will vote without his conscience, which, of course, we shall not welcome. But we see the empty Benches of the so-called alliance, the mésalliance—

Photo of Mr David Alton Mr David Alton , Liverpool Mossley Hill

On a point of order, Mr. Speaker. Is it in order for an hon. Gentleman to suggest that the alliance Benches are empty, when there are Members present?

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Every hon. Member must take responsibility for his own speech.

Photo of Geoffrey Robinson Geoffrey Robinson Shadow Spokesperson (Trade and Industry)

I am corrected, Mr. Speaker. In the singular, the SDP Bench is empty. The Liberal Bench, for its intellectual content, is not much fuller.

In the earlier part of the debate we had a most co-operative and thoughtful contribution from my hon. Friend the Member for Brent, South (Mr. Pavitt), who apologises for being unable to be in his place for the Front Bench replies. I hope that that apology will be accepted as others have been during the course of the evening. We moved on to St. Ives and heard about an unemployment rate of 33 per cent. I have been in Cornwall for 10 days in the past month and I do not understand how it can be suggested that regional policy is not needed to deal with the rural impoverishment of Cornwall. Some wage levels produce weekly take-home pay of £35.

Photo of Geoffrey Robinson Geoffrey Robinson Shadow Spokesperson (Trade and Industry)

Those are the facts. I shall not give way. I shall substantiate word for word what I am saying. I have been to Cornwall and I have seen payslips and visited certain establishments at which those who receive them work.

The well-established arguments in favour of regional policy still stand. The only change has been the Government's unique achievement of turning a regional problem into a national one. Instead of having depressed areas we have an entirely depressed United Kingdom. If any Conservative Members disagree with me—I shall be sorry if they do so — I invite them to study the unemployment figures and the rate of increase of unemployment in any area in the United Kingdom. We entered the recession first, thanks to the Government's policies, and we are still not out of it. We are coming out of it worse than any European or comparable industrialised country. We have worse unemployment levels and output levels than any of our competitors in comparable industrialised countries.

Why are we in this position? The fault lies with the Government. They are backing away from an economic policy because they do not believe in such policies. Why did we have high interest rates? We probably do not know, but we are told that the market was responsible. Why did we have a high exchange rate? Again, we are told that it was determined by the market. At one stage we had to live with $2·40 to the pound.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

What does this have to do with a regional policy?

Photo of Geoffrey Robinson Geoffrey Robinson Shadow Spokesperson (Trade and Industry)

These are factors that have affected the regions. If the hon. Gentleman does not realise that, he has not lived in his constituency and has not seen the impact that they have had. The west midlands has never been classified as a development area or assisted area and it has never received RDG to any significant extent.

Photo of Geoffrey Robinson Geoffrey Robinson Shadow Spokesperson (Trade and Industry)

I shall do so in a moment. Why did we have high interest rates, a high exchange rate and a high inflation rate all at once? They rose to intolerable levels because of the Government's economic policy. They have now abolished that policy and they now say that they cannot control economic policy or regional policy and, therefore, there will be no regional policy.

Many of my right hon. and hon. Friends have talked about the smaller sums that will go to the region as a result of the Bill. The Minister must understand that that is why we shall vote against its Second Reading. It is almost possible to say who drafted each part of the Bill. It can be said that one section came from the Secretary of State while another, for example, came from the Undersecretary of State, the hon. Member for Rossendale and Darwen (Mr. Trippier). I remember an interview that the Under-Secretary of State gave before he assumed the high office that he now holds. He said on television that the Prime Minister must realise that there is a regional problem, that we have unemployment and that manufacturing is extremely important. It is surprising that he was promoted, and perhaps that is a reflection on the Prime Minister and not on him. We can see which parts of the Bill he drafted and we know that the sections at the back of the Bill were inserted by civil servants.

We are told that the financial effect of the Bill cannot be specified". Why are we discussing it, if it cannot be specified? In a previous incarnation as a management controller, I know what view I would have taken if someone had told me that his proposition could not be specified. He would have been out of the office before he entered it. It goes on, and the words are very precise: likely to lead to a significant reduction in planned expenditure on RDG". We know that. We know that it will be £200 million a year — indeed, it could well be more. As my right hon. Friend the Member for Swansea, West said, it will be £1,000 million over five years. All that Conservative Members can plead in aid is the final section, which says: This may be offset to some extent by an increase in take up of selective financial assistance under section 7 of the 1982 Act. Anyone reading those three contradictory and self-qualifying statements could only reach one conclusion, and it is stated in the White Paper which preceded the Bill, that the Government have as their prime aim the reduction of expenditure on regional development grants and regional aid. That is undeniable. I challenge either the Minister of State or the Under-Secretary of State to deny that. They both know that that is the overriding intention. If they wish to stand up and say, "No. It is our intention to have under section 7 of the 1982 Act an uptake equivalent to that," I should willingly give way to them. However, that will not happen.

The proof lies in the experience of the past four years of this Government's expenditure on regional aid. How does that compare with the previous five years under the Labour Government? We know that it is about half what the Labour Government spent. What do the Government reply? They say that it created only 500,000 jobs. That would make a big dent in the unemployment figures. Why are we so ashamed of creating 500,000 jobs through a regional policy that is intended to do that? They say, "We must fix a capital limit to the amount we spend on creating jobs." Their arguments are negative throughout.

