Regional Policy

– in the House of Commons at 4:43 pm on 17th January 1985.

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Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East 4:43 pm, 17th January 1985

Before we proceed with this important debate on regional policy I should inform the House, in relation to it, that, because of the number of hon. Members who wish to speak, I intend to apply the time limit on speeches of 10 minutes agreed to by the House on 31 October last. On this occasion I shall apply the limit to hon. Members called between 6 o'clock and ten minutes to 8 o'clock and not between 7 o'clock and ten minutes to 9 o'clock as on previous occasions. The resolution of the House on 31 October authorised both these methods of limitation. It would be useful for the House to gain experience of how each method works.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford 4:44 pm, 17th January 1985

I beg to move, That this House takes note of the Government's statement on 28th November announcing changes in regional industrial incentives; welcomes the closer alignment of the new Assisted Areas map to areas' relative needs for increased employment opportunities; agrees that it is right at a time of high unemployment to relate assistance more directly to jobs; and notes with approval that the increased cost-effectiveness of regional assistance will enable the burden upon taxpayers to be substantially reduced.

Today's debate provides an opportunity for the House to give consideration and, I hope, approval to the changes in the thrust of regional policy—the change of emphasis away from automatic subsidy of capital expenditure towards incentives for employment—and the changes to ensure that our spending is undertaken in the areas that are most seriously afflicted by the combination of unemployment, industrial decline and structural change.

The new policy also does away with the unjustifiable discrimination against service industry, which now provides a growing proportion of jobs. None of these changes comes as a surprise to the House. They were foreshadowed in the White Paper "Regional Industrial Development" which was published in December 1983, debated to some extent during the passage of the Cooperative Development Agency and Industrial Development Act and set out in greater detail in the statement made by my hon. Friend the Minister of State on 28 November last year, together with the supporting documentation that was made available at that time. I shall, however, refer later to one aspect of the implementation of the policy which will be new to the House.

The House will recollect that the 1983 White Paper boldly faced up to the question of the justification of regional industrial incentives, regional policy for short, and concluded that there is no longer a clear-cut economic case for such a policy. I realise that that outrages the more conservative—with a small "c", I hasten to add—Socialists on the Opposition Benches, but I do not think they should become over-excited about it since we can, I believe, stand on the common ground of the justification of this policy primarily on social grounds. By that I mean that the Government accept the need to do what we can —and Government are not omnipotent in this matter—to reduce the imbalance between the prosperous and the most hard hit areas of Britain. There is, of course, a price tag, a cost, to such a policy and it would be foolish indeed to count only the benefit and not the cost, or vice versa.

Again, whatever views we might take about the scale of benefit or the cost that might be afforded, I hope we might, again, agree to stand on the common ground that the cost-benefit ratio should be as favourable as possible. There will be people who have to pay for this policy—the generality of taxpayers and, let it not be forgotten, also those whose businesses or jobs suffer subsidised competition; there will be people, too, who gain from the policy. I am sure we would agree that so far as possible the recipients should be in those areas that are most hard hit and that these should be established on sound criteria.

I hope, though it is only a hope, that one day we might agree that not every part of the kingdom can be a beneficiary area. In the White Paper we argued: The incentives must be made more cost effective…with greater emphasis on job creation and selectivity and less discrimination against service industry". That major change won widespread support. Nor should that come as a surprise since examples abound of substantial grant payments that have been made as incentives to companies which would have located the investment in an assisted area in any event. In some cases those companies were themselves hardly pressed for cash and the investment produced few jobs, but the test, surely, for support for any project should be: what does it do for jobs, how many jobs and at what cost?

In some other cases, high rates of grant encouraged projects of marginal viability to concentrate in the assisted areas with the enhanced risk of multiple collapses during difficult times. Thus, past policies left the assisted areas particularly vulnerable during hard times. Perhaps, there is more than a little truth in the suggestion that major companies—not least multinationals—shopped around for the highest grant rates for their branch operations and that the assisted areas then suffered from the tendency for such companies to cut back on the more remote branches of their operations during recessions. At the same time, geographically mobile service industries which might have been attracted were denied incentives available to manufacturing industry to encourage their location in assisted areas.

I believe that these problems can be mitigated by the new policies. First, in most cases, the automatic grant will be related to jobs. The grant per job limit will avoid what one might call the Sullom Voe syndrome of high subsidy and disproportionately few long-term jobs. Even worse were the high automatic subsidies paid to investments which created no new jobs, or even reduced jobs, or merely shuffled jobs from one assisted area to another. Some have argued that automatic assistance should continue for job protection. I believe that that is best dealt with on a case-by-case basis.

In the past the abuses extended over a wide range. For example, a printing company could gain automatic RDG when it bought new plates to print a different book from the book it had been printing during the previous week. That was hardly related to job creation or even to job protection. Under our new policy, therefore, selective aid will continue to be available for the particularly desirable modernisation projects. Selective aid will also enable us to continue to compete effectively for internationally mobile projects.

The second major change is the fact that we have revised the geographical coverage of the assisted areas and moved from a three-tier system to a two-tier system. I am sure that there will be discussion today and later tonight on whether we have included a sufficiently large percentage of our working population in the assisted areas.

I believe that we have included as many as can be afforded. It would have been difficult to persuade the European Commission that a larger percentage would not have taken the policy from one of assistance to less-favoured areas to one of illegal general subsidy.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

I am sure my right hon. Friend appreciates that the fact that the Lancaster travel-to-work area with its high unemployment of 15·3 per cent. ceased to be an assisted area was a great disappointment to the area. We hope very much that my right hon. Friend will mitigate the damage that would otherwise by caused to us and will make the area a derelict land clearance area. If that is done, we can reasonably continue with the progress we have been making during our time as an assisted area.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I can understand my hon. Friend's disappointment at the fact that Lancaster fell on the wrong side of the line we drew. I understand that my hon. Friend the Under-Secretary of State for the Environment—the hon. Member for Sutton and Cheam (Mr. Macfarlane) —has written to my hon. Friend and some other hon. Members. I hope that my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) will receive that letter either this evening or tomorrow telling her that Lancaster has been granted status as a derelict land clearance area.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

The hon. Gentleman clearly does not understand logic or he would understand the purpose of those clearance areas and the subsidies granted to them. I regret the fact that the hon. Gentleman opposes the grant of such subsidies to Lancaster. No doubt the Labour candidate for the area at the next election will be asked about his party's attitude.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

If the hon. Gentleman makes a speech tonight I hope that he will make a point about the percentage of Tory-held seats and the percentage of Labour-held seats which are beneficiaries of regional aid. That would dispose of any suggestions of bias —[Interruption.] Having had this debate delayed once by unruly behaviour, I hope that will not be delayed again by unruly behaviour by the Opposition Front Bench.

The rapid restructuring of the economy had made a nonsense of the old map. Who could argue that the core of the west midlands, with unemployment rates of up to 21 per cent., should be excluded from benefits received by, say, Darlington with 15·2 per cent. unemployment, Durham with 14 per cent. unemployment or Oldham with 13·8 per cent. unemployment? Of course, current unemployment rates cannot be the sole criterion for inclusion in the assisted areas, but the west midlands stood out as an unfair exclusion.

Photo of Mr Reginald Eyre Mr Reginald Eyre , Birmingham, Hall Green

How many applications for grants have been received in the west midlands area, including Birmingham, since the proposals incorporated in the scheme were first announced?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I cannot give my hon. Friend a precise answer, but I know that the level of interest expressed has been high. The last time I inquired there had been well over 2,500 inquiries and well over 100 applications were being processed. I believe that my Department has arranged more than 40 seminars for interested parties in the Birmingham-west midlands area to examine the opportunities opened up by the new status of the area. I hope that that will be helpful to the city.

Photo of Mr George Park Mr George Park , Coventry North East

Will the right hon. Gentleman try to satisfy the House about the scheme's flexibility? The right hon. Gentleman just answered a question about land clearance from the hon. Member for Lancaster (Mrs. Kellett-Bowman). An application for land clearance was made in my constituency, in some parts of which there is 30 per cent. unemployment. We received a reply stating that, looking at the city as a whole, there was no justification for granting land clearance status. Could the scheme be more flexible and more selective and take such aspects into account?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I am sure that the hon. Gentleman will want to take up that matter with my right hon. Friend the Secretary of State for the Environment, who is responsible for that scheme. I am not responsible for it —[Interruption.] The hon. Gentleman must take account of the fact that I am often aware of what goes on, even in other Departments, but I cannot take responsibility for the schemes they draw up.

Photo of Mr Keith Hampson Mr Keith Hampson , Leeds North West

Does my right hon. Friend agree with the answer that has been given in the newspapers, that there is a case for task forces, especially for cities with needs that do not fall within the prescribed assisted areas criteria, to pull together the various activities of Departments such as the Department of Trade and Industry and the Department of the Environment? I assume that my right hon. Friend's Department will have a major role to play in such task forces.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

My hon. Friend puts a good point. I am not sure that we would necessarily create task forces as such. We seek to achieve much greater co-ordination between the regional offices and the Departments that operate in these areas, where several schemes of urban aid and regional industrial assistance overlap.

Photo of Mr Anthony Favell Mr Anthony Favell , Stockport

Will my right hon. Friend give way?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

This might be the last intervention I shall accept, or my speech will be rather long.

Photo of Mr Anthony Favell Mr Anthony Favell , Stockport

My right hon. Friend pointed out earlier that many well-run Conservative authorities have been excluded from the map. Is there not a problem with this policy in regarding development status as a reward to the prodigal son? Let us take the case of Manchester and Stockport. There is not a blade of grass between the two. Manchester city employs twice as many people per head of population as Stockport. Manchester thereby drives employment out of Stockport. Stockport is faced with the difficulty of Manchester city being aided to a large extent and Stockport not receiving that aid.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I can understand how my hon. Friend feels because I know that the local authority at Stockport has been assiduous in running a tight ship and giving good value to its ratepayers, which is more than can be said for a good many of the others nearby. But inevitably there are problems across boundaries of discrimination one way and another, and inevitably there are occasions when those who have looked after their financial affairs find themselves called upon to give help to those who have wilfully not done so. That is an inevitable consequence of some of these schemes.

In redrawing the map we have taken into account total unemployment, long-term unemployment, growth in labour supply, industrial and occupational structure, activity rates, peripherality and inner city problems. Even then we felt it necessary to take into account the relationships between neighbouring areas and, indeed, one might wax eloquent about what have become known as doughnut effects, where one small area is left unaided with a whole circle of aided areas round it. No doubt some hon. Member will touch on that later this evening.

Of course, we gave careful consideration to the many representations made to us. We have increased coverage to 35 per cent. of the working population and that will give us maximum access to the European regional development fund. Without that funding we could not have given such wide coverage. Thus we have been able to increase the areas eligible for regional selective assistance, too.

Within that wide coverage we have drawn a tighter group of inner tier areas, covering some 15 per cent. of the working population, on which to focus resources where they are most needed. In this inner tier we are concentrating assistance: not only ERDF and regional selective assistance, but the automatic RDG assistance. I realise of course that the former SDAs, whose 22 per cent. grants will go down to 15 per cent., will complain, but we are not setting out to give handouts to companies and in many cases it was simply not necessary to go to that level of subsidy to secure the jobs. I for one see no reason why we should add to the profitability of companies that were already adequately profitable and could have been induced to go on 15 per cent. or perhaps even less.

One consequence of these changes, as I have said, is that some areas will be downgraded or excluded from assistance. That will be a source of dissatisfaction. To minimise the pain, therefore, there will be transitional arrangements more generous than any offered before. These were described in detail by my hon. Friend the Minister of State last November.

That brings me to one matter that was not foreshadowed in earlier statements; nor is it so much a regional policy issue as a public expenditure issue that had to be faced by my right hon. Friends the Secretaries of State for Scotland, for Wales and myself. We agreed upon an approach—

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

Yes, we agreed upon an approach, which normally would have been announced at the time of the publication of the public expenditure White Paper. But my right hon. Friends and I thought it would be wrong for the House to debate these matters in ignorance of decisions that had been taken and that would shortly be public knowledge.

As I have explained, the transitional provisions protecting the decisions made on the basis of the old map and the old scheme will overlap the new policy and the new area coverage. In effect, two schemes will be running side by side with considerable overlap.

In 1983 we estimated that spending on regional industrial incentives in the year 1985–86 would be just under £500 million. It is now clear that, with the new policy and the transitional arrangements, that expenditure would have increased to well over £600 million and that bulge of expenditure simply could not be afforded.

We are therefore introducing today a four-month moratorium on the payment of the old style RDGs.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

If the hon. Gentleman will relax for a moment, I am sure that he would want to hear what the moratorium is and how it will operate. It means that there will be a four-month gap between the approval of an application and the payment and this will apply to the old RDGs until further notice. It will not apply to properly completed applications for grant which were either received or postmarked before midnight tonight; nor will it apply to the new RDG scheme. The moratorium will ensure that next year we spend no more on regional industrial incentives than we forecast in 1983.

Photo of Mr Jack Ashley Mr Jack Ashley , Stoke-on-Trent South

Will the right hon. Gentleman give way?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

It does not mean that there will be any substantive reduction in spend next year compared to the 1983 forecasts, nor will any grants be "lost"—they will only be delayed. So, while there may be some savings from the new policy as soon as 1986–1987, we still do not expect there to be any significant saving in regional policy spending until 1987–88, when we would have spent some £700 million if we had made no policy changes.

Photo of Mr John Smith Mr John Smith , Monklands East

Does the Secretary of State appreciate that extensive undertakings were given during the passage of the legislation about the transitional provisions, and assurances were given to those affected by regional development policy that great care would be taken? The result of the Secretary of State's announcement, although he claims that it makes no real difference to the national accounts—one wonders, therefore, why it is made—will mean that companies that have undertaken to purchase equipment and entered into contracts for it will be left with four months in which to find the money, and they will probably have to borrow it at the new rates of interest that the Government have introduced.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

In the event that that is so, I do not think that there would be any great difficulty in the company being able to borrow the money against the security. The amount that we are discussing is something like 4 per cent. on the 15 per cent. grant so it is not a major element of the cost involved. I have to remind the House that overall the expenditure in the coming year is expected to be the same expenditure as would have been undertaken on the basis of our 1983 estimates. I think that the right hon. and learned Gentleman has slightly missed the point, and I am not trying to be funny at his expense. I want to make it absolutely clear that—

Photo of Mr Jack Ashley Mr Jack Ashley , Stoke-on-Trent South

Will the right hon. Gentleman give way?

