Orders of the Day — Industry and Employment

Part of the debate – in the House of Commons at 6:10 pm on 12 November 1984.

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Photo of Mr Peter Hordern Mr Peter Hordern , Horsham 6:10, 12 November 1984

I agree with my hon. Friend, but I wish to develop my remarks. The Government should consider reviewing regional grants with a view to abolishing them. It is essential to reduce the cost of work in the regions. If the Government were to abolish employers national insurance contributions in the regions and to introduce a nil rate of corporation tax for firms operating within the regions, thus reducing the cost of work in those areas, I suggest with all humility that better results would flow, as in the United States. In New York state industry is offered interest rates in the form of tax-exempt bonds that run at 7½ per cent. for 20 years. That form of special development scheme should be considered. I do not suggest that the New York scheme is perfect, and I have no doubt that there are snags, but I am sure that it is no good treating the country as if it is one economic unit and throwing money away in areas that are not conforming to the pattern that the Chancellor has set for them. We must reduce directly the cost of work.

Where is the money to come from? I know that some of my hon. Friends are cereal farmers, or represent them, but I cannot understand why we should give cereal farmers a penny. If my right hon. Friend the Minister of Agriculture, Fisheries and Food were to go to the Council of Ministers in Brussels and shake his head sadly from side to side, we would save £1,250 million. It is my contention that regional grants should be abolished, which would save more than £600 million.

I am sure that the way ahead lies in reducing the cost of work in the regions rather than throwing money at them. I see no reason why Liverpool and other cities should not be attractive again. If new technological industries in communications, for example, can flourish anywhere in the country, there is no reason why the country as a whole should not make higher profits. That can happen if the movement of people is free and if the price of work reflects local conditions. My right hon. Friend the Chancellor of the Exchequer says that unemployment is not an economic problem. Indeed, he says that it is a social problem. I say to him that if different methods are used we shall have, not an economic problem, but an economic opportunity.