The Government should be careful before turning down — or considering — major capital investments in the regions. I do not say that because they have been kowtowing to Nissan, to the detriment of our own British industries. We will be throwing £100 million at Nissan. The sad thing is that it does not need the money. We can be certain of one thing, and that is that whatever happens in the Bill and to British companies investing in British jobs, Nissan will get its money.

Before the Government turn down capital investment projects that have a high capital investment in relation to the employment they create, they should remember that this country is very centralised on London and the metropolis. When one puts down a major new capital investment in processing and production industries, one places with that equipment not just the pounds, shillings and pence, the hardware of iron and steel, the microprocessors and the rest, but people who have skills, intelligence, cultures and knowledge that belong more naturally in the south-east, and that go with that investment to the regions. My right hon. Friend the Member for Swansea, West, who opened the debate from the Opposition Benches, agrees with me that it is a consideration, but it cannot and should not be the overriding consideration in deciding whether money is granted for a major capital project.

Equally, I have to say to the Government, with regard to ratecapping and to the diminution of local authority powers, that there is a major cutback in the authority and ability of the regions to help in a constructive and positive way to solve their own problems.

There is no future in a policy of negatives, but negatives are all that we have heard. The Government say that they will not spend any more in capital on the regions and that they will cut back by £1,000 million over five years. It is a policy of despair that has been amply demonstrated not just in the regions but in the whole nation. The country needs a policy of belief in the people and belief that the regional authorities can organise their own affairs and that, if given the responsibility, they will respond to it. We need a belief that money from the centre can be matched by money from the regions, and that the centre, working with the regions through the local authorities, can help to solve the serious industrial problems that the country faces today.

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen 9:42 pm, 7th February 1984

I have listened with interest to what, for the most part, has been an interesting and constructive debate.

Before dealing with the questions of substance, I need to say a few words in response to the right hon. Member for Swansea, West (Mr. Williams), the hon. Member for Liverpool, Mossley Hill (Mr. Alton) and my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) who have criticised the Government for seeking to limit discussion on the revised scheme of regional development grants by combining these provisions with those for the CDA which attract wider support. The Government attach importance and urgency to both sets of provisions; the CDA because its current grant limit will be reached in the summer and therefore needs to be extended; and the RDG scheme because we are concerned to secure an increase in cost-effectiveness as quickly as possible. There is, therefore, a shortage of parliamentary time. Today's debate, together with the opportunity for discussion in Committee, I believe, demonstrate that there is adequate opportunity to discuss in detail the proposals of both elements of the Bill. Before I answer the points on the CDA, it may be helpful as background if I outline briefly the history and work of the agency and our reasons for continuing to support it. The agency was established in the Co-operative Development Agency Act 1978 and we reviewed it in 1981. We concluded that the agency had been moderately successful but that there was much scope for improvement. We therefore made further funding to it on certain conditions. Given that the CDA's current funding expires in August this year, we have looked again at its progress and we have been most encouraged.

In the short time since 1981, it has made a much greater impact. What has particularly impressed us is the much more professional way in which the agency operates. I respond to the words of the right hon. Member for Swansea, West and pay a warm tribute to the present chairman, Mr. Ralph Wolfe, and in particular to the director, Mr. George Jones. The agency has placed the emphasis firmly on the need for co-operatives to be economically viable. It has recruited specialist staff in fields such as banking, marketing and accountancy to help new and existing co-operatives to improve their business skills as well as making greater use of the small firms service.

Nor has the agency neglected the promotional side of its work, at which it has been very adept. A measure of its success is that it now receives 1,200 inquiries a year, an increase of 56 per cent. since 1981; and these inquiries are being handled by about half as many staff as in 1981. The agency has made an important contribution to the notable growth of co-operatives from 300 in 1980 to 700 in March 1983 and I understand that that figure is now approaching 1,000. Since its reorganisation in 1981 it has assisted over two thirds of the 500 or so co-operatives formed since that date through its expert advice and its model rules, which make the formation and registration of co-operatives easier.

Following the review in 1981 we asked the agency to examine the possibility of financial independence from Government as the original intention was that the CDA would be self-supporting. However, the agency has reported that it cannot support itself because its earnings opportunities are very limited. Under the 1978 Act the agency is prohibited from carrying on its functions in a way which would amount to undertaking commercial activity, although it is allowed to make charges to cover the cost of its services. That restricts the contribution which the sale of its services could make to its expenditure.

We accept that view, so the only other prospect of the agency achieving financial independence is by securing a high level of support from the private sector. I have noted that the agency has been successful in keeping within its grant of £200,000 a year. It has done that by a combination of good housekeeping and help from the private sector and co-operative movement which have provided secondees. I understand that that is worth some £100,000 a year. I should, perhaps, point out to the hon. Member for Huddersfield (Mr. Sheerman) that the £200,000 compares to the £75,000 given to Business in the Community, to which my hon. Friend the Minister of State referred, and which is a similar umbrella organisation looking after local enterprise agencies and encouraging them to start. They, in their turn, are encouraging thousands of small businesses to start within the community. It has been interesting, as the debate has unfolded, to hear many Opposition Members refer to that figure. In fact, to date, the agency has achieved a contribution from the private sector and the co-operative movement of £1 for every £2 from its public funding. That is a direct result of the Government's decision to streamline the agency and encourage it to look to the private sector for increased support.

I reject the claim of the hon. Member for Brent, South (Mr. pavitt) that we are half-hearted about the CDA. Our decision to continue the funding of the agency was based on the conclusion that it should become an effective force in helping to stimulate the growth of viable co-operatives.