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

Order. The right hon. Gentleman can see that the Secretary of State is not giving way. I think that he may give way later, but not now.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I want to make it absolutely clear so that we can understand each other that there will be two policies, in effect running side by side during the transitional period. Therefore, in order to maintain expenditure at the level which had been forecast in the 1983 White Paper we have used a moratorium on the RDGs on the old system. The new system will go ahead untouched. That is the way in which we avoid the bulge of public expenditure. I can understand right hon. and hon. Gentlemen not liking it—I can understand companies not liking it—but on the other hand it may be rather more popular with taxpayers as a whole.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarfon

On this point, will not the right hon. Gentleman appreciate that the cash flow problems for companies are as great as, if not greater than, the cash flow problems for Government? In these circumstances, can he give an assurance not only that a letter of intent will be issued to the companies to help them in getting the liquidity that they might need, but that the Government will consider reimbursing any interest costs in the interim period, given the current high rate of interest?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

Let me take the hon. Gentleman's points one by one. First, there are many companies whose cash flow problems are considerably less than those of Governments—we would all like to be in the position of, for example, GEC, with a cash flow. Many companies do not have cash flow problems. The position of industry as a whole—its profitability and its liquidity—has vastly improved in the last year or so, and I believe that in general this would not be an unduly onerous burden.

Secondly, where a company's application is approved, a letter will be issued to it which will say, "Yes, you qualify for the grant. It will be paid, and it will be paid in four months from now," as opposed to today. I imagine that such a letter could be used in an application to a bank.

Thirdly, it would not be right for the taxpayer to carry the cost of the interest involved.

Photo of Mr Jack Ashley Mr Jack Ashley , Stoke-on-Trent South

Is the Secretary of State aware that his colleague announced a reduction in regional aid? The Secretary of State is now announcing a freeze on that reduction. Given the increase in unemployment and the fact that regional aid ensures equity, he is announcing an unfair policy that will hit those areas suffering high unemployment.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

The right hon. Gentleman hardly expected me to come to the House today to announce an increase in expenditure on regional aid. For next year, expenditure will be maintained at the level that we forecast in 1983, but, because of the changes in policy, that expenditure will be more effective than it would have been under the old policy.

Photo of Mr Winston Churchill Mr Winston Churchill , Davyhulme

The fact that the new regional development grants will be unaffected by this moratorium and that the overall volume is unaffected for the coming year is much appreciated. May I thank my right hon. Friend on behalf of my constituents in Greater Manchester for the fact that Trafford Park has been included in the regional assistance status area?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I am glad that that has happened. I should perhaps trespass upon the relatively quiet response that I have so far had and say that in 1987–88 there will be significant savings of about £300 million a year on what would have been spent under the old policy. I emphasise that that is justified because the money that will be spent will be spent much more effectively. The Chancellor will be happy, but not yet.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

Others of differing political views may want to be miserable, but I would advise them not to be miserable yet. I would counsel them against misery in any case.

Photo of Alan Beith Alan Beith Opposition Whip (Commons), Shadow Spokesperson (Foreign and Commonwealth Affairs)

Does the Secretary of State recognise that he is delivering a double blow to areas such as Amble in Northumberland, which he has excluded from regional development aid? Firms in those areas are seizing the last chance to obtain some help from the scheme. Those firms are now being told that plans that they have had to bring forward to come within the scheme will not be paid for another four months.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I understand that, but there has been a reasonable time during which people could apply for grants. We could not have told them in advance that there was going to be a moratorium or its purpose would have been frustrated. That is one of the consequences of changing the shape of the map and the policy.

Photo of Mr Michael Grylls Mr Michael Grylls , Surrey North West

While of course the moratorium may, as the Secretary of State has readily recognised, cause some problems to some firms, does he accept that the vast majority of British industry is much more interested in supporting him in keeping the general level of public expenditure under control because its greatest interest is in ensuring that inflation does not take off again? He has a great deal of support for trying to control public expenditure.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I am grateful to my hon. Friend. It is appropriate that the case for the generality of the population—the taxpayers—should also be heard in a debate when, not unnaturally, we hear a great deal about the case for those who are in assisted areas or who would wish to be.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

Yes, they are taxpayers, but they are beneficiaries, whereas the others are not.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

Mr. Speaker, this is a short debate. I should have been able to give way to the hon. Gentleman had we not suffered from the vilely rude behaviour of some of his colleagues.

Regional policy should not be judged good if it costs a lot and bad if it costs rather less. It should be judged on what it achieves. Bluntly, past policies were not completely successful in the regions that they sought to help. In addition, they damaged some other areas, and the west midlands felt that strongly. They were expensive, thus causing a more general negative effect in the economy.

It has been estimated that the cost per net additional job created in the assisted areas in the 1970s was about £35,000 at 1982 prices. Many of those jobs would otherwise have come into being elsewhere in the country.

It will be some time before we know the cost per job of the new policy because such estimates must take into account the total effect not just on the firms that receive assistance but on their suppliers and competitors. Of course, new long-term stable jobs do not come into being overnight. I am confident that the new policy will be much more cost-effective than the old. However cost-effective the policy, it will still be a burden on the taxpayer. The new policy is expected to cost nearly £400 million a year in 1987–88. [Interruption.] The cost of the policy is imposed on industry. It is the wealth-producing industry of this country that provides the money to do it.

This is a considerable lightening of the burden on the country as a whole—a reduction of nearly £300 million from what would have been spent under former policies, and I make no apology for that.

The policies that I have outlined give the hardest hit areas the most help. They concentrate on job creation and not on how much taxpayers' money can be given away, sometimes to prosperous companies to subsidise them to do what they would have done anyway. The policy is to minimise job shuffling within assisted areas.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I am sorry that I have had to say it three times, but it is possibly still not understood by the hon. Gentleman, and I might have to say it again.

The policies recognise more fully the role of the service industries as a provider of jobs. We look to better value for money and more jobs per pound of expenditure, because we recognise that regional policy has adverse effects on those who pay but do not receive, and their jobs matter too.

The Government do not turn their back on the problems of the regions, but we believe that as the traditional policy which has been followed for almost 40 years has not achieved what it should, new, more effective and less expensive policies are overdue. To suggest, as the Opposition amendment does, that the policy of spending some £480 million in 1985–86, £610 million in 1986–87 and £390 million in 1987–88 is destructive of regional policy is just plain silly. To deplore, as the amendment does, the changes — by calling them restrictions — to make that spending more cost-effective, is to support spending for the sake of spending and to oppose cost-effective policies.

As ever, the longer that the Opposition are out of office the fewer there are of them who remember what responsibility even felt like. The more distant their prospect of returning to office, the more ridiculous and irresponsible they become with this type of amendment. If there are credible alternatives to our policies they are not to be found in any of the Oppositions' policies. I commend the Government's policies to the House.

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

I must announce to the House that I have selected the amendment which stands in the name of the Leader of the Opposition.

Photo of Mr John Smith Mr John Smith , Monklands East 5:20 pm, 17th January 1985

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: but deplores the destruction of regional development policy at a time of record high unemployment and steep industrial decline in the regions and nations of the United Kingdom, condemns the massive cut of £300 million each year in regional industrial assistance, the abolition of special development areas, and the new reductions and restrictions on regional aids and urges a programme of national economic recovery to rebuild the industrial base in which positive regional development is given a crucial role.

Before embarking on the debate on the policy changes, I must express the deep concern of hon. Members on this side — and, I suspect, in other parts of the House, although they have not yet revealed it — about the sudden announcement by the Secretary of State today of the moratorium on regional development payments.

As the right hon. Gentleman well knows, the effect will be to damage many projects which are dependent on regional assistance for their viability. Even if the grants are paid at the first opportunity — I do not know whether that, in all cases, can be guaranteed—there will be an obvious effect on the cash flow of the companies concerned.

After all, many of those companies will have entered into binding contracts with suppliers on the basis that they thought they had a genuine undertaking and guarantee from the Government that the money to which they were entitled would be paid on the date on which it was due. They may in some cases be able to borrow to cover the difficulty of receiving their money four months late, but those which do that will have to pay interest, and they will have to pay at a higher interest rate as a result of the Government's recent financial policies.

The Secretary of State has treated this matter far too lightly. He says airily that many companies will be able to face this problem. But many companies will not, and to those that will not the Government merely shrug their shoulders and say, "That is too bad."

It emerges, however—from the way in which the right hon. Gentleman explains the national accounts—that not much is involved. The explanation we are given is that there really is no change; the same money will be spent. If so, why on earth are we having a damaging moratorimum. The Secretary of State cannot have it both ways. If there is no real change in this magical creative accounting—in which I am not surprised the right hon. Gentleman is an expert—there should be no need for this moratorium.

Photo of Mr John Smith Mr John Smith , Monklands East

I am happy to give the right hon. Gentleman another shot at it, if he would like one.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I could not have made myself clear, although I hoped that I had. The combination of bringing in the new policy would have increased spending next year. By bringing in the moratorium, we have brought spending back on to the line that had been forecast in 1983. That means that we have a more effective policy for the same money.

Photo of Mr John Smith Mr John Smith , Monklands East

The money must be paid anyway. It is clear however, that it will be paid next year instead of this year. It is being shifted from one set of accounts to another. That fact prompts me to take the point further. One would have thought that this resulted from some unexpected development that threw the Government off course. But that has not been the case. It results precisely from the way in which the Government have gone about it.

The Government were warned throughout the passage of the preceding legislation that there would be a need for proper transitional arrangements. When they announced reductions in regional development grants—there had been a shrewd suspicion by many people that they would — there was a bunching of applications. When the Government then, in the last Budget, changed the capital allowances, there was a further incentive for people to get on with their projects as soon as possible. Therefore, there was a bunching of applications, and that apparently threw the Government accounts out of line for this year.

Instead of bringing forward a Supplementary Estimate to deal with that entirely predictable problem, the Government are trying to move the money into the next year's accounts. That seems funny accounting to those who are trying to understand it, and certainly the public will be puzzled by it.

However, that is not so much the problem. People who have undertaken contracts and made purchases will be left in the lurch as a result of this change by the Government, and it is on their behalf that we complain today.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

My right hon. and learned Friend will recall that one of the bull points made by the Minister of State when introducing the transitional arrangements was that they would be extremely beneficial in helping to alleviate the problems of firms which wanted to go ahead under the existing scheme. Now, by this moratorium, the Government are welshing on that promise.

Photo of Mr John Smith Mr John Smith , Monklands East

I am grateful to my hon. Friend for making that point. Perhaps, like me, the Secretary of State is at a slight disadvantage in not having taken part in the proceedings on the Bill.

Photo of Mr John Smith Mr John Smith , Monklands East

I was being charitable to the right hon. Gentleman. If he chooses to reject my charity, another side of my attitude towards him may develop during my remarks.

My hon. Friend raises the important point that Ministers concerned with the matter at the time gave one assurance after another that there would be generous transitional arrangements and promised that the scheme would last for a year in respect of applications in transit. One understood why that was done. Indeed, I understand that a provision to that effect appears in the commencement order. Now we have a sudden change which will mean a four-month delay. For a company which may be struggling for its very existence, regional development assistance is essential to its investment decisions. All its calculations are being thrown off balance.

Photo of Mr Barry Henderson Mr Barry Henderson , North East Fife

Does the right hon. and learned Gentleman not think that industry will feel that the careful consultation and consideration which has been given to these changes—[Interruption.]—and the two to three-year transitional arrangements compare favourably with the sudden ending, at a stroke, of regional employment premium by the Government of which he was a member?

Photo of Mr John Smith Mr John Smith , Monklands East

If the hon. Gentleman thinks that today's sudden announcement is an example of careful consideration and consultation with companies, he has an odd view of consultation. I am not surprised that companies find that they are often not adequately represented by Conservative Members who, if a Labour Government were in office, would be telling tales of woe about companies being in terrible trouble, saying that my hon. Friends and I do not understand the realities of business, do not know how companies are run, and the rest of it.

We have in office a party which claims to speak for manufacturing industry and management, yet not one Conservative Member rose while the Secretary of State was speaking to complain on behalf of the managements of those companies and the difficulties into which they are being put by the Government. Tory Members should be ashamed of themselves for being such party political sheep that they put their prejudices—[Interruption.] We have a volunteer.

Photo of Mr James Couchman Mr James Couchman , Gillingham

Is the right hon. and learned Gentleman suggesting that companies would have entered into firm, binding contracts before having their applications for grant acceded to by the Department? If so, that would be curious commercial sense. If not, I understood my right hon. Friend to say that applications which had already been agreed would not be affected by the moratorium.

Photo of Mr John Smith Mr John Smith , Monklands East

The Secretary of State had better have a word with the hon. Member for Gillingham (Mr. Couchman), who clearly did not understand the argument. It is applications already granted in respect of which payment will be delayed. Almost by definition, therefore, the contracts on which they depend were entered into previously.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

So that the right hon. and learned Gentleman does not give the wrong impression—I know that he would not want to do so—let me deal with that question which arises on the moratorium. I am anxious to be careful in the words I use because I want to get it absolutely right. The moratorium will not apply to properly completed applications for grant received or postmarked before midnight tonight. Let us be clear about that.

I believe that the other reason why there was not quite so much outrage from the Government Benches as there was from the Opposition Benches was that my hon. Friends may have done their arithmetic more quickly than the right hon. and learned Gentleman and his hon. Friends and will have considered that on a £100,000 project with a rate of 15 per cent. grant, those concerned with the project would be looking for £15,000, and the 4 per cent.—assuming they were paying that sort of interest rate—that it would cost over four months would not he a catastrophic amount. If they were caught for that amount of money, perhaps they were unwise to go in for the project in the first place.

Photo of Mr John Smith Mr John Smith , Monklands East

We hear harrowing tales of woe whenever there is an increase in local authority rates. We are told that sometimes a company's whole viability is at risk In fact, local authority rates have a much smaller impact. The right hon. Gentleman had better be careful lest the response that he has just made is quoted against him. In effect, he said, "There is not much to worry about in the vast majority of cases." If it is that unimportant, why go to the fuss of making the announcement that the right hon. Gentleman has made today?

The Government are caught, on the one hand, by saying that there is no change of any consequence and we should not be particularly concerned about what is being done; but, when we look at it from the point of view of companies, we find every reason for them to be deeply concerned. That shows that the Secretary of State's announcement is so serious that we must protest profoundly and vigorously not only at the change that has been made, but at the sudden manner in which it has been made, which is all too typical of the lurching way in which Government policy develops from day to day.