Photo of Mr Alf Morris Mr Alf Morris , Manchester Wythenshawe

How, then, does the hon. Member respond to the point that the Government are giving powers to the CDA without the resources that will enable it to use them effectively?

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

With great respect to the right hon. Gentleman, the co-operative movement receives support from the district authorities at local community level. The CDAs within the regions receive some support from the county council. They also receive some support from the larger co-operatives and, additionally, through secondees. They receive the type of support that is enjoyed by the local enterprise agencies, which are not in the business of making grants to small businesses within the community. I cannot see why we should give that favourable treatment to co-operatives at the expense of other organisations, especially when one is talking about the CDA, which is, primarily, an advisory organisation.

Our view was shared by the majority of outside organisations that my Department consulted as part of the review. We have several reasons for our view. The agency now has resourceful and imaginative management pursuing clear objectives. It is attracting increased private sector support and is being run under tighter financial control.

The funding period will, as already mentioned, be for six years. We believe this provides a firm basis which will give the agency, and its private sector supporters, the confidence to pursue its objectives. It will also put the funding on a more practical footing than under the present arrangements which have necessitated two major reviews and associated legislative action in less than six years of the agency's establishment. The agency will be reviewed at the end of the funding period. By then I trust that the additional powers that the agency is to be given to maximise its own earning capacity, together with the expected assistance from its major private sector supporters, will make financial independence from Government achievable.

Photo of Mr David Alton Mr David Alton , Liverpool Mossley Hill

Will the Under-Secretary confirm that, although he is confident that £200,000 is to be made available to the CDA, the CDA asked for more than that —£250,000—and that it does not believe that that is adequate to run its service?

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

I cannot recall — I have been the Minister responsible for this aspect in the Department of Trade and Industry—that the CDA specified a figure. It certainly did not specify a figure to me. Having heard some of the Opposition speeches, I should have thought that the figure put to me by the hon. Gentleman was low compared to the figures that some hon. Members mentioned. I do not believe that the hon. Gentleman is helping the CDA's case.

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

I am sorry, I must proceed. I have many points to make.

The removal of the prohibition on the agency carrying on commercial activity will not mean that it can enter into any type of commercial activity. It will be able to act only in a commercial manner in regard to those functions which are set out in section 2 of the 1978 Act. Similarly, on removal of the block on forming partnerships, the agency will be able only to go into partnerships in pursuit of those statutory functions.

I shall now turn to the RDG provisions which, not surprisingly, have proved more contentious. As to comments on rates of grant, the extension of the service sector and assisted area coverage, I assure hon. Members that their views will be taken into account before final decisions are taken. I also advise hon. Members who have raised questions relating to specific interests within their constituency to invite their constituents to take advantage of the consultation offered in the White Paper and to submit detailed comments and proposals to the Department by the end of May.

The right hon. Member for Swansea, West covered a great deal of ground and, in so doing, exercised a fair measure of licence. I am sure that he is grateful to my hon. Friend the Member for Darlington (Mr. Fallon) for drawing his attention to the relevant part of the explanatory and financial memorandum. On the one occasion the right hon. Gentleman found his place unaided, he managed to find a word that was not in the memorandum. There is no mention of a "slight" increase in selective financial assistance. The memorandum states that the possible £150 million to £200 million reduction in expenditure on RDG in a full year, on certain assumptions, may be offset to some extent by an increase in take up of selective financial assistance". I cannot say what that increase might be, because I cannot predict what projects will come forward.

The right hon. Gentleman criticised a possible £1,000 million lost to the assisted areas during the past five years. Were I not replying, I should be speechless. The right hon. Gentleman accepts that the areas in which we foresee savings are desirable. Presumably he does so on the same basis as the Government: savings are being sought in areas where a grant makes a minimal contribution to job creation, to decisions to proceed with investment and decisions about where investment is located. Consequently, most — I concede not all — of that investment would go ahead anyway.

Before discussing the proposals regarding RDGs in general, I should like to say a few words about their application to small firms, to which specific reference is made in the White Paper. Reference was made to small firms by a number of hon. Members, specifically by my hon. Friend the Member for Darlington. The White Paper reflected the importance the Government attach to small firms by making it clear that the revised RDG scheme would be designed to minimise the burden of administration on them. That point is worth emphasising.

In many of the assisted areas, there has been a tendency to become overdependent on large companies or a single industry. That point was made by my hon. Friend the Member for Lancashire, West (Mr. Hind). The result has been a narrow industrial base such as we have seen in steel and shipbuilding areas. Such overconcentration tends not to spawn innovation and small firms or generate enough jobs. Encouragement of small firms creation and growth is therefore an important part of industrial strategy on both a national and a regional basis, and this Government have worked harder than any before to ensure that small firms stay in business longer and grow and develop.

There has been much talk about numbers of measures. I prefer to emphasise the work done to improve the climate for small businesses. Since May 1979 we have gone a long way down the road of rolling back the disincentives which were crippling small firms' ability to compete. The most important of these has been the progress that we have made in controlling inflation. Loan finance is now more easily available, equity participation has been stimulated and tax burdens have eased.

I mentioned in passing the innovative capability of small firms. I shall not dwell on this, but I draw attention to paragraph 38 of the White Paper which invites comments, among other things, on how innovation might be further encouraged in assisted areas. I hope that small businesses will respond to that invitation and let us have their views.

Many Opposition Members, especially the right hon. Member for Swansea, West and the hon. Member for Liverpool, Garston (Mr. Loyden), have criticised our proposals as a cynical exercisce to achieve public expenditure cuts. We have made no secret of the fact that we believe that the economic case for a regional policy is less clear cut than in the past and that the case is now mainly a social one. Our social objective, which we believe is best achieved by economic means, is to reduce imbalances in employment opportunities and thus to create stable long-term jobs in the regions. Much of the expenditure under the present RDG scheme is inconsistent with that objective.

I should have thought that the hon. Member for Coventry, North-West (Mr. Robinson) and the parliamentary Labour party which he represents would have welcomed the Government's initiative in creating new jobs. If he is suggesting that attention—

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

Do not be so ridiculous. With great respect, the hon. Gentleman did not give way to anyone when he spoke.

If the hon. Gentleman is suggesting that attention should be focused only on retaining jobs and not on creating new jobs, he is by definition accepting that we should continue to live with the present high levels of unemployment, and I cannot imagine him saying that. Needless to say, that is unacceptable to us. At least, however, the truth is out. The promises of significantly reduced unemployment made by the Labour party at the last general election were a complete sham. What other interpretation is there? We are saying that there is a need to recognise the less favoured areas and to help to create real jobs that will last. That is why I agree with my hon. Friend the Minister of State who said that the Labour party should support this legislation.

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

I detect that the hon. Gentleman—

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

I detect that the hon. Gentleman has his own cross to bear. Between 1964 and 1970, when the Labour party was in power, active regional policy and tight IDC controls prevented jobs from going to the west midlands. Instead, they were deflected to the assisted areas, particularly in Scotland. That created a structural weakness in the west midlands and the narrowness of its industrial base left it vulnerable in the midst of a world recession from which it has not recovered.

I seem to recall that the hon. Member for Coventry, North-West made a contribution in the small firms debate on 4 November. His suggested ingredients for the recipe of success was that more money should be given to small firms, medium-sized firms and large firms. There was no mention of where the money was to come from—or perhaps he was too medium-sized firms and large firms. There was no mention of where frightened to explain to the House then, as he has been today, that it could come only from increases in both personal and company taxation.

I believe that the proposals that we have presented today in relation to the CDA will encourage economic growth, the creation of jobs and active participation of employees in the ownership and running of businesses. For future regional development grant we have presented proposals which reduce the payment of grant towards investment when no incentive is necessary. We believe that all these proposals represent a constructive improvement in the industrial environment, and I commend them to the House.

Question put, That the amendment be made:—

The House divided: Ayes 201, Noes 307.