The Secretary-of State sought to persuade the House that what was involved in regional policy changes was not really major departure of principle, but merely a wise redistribution of resources and an exercise in value for money, trying to hone regional development policy techniques to be a more perfect way of delivering the goods. That simply will not wash when, at a stroke, £300 million has been taken out of a budget of £700 million not just this year but for every year that the policy runs. In three years or so, that will mean £1 billion being taken away that would otherwise have been available for the regions. That is a crippling attack on regional policy as a whole. It is not the first attack. There were cuts in 1979 and in 1982. Between 1974 and 1979 regional development expenditure was £6.4 billion. From 1979 to 1984 it was reduced to £4·1 billion. In other words, there has already been a reduction of £2·3 billion, or 35 per cent., compared with the amount spent by the Labour Government.

The further slashing cut of £300 million makes it clear that the Government's purpose is not to deploy resources more efficiently, but to reduce the financial commitment to regional indistrial assistance. Indeed, that was openly stated by the Minister of State in a speech in Birmingham shortly after the policy statements were made. The press release sent out by the Department tells us that regional policy savings should be "welcomed" according to the Minister of State in a stout defence of the Government's regional policy". Press officers at the Department are becoming somewhat deferential in relation to ministerial pronouncements. In that "stout defence" of Government policy the Minister went on to make a most surprising statement. He argued that the cuts were quite a good thing in public expenditure terms, but he then had some difficulty reconciling that view with any belief in regional development policy. He went on to say: What I am sure about is that lower public expenditure will help to create jobs. It is not Government spending money but Government not spending that creates jobs.

One wonders about the sanity of Ministers capable of uttering statements like that. The Minister of State is a perfectly intelligent person—[Interruption.] Perhaps I am being too generous. He is a reasonably intelligent person. His difficulty is that, like so many other folk in this country, he wants to keep his job. I dare say that he also hopes to improve his position. That is why he has to say these things. If it is not Government spending but Government not spending that creates jobs, there should have been a great leap forward in employment under a Government so dedicated to cutting public expenditure. Moreover, unemployment means higher public expenditure. If the result of Government policy is to put more people on the dole, and thus to increase public expenditure, one wonders at the logic of their statements. From the Minister's statement, that cutting £300 million from a £700 million budget will create more jobs, it follows logically that the total abolition of any regional development policy should be the greatest job creation exercise ever.

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

Does the right hon. and learned Gentleman not think that £300 million in extra taxes also destroys jobs?

Photo of Mr John Smith Mr John Smith , Monklands East

Perhaps some day the Minister will explain to me why £300 million not being spent creates jobs, but £400 million being spent destroys jobs. I find that difficult to understand when the £400 million is being used to create and finance projects which in turn create jobs and wealth. I am beginning to think that hon. Members who begin their political life as reasonably intelligent people should have the benefit of a Government health warning in their dispatch boxes to the effect, "Thatcherism damages the brain", as that is clearly what has happened to Ministers at the Department of Trade and Industry. If the Minister of State is right in his assumptions, we should be destroying regional development policy entirely.

Towards the end of the same speech in Birmingham, when his audience of business men must already have been fairly mystified, the hon. Gentleman realised that he had to justify the £400 million that was still to be spent, so he said that some areas had considerable problems and still needed assistance. He did not make it clear why the £400 million was good for those areas when taking away £300 million was good for other areas. At that point, one begins to lose sight of the logic that drives the Government on.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I was waiting to see whether the right hon. and learned Gentleman would either clean his spectacles or stumble across the truth along the way, but clearly I shall have to help. He seems to have forgotten that the prime justification for the regional spending policy is a social justification—[HON. MEMBERS: "Oh!"] That is what the White Paper says. [Interruption.] If hon. Members will just relax, I shall explain. Within the total of jobs in the economy, what that spending achieves is, not least, that jobs will be created in one place rather than another. The right hon. and learned Gentleman then confused that with the point that my hon. Friend the Minister of State was making in relation to the aggregate of jobs in the economy.

Photo of Mr John Smith Mr John Smith , Monklands East

The Secretary of State is now having to come to grips with things and to listen to arguments that are probably not often articulated in the Cabinet. Debates of this kind can be an educative experience for Ministers, and I hope that they will learn something today.

The Secretary of State now says that regional development policy is merely a matter of shifting jobs from one area to another—the very reason for which he condemned Labour Government policy. He is now saying, "I have changed that wicked policy, but in fact that is all that one can ever do with regional development policy." That follows from his statement that regional development policy is merely social policy. He clearly does not appreciate the economic case for regional development policy—to stimulate growth in the regions and to create new industrial enterprises that would not otherwise have been created. Far from merely moving jobs from one part of the country to another, it is a matter, as much as anything, of generating new jobs.

That is the basic fallacy of the Government's approach, and it arises due to a number of forces. The first is the need to slash public expenditure, and there have been all too many victims of that. Because of the mounting bill for unemployment on the Government's back, they are forced to cut other programmes — and regional development policy has been one of the victims.

I am especially sorry for the special development areas —the areas of highest need. As Ministers well know, the highest grants went to those areas because they had the biggest problems. If we are redefining the tools of regional development policy, what sense does it make to take away the specialist operations of the special development areas? That gives the lie to the claim that there is a re-honing of the techniques involved.

Let me deal with the argument that this was justified because of the very large projects upon which a great deal of regional money was spent. We have heard endlessly about the Sullom Voe oil terminal. The money spent upon that was spent many years ago. I suppose that the Government have in mind the Moss Morran project, the grants for which were, I believe, sanctioned by the present Administration. There is a very simple answer. The Government claim credit for the support that they gave to the Moss Morran project when it suits them, but they try to run away from it when it does not suit them in the House of Commons. The Government know, as does the House, that if that is the problem, there is a very simple way of dealing with it—one declassifies some of those projects from the range of regional development assistance or makes them subject to ministerial discretion of some kind.

The Secretary of State knows that certain types of industry are unable to benefit from regional development assistance and that decisions have to be made as to which industries qualify for such assistance. One can easily move an industry from one column to another. However, that is no justification for raiding regional development funds for public expenditure reasons that the Secretary of State has advanced today.

These changes, and also the Budget changes, will be very much to the disadvantage of certain industries which are struggling to survive. Those Conservative Members who take their constituency responsibilities seriously know that many companies, some of them old-established companies, are struggling to survive. They are struggling to survive on low profits and against the heavy tide of imports. Their only hope for survival is to invest heavily in new products and processes. I should have thought that any intelligent Government would wish in particular to give as much assistance as possible to companies which are situated in high unemployment areas. I fear that the consequences of these so-called job-directed changes and of the changes made in the Budget to capital allowances will hit precisely those industries and companies. They will suffer greatly from the present and continuing decline.

As the Secretary of State revealed in his intervention, the truth is that the Government do not believe there is an economic case for regional industrial policy. The White Paper is in line with the Chancellor of the Exchequer's famous and fatuous remark, that unemployment is a social, not an economic, problem. That is at the same intellectual level as the Chancellor's other famous observation, that the trend of future employment is not so much low-tech as no tech. What an ambition for the Chancellor to have for the people of this country. The Government have deluded themselves into believing that regional development policy is a social matter which verges on charity: that they must be quite nice to those who live in disadvantaged areas and give them a handout from time to time in order to keep the social fabric in good repair. That is a departure from the policy followed by previous Conservative as well as Labour Governments.

Thatcherism does grave damage by inculcating the inability to grasp the point that unemployment is a waste of resources, both physical and human. Failure to deploy those resources in our regions will condemn us to economic and national decline. If we persist in this waste, we shall fail to create the wealth which can truly guarantee the social fabric of this country. I regret that that decline is well advanced in many regions of the country, but it has spread more widely than the areas which are traditionally defined as being in need of assistance.

The Secretary of State has today had the sauce to try to claim some credit for bringing the west midlands into the range of reginal industrial assistance. He has got hold of the wrong end of the stick. The Government should be condemned for causing such destruction to the once great industrial powerhouse of the west midlands. Since 1979 the Government have brought the west midlands to its knees — to the condition that fulfils the criteria for regional industrial assistance. However, when the Government seek to assist such regions, they give to difficult areas within areas like the west midlands—for instance, the centre of Birmingham — far too little assistance.

Photo of Mr John Smith Mr John Smith , Monklands East

My hon. Friend speaks eloquently of the problem in that area. As the Secretary of State knows, it is not an area with which previous Governments had to deal as a matter of policy.

Photo of Mr John Smith Mr John Smith , Monklands East

The hon. Gentleman can leave, if he wishes, but I am not going to give way to him.

What will be the effect of all these changes in policy? Inevitably, they will accelerate both job losses and industrial decline in the hard-pressed areas. Scotland will lose £100 million, Wales will lose £60 million and England nearly £150 million in each year of the operation of this policy. It is not as though these areas have not been suffering. Since 1979, Wales has lost 83,000 jobs, the north 100,000, the north-west 250,000, Yorkshire and Humberside 162,000 and Scotland 150,000. On top of that there has now been the chopping almost in half of regional development industrial assistance. In every area where there has been a reduction in assistance as a result of this policy, from the south-west of England to the north of Scotland, there will be added the almost direct stimulation of unemployment. For those reasons we condemn the changes that have been introduced.

May I remind the House of what the Conservative party has said. I can do no better than to quote the words of the present Prime Minister during the 1979 general election campaign. Speaking in Bolton on 1 May 1979, she said: Of course, we will continue with regional aid. We have always given special help to the regions". That was a regional development policy of much greater extent and capability than the one we are discussing today.

In case there is any doubt about the intentions of the Conservative party, on 16 April 1979, in Coventry the Prime Minister said: Labour's latest smear suggests that the next Conservative Government would cut off all state help for industry and the regions—and thus destroy jobs. This is a wicked lie … We are committed to the maintenance of a strong and effective regional policy. Hon. Members who seek to try to escape from the consequences of that quotation by referring to all the help that has been given must bear in mind that the Prime Minister said: We are committed to the maintenance of a strong and effective regional policy. The Prime Minister did not say, "We shall have to take the interests of the taxpayer into account." Anybody who describes these changes as making regional policy stronger and more effective does not understand what the policy is about.

At the heart of this matter there is a fundamental problem, namely that the Government cannot see the economic case for it. If we continue to neglect the economic case, the creation of wealth in this country will depend only upon the more prosperous areas in the south. The rest of Britain will be relegated to competing with low-wage countries for routine assembly type production. That can never be a proper policy for the whole of this country which Parliament has to represent. Parliament represents those areas which are well off as well as those areas which are not so well off.

The great opportunity to redesign our regional development policy in the context of the recession has been missed by the Government. They have perverted it into a cost-cutting exercise. No attempt has been made to integrate regional industrial assistance with other forms of social help and assistance and with the range of policies that the Government ought to be pursuing. They have made cuts there, too. In recent years local authorities have taken much more interest in the economic development of their areas. Many have been pressed to do so because this is the most important problem that faces their citizens.

There have been many imaginative developments. The enterprise boards are often able to create more jobs at a greatly reduced cost than the present Government or previous Governments have been able to create through their regional development policies. They are certainly very much cheaper than jobs created in enterprise zones. The Government are frightened to tell us how much they cost. I am not the only Member who has put down questions asking about the cost of jobs in enterprise zones. We have all received the same answer: the Government do not know. They prefer to use it as a technique of policy, but they do not know what such jobs cost, or they are frightened to say what they cost. Such a job is estimated to cost £50,000. We hear very little about the value of money in the context of the enterprise zone argument.

We have seen local authorities, many of them Labour-controlled, seeking to fill the vacuum created by the Government's withdrawal from action on and concern for economic development in their areas. There has been no new thinking and there is no new approach in this regional development policy. It is the same old story from the Government. The Government do not build for themselves; they destroy the work of others—not just the work of Labour Governments, but of Tory Governments in the past.

What is frightening is that the Government appear to be impervious to the damage that they are causing. As the economic storm clouds gather over Britain and become more serious every day, the Government plunge blindly on destroying as they go. When they are finally called to account, the missed opportunities and wanton destruction of regional development policy will, I hope, be high on the indictment.

Photo of Mr David Mudd Mr David Mudd , Falmouth and Camborne 5:50 pm, 17th January 1985

I hope that the right hon. and learned Member for Monkland, East (Mr. Smith) will accept that as I am not following him into the Division Lobby tonight I shall not follow the argument that leads him there, although he may find a certain identity of views on one or two aspects of the philosophy of failed regional policy. To reassure my right hon. Friend the Secretary of State and my hon. Friends, I shall not be following them into the Lobby either in support of this regional aid package.

However, I welcome two particular aspects of the policy relating to Cornwall. First, I welcome the tidying up of development areas in the extreme west of the county, even though that means a downgrading, and equally, I welcome the recognition for the first time of mining activities as qualifying for regional policy and grant aid.

Having said that, I must make the blunt point that regional aid in its original form, its modified form, its updated form, its improved form and now its new-look form has completely failed to serve the economic needs of the west country, particularly the far west of Cornwall, even at a time when parts of my constituency enjoyed special development area status.

If the present regional policy has succeeded, why do I have 2,500 men out of work in Falmouth—27·2 per cent. unemployment—1,500 registered as unemployed in Redruth, and 2,000 people registered as unemployed in Camborne, despite that being a small area that should be the industrial heartland and growth area of west Cornwall?

Falmouth, Camborne and Redruth, having failed to gain any benefit from special development area status, now find — surprise, surprise — that they have been relegated to development area status. We are entitled to ask what is the merit, value and point of that. What good will that do the unemployed in my constituency?

I must admit that I am not merely saying that it is Government regional policy, as embodied in the statement of 28 November, that is at fault. There is a shopping basket of failed Government regional policy that has impeded the regeneration of economic activity in west Cornwall.

The Department of the Environment would not allow Carrick district council to use £2·5 million of the £7 million that it had made in selling council properties to extend a new building programme that would help the elderly, the handicapped, single-parent families and young married people. That was Carrick's own money, brought about by its own judicious activities. As a result, the unemployed remain unemployed. Those who require housing have to wait still longer and a local authority is denied the ability to levy rent and rates on its own bricks and mortar. I criticise that policy and the effect it has on parts of my constituency.

It is the policy of the Department of Trade and Industry resolutely to refuse even to consider for one moment the possibility of the introduction of legislation on mineral rights. That would ease the way to the exploration and exploitation in the Cornish minerals industry in what happens to be the one growth industry in Cornwall in terms of an increased work force.

The Treasury has now come up with a wonderful scheme effectively to reduce VAT collection in west Cornwall. Nobody likes VAT. Nobody likes having to pay it. But Cornish business men and small shopkeepers will now have to wait a long time for advice or will have to make costly phone calls which in no way assists the survival of the economy of west Cornwall.