Division No. 155][10 pm
AYES
Adams, Allen (Paisley N)Douglas, Dick
Alton, DavidDubs, Alfred
Archer, Rt Hon PeterDuffy, A. E. P.
Ashdown, PaddyDunwoody, Hon Mrs G.
Ashley, Rt Hon JackEadie, Alex
Ashton, JoeEastham, Ken
Atkinson, N. (Tottenham)Edwards, Bob (W'h'mpt'n SE)
Banks, Tony (Newham NW)Evans, Ioan (Cynon Valley)
Barnett, GuyEvans, John (St. Helens N)
Barron, KevinFatchett, Derek
Beckett, Mrs MargaretFaulds, Andrew
Beith, A. J.Field, Frank (Birkenhead)
Bell, StuartFields, T. (L'pool Broad Gn)
Bennett, A. (Dent'n & Red'sh)Fisher, Mark
Bermingham, GeraldFlannery, Martin
Bidwell, SydneyFoot, Rt Hon Michael
Blair, AnthonyForrester, John
Boyes, RolandFoster, Derek
Bray, Dr JeremyFoulkes, George
Brown, Gordon (D'f'mline E)Fraser, J. (Norwood)
Brown, Hugh D. (Provan)Freeson, Rt Hon Reginald
Brown, N. (N'c'tle-u-Tyne E)Freud, Clement
Brown, R. (N'c'tle-u-Tyne N)Garrett, W. E.
Brown, Ron (E'burgh, Leith)George, Bruce
Bruce, MalcolmGilbert, Rt Hon Dr John
Callaghan, Jim (Heyw'd & M)Godman, Dr Norman
Campbell, IanGolding, John
Campbell-Savours, DaleGould, Bryan
Canavan, DennisGourlay, Harry
Carlile, Alexander (Montg'y)Hamilton, W. W. (Central Fife)
Carter-Jones, LewisHardy, Peter
Cartwright, JohnHarman, Ms Harriet
Clark, Dr David (S Shields)Harrison, Rt Hon Walter
Clarke, ThomasHart, Rt Hon Dame Judith
Clay, RobertHattersley, Rt Hon Roy
Cocks, Rt Hon M. (Bristol S.)Haynes, Frank
Cohen, HarryHealey, Rt Hon Denis
Coleman, DonaldHeffer, Eric S.
Concannon, Rt Hon J. D.Holland, Stuart (Vauxhall)
Conlan, BernardHome Robertson, John
Cook, Frank (Stockton North)Howell, Rt Hon D. (S'heath)
Cook, Robin F. (Livingston)Howells, Geraint
Corbett, RobinHoyle, Douglas
Corbin, JeremyHughes, Dr. Mark (Durham)
Cowans, HarryHughes, Robert (Aberdeen N)
Cox, Thomas (Tooting)Hughes, Roy (Newport East)
Craigen, J. M.Hughes, Sean (Knowsley S)
Crowther, StanJanner, Hon Greville
Cunningham, Dr JohnJohn, Brynmor
Davies, Ronald (Caerphilly)Jones, Barry (Alyn & Deeside)
Davis, Terry (B'ham, H'ge H'l)Kaufman, Rt Hon Gerald
Deakins, EricKennedy, Charles
Dewar, DonaldKilroy-Silk, Robert
Dixon, DonaldKirkwood, Archibald
Dobson, FrankLambie, David
Dormand, JackLamond, James
Leadbitter, TedRoberts, Allan (Bootle)
Leighton, RonaldRoberts, Ernest (Hackney N)
Lewis, Ron (Carlisle)Robinson, G. (Coventry NW)
Lewis, Terence (Worsley)Rooker, J. W.
Litherland, RobertRoss, Ernest (Dundee W)
Lloyd, Tony (Stretford)Ross, Stephen (Isle of Wight)
Lofthouse, GeoffreyRyman, John
Loyden, EdwardSedgemore, Brian
McCartney, HughSheerman, Barry
McDonald, Dr OonaghSheldon, Rt Hon R.
McKay, Allen (Penistone)Shore, Rt Hon Peter
McKelvey, WilliamShort, Ms Clare (Ladywood)
Mackenzie, Rt Hon GregorShort, Mrs H.(W'hampfn NE)
McTaggart, RobertSilkin, Rt Hon J.
McWilliam, JohnSkinner, Dennis
Madden, MaxSmith, C.(Isl'ton S & F'bury)
Marek, Dr JohnSmith, Cyril (Rochdale)
Marshall, David (Shettleston)Smith, Rt Hon J. (M'kl'ds E)
Martin, MichaelSnape, Peter
Mason, Rt Hon RoySoley, Clive
Maxton, JohnSpearing, Nigel
Maynard, Miss JoanSteel, Rt Hon David
Meacher, MichaelStewart, Rt Hon D. (W Isles)
Meadowcroft, MichaelStott, Roger
Michie, WilliamStrang, Gavin
Mikardo, IanStraw, Jack
Millan, Rt Hon BruceThomas, Dafydd (Merioneth)
Miller, Dr M. S. (E Kilbride)Thompson, J. (Wansbeck)
Mitchell, Austin (G't Grimsby)Thorne, Stan (Preston)
Morris, Rt Hon A. (W'shawe)Tinn, James
Morris, Rt Hon J. (Aberavon)Tomey, Tom
Nellist, DavidWainwright, R.
Oakes, Rt Hon GordonWardell, Gareth (Gower)
O'Brien, WilliamWareing, Robert
O'Neill, MartinWeetch, Ken
Orme, Rt Hon StanleyWelsh, Michael
Park, GeorgeWhite, James
Parry, RobertWigley, Dafydd
Patchett, TerryWilliams, Rt Hon A.
Pendry, TomWilson, Gordon
Penhaligon, DavidWinnick, David
Pike, PeterWoodall, Alec
Prescott, JohnWrigglesworth, Ian
Redice, Giles
Redmond, M.Tellers for the Ayes:
Rees, Rt Hon M. (Leeds S)Mr. Norman Hogg and
Richardson, Ms JoMr. James Hamilton.
NOES
Adley, RobertBrandon-Bravo, Martin
Aitken, JonathanBright, Graham
Alexander, RichardBrinton, Tim
Amess, DavidBrooke, Hon Peter
Ancram, MichaelBrown, M. (Brigg & Cl'thpes)
Arnold, TomBrowne, John
Ashby, DavidBruinvels, Peter
Aspinwall, JackBryan, Sir Paul
Atkins, Rt Hon Sir H.Buchanan-Smith, Rt Hon A.
Atkinson, David (B'm'th E)Budgen, Nick
Baker, Nicholas (N Dorset)Bulmer, Esmond
Baldry, AnthonyBurt, Alistair
Banks, Robert (Harrogate)Butcher, John
Batiste, SpencerButterfill, John
Beaumont-Dark, AnthonyCarlisle, John (N Luton)
Bellingham, HenryCarlisle, Kenneth (Lincoln)
Bendall, VivianCarttiss, Michael
Bennett, Sir Frederic (T'bay)Chalker, Mrs Lynda
Benyon, WilliamChannon, Rt Hon Paul
Bevan, David GilroyChapman, Sydney
Biffen, Rt Hon JohnChope, Christopher
Biggs-Davison, Sir JohnChurchill, W. S.
Blaker, Rt Hon Sir PeterClark, Hon A. (Plym'th S'n)
Body, RichardClark, Dr Michael (Rochford)
Bonsor, Sir NicholasClarke, Kenneth (Rushcliffe)