Photo of Mr David Harris Mr David Harris , St Ives

Will my hon. Friend confirm that both he and I and other hon. Members from Cornwall have written to the Minister and the Treasury on that point and that, despite our letters, we have been given no costings of the savings that the Minister claims will be made by this reorganisation?

Photo of Mr David Mudd Mr David Mudd , Falmouth and Camborne

I gladly agree with my hon. Friend but that is a point that he will no doubt wish to pursue with Treasury Ministers rather than with the Department of Trade and Industry within the context of this debate.

The Government's policy wastes resources and effort by attracting the footloose into the far west of Cornwall —firms which may close quickly with no notice whatever in response to the faintest quiver of economic change, which may well founder as a result of new and changed technology and any changed pattern of economic activity. Those are the firms that I describe as the footlose or the bounty hunters. They have made the decision to come to Cornwall from afar. From the moment that they arrive they do not identify with the local communities and needs. Their particular interest in coming to Cornwall is purely an attempt to take advantage of such regional aid as their accountants assure them will be necessary and beneficial to them.

I have no doubt that the real way forward is to switch support to indigenous undertakings in Cornwall, including tourism; to remove the inhibitions that prevent local government from using its resources in the interests of its communities, and to look carefully and closely at one aspect of Government policy that I admit has succeeded in Cornwall—the community programme.

The community programme has genuinely introduced hope where it did not exist. It has helped to develop new skills, and above all it has created a new pride in community effort and activity. Steps should now be taken by the Government within the context of regional policy seriously to consider extending the scheme to something on the lines of a regional, county or district task force undertaking long-term projects such as the construction of houses, hospitals, roads, schools and other environmental works.

Although the community programme has succeeded, before long it will be seen as having been nothing more than a great deal of effort and generated activity. In the process of time the weeds will return to the churchyard that have now been cleared. The walls that have been restored will fall down again and our ponds and village streams will once more have the clutter of supermarket trolleys, pram bodies and mattresses. It will have been a good scheme which harnessed a great potential, but to no avail whatever.

As the Government consider what they should be doing for the regions, they should consider some way of harnessing the community programme to create long-term employment by creating community works of value to the infrastructure. In that way, even at this late stage, the Government's regional policy could, while helping the unemployed, give positive and lasting value to the industries, firms, businesses and people of our hard-pressed and neglected regions.

Photo of Mr Norman Miscampbell Mr Norman Miscampbell , Blackpool North 5:58 pm, 17th January 1985

I speak on behalf of an area which has lost its assisted area status and where there is now in Blackpool 20·2 per cent. unemployment. Taking an average over the last year from January to January, that is 17·8 per cent.

I understand the Government's difficulties, but neither I nor my right hon. Friend the Member for Blackpool, South (Sir P. Blaker) can support the Government in the Lobby tonight, for the following reasons. I used, the figures for the local authority area, but the Government have based their decision on the travel-to-work area.

The controversy between us is central to Blackpool's problem. On the criterion used by the Government—the travel-to-work area — we are linked with Lytham St. Anne's and between Blackpool and Lytham St. Anne's there is very little relationship. The latter is a wealthy retirement area. Most of those who work are in businesses in the north-west of Lancashire or travel to Manchester. The unemployment rate is about 9 per cent. These facts mean that the criterion, when rigidly applied, drags Blackpool down below the level at which it will qualify for assisted status.

I am not arguing for a black spot policy. I understand that one cannot have a piecemeal approach, but Blackpool itself would pass every criterion and every test to be a travel-to-work area on its own. We have 60,000 people working in the town and 70 per cent. of them work in the area of Blackpool local authority. On that basis, Blackpool constitutes one of the largest areas in the north-west of England, far larger than many travel-to-work areas that have been granted assisted area status. My right hon. Friend the Member for Blackpool, South and I are saying that Government policy should be more flexible than it has been.

The problem does not end there. Over the past year, there has been a steady decline in our town. The figures for the future are ominous. Taking the town of Blackpool alone—the local authority area—over the past year there has been an increase of 1·8 per cent. in unemployment. The travel-to-work area has shown an increase of 1·3 per cent. Unfortunately, that rate is well ahead of the Lancashire rate, which is running at 0·7 per cent., while in the United Kingdom as a whole it is 0·6 per cent.

Among the criteria that are used, do the Government take into account the fact of rapid deterioration and the fact that the figures show an ominous future ahead of us unless changes come? It is not as if Blackpool has been slow in facing up to competition. The tourist industry is now our main industry because our small manufacturing industries have suffered over the past 20 years. The tourist trade has been faced with fierce competition from the Costa Brava and other resorts in Europe. We have done our best, and we have done well. If British industry as a whole had done as well as Blackpool's tourist industry, we would be telling a different story tonight. We have changed in part from small boarding houses to self-catering flats. There have been massive changes and improvements in our hotel accommodation. We have embarked on leisure complexes of great size, some of them the biggest in Europe. We have done all that we can and, in doing so, we were among the prime areas attracting EEC money.

One of the biggest complexes is being built in the constituency of my right hon. Friend the Member for Blackpool, South. Hon. Members will not be surprised to hear that, it being Blackpool, the area is called the Sandcastle. That rather odd name disguises a complex with £16 million of leisure facilities which will bear comparison with anything in Europe and many other places in the world. It has already attracted £1·6 million of EEC money, and we are grateful for that. However, that is only part of what we could and should be getting and what we shall lose.

For these reasons, and because of the lack of flexibility, we feel that we cannot support the Government. One thing has been said by everyone concerned, and that is that there should be a constant review of the problems that areas such as ours face. There certainly needs to be a review. I hope that it will be assiduous and careful, and in the end will help Blackpool.

Mr. Bruce Milian:

Even before today's announcement of the moratorium, we in Scotland had plenty to complain about regarding the Government's record on regional policy over recent months. On 28 November the Minister made an announcement about the new assisted areas and the new rate of grant of 15 per cent., compared with the 22 per cent. enjoyed in special development areas and 20 per cent. in ordinary development areas. When the new rules were introduced under the Co-operative Development Agency and Industrial Development Act 1984, there was an explosion of anger in Scotland at the loss of assistance to Scottish industry amounting to about £100 million a year out of the £300 million that the Government wanted to save. The announcement of a moratorium is simply twisting the dagger in Scotland's wound.

I have made speeches before about the new system of development assistance, and the move away from automatic grants to greater reliance on selective grants and dealing with matters on a project basis rather than on a straight capital expenditure basis. Tonight I do not have time to repeat the criticisms that I have made on a number of occasions, both in the House and in the Scottish Grand Committee. The new policy is fundamentally misconceived. The purpose of the policy is to save money, but it will also cause more bureaucracy and argument between Government officials and the individuals applying for project assistance. Once the new scheme is properly in operation, and industrialists who enjoy the benefits of the existing scheme see the implications of the new scheme—particularly the exclusion from the new scheme of modernisation and replacement projects—there will be another explosion in Scotland among many companies and individuals who are traditional supporters of the Conservative party and Government.

We have made these points on many occasions, and my right hon. and learned Friend the Member for Monklands, East (Mr. Smith), in his excellent speech, has developed the case for regional policy as a whole. We base our case not simply on social grounds, but on economic grounds, and my right hon. and learned Friend disclosed some of the fallacies behind the recently announced changes in policy.

I come specifically to what was announced today. When the Co-operative Development Agency and Industrial Development Act was going through the House, it was reported that the savings would be between £150 million and £200 million a year. Some of us said then that there would be considerable additional saving when a new map was published and the new rates of grant were announced, as they were on 28 November. At that time, I remember the Under-Secretary of State for Scotland with responsibility for education and industry specifically telling me that we should not make any assumptions that there would be any further saving, and that perhaps there would be only a redistribution of money. We were misled into believing that the savings of £150 million to £200 million would be the total, and we did not have to worry about anything that happened subsequently.

Mr. Milian:

No, I shall not give way, because the hon. Gentleman was not present when I had that answer from the Under-Secretary of State.

When the announcement was made in November, we found that the cuts would be not £150 million to £200 million, but about £300 million, with the cuts in Scotland at about £100 million. We were given no warning that there might be further cuts, like those that were announced this afternoon through the moratorium.

What do the cuts amount to? The Secretary of State gave many figures, but he was careful not to give a precise figure for the cuts. I understood him to say, however, that in 1985–86, after the cuts, expenditure would be £480 million, whereas before the cuts it would amount to more than £600 million. How much more? We do not know. However, we know that a cut of more than £120 million is to fall on industry in the development areas in 1985–86. I hope that the Minister will either confirm or deny my assumption when he replies to the debate.

Secondly, when is the moratorium to end? Has a decision been taken? The Secretary of State gave estimated figures not only for 1985–86 but for 1986–87 and 1987–88. He must be assuming either that the moratorium will continue indefinitely or that at some time it will be lifted. We are entitled to know what the Government's intentions are.

Industry has been misled not only by what Ministers have said in the House but by the commencement order itself. The commencement order for the Co-operative Development Agency and Industrial Development Act 1984 was published on the same day as the Government announcement and was to come into operation on 29 November. The transitional provisions in article 4 of the coommencement order led industry to believe that as long as the asset was provided within the period of one year from the appointed day — 29 November 1984 — everything would be all right and the grants would be paid. There was no question then of a moratorium or of any cut in the amount of money to be made available to industry under these provisions.

Because there is a transitional period, because the new system is much less favourable than the old, and because the Budget changes encourage capital expenditure for a limited period, expenditure will naturally and inevitably be higher than it would otherwise have been. Indeed, Ministers constantly boast about it. Earlier this week, the Chancellor of the Exchequer said that private investment is increasing by leaps and bounds. Yet, at the same time as he is taking credit for that, he introduces a moratorium to cut assistance to such capital investment in the existing development and special development areas—the areas of the country that need it most desperately.

We have been misled on numerous occasions. We were misled when the Co-operative Development Agency and Industrial Development Bill was going through Parliament and we were deliberately misled at the time of the announcement on 28 November. Today, we have not so far been given the whole story.

The Secretary of State for Trade and Industry was honest on one point. He said that the Secretary of State for Scotland agreed with the contents of the announcement. I hope that that comment will prevent the Secretary of State for Scotland from briefing the press all over Scotland to the effect that he did not really approve of the changes and was, indeed, opposed to them.

Why is the Secretary of State for Scotland not here to take his share of the responsibility? The answer is that he is in Aberdeen. This evening he is to attend a banquet and to address the Aberdeen chamber of commerce. The title of his speech is to be "Scotland Tomorrow". I can tell him what Scotland tomorrow will feel about today's announcement. It will feel that the Government are once again giving every sign that they are abandoning the regions, and abandoning Scotland.

Photo of Mr Barry Henderson Mr Barry Henderson , North East Fife 6:15 pm, 17th January 1985

Not so long ago the right hon. Member for Glasgow, Govan (Mr. Milian) had considerable influence on the management of the Scottish economy. During that period, the Scottish economy did not grow as it has done while my right hon. Friend has been responsible for it.

Recently, the New Statesman told us that Labour had lost the economic argument. On the form shown in the debate so far, Labour will not win the regional policy argument either. What was made clear by the speeches of the right hon. and learned Member for Monklands, East (Mr. Smith) and the right hon. Member for Govan is that they have nothing new to offer to regional policy thinking. It is the old, failed approach, except that it is now five years older and five years out of date. They are offering again—perhaps with a slightly more Left-wing slant—the old policies that under the Labour Government doubled unemployment, doubled prices, doubled taxes and in five years doubled the national debt. That was the achievement of the Labour policies, and they have not changed despite the fact that Labour Members have had five years in which to consider how to do better.

The only substantial argument that we have heard from the official Opposition is that the Government propose to reduce total expenditure on regional employment policy by £300 million, starting in three years' time. Should we not put that reduction in the context of the fact that the abolition of the national insurance surcharge—Labour's tax on jobs—has put £3,000 million back into industry and commerce? Industry has already benefited from regaining that sum, in three instalments—that may be one significant reason why industrial investment in this country is at an all-time high—and it will continue to benefit every year.

However, even that assistance to industry and commerce is not as important as the effect of controlling inflation, which has helped industry in terms of competitiveness and cost and has equipped it better to face competition in the world. No amount of expenditure on regional policy will help even those who benefit from it as much as the control of inflation has helped industry in general.

In their prejudice, the Opposition have ignored the real improvements in regional policy devised by the Government. We are reducing the extent of the most wasteful kind of regional policy expenditure—the kind exemplified at Sullom Voe — expenditure where the investment would have taken place regardless of regional policy and where substantial benefits would have resulted. There is fairly widespread agreement that the Government were right to take that step.

The Government should also be given credit for the fact that they are relating the help much more directly to jobs. The great issue of our time is coping with the problems of unemployment. Surely, therefore, it is right for the Government to emphasise and encourage the creation or defence of real jobs.

The third element of the policy, wholly ignored by the Opposition, is the Government's recognition of the role that service industries can play in job creation. Over many years and under successive Governments the great failure of regional policy has been the insistence on encouraging manufacturing industry in problem areas. That policy has done a positive disservice to the areas that it was intended to help, partly because, worldwide, manufacturing industry is in decline. It was not kind to send to the development areas a sector that was declining in importance.

Mr. Milian:

It is not declining worldwide.

Photo of Mr Barry Henderson Mr Barry Henderson , North East Fife

Can the right hon. Gentleman tell me of any OECD country—

Mr. Milian:

Japan, for one.

Photo of Mr Barry Henderson Mr Barry Henderson , North East Fife

The right hon. Gentleman will find that services in Japan are expanding significantly more than manufacturing. Services have an important role to play in job creation. The Government's policy will also help to provide flexibility in competing for mobile international investment, whether in manufacturing or service industries.

I hope that the Government will enhance their policy by having greater regard to the quality of the proposed investment and the activities being undertaken, whether they involve the transfer of technology or of management knowledge, skills, and technical knowhow. Such things would greatly benefit us, and some types of investment are not of such high quality.

Arguments on the map are inevitable. I am aware that some areas face special difficulties.

Photo of Mr Bill Walker Mr Bill Walker , North Tayside

My hon. Friend must agree that he cannot simply say that arguments about the map are inevitable. The area encompassing Blairgowrie, Pitlochry and Aberfeldy has been declared a travel-to-work area but no logical person imagines that people will commute on roads in that area during the winter. Indeed, I have invited Ministers to come with me and get stuck in the snow.

Photo of Mr Barry Henderson Mr Barry Henderson , North East Fife

I understand my hon. Friend's point, but he has questioned the definition of a travel-to-work area. I hope that none of us disagrees that the travel-towork area is an appropriate building block from which to construct the map. We all know of areas where travel-towork areas could be defined better, and I hope that the Government will continue to consider those problems.

Scotland's relative position in the United Kingdom economy has improved markedly in the past few years. I hope that the day will come when Scotland has no development areas, as that will be the day when we have achieved the object of regional policy, which is to iron out discrepancies. I understand that Scotland was eighth in the list of areas in the United Kingdom showing gross domestic product per head of population in 1971. We are now third. Average male earnings are now higher only in south-east England. These are substantial changes, and it would be surprising if they were not reflected to some extent in the map.

In the United Kingdom as a whole there has been continuous growth for three years. Unemployment has risen but, mercifully, the pace has been slower. In the past year there has been significant growth in the number of people employed. I believe that, were it not for the miners' strike, the 20-year trend of rising unemployment would have been reversed last year. I hope that the tide will be turned this year. I hope that the growth will help in every area, especially Scotland which has had enormous success in the new industries of the future. I also hope that help will be given to people in areas which, for social reasons, have been singled out for better targeted regional policy.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil 6:23 pm, 17th January 1985

The hon. Member for Fife, North-East (Mr. Henderson) might hear about the speech that he has just made when he fights the next general election.

Two great problems face Britain today. The first is that we are increasingly becoming a divided nation—between rich and poor, north and south and employed and unemployed—and the second is that our industrial base has been allowed to wither away. We shall not have the stability and prosperity of the past until we find the means by which to reverse that trend.

One of the greatest instruments, if not the greatest instrument, that the Government have to address both of those problems, and at the same time, is regional policy. Regional policy is at the centre of the current political debate. It is a talisman by which we might judge the Government's seriousness about tackling Britain's fundamental problems.

Many right hon. and hon. Members have spoken in intimate detail of the Government's new policy, and I gather that many more will do so today. I shall address myself to some of the broader issues. The first concerns what regional policy will do to the British economy. We must measure the scale of the problem before deciding whether the means tint the Government have chosen are appropriate and adequate. Britain has economic problems, but not because of the price of oil. Oil is the symptom rather than the underlying weakness. Britain's industrial base has been allowed to wither away since 1979. Non-oil trade was £2·75 billion in surplus in 1979 whereas in 1984–85 it is likely to be £11 billion in deficit, despite the fall in sterling. The world has suffered from the recent instability in currency rates, but once again Britain has suffered more. We have become a one-commodity economy—a kind of banana monarchy, the banana in our case being the price of oil. That underlying weakness in our industrial base, which the rest of the world recognises, makes us vulnerable to every new small wave that hits the monetary system. Manufacturing in the third quarter of 1984 was down 11·6 per cent. on the third quarter of 1979.

We can get by for a few more years on the temporary opiate of oil revenues, but the underlying weakness of our economy causes the greatest problems. What means have the Government chosen to overcome that? Not regional policy, as we heard from the Secretary of State. They have chosen the force of the market—what the Chancellor of the Exchequer describes as the creation of an enterprise economy. We do not see too much evidence of that bearing fruit. The International Monetary Fund's sixth annual report on international competitiveness puts Britain in 14th place out of 28 in a list that includes Mexico, Brazil, Portugal and Ireland. On the Government's criteria we are performing less well than the Netherlands, Norway, Austria, Saudi Arabia and Luxembourg. That is some enterprise economy.

In the area of enterprise that the Government consider most important — information technology — we have slipped from having a surplus in trade to a £150 million deficit. Moreover, it is predicted that we shall have a £1 billion deficit in 1990. It is a supposedly expanding area of our economy, yet, according to the National Economic Development Council's recent report, information technology, far from providing more jobs, will provide 2,500 fewer jobs this year.

Against that catalogue of decay and decline, we must review the Government's regional policy. It is clear that the Government are not matching their actions to the scale of the problem. They aim to reduce expenditure by £300 million. The cut is better expressed as nearly one half. Bearing in mind the scale of the problem, what Government would reduce aid to rundown areas—the very seat of our national decay? What Government would decide that there should not be more money to solve the problem but less? The answer must be only a Government who are blind, irresponsible or trapped within their ideology. Many of us believe that the Government show signs of all three, but I suspect that the chief reason is their ideology. They do not believe in regional policy. That is why they have cut spending by nearly one half. They have the spurious idea that the free market can be let rip—the very policy that has brought about the industrial decline from which we now suffer.

I believe in free market forces. They are there, and need to be manipulated and controlled for the benefit of society. But we cannot leave them totally uncontrolled. If we do so, they become the very instrument that widens the divisions in Britain. The south of England's free markets have become the north of England's lost hopes. That is why we must consider whether the Government's regional policy does anything to lessen those divisions. I believe that it will do little, because it will not meet the underlying necessity of getting the economy moving in the centres of decay, or of solving the problems of unemployment.

I am delighted that the west midlands is included, but the resources that the Government have put in are totally inadequate to the task. It has been calculated that one in every nine jobs there has been lost. That amounts to 250,000 jobs. The west midlands has declined more than any other region in Europe. West Yorkshire, included in the worst 25 per cent. of European regions, has now been gratuitously excluded from any access to EEC funds.

I have outlined the key points, but of course there are other points of detail. As my hon. Friends the Members for Berwick-upon-Tweed (Mr. Beith) and for Truro (Mr. Penhaligon) have said so eloquently on previous occasions when talking about Amble and Cornwall, the Government's policy is hopelessly inflexible. My hon. Friend the Member for Truro said that a sixth-former with a calculator and three or four hours in a library could produce a better scheme, and how right he was.

The shift from automatic to selective aid will produce a more bureaucratic system and will increase the power of civil servants over what happens. The £10,000 job limit that has been instituted for automatic aid is far too low. Indeed, in 1977 the Department of Trade and Industry itself set a limit of £7,000 for selective financial assistance. Thus, £10,000 is far too low.

We are also concerned about the missed opportunities. A regional policy could do so much. It could form the framework for local initiatives and community enterprise. It could specifically promote the new technologies to replace the old industries, along the lines proposed, I think, by the hon. Member for Thanet, North (Mr. Gale). It could encourage self-help and the self-employed, and improve labour mobility. It could build new hope where there is now despair. It could form a central pillar of a new strategy to regenerate Britain's industrial base.

I fear that the Government's policy will do none of that, for this Government have no commitment to the idea of regional aid. The real purpose of their policy is cost-cutting rather than industrial regeneration. These proposals will do very little to reverse the underlying decay of Britain's industrial base, and will do nothing at all to bridge the terrible divisions in Britain, which now threaten to tear apart our nation. That is why we shall vote against the proposals.

Photo of Mr Paul Marland Mr Paul Marland , Gloucestershire West 6:32 pm, 17th January 1985

I find the remarks of the hon. Member for Yeovil (Mr. Ashdown) extraordinary. He seems to think that money grows on trees. It is a stale old argument to say that it is too little, too late. The hon. Gentleman seems to want to aid everybody north of Watford and west of Newbury. If one helps everybody a little, one ends up helping no one. It is quite right that the Government should have had a close look at a rearrangement of regional aid, because many taxpayers in this country rightly look to us to obtain the best value for money. We need to help those in need properly instead of helping everybody a little.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

Will the hon. Gentleman give way?

Photo of Mr Paul Marland Mr Paul Marland , Gloucestershire West

I shall not give way, as I have only 10 minutes in which to speak. The hon. Gentleman had his 10 minutes, and I shall have mine.

My speech will be somewhat different from some of the contributions that have been made, because the citizens of Gloucestershire, West are well pleased with the announcement. They have received intermediate area assistance, and that puts them on an equal footing with south Wales. A lot of local effort has been put into achieving official recognition of our problems. Indeed, it has been a good year for the Forest of Dean, as that has also been designated an area of rural development by the Development Commission. I am confident that those two new sources of income will go a considerable way towards cutting our unemployment rate, which now stands at more than 17 per cent. That assistance has come in the nick of time. Several firms in the district had plans to move their enterprises away to adjoining assisted areas if that assistance had not been forthcoming. Now that we have that intermediate area assistance, those firms will stay put and expand in the Forest of Dean, thus creating more jobs for those in the area. I am confident that new firms will also be attracted to the area with the extra aid now available.

As other hon. Members have said, we are also now eligible for Euro funds, which will be of great assistance. Prior to the announcement from the Department of Trade and Industry, massive local efforts had been made by both local firms and the Forest of Dean district council to stem the tide of rising unemployment, but it was an uphill battle and unemployment now stands at more than 17·5 per cent. Now, by recognising our problems, the Department of Trade and Industry has given the local job and wealth creators great encouragement.

Since I was first elected in 1979, unemployment has been my biggest and most difficult ongoing problem. I have personally explored many schemes and ideas to get more job opportunities into the district. Some of that I did on my own, but more often others have been involved. The range of ideas has been enormous and ingenious. There have been individuals with ideas for making furniture and ornaments from scrapwood given by a local sawmill, and there has been the mighty Rank Xerox spending £500,000 on developing the Mitcheldean enterprise workshops, recently opened by the Duke of Kent. Actually, he could not get there because of the fog, but that was the original plan. In addition, the local authority was worried about financing and developing the Forest Vale industrial estate or running a spine road through its new development at Coleford.

Much courage and determination have been demonstrated in the Forest of Dean, and it is fitting that extra outside help should now have arrived. Many have been involved in winning that help. Gloucestershire county council has been actively involved in giving advice and support, especially in the preparation of formal submissions to the Department. However, by far the most constructive and consistent support that I have received has come from the Forest of Dean district council. My job as spokesman for the district has been made much more effective, thanks to its help and support.

I should like publicly to pay tribute to the senior councillors and council staff who have done so much to achieve this national recognition of our local difficulties. That recognition is made all the more significant by the fact that we are not, by any stretch of the imagination, all of the same political persuasion. But under the steady hand of the council chairman, Arthur Cooper, we have genuinely bridged the party gap to work in the best interests of the district. My hon. Friend the Minister of State, the hon. Member for Kingston upon Thames (Mr. Lamont), and my hon. Friend the Under-Secretary of State, the hon. Member for Rossendale and Darwen (Mr. Trippier), are only too well aware of the endless delegations that I have brought to see them to discuss the matter, and of my own persistent nagging in the Lobbies and elsewhere. I think that I have tried their patience to the very limit, and I thank them for being so tolerant.

I am especially grateful—indeed, we all are in the Forest of Dean—to my hon. Friend the Under-Secretary of State for the consistent and careful attention that he has given to us. On many occasions, in his role as Under-Secretary of State, he has visited the Forest of Dean, and on every occasion he has shown great consideration and understanding of our difficulties. On behalf of all my constituents and myself, I should like to thank him most warmly.

Photo of Mr Colin Shepherd Mr Colin Shepherd , Hereford

Perhaps the thanks of those in the Ross-on-Wye travel-to-work area could be coupled with those of my hon. Friend. The coupling of the Forest of Dean and Ross-on-Wye travel-to-work areas is significant and important.

Photo of Mr Paul Marland Mr Paul Marland , Gloucestershire West

I know that our mutual hon. Friend took the opportunity to visit both places. I thank my hon. Friend for adding his thanks to mine.

I now take the opportunity to bring to the attention of the House a further problem that is causing anxiety in Gloucestershire, West and in other constituencies. It relates to the poor and underdeveloped infrastructure of the Forest of Dean. There is no doubt that that needs to be developed to sustain and cherish our new development status.

The council sought permission from the Department of the Environment for an additional allocation of funds for specific areas of expenditure in that regard, but was refused. As a matter of broad principle, I understand that refusal, but I am sure that the Forest of Dean is not the only district to become a special case regarding new development.

As the Department of Trade and Industry has decided to invest in the area and its development, would it be in order for it to steer the Department of the Environment towards having another look at infrastructure developments in development areas? For example, the Forest of Dean district council is sitting on about £2 million of frozen capital assets. Could they be unlocked for specific projects relating to infrastructure development? No further borrowing would be required and it would be an excellent way to use the money locally. I should be grateful if my hon. Friend would answer that point when he replies.

Today is a good day for the Forest of Dean. The national recognition of our problems is a great encouragement to the district, which has already done much locally to help itself. With these extra funds, much more can be done. I should like to assure you, Mr. Speaker, and all hon. Members that every penny will be spent wisely.

Photo of Mr Gareth Wardell Mr Gareth Wardell , Gower 6:41 pm, 17th January 1985

In the first quarter of last year the Select Committee on Welsh Affairs, of which I am privileged to be Chairman, examined the impact of regional industrial policy on Wales as a response to the Government's White Paper on regional industrial development. The conclusions and recommendations were based on the wider spectrum of opinion in Wales. It was clearly established that, while there was room for substantial savings by more cost-effective regional aid, a continuing commitment to regional policy would mean that the savings should be used to make more generous provision. The Committee recommended, for example, that assisted area status should be given to the whole of the Principality.

The Welsh Trades Union Congress, the Welsh Confederation of British Industry, local authorities and Government agencies are all dismayed at these measures. The consensus is that they have nothing to do with regional policy. Public expenditure cuts are the real motive behind them.

There is a desperate need for an effective regional policy for Wales. We need to attract foreign and British investment that will bring jobs and economic regeneration. Whereas nationally before 28 November 1984 special development area and development area status aid used to cover 22 per cent. of the working population, it will now cover only 15 per cent. in SDAs in Wales. Development area status aid used to cover 90 per cent. of the working population but has been cut to 35 per cent. That is a savage reduction and makes nonsense of the Minister's recent answer: Wales has been treated fairly." — [Official Report, 28 November 1984; Vol. 68, c. 941.]

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

I do not understand the hon. Gentleman's comment because approximately 90 per cent. of the working population of Wales are still within the areas covered by the regional assistance package.

Photo of Mr Gareth Wardell Mr Gareth Wardell , Gower

I understand the point of the Secretary of State, but there has been a massive shift from those areas that qualified for a high rate of assistance towards intermediate area status, which does not qualify for regional development grant.

Bridgend has lost its special development area status and has been deflated to intermediate area status. Other new intermediate areas that have lost their development area status include Swansea, Llanelli, south-west Dyfed, Cardiff, Newport and western Gwynedd. Most of those are the large areas of population in the Principality.

Former SDAs relegated to an inner tier category will have their capital grant cut from 22 per cent. to 15 per cent. That tier will carry an additional burden. Any firm employing fewer than 200 people — the majority of Welsh firms—will be limited to a job grant of £3,000 for each new job created. It is interesting to note that, in evidence to the Welsh Select Committee, the Welsh Development Agency set the appropriate and reasonable figure at £15,000 — a factor of five greater than the Government's figure. The figure is miserly in the extreme, especially when one remembers that it costs £6,000 a year to keep a person on the dole.