Boscawen, Hon RobertClegg, Sir Walter
Bottomley, PeterCockeram, Eric
Bowden, A. (Brighton K'to'n)Colvin, Michael
Bowden, Gerald (Dulwich)Conway, Derek
Boyson, Dr RhodesCoombs, Simon
Braine, Sir BernardCope, John
Corrie, JohnLang, Ian
Couchman, JamesLawrence, Ivan
Cranborne, ViscountLee, John (Pendle)
Critchley, JulianLeigh, Edward (Gainsbor'gh)
Crouch, DavidLewis, Sir Kenneth (Stamf'd)
Dickens, GeoffreyLightbown, David
Dicks, T.Lilley, Peter
Dorrell, StephenLloyd, Ian (Havant)
Douglas-Hamilton, Lord J.Lloyd, Peter, (Fareham)
Dover, DenshoreLord, Michael
du Cann, Rt Hon EdwardLuce, Richard
Dunn, RobertLyell, Nicholas
Edwards, Rt Hon N. (P'broke)McCrindle, Robert
Eggar, TimMacfarlane, Neil
Emery, Sir PeterMacKay, John (Argyll & Bute)
Evennett, DavidMaclean, David John.
Eyre, Sir ReginaldMcNair-Wilson, P. (New F'st)
Fairbairn, NicholasMcQuarrie, Albert
Fallon, MichaelMadel, David
Farr, JohnMajor, John
Favell, AnthonyMalins, Humfrey
Fenner, Mrs PeggyMalone, Gerald
Finsberg, Sir GeoffreyMaples, John
Fletcher, AlexanderMarland, Paul
Fookes, Miss JanetMarlow, Antony
Forman, NigelMarshall, Michael (Arundel)
Forsyth, Michael (Stirling)Mather, Carol
Forth, EricMaude, Francis
Fraser, Peter (Angus East)Mawhinney, Dr Brian
Fry, PeterMaxwell-Hyslop, Robin
Gale, RogerMayhew, Sir Patrick
Gilmour, Rt Hon Sir IanMellor, David
Glyn, Dr AlanMerchant, Piers
Goodlad, AlastairMeyer, Sir Anthony
Gorst, JohnMiller, Hal (B'grove)
Gower, Sir RaymondMills, Iain (Meriden)
Grant, Sir AnthonyMills, Sir Peter (West Devon)
Griffiths, E. (B'y St Edm'ds)Miscampbell, Norman
Grist, IanMitchell, David (NW Hants)
Hamilton, Hon A. (Epsom)Moate, Roger
Hampson, Dr KeithMonro, Sir Hector
Hanley, JeremyMoore, John
Harris, DavidMorris, M. (N'hampton, S)
Harvey, RobertMorrison, Hon C. (Devizes)
Haselhurst, AlanMorrison, Hon P. (Chester)
Hayhoe, BarneyMoynihan, Hon C.
Heathcoat-Amory, DavidMudd, David
Heddle, JohnNeale, Gerrard
Henderson, BarryNeedham, Richard
Heseltine, Rt Hon MichaelNelson, Anthony
Hickmet, RichardNeubert, Michael
Hicks, RobertNewton, Tony
Higgins, Rt Hon Terence L.Nicholls, Patrick
Hind, KennethNormanton, Tom
Hirst, MichaelNorris, Steven
Hogg, Hon Douglas (Gr'th'm)Onslow, Cranley
Holland, Sir Philip (Gedling)Oppenheim, Rt Hon Mrs S.
Holt, RichardOttaway, Richard
Hooson, TomPage, John (Harrow W)
Hordern, PeterParris, Matthew
Howard, MichaelPatten, Christopher (Bath)
Howarth, Gerald (Cannock)Patten, John (Oxford)
Howell, Rt Hon D. (G'ldford)Pattie, Geoffrey
Hunter, AndrewPawsey, James
Irving, CharlesPeacock, Mrs Elizabeth
Jenkin, Rt Hon PatrickPercival, Rt Hon Sir Ian
Jessel, TobyPink, R. Bonner
Johnson-Smith, Sir GeoffreyPollock, Alexander
Jones, Gwilym (Cardiff N)Porter, Barry
Jones, Robert (W Herts)Powell, William (Corby)
Jopling, Rt Hon MichaelPowley, John
Kershaw, Sir AnthonyPrentice, Rt Hon Reg
Key, RobertPrice, Sir David
King, Roger (B'ham N'field)Raffan, Keith
King, Rt Hon TomRaison, Rt Hon Timothy
Knight, Gregory (Derby N)Rathbone, Tim
Knight, Mrs Jill (Edgbaston)Rees, Rt Hon Peter (Dover)
Knowles, MichaelRenton, Tim
Knox, DavidRhodes James, Robert
Lamont, NormanRhys Williams, Sir Brandon
Ridley, Rt Hon NicholasTerlezki, Stefan
Ridsdale, Sir JulianThompson, Donald (Calder V)
Rifkind, MalcolmThompson, Patrick (N'ich N)
Rippon, Rt Hon GeoffreyThorne, Neil (Ilford S)
Roberts, Wyn (Conwy)Thornton, Malcolm
Robinson, Mark (N'port W)Thurnham, Peter
Roe, Mrs MarionTownend, John (Bridlington)
Rost, PeterTownsend, Cyril D. (B'heath)
Rowe, AndrewTracey, Richard
Rumbold, Mrs AngelaTrippier, David
Ryder, RichardTrotter, Neville
Sainsbury, Hon TimothyTwinn, Dr Ian
St. John-Stevas, Rt Hon N.van Straubenzee, Sir W.
Sayeed, JonathanVaughan, Sir Gerard
Scott, NicholasViggers, Peter
Shaw, Giles (Pudsey)Waddington, David
Shaw, Sir Michael (Scarf)Wakeham, Rt Hon John
Shelton, William (Streatham)Waldegrave, Hon William
Shepherd, Colin (Hereford)Walden, George
Shepherd, Richard (Aldridge)Walker, Bill (T'side N)
Shersby, MichaelWalker, Rt Hon P. (W'cester)
Silvester, FredWall, Sir Patrick
Sims, RogerWaller, Gary
Smith, Sir Dudley (Warwick)Ward, John
Smith, Tim (Beaconsfield)Wardle, C. (Bexhill)
Soames, Hon NicholasWarren, Kenneth
Speed, KeithWatson, John
Speller, TonyWatts, John
Spence, JohnWells, Bowen (Hertford)
Spencer, D.Wells, John (Maidstone)
Spicer, Michael (S Worcs)Wheeler, John
Squire, RobinWhitney, Raymond
Stanley, JohnWiggin, Jerry
Steen, AnthonyWilkinson, John
Stern, MichaelWinterton, Mrs Ann
Stevens, Lewis (Nuneaton)Winterton, Nicholas
Stevens, Martin (Fulham)Wolfson, Mark
Stewart, Allan (Eastwood)Wood, Timothy
Stewart, Ian (N Hertf'dshire)Yeo, Tim
Stokes, JohnYoung, Sir George (Acton)
Stradling Thomas, J,Younger, Rt Hon George
Sumberg, David
Tapsell, PeterTellers for the Noes:
Taylor, Rt Hon John DavidMr. Tristan Garel-Jones and
Taylor, Teddy (S'end E)Mr. David Hunt.