Even in those areas which will qualify for maximum regional assistance, aid is no longer automatic. A discretionary element has now been introduced, even into the formerly automatic regional development grant. Not only is it an increase in the centralisation of decision-making, which will complicate the forward financial planning of existing and prospective firms, but it leaves a tier open for further reductions in assistance.

Already there are delays in processing applications for aid, although the moratorium today may ease that. Yet the Government have not announced any plans to increase staffing levels in the Welsh Office and to invest to cope with administering the new layer of red tape.

The policy represents a 20 per cent. cut in the Welsh economy—a figure that will save £60 million this year. The pill is all the more unpalatable because the Government have no plans to redistribute that amount.

At present, land reclamation schemes totalling £100 million have been submitted by Welsh local authorities to the WDA. Many of the schemes are geared to potential industrial use, yet WDA funds for the schemes have been cut to £39 million over the next five years. Will the Government use some of that saved Welsh regional aid money to restore the cuts? It is recognised that a massive training programme to update workers' skills is needed. Will the Government divert part of the £300 million saved nationally into this sector? No. Instead they are planning to close successful skillcentres, such as the one in Llanelli, which serve my constituency of Gower.

Furthermore, despite the stated intention of the Secretary of State for Employment to extend the community programme scheme, he has just changed the qualifying criteria for the MSC scheme which is geared to the long-term unemployed. In all but name, it is a cut that will mean that fewer people are able to take advantage of the scheme, and that the number of people who will be eligible to use their work skills as instructors for retraining others will be drastically reduced. The Government could redistribute some of the saved money into this sector to extend job creation for the long-term unemployed.

If the Government win the battle with the miners, almost all Welsh pits will close.

Photo of Mr Gareth Wardell Mr Gareth Wardell , Gower

NCB Enterprise Ltd. will be given another £5 million, which will mean a total budget of £10 million for job creation initiatives in what will become economically derelict communities. How much of the £300 million saved will be reinvested in the mining villages of Wales? The Government cannot sell this programme as a new regional policy. It flies in the face of the economic and social hardship being experienced by the Welsh people as a direct result of the Government's obsession with spending cuts—

Photo of Mr Gareth Wardell Mr Gareth Wardell , Gower

—and ignores the many measures that are needed to bring relief and to rebuild the Welsh economy.

Photo of Mr Raymond Powell Mr Raymond Powell , Ogmore

While my hon. Friend has been speaking, the Secretary of State for Wales has been shouting, "Rubbish". Could my hon. Friend clarify his statement about the closure of collieries in Wales?

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

I should tell the hon. Gentleman that he has only one minute in which to do it.

Photo of Mr Gareth Wardell Mr Gareth Wardell , Gower

If my hon. Friend does not mind, I would rather continue my speech.

There is no effort in those measures to redistribute to other job creation and economic regeneration opportunities the £60 million a year that will be saved from regional aid. The Opposition believe that the change will be disastrous for Wales. It represents the death of regional policy, and I wonder whether all that the Government are saying is that this policy should rest in peace.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam 6:51 pm, 17th January 1985

This debate must be taken in the context of the Chancellor of the Exchequer's statement on Monday, the debate on unemployment on Tuesday, and yesterday's debate on the rate support grant. It cannot be taken in isolation. My hon. Friend the Member for Fife, North-East (Mr. Henderson) mentioned the OECD. I should tell him that at the end of the month the Assembly of the Council of Europe will debate the economic position in Europe. That is an annual debate based on the OECD report. I am the rapporteur to that debate, and I have already sent a provisional draft of my report to my hon. Friend the Minister of State.

My contribution to the debate will be about Sheffield, which the right hon. and learned Member for Monklands, East (Mr. Smith) visited recently. All countries suffer from regional disparities and "jobless" growth and often the differences within countries or regions are as great as those between them. In south Yorkshire, for example, as against the north of Yorkshire, unemployment is almost 17 per cent., and in Sheffield it is slightly more than 15 per cent. About 44,000 people from a population of half a million are out of work. Those appalling figures must burn on any Member of Parliament who represents such an area.

After a period of high unemployment, regional discrepancies become even more marked and society even more divided between those with a job and those without, and, increasingly, between north and south. That is why people who live in different areas perceive the present economic position so differently. We have heard that theme often in the Chamber this week.

The Government's new regional policy, announced in November and explained today, is one that I welcome greatly, because I believe that it will lead towards more cost-effective, selective and job-related policies. However, with my hon. Frrend the Member for Gloucestershire, West (Mr. Marland), I am prejudiced, because I welcome the fact that Sheffield has been granted intermediate area status, which will enable the city to qualify for assistance from the Government and from the European regional development fund, with which I was much concerned when I was a Member of the European Parliament. My anxiety is that the new status should be used properly.

Important though regional policy is, it is wrong to expect too much of it. Some of the criticism that the policy has encountered arises perhaps from false expectations. Today we debated the moratorium, but I have noted that regional policy capital investment decisions made by the Conservative Government more than 20 years ago on such projects as Llanwern and Ravenscraig, and some of the car factories in Scotland, could be described today as not the best way of using limited capital resources.

High costs of wages and—this is especially true of Sheffield — electricity can precipitate decline. That is certainly true of the Sheffield steel industry. The whole industry has lost 60 per cent. of its work force since 1979. The consequences of unemployment and poverty are tragic. The bishop of Sheffield, in a well-thought-out address to his diocesan synod in November, the full text of which he sent to me, was concerned about the north-south divide. He achieved publicity for inviting the Queen to the Doncaster races. The gap is bigger than it was 25 years ago, and that is a fact from which no Government can run away.

Self-help is also important. I have been associated with the Sheffield industrial mission and Mr. Peter Lee, who is chairman of a surviving steel firm, happens to have made one of several contributions of interest. In his paper, he said that there was no reason for long-term pessimism that the nation has an unsatisfied demand for goods and services and that there is a supply of people willing to work —a point that I reflected in my OECD report.

In previous debates, I have given my analysis of the decline in the Sheffield steel industry and of why, because of cheap energy and the availability of raw materials, the industry has moved elsewhere in the world. However, a fundamental start in Sheffield would be to have hope for the area. Far too often, all that we hear from Sheffield is gloom and doom. That is not the case. It will be a surprise to many to learn that the chamber of trade, with which I have been in touch this week, has reported a boom in the retail trade, with sales before Christmas 15 per cent. to 30 per cent. up on last year, and record January sales. That means that there is purchasing power in Sheffield. It must be recognised that living standards have increased—the statistics show that they have. The EC and the OECD state that, on average, people in Europe are better off than they were five or 10 years ago. The citizens of Sheffield have purchasing power, despite the fact that they live in a depressed region, and the Government are rightly keen that this be channelled to the right areas of development.

The trouble is that Sheffield city council has followed a path of high current expenditure at the expense of capital expenditure. The policy has been disastrous to local industry. Rates have soared, and the chamber of commerce has urged me to do something about it. That is why I supported the Rates Act 1984. Rates have also driven residents out of the city, and migration from the cities is probably the biggest cause of regional disparity in Britain today. A wrong attitude of the council towards intermediate area status could throw away an opportunity, as was highlighted in an article in the Financial Times this week.

There will soon be a debate on Heathrow, Stansted and Gatwick airport policy. I have received representations from the North of England Regional Consortium. Fifteen years ago, I would have resisted a large expansion at Stansted, because I favoured Maplin. In 1976, the Labour Government introduced the Maplin Development Authority (Dissolution) Act, and it was a Labour Government who turned their back on the channel tunnel—two examples of capital projects that could have kept people off the dole queues for the past seven or eight years. It is good regional policy to expand air traffic from and to the north. I hope that the Minister of State and the Secretary of State will consult my right hon. Friend the Secretary of State for Transport and encourage him to increase flights to and from the north, which could well do more to help the area than would a regional policy such as the one outlined.

Today some Opposition Members asked for a debate on the coal strike. One tragedy is that Arthur Scargill, with the overt or covert support of Opposition Members—the demonstration in the Chamber today may have been an example, as was the appearance of the right hon. Member for Islwyn (Mr. Kinnock) on the Welsh picket lines and even the support of Sheffield city council for the NUM—has chosen a strike for political ends. Steel workers have learned to their dismay that a strike today can only accelerate an appearance on the dole queue tomorrow. I hope that this will not be the case with the railwaymen.

The Labour party today, as exemplified by Opposition Members, has demanded from the Secretary of State a more active regional policy. They should consider the extent to which they are perhaps not so much destructive as lacking constructive opposition in their conduct and attitudes, particularly in an area like Sheffield. They are forcing the northern region to take two steps backwards for every step forward by my right hon. Friend the Secretary of State for Trade and Industry.

7 pm

Photo of Mr John Forrester Mr John Forrester , Stoke-on-Trent North

When the Government announced that they would review the regional aid programme, they got a lot of support. Many people acknowledged that there were weaknesses in the previous system. In some cases too much money had been given to capital-intensive industries, with little effect on employment. There was some job shuffling between areas to take advantage of grants, although it is difficult to see how this could be eliminated.

Now we have had the review, which took a long time in coming. The Government seem to have pleased very few people, unless one lives in the Forest of Dean, when obviously it is a great advantage. It may be acknowledged that there was some success with previous regional policy if employment in some areas improved sufficiently for them to be taken out of these proposals. If that is so, it is most regrettable and beyond comprehension that regional aid should be reduced from £700 million to £400 million per annum. The Minister must accept that there is growing disappointment at the fact that the Government have lost a great opportunity to take positive steps forward.

I hope that the percentage of the working population to be covered by regional aid, 35 per cent., is not immutable and that the Government will be open to persuasion that other areas have a good case for inclusion. For a number of years, it was increasingly clear that something dramatic was happening in the west midlands. I am pleased that the Government have recognised that, although there will obviously be arguments about the size of the area and the amount of aid. Early-day motion 265, in the name of some Conservative Members who live in the area, extols the virtue of Government proposals and refers to how successful they have been in this short time in getting industry interested. The Government should take note of that, accept its wisdom and logic and bring forward proposals for a wider and more generous approach to regional aid.

The Minister of State and the Secretary of State have said that when the maps were being re-drawn, present and future employment prospects were taken into account. Forecasting the future can be a hazardous occupation, as any betting man will confirm. I cannot recall that during the 1979 general election today's level of unemployment was forecast by anyone in any party. The forecast can be only a rough guide. There will be local hiccups, some of which will be beneficial, while others will be disastrous.

To make a constituency point, in Stoke-on-Trent last week we suffered one of those disasters. The Michelin tyre company has announced 2,400 redundancies, with no time for alternatives; most of the people must be out of work by the end of April. In December 1984 unemployment in the Stoke travel-to-work area was 12·4 per cent. These redundancies will put the figure up to 13·6 per cent. and the knock-on effect will take it to at least 14·4 per cent.

Stoke has had one of the fastest-growing unemployment rates in the country. Between 1979 and 1984 it rose by 173 per cent. against the national average of 140 per cent. In the city 45 to 47 per cent. have been unemployed for more than a year. The national average is 39 per cent. In some wards unemployment is nearly 20 per cent. Stoke-on-Trent is a typical old industrial area with too narrow an industrial base, depending on pottery, coal, steel and tyres. Over the past few years, we have lost nearly 30,000 jobs in those four industries. Nor does the city have any soft cushion of expanding service industries, because 48 per cent. of the working population are in service industries, against an average of 60 per cent. nationally.

The unemployment rate must be a major factor in deciding the amount of regional aid, but the infrastructure of an area is also a vital component. It will determine the ability of the area to attract new industries. Areas which have not experienced centuries of coal mining cannot understand how much underground dereliction there has been and the additional cost associated with any kind of building work, to guard against subsidence.

If a manufacturer learns that, as has happened in Stoke, a factory has subsided by 21 ft in 60 years or that a new factory has fallen by 12 in in one year and that it costs £60 per square metre to compensate for the possibility of subsidence when building a factory, then, all other things being equal, he is bound to think about going to an area which would not have those problems.

We are fortunate in having been chosen to host the 1986 national garden festival, which will take place on the site of the old steelworks. Without Government assistance that area would not have been reclaimed in this century. Even if the local authority had tried to find the money, I am sure it would have fallen foul of the rates legislation, which seems to change from day to day. Even in the Forest of Dean apparently councils cannot spend their own money on improving their infrastructure.

From the war to the recession, industries have been positively discouraged from coming to Stoke-on-Trent so as to maintain the labour force for the pottery and coal mining industries. That attitude might have been valid at the time but if such decisions are taken in the national interest, then when times are hard the Government have a moral responsibility to do something to help. By all accounts the decision on Stoke's appeal for regional assistance was marginal. I hope that the Government will accept that there is a new situation and that the case put forward by Stoke is beyond dispute.

Apart from the possible social consequences of decay and neglect, it is folly to allow old industrial areas to die a slow death. If the infrastructure is tatty and needs modernising, let us remember that those communities have evolved over the last 300 or 400 years. One cannot recreate on a green field site the qualities of stability of the people, the good sense and skill of the work force, and the commitment of workers and management alike to an area.

It is the Government's job to assist in repairing the damage to the old industrial areas of this city by providing a springboard for the city to advance into the future. We are not seeking charity or a meal ticket for life; we are asking for assistance now so that we can work out our own destiny.

Photo of Michael Fallon Michael Fallon , Darlington 7:09 pm, 17th January 1985

I am delighted to be the first speaker from the north-east to be called in this debate, because no region has seen more clearly than the north-east the failing of regional policy as practised by successive Governments. Year after year, our 7-egion has received between 20 per cent. and 30 per cent. of the resources made available in regional aid. Year after year, the decline in employment opportunities and the imbalance in our industrial infrastructure have continued. There has been a continued lack of home-grown entrepreneurship.

I applaud the White Paper and the background paper "Some Economic Issues" for widening the understanding of the failings of previous regional policy, for setting out the enormous costs of subsidising capital projects and for showing the statistical difficulty of calculating the cost of secondary employment lost elsewhere through high taxes and demonstrating the uncertainty that exists about whether the projects that were backed would have been located in those regions anyway.