Question accordingly negatived.

Main Question put forthwith, pursuant to Standing Order No. 41 (Amendment on Second or Third Reading):—

The House divided: Ayes 299, Noes 23.

Division No. 156][10.15 pm
AYES
Adley, RobertBonsor, Sir Nicholas
Aitken, JonathanBoscawen, Hon Robert
Alexander, RichardBottomley, Peter
Amess, DavidBowden, A. (Brighton K'to'n)
Ancram, MichaelBowden, Gerald (Dulwich)
Arnold, TomBoyson, Dr Rhodes
Ashby, DavidBraine, Sir Bernard
Aspinwall, JackBrandon-Bravo, Martin
Atkins, Rt Hon Sir H.Bright, Graham
Atkinson, David (B'm'th E)Brooke, Hon Peter
Baker, Nicholas (N Dorset)Brown, M. (Brigg & Cl'thpes)
Baldry, AnthonyBrowne, John
Banks, Robert (Harrogate)Bruinvels, Peter
Batiste, SpencerBryan, Sir Paul
Beaumont-Dark, AnthonyBuchanan-Smith, Rt Hon A.
Bellingham, HenryBudgen, Nick
Bendall, VivianBulmer, Esmond
Bennett, Sir Frederic (T'bay)Burt, Alistair
Benyon, WilliamButcher, John
Bevan, David GilroyButterfill, John
Biffen, Rt Hon JohnCarlisle, John (N Luton)
Biggs-Davison, Sir JohnCarlisle, Kenneth (Lincoln)
Blaker, Rt Hon Sir PeterCarttiss, Michael
Body, RichardChalker, Mrs Lynda
Channon, Rt Hon PaulKershaw, Sir Anthony
Chapman, SydneyKey, Robert
Chope, ChristopherKing, Roger (B'ham N'field)
Churchill, W. S.King, Rt Hon Tom
Clark, Dr Michael (Rochford)Knight, Mrs Jill (Edgbaston)
Clarke, Kenneth (Rushcliffe)Knowles, Michael
Clegg, Sir WalterKnox, David
Cockeram, EricLamont, Norman
Colvin, MichaelLang, Ian
Conway, DerekLawrence, Ivan
Coombs, SimonLee, John (Pendle)
Cope, JohnLeigh, Edward (Gainsbor'gh)
Corrie, JohnLewis, Sir Kenneth (Stamf'd)
Couchman, JamesLightbown, David
Cranborne, ViscountLilley, Peter
Crouch, DavidLloyd, Ian (Havant)
Dickens, GeoffreyLloyd, Peter, (Fareham)
Dicks, T.Lord, Michael
Dorrell, StephenLuce, Richard
Douglas-Hamilton, Lord J.Lyell, Nicholas
Dover, DenshoreMcCrindle, Robert
du Cann, Rt Hon EdwardMacfarlane, Neil
Dunn, RobertMacKay, John (Argyll & Bute)
Edwards, Rt Hon N. (P'broke)Maclean, David John.
Eggar, TimMcNair-Wilson, P. (New F'st)
Emery, Sir PeterMcQuarrie, Albert
Evennett, DavidMajor, John
Eyre, Sir ReginaldMalins, Humfrey
Fairbairn, NicholasMalone, Gerald
Fallon, MichaelMaples, John
Farr, JohnMarland, Paul
Favell, AnthonyMarlow, Antony
Fenner, Mrs PeggyMarshall, Michael (Arundel)
Finsberg, Sir GeoffreyMather, Carol
Fletcher, AlexanderMaude, Francis
Fookes, Miss JanetMawhinney, Dr Brian
Forman, NigelMaxwell-Hyslop, Robin
Forsyth, Michael (Stirling)Mayhew, Sir Patrick
Forth, EricMellor, David
Fraser, Peter (Angus East)Merchant, Piers
Fry, PeterMeyer, Sir Anthony
Gale, RogerMiller, Hal (B'grove)
Gilmour, Rt Hon Sir IanMills, Iain (Meriden)
Glyn, Dr AlanMills, Sir Peter (West Devon)
Goodlad, AlastairMiscampbell, Norman
Gorst, JohnMitchell, David (NW Hants)
Gower, Sir RaymondMoate, Roger
Grant, Sir AnthonyMonro, Sir Hector
Griffiths, E. (B'y St Edm'ds)Moore, John
Grist, IanMorris, M. (N'hampton, S)
Hamilton, Hon A. (Epsom)Morrison, Hon C. (Devizes)
Hampson, Dr KeithMorrison, Hon P. (Chester)
Hanley, JeremyMoynihan, Hon C.
Harris, DavidMudd, David
Harvey, RobertNeale, Gerrard
Haselhurst, AlanNeedham, Richard
Heathcoat-Amory, DavidNelson, Anthony
Heddle, JohnNeubert, Michael