There is now a recognition of those failings not just among industrialists and academics but among some surprising commentators. My hon. Friend the Minister might be interested to learn that Harry Meed, a commentator for The Northern Echo—by no means a Conservative paper, and usually a fiercely independent critic of the Government—said in an article about the Minister's statement in November headed "Cash move in right direction": the Government is surely right in claiming that most of the schemes now receiving grant support, like ICI's new £30m nitric acid plant at Billingham (ten jobs) would go ahead anyway.Extra jobs for the future are unlikely to be created by the industries now mopping up the scarce Government cash. But most people will ultimately recognise that the Government's shift in policy is not merely correct but long overdue. At £35,000 for every new job created, the industrial-aid bonanza just had to stop. That leaves the Labour party alone as the defender of the old system. It makes a pretty strange defender of some of the capital projects that have been backed in the past. The defenders of regional policy say only that the decline in our industrial areas might have been faster without the regional aid that has gone into them. In the meantime, the cost of £35,000 per job—the average cost of previous regional policy—to create jobs in some industries is paid for by other industries, including service industries, and other areas.

If my hon. Friends complain that other regions in the United Kingdom subsidise the north-east, I might well reply that Darlington is an intermediate area which in the past has subsidised the special development and development areas elsewhere in the north-east region.

The new policy will benefit my constituents in Darlington, first because the cost to Darlington taxpayers will be reduced, leaving firms in Darlington more to invest in our own area; secondly, because service industries in the north-east are to be included for the first time—that is a significant development in a region like ours which has been dominated by heavy industries — and, thirdly because we have retained our assisted intermediate area status, which will allow us to receive selective assistance of the kind that has benefited us well in the past and will continue to enable us to attract European investment and regional development fund money. I am grateful to the Government for recognising our case.

Criticism of the Government's changes has been ill-judged and, in the case of the chairman of the development committee of Darlington borough council, has been wrong. He was wrong to say that the policy means less aid. For a town like Darlington it will mean more money on the selective side. He was wrong to say that the policy will mean fewer opportunities, because hundreds more companies throughout the north-east in the service sector will become eligible for the first time. He was wrong to say that Darlington will lose to other parts of the northeast. It has always been true that a district such as Darlington has not done as well under these regional subsidies as other parts of the north-east. You, particularly, Mr. Deputy Speaker, will know that other parts of the north-east have been hit much harder by the imbalance in our industrial infrastructure and the recession.

Darlington has a responsibility for Shildon, to name but one area. It is right for more aid to go to where it is needed most. I am surprised that, of all people, a Socialist councillor, such as the chairman of my development committee, does not recognise that fact.

On balance, the Government have got it right. I welcome the switch from automatic to selective assistance—a switch in emphasis at least. I welcome the switch from capital projects to job creation. I congratulate my hon. Friends in the Department on their skill in ensuring that such a large area of the country is still eligible for European help and that that area is larger than it was.

It would be idle to suggest that £300 million, or even £3 billion, will restore the north-east to prosperity. In many ways, the best regional policies are the Government's general economic policies. The best regional policies include the policy of keeping the lid on inflation, and that is worth far more in financial terms to companies, industry and people in the north-east than regional development grants. The best regional policies include the policy of switching support from the loss-making old industries under the Department's budget to the new technology industries and to smaller businesses. That is worth more in financial terms to the north-east than regional development grants.

Our task in the north-east in bringing jobs into the region and in creating more jobs there is simply to make the north-east more attractive than any other region. That is the only reason why companies will come into and grow in the north-east. Instead of spreading doom and gloom about the region, as the series of reports by the North of England County Councils Association does, local authorities should start to guarantee lower rates than elsewhere. When Middlesbrough rates companies at £2·30 in the pound as against Mole Valley's rate of £1·64 in the pound, when Stockton rates companies at £2·13 in the pound as against Slough's rate of £1·52 in the pound and when Darlington imposes the highest rate in the county of Durham at £1·97 in the pound as against Bracknell's rate of £1·52 in the pound, is it any wonder that companies go on locating in the Thames valley and the south-east rather than in the counties of Cleveland and Durham?

Photo of Michael Fallon Michael Fallon , Darlington

I am sorry. I shall not give way because I want to keep strictly to the ten-minute limit.

Instead of draining £350 million a year in rates away from business in the north-east it is time local authorities asked themselves why they have the highest proportion of council housing in the country—higher even than in the Soviet Union and Czechoslovakia—at 41 per cent. That is the highest proportion of public housing in England. What is the point of spending all those millions of pounds subsidising council housing and public transport and giving the unemployed cheap rented houses and free passes on the buses but not giving them jobs? Through local authority policies, other constituents in the north-east are becoming trapped in unemployment on huge council estates — away from the jobs to which they wish to move.

Trade unions and management in the north-east must do more to reduce the cost of labour. They must do so not simply by tackling demarcation, excessive overtime and the restrictive practices that have increased the cost of labour and kept other people out of work, but by looking again at the wages they pay. It is no accident that the most heavily unionised region in England has the highest unemployment. Ten years ago, the north-east had the highest average male earnings outside London and the south-east in the United Kingdom, and that remains true today.

If I have one regret about the debate on the White Paper it is that there was not more discussion on the extent to which wage flexibility might be encouraged to restore some of the imbalance in employment opportunities that the rest of the Government's policy seeks to reduce.

Photo of Mr Stanley Crowther Mr Stanley Crowther , Rotherham 7:19 pm, 17th January 1985

The hon. Member for Darlington (Mr. Fallon) will understand if I do not comment on his speech.

The Secretary of State, in opening the debate, proved conclusively that he had not the slightest inkling of the real nature of the problem. In view of that, I suppose that we cannot really expect him to come up with a solution. To be fair, it has to be said that his predecessors have not come up with a solution either. The difference is that the Secretary of State is going to make it worse.

The purpose traditionally of regional policy has been to try to iron out the regional imbalances in the level of economic activity. It has to be said that, measured against that objective, regional policy has failed miserably ever since it was introduced. The differential in unemployment levels between the most prosperous and least prosperous areas of Britain is still much the same as it was except, of course, that the totals have enormously increased at each end of the scale. In my constituency, which I quote merely as an example, the unemployment level for at least the last 20 years has been about one and a half times the national average or more. When the national figure was 4 per cent., in Rotherham it was 6 per cent. Now that the national average is about 12 or 13 per cent., in Rotherham it is 21 per cent. Nobody can pretend that our past policies or existing policies have narrowed the gap.

Rotherham has been an assisted area since 1966. I make that point to show that our existing policies have certainly not solved the problem. I accept that the position would have got much worse had we not been an assisted area, and I certainly do not urge the Secretary of State to take away our status. However, I am saying that a policy which is based solely on the idea of giving financial inducements to persuade somebody to build a factory in one place rather than another has manifestly not solved the problem that we are debating. It does not work.

There is therefore, in my view, an obvious need for a complete reappraisal of regional policy now, yet in spite of that the Government do not take this opportunity. All they can suggest as they stand at the bedside of a desperately sick patient is, "Keep taking the tablets but do not take quite as many as you did before and do not take them in the same place."

Photo of Mr Gordon Wilson Mr Gordon Wilson , Dundee East

There is rather a restricted list, too.

Photo of Mr Stanley Crowther Mr Stanley Crowther , Rotherham

There is indeed a restricted list, as the hon. Gentleman points out.

There must be no doubt, as my hon. Friends have pointed out, that the sole object of the changes announced on 28 November is not to make the policy more effective, but only to make it cheaper. I cannot understand why the Government should think that it is so desperately important to save £300 million in two or three years' time when that same Government have now been shown on the information which emerged only last week to have lost £4,000 million of the taxpayers' money on the sale of British Telecom. Are they getting their priorities slightly wrong somewhere?

I suggest that there is a need to re-examine not only the operation of regional policy but the philosophy that underlines it. Twenty years ago when the present regime of regional assistance came in, in about 1965, the object was to spread economic prosperity. At that time there were regions of the country which were grossly overheated. That was all right at the time, but today there is precious little prosperity to be spread.

In my view, a new regional policy needs to be developed which is an integral part of a national policy for economic regeneration. I refer to the economy here as meaning the real economy which is based on the production of goods and services and not simply moving money around in the City of London. The new policy needs to be based on bringing back into the service of the nation that great pool of skill and experience which is now lying on the waste heaps of unemployment.

In my own region of Yorkshire and Humberside, 13 or 14 years ago I helped with other people to set up the Yorkshire and Humberside development association. I was the chairman of it for some years before coming into the House. The Government, to their credit, are giving substantial financial help to that association in its efforts to promote the region overseas, as, indeed, they give help to other regional associations in other parts of the country.

The same Government who spend hundreds of thousands of pounds on helping regional associations to try to persuade industrialists in Japan, United States or Scandinavia to come and build their factories in Britain are quite happy to allow billions of pounds worth of capital to be exported from the country every year, creating jobs by the thousands in other parts of the world. I see a total inconsistency in this — in fact, the inconsistency is breathtaking.

For two centuries the Yorkshire and Humberside region made a massive contribution to the wealth of the country through its traditional industries—textiles and clothing, steelmaking, engineering, fishing, coal mining and agriculture—and in every one of those industries there has been a huge drop in the number of job opportunities over the past 10 to 20 years. I will not go through a lot of statistics; I mention only one. In the manufacturing industries in the Yorkshire and Humberside region in 1974 there were 764,000 jobs and by the middle of last year that number had dropped to 514,000—a loss of one third of the jobs in manufacturing. Those have not been replaced, of course, because of the failure of regional policies. That is the problem that we face.

I shall certainly not—and it would not be right for me to do so — go through the arguments that were advanced by my hon. and right hon. Friends in the debate in the House on Tuesday. But it is proper to mention that, if there were a plan for economic recovery in the country based on using the construction industry as the spearhead, which is what we were talking about on Tuesday, there would necessarily be a major regional dimension in such a policy because it happens that many of the areas with the greatest needs for investment in housing and other capital projects are also the areas with the highest levels of unemployment and the greatest potential for development. That is the kind of policy that we now need to be developing.

What I seek is a positive regional policy, not a negative one aimed solely at alleviating the misery. I believe that the Government today should be announcing the establishment of development agencies in the English regions and a massive programme of investment in those regions so that once again areas like my own and many more which are now suffering serious deprivation and unemployment could take their part in making this country once again a great industrial nation.

Photo of Mr David Sumberg Mr David Sumberg , Bury South 7:28 pm, 17th January 1985

If ever there was an example of the positive way in which the Government have responded, in the words of the motion, to a closer alignment of the new Assisted Areas map to areas' relative needs for increased employment opportunities", I would say that my right hon. and hon. Friends at the Department of Trade and Industry need look no further than my constituency and the metropolitan borough of Bury. I want to devote my remarks to the impact of regional policy on my constituency, because I think that what I have to say shows an interesting history and, indeed, that the Government are willing to listen to representations that are made to them.

In the past Bury was eligible for regional assistance, but, for reasons which are beyond me, it was withdrawn some years ago. As a result, the town, its commerce and employment prospects suffered immediately. Bury suffered not just because there was no longer any Government aid for projects, however worthwhile, or because it no longer had access to European funds, but probably because that there was a feeling of fundamental unfairness and injustice.

That feeling of injustice and unfairness stemmed directly from the fact that all the surrounding areas—Manchester, Rochdale and, in particular, Bolton, all constituent parts of Greater Manchester—were eligible for assisted area status in some form. As a result, because Greater Manchester is so closely interlinked with good travel facilities and communications, it became difficult, despite a local authority which pursued a policy of encouraging new business, particularly with its low rating policy, to tempt new business into the area and away from surrounding authorities.

An undoubted wrong therefore needed to be righted. If final proof of that were required, the recent publication of figures that showed an increase to over 17 per cent. in the level of unemployment in the travel-to-work area set the seal on it.

Local business opinion felt strongly that although it was more than content with and confident in its ability to compete with all corners, it was impossible to compete on such unfair terms. The community was outraged at the fact that the town remained an island in a sea of more advantaged areas. Therefore, my hon. Friend the Member for Bury, North (Mr. Burt) and I, helped tremendously by the local authority, the local business community and the trade unions, put the case to my hon. Friend the Under-Secretary of State for Trade and Industry. I appreciate, following the comments made by my hon. Friend the Member for Gloucestershire, West (Mr. Marland), that this may seem like the Minister's benefit match—I am sorry that he is not here—but I wish to pay tribute to his considerable patience, interest and, above all, understanding of the problems that I have outlined. The fact that he was a former pupil at Bury grammar school may have helped. but he saw the justice of our case.

The decision which was announced in the House on 28 November, which included the restoration of assisted area status for my constituency and the town which is part of it, was good news, because it recognised, after the unfairness that I have mentioned, that the constituency, with its over-dependence upon the paper industry and other traditional manufacturing industries of the northwest, was a classic case for some form of help.

I appreciate that, whenever one area receives assistance and others do not there is bound to be—my remarks have emphasised this—an element of unfairness. It is impossible to remove all inconsistencies, but the Government have tried to do that by their announcement. They have succeeded in many instances, and the fact that they have succeeded in the case of Bury has been received with considerable gratitude and relief in my constituency.

The people whom I represent undoubtedly have the skills, enterprise, energy and, above all, determination to succeed in the job of reviving their community. To adapt Churchill's words, they have now been given some of the tools by my right hon. and hon. Friends at the Department of Trade and Industry. For that reason, I shall have no hesitation in supporting the Government in the Lobbies tonight.

Photo of Mr Jack Thompson Mr Jack Thompson , Wansbeck 7:37 pm, 17th January 1985

I am sorry to see that the hon. Member for Darlington (Mr. Fallon) has left the Chamber, because he and I represent constituencies in the north-east of England. The hon. Gentleman and one of his colleagues have been critical of a document produced by the North of England County Councils Association. He said that nothing happened in the northern region in the time of either the Labour or Tory Governments in the 1960s and 1970s. I know that, like me, he received the document on the morning that he made a press statement about it. He could not have had the opportunity to read it in depth or study its implications.

I shall quote a significant part of the document which is important for the north: Regional policy has been highly successful in the past. The Northern Region Strategy Team estimated that over the decade to 1973 Regional Policy generated some 50,000 more jobs in manufacturing industries in the North than might otherwise have been expected. That shows the significance of the programme that was established in the 1960s and carried through to the early part of the 1970s for the north of England.

During the time that I have been involved in pursuing the interests of the north as a Member of the House, as a representative of my county council, as a member of the executive body of NECCA and for the past six years a member of the Northumbria water authority, one thread has run through all the reaction to Government regional policies. I can define it in one word—"inconsistency". Year by year attempts by industry and local authorities to take advantage of the meagre and reduced support given to the regions suffering long-term decline have been constantly frustrated by significant changes in regional aid. The lack of confidence in regional policy because of that constant tinkering has been reflected in the attitude of potential sources of employment planning to expand,. locate or relocate in peripheral areas such as the north-east. Industrialists who have responded to the challenge to locate on a site qualifying for aid and setting up programmes for development and production are faced with a change in the rules which affects their ability to overcome the initial problems of starting or expanding their businesses. That is reflected in the November statement and even more so by the moratorium.