Henderson, BarryNewton, Tony
Heseltine, Rt Hon MichaelNicholls, Patrick
Hickmet, RichardNormanton, Tom
Hicks, RobertNorris, Steven
Higgins, Rt Hon Terence L.Onslow, Cranley
Hind, KennethOppenheim, Rt Hon Mrs S.
Hirst, MichaelOttaway, Richard
Hogg, Hon Douglas (Gr'th'm)Page, John (Harrow W)
Holland, Sir Philip (Gedling)Parris, Matthew
Holt, RichardPatten, Christopher (Bath)
Hooson, TomPatten, John (Oxford)
Howard, MichaelPattie, Geoffrey
Howarth, Gerald (Cannock)Pawsey, James
Howell, Rt Hon D. (G'ldford)Peacock, Mrs Elizabeth
Hunter, AndrewPercival, Rt Hon Sir Ian
Irving, CharlesPink, R. Bonner
Jenkin, Rt Hon PatrickPollock, Alexander
Jessel, TobyPorter, Barry
Johnson-Smith, Sir GeoffreyPowell, William (Corby)
Jones, Gwilym (Cardiff N)Powley, John
Jones, Robert (W Herts)Prentice, Rt Hon Reg
Jopling, Rt Hon MichaelPrice, Sir David
Raffan, KeithTapsell, Peter
Raison, Rt Hon TimothyTaylor, Rt Hon John David
Rathbone, TimTaylor, Teddy (S'end E)
Rees, Rt Hon Peter (Dover)Terlezki, Stefan
Renton, TimThompson, Donald (Calder V)
Rhodes James, RobertThompson, Patrick M(N'ich N)
Rhys Williams, Sir BrandonThorne, Neil (Ilford S)
Ridley, Rt Hon NicholasThornton, Malcolm
Ridsdale, Sir JulianThurnham, Peter
Rifkind, MalcolmTownend, John (Bridlington)
Rippon, Rt Hon GeoffreyTownsend, Cyril D. (B'heath)
Roberts, Wyn (Conwy)Tracey, Richard
Robinson, Mark (N'port W)Trippier, David
Roe, Mrs MarionTrotter, Neville
Rowe, AndrewTwinn, Dr Ian
Rumbold, Mrs Angelavan Straubenzee, Sir W,
Ryder, RichardVaughan, Sir Gerard
Sainsbury, Hon TimothyWaddington, David
St. John-Stevas, Rt Hon N.Wakeham, Rt Hon John
Sayeed, JonathanWaldegrave, Hon William
Shaw, Giles (Pudsey)Walden, George
Shaw, Sir Michael (Scarb')Walker, Bill (T'side N)
Shelton, William (Streatham)Walker, Rt Hon P. (W'cester)
Shepherd, Colin (Hereford)Wall, Sir Patrick
Shepherd, Richard (Aldridge)Waller, Gary
Shersby, MichaelWard, John
Silvester, FredWardle, C. (Bexhill)
Sims, RogerWarren, Kenneth
Smith, Sir Dudley (Warwick)Watson, John
Smith, Tim (Beaconsfield)Watts, John
Soames, Hon NicholasWells, Bowen (Hertford)
Speed, KeithWells, John (Maidstone)
Speller, TonyWheeler, John
Spence, JohnWhitney, Raymond
Spencer, D.Wiggin, Jerry
Spicer, Michael (S Worcs)Wilkinson, John
Squire, RobinWinterton, Mrs Ann
Stanley, JohnWinterton, Nicholas
Steen, AnthonyWolfson, Mark
Stern, MichaelWood, Timothy
Stevens, Lewis (Nuneaton)Yeo, Tim
Stevens, Martin (Fulham)Young, Sir George (Acton)
Stewart, Allan (Eastwood)Younger, Rt Hon George
Stewart, Ian (N Hertf'dshire)
Stokes, JohnTellers for the Ayes:
Stradling Thomas, J.Mr. Tristan Garel-Jones and
Sumberg, DavidMr. David Hunt.
NOES
Alton, DavidParry, Robert
Ashdown, PaddyPenhaligon, David
Beith, A. J.Ross, Stephen (Isle of Wight)
Bennett, A. (Dent'n & Red'sh)Skinner, Dennis
Bermingham, GeraldSmith, Cyril (Rochdale)
Bruce, MalcolmSteel, Rt Hon David
Canavan, DennisThomas, Dafydd (Merioneth)
Carlile, Alexander (Montg'y)Wigley, Dafydd
Cartwright, JohnWrigglesworth, Ian
Eadie, Alex
Freud, ClementTellers for the Noes:
Howells, GeraintMr. Archy Kirkwood and
Kennedy, CharlesMr. Michael Meadowcroft.
Loyden, Edward

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 42 (Committal of Bills).