Before my election to the House I was leader of Northumberland county council and I had the opportunity to consult many industrialists in the north of England and not just in my community. Some were long-established in the region and some were enthusiastic newcomers. They generally all expressed the same view—they appreciated the enormous help given by local authorities but there was, and still is, a lack of confidence in long-term planning because of the constant changes in regional assistance which are usually to their detriment. I am sure that after today's announcement about the moratorium they will be sitting again with their calculators, computers and pieces of paper trying to work out what grants will be available from midnight tonight if they catch the last post.

Selected public expenditure figures for the United Kingdom covering regional specific measures were down from £1,065 million in 1978–79 to £715 million in 1984–85. Industrial measures fell from £3,351 million in 1978–79 to £1,886 million in 1984–85. Those years, 1978–79 to 1984–85, reflect a connection between the attitudes of the present Government and what actually occurred.

The reduction coincided with reduced opportunity for local government to increase its contribution to the improved infrastructure, to give direct assistance to job creation and to help with the expansion of the industrial base of their communities because of the penal rate support grant policies pursued since 1979.

I have been directly involved in that aspect as a member of a county council. I have witnessed the deterioration of the infrastructure of my county, and the local authority has been unable to do much about it. I congratulate local authorities on the splendid job they have done, taking account of the dramatic reduction in rate support grant.

My region is the one I know best and, from my experience there, I direct the attention of hon. Members to a fundamental issue which arises because my views conflict strongly with those of the Government. My hon. Friend the Member for Rotherham (Mr. Crowther) mentioned this aspect. During the first industrial revolution, many thousands of people moved about the north of England, taking up work in the expanding industries of coal mining, heavy engineering, shipbuilding and steel making. The Tyne, Wear, Northumberland and Durham became famous for those industries, basically because of the availability of raw materials and the inventive skills of the northerners.

The north of England during that period was a major producer of wealth for Britain. Indeed, it can rightly be claimed that the foundations of the present economic structure of the nation was strongly based on the rich seams of coal and iron ore and the skills in heavy engineering and shipbuilding of that era. My hon. Friend the Member for Rotherham made a similar point relating to Yorkshire and Humberside. What he said did not conflict with what I have said, because the area to which he referred was basically the north.

Since the second world war, the changing face of the economy has created a virtual vacuum in the north, although there is strong evidence that that sad state of affairs need not have arisen had different central Government policies been pursued, including those of former Labour Governments.

The fundamental difference between the situation in the 19th century and first half of the 20th century and now is that today there is less need for workers to move to other areas for jobs. In other words, it is not necessary these days for me to get on my bike. There is more opportunity for jobs to move to people. However, this requires a degree of national planning and regional organisation, and they have been sadly lacking in the Government's policies.

I have time and again quoted an example from my constituency — it is probably the best example of a development anywhere in Britain — of co-operation between Government, private industry, nationalised industries and local authorities. A company known worldwide, Alcan Aluminium, decided in the 1960s to come to Britain. It wanted to establish a smelter in this country. There were extensive discussions between the Labour Government of the day, local authorities and others, and the company decided to establish at a place named Lynemouth in my constituency. That smelter is now one of the most productive units in Alcan's international activities. It sets a standard for the company's other production units.

In no way could Northumberland be associated with the aluminium industry before Alcan came on the scene. All we knew of aluminium was as a component part of pots and pans and as used in parts of aircraft during the last war. Today, aluminium is an important industry in my constituency, employing 1,100 people. The majority of them, working in Alcan's plant, have been retrained from other work, and I am told by the management that the factory supports perhaps 5,000 other jobs in the area.

We want to see more of that type of development in the north. It has happened to a degree, a recent example being Nissan. The local authorities had more influence on Nissan coming to the north-east than any other factor, and I congratulate the North of England County Councils Association. I was involved at the time when the five northern counties—all Labour-controlled, incidentally—got together and decided which two sites to put forward to Nissan. The chosen site was in Sunderland. That type of regional planning should be provided by the region. It is an example of what can be achieved by planning.

I appreciate that we must have change, but some of the changes affecting local authorities are extremely worrying. My local county council has in recent years, because of circumstances, established an employment committee. It has invested in a business centre, supported by the two district councils in the south-east of the county, and the result has been the setting up of the south-east Northumberland enterprise trust, which has been officially opened today.

That reflects not only the efforts being made in Northumberland but those taking place in Durham, Cumbria, Cleveland and Tyne and Wear, though the Tyne and Wear area is likly to disappear, and that, too, will have a serious effect on the north.

I recall being in discussion with a Minister at the Department of Employment some years ago. At that time we in the north were advised to pull ourselves up by our own bootstraps. In those days we did not even have bootstraps. We have them today and we are pulling ourselves up by them. But we need help and support from the Government. We need a democratic regional body and, more especially, we need a Minister responsible specifically for the north.

Photo of Mr Richard Hickmet Mr Richard Hickmet , Glanford and Scunthorpe 7:47 pm, 17th January 1985

It must be right that regions with high rates of unemployment and derelict industries cannot be left to languish. Some attempt must be made to iron out the imbalances in employment and industrial dereliction in those regions.

Some of my hon. Friends claim that regional assistance simply results in the movement of jobs from one constituency to another, but I do not accept that that is necessarily the case. Indeed, even if it were, it is no reason for not having a regional policy. Social consideratiions must play a part and it is particularly important that regions which have suffered a rapid and substantial decline in older and heavier industries should have effective regional assistance such as the Government are proposing in their new policy. That assistance can produce viable economic activity. I agree with my hon. Friend the Member for Darlington (Mr. Fallon) that such activity is, however, dependent on the national economy being in such a state that it can occur.

What is rapid decline and what regions come within that definition? It will help to answer that question if hon. Members consider the circumstances that apply in my constituency. The decline there has been rapid and substantial and to a large extent it undermined the economy of the region. The travel-to-work area of my constituency reflects that process in terms of unemployment and industrial decline. I suggest that the travel-towork areas must be the building blocks on which our policy is constructed.

This is a happy evening for me, because I am able to thank the Government for converting my constituency into a region with the most beneficial grants available, remembering that we in south Humberside are not in Scotland or Wales. We do not have a tedious lobby taking up the time of the House once a month. We do not have bodies such as the Welsh and Scottish Development Agencies. We do not have the time allocated to those vociferous areas.

At one time Scunthorpe employed more than 20,000 men making steel. It was a boom town. Massive investment took place in the 1970s. But it was a one-industry town. Since then, the steel industry has faced problems of over-capacity both at home and abroad and between 1981 and 1983 11,000 men were put out of work in my constituency. I invite any of my hon. Friends who doubt the need for regional policy to drive past the steelworks that was closed. The consequences of that closure for the economic viability of the region, for employment and for the industrial base were severe indeed.

That region needs assistance. When limited resources are available to Ministers, judgments have to be made as to where assistance should go. I am bound to say, no doubt partly because it involves my constituency, that if any part of the country deserves assistance it is the steel closure areas of Scunthorpe, Corby, and so on. I welcome the decision of my right hon. Friend the Secretary of State to give us development area status. I am also grateful for the assistance given to me and to the deputation that I brought to the Minister, when two authorities of different political persuasions buried the political hatchet and put their case together most effectively. If the regions with development area status are to market themselves successfully they must bury their political differences. They will be far more successful if the political parties co-operate.

In my constituency we now have three enterprises, with all the benefits and incentives that they offer to industrialists. In addition, we are eligible for European regional development fund grants to improve our infrastructure and for non-quota ERDF funds to assist industry, as well as cheap loans from the European coal and steel fund to assist investment. A substantial factory-building programme has been undertaken by English Industrial Estates. I believe that south Humberside is now in a position to broaden its industrial base and gradually to attract investment.

Regional assistance must be cost-effective and I welcome the Government's decision to encourage investment in job-creating enterprises such as the service sector. There must be no more Sullom Voes. My constituency needs jobs. I urge my hon. Friend the Minister to bear in mind the effect that some other Departments have on the efforts of his Department and of local agencies to achieve those jobs. We have constant problems with the Ministry of Agriculture, Fisheries and Food over our proposals to develop the Trentside wharves because grade 1 industrial land is involved. We have to persuade the Department of Transport of our eligibility for freight facilities grant. We have to persuade the Department of the Environment that we are eligible for derelict land grant. When all those grants are available for regions such as mine, there is a clear case for some kind of co-ordination.

I have no doubt that there is a bright future for my constituency. Goodness knows, it has waited long enough to see the light at the end of the tunnel. I therefore welcome the Government's decision in terms of general regional policy. Although south Humberside has no Minister in the Cabinet and is not entitled to a day a month of parliamentary time, the needs of the region have at long last been recognised. I am grateful for that and I believe that a bright future awaits us.

Photo of Mr Gordon Wilson Mr Gordon Wilson , Dundee East 7:54 pm, 17th January 1985

The hon. Member for Wansbeck (Mr. Thompson) was clutching at straws when he referred to the advantages of having a territorial Minister. As a Scot, representing a country which has such a Minister, I should warn the hon. Gentleman off that prospect. When decisions have been taken by the Government, the Scottish Office has proved utterly impotent and ineffective. It certainly has not defended Scotland in any way at all. There are two reasons for that. First, the Secretary of State for Scotland is a minority of one in the Cabinet. He can be, and no doubt was, outvoted with regard to the moratorium announced today. Secondly, the Barnett formula limits growth in the Scottish Office to that of the comparable United Kingdom Department. In other words, it has very little power, so the hon. Gentleman should beware of that solution.

The hon. Member for Glanford and Scunthorpe (Mr. Hickmet) referred to the "tedious" Scottish and Welsh lobbies. As one who has to feature in them, I find them equally tedious. We should be far better off with our own Government and Parliament, able to take decisions sympathetic to the needs of our nation without having to explain them to people who know nothing and care less about our country. I assure hon. Members that neither forming part of a tedious lobby for the north of England nor having a territorial Minister to whom the tedious representations may be made would bring much advantage.

Strangely enough, in the current cold snap the south of England obtained the additional social security benefits of which the Scots have been deprived in the past. That just about sums up the political decision-making behind the changes in regional policy. The west midlands and one or two other areas, represented in glowing terms by distinguished new Members who came to the House after the last election and who are worried about keeping their seats, have received the benefits. To provide those benefits for the Conservative party, £100 million has been taken from Scotland and £60 million from Wales. Those moneys are to be transferred to the areas that the Government believe will be the cockpits of British policy in the future. In the decaying society of the United Kingdom where money is short, it is made available to those who will benefit politically—that is, the Conservative party.

The Secretary of State rightly referred to the role of multinational companies which sometimes come in where they can obtain the most cash, pocket the money and leave when times get hard. That is very much like the Government's policy. As the United Kingdom's economy goes down the plughole, money becomes short, public expenditure constraints are imposed, and money is taken from the periphery in the hope of sustaining the central core. Those are party political decisions, and they should be recognised as such.

I take exception, too, to the Secretary of State's analysis of regional policy as being social rather than economic, although I accept at once that regional policy is no substitute for relevant economic policy. When the regional aid schemes were developed and refined in the 1960s, part of the objective was to achieve economic regeneration when the national economy and the stop-go policy applied from the centre discouraged activity at the periphery when things were cold. National policies at that time thus benefited the overheated regions but did not affect the north of England, Scotland or Wales.

Unemployment in the small countries of Europe is between 4 and 6 per cent. That is the standard upon which we should set our sights. We should not just complain that unemployment exceeds 13, 14, 15 or even 20 per cent. It is a sign of how bad things have become when we are prepared to accept unemployment rates which none of us would have accepted a few years ago.

During his speech the Secretary of State for Trade and Industry said that industrial policy costs money and that, in a few years' time, he will save £300 million. He appears to hold the implicit view that regional policy amounts to no more than a row of nuts—that is social rather than industrial or economic aid.

The Government spend about £17,000 billion on defence. Scotland, however, receives less than 5 per cent. of defence expenditure. Therefore, Scotland loses out. Most of that money is spent upon the betterment of the south and the midlands. Too little attention is paid to defence expenditure in Scotland. Mr. Peter Balfour, the chairman of the Scottish Council (Development and Industry), said: Recent events have given the impression that higher education and regional industrial policy do not comprehend the needs of adjusting our industrial and commercial activities to the changing requirements of the market place.

There is deep dissatisfaction in Scotland — in industry, the trade unions and local authorities—about the changes that the Government have made. Scotland has suffered 30 per cent. of the cash cuts. It is not as though Scotland is a net debtor. If Scotland were an independent country, it would receive at least £11,000 million or perhaps £12,000 million in oil revenues. That is an expression of the deep ingratitude that is shown by the present Government towards Scotland. Members of Plaid Cymru have asked me to say that they will develop their own arguments about Wales in the Welsh Grand Committee, but that they take great exception to the huge cuts that will be suffered by Wales. There is controversy about the applicability of European grants to Wales and to Scotland. I hope that the Minister will say something about that matter.

The forecasts are that Scotland could lose up to half a million people during the next 25 years. That is not just the result of a drop in the birth rate; it is the sign of the gross ill health of our economy. Emigration is the surest possible sign that an economy is not doing well. I would point out to the Minister with responsibility for industry in Scotland that his Department has betrayed Scotland and the Scottish economy. It is supposed to protect them, but it does not. One of the slogans during the radical rebellions of 1820 was "Scotland free or a desert." We are reaching the stage where, without a change in Government policy, Scotland will be an industrial and economic desert. That is why the Scottish National party campaigns vigorously for a Scotland that, like other small countries in Europe, will be free and prosperous.

Photo of Roger Gale Roger Gale , North Thanet 8:04 pm, 17th January 1985

Like many Members, I suppose that I ought to be here tonight with a begging bowl because I represent part of a travel-to-work area which has the highest unemployment rate but which is not in receipt of assistance. However, I believe that we have sufficient natural assets in our harbours and coastline and in our proximity to the continent to be able to sort out our own problems and to create the new jobs that the area undoubtedly needs. To that end, the East Kent economic development group, an entirely private body that is backed by the county council, will achieve a great deal. However, we cannot do so with one hand tied behind our backs.

I am not asking for advantage. Equally, we cannot succeed if we are to be disadvantaged. Because of the assistance that my right hon. Friend the Secretary of State for Trade and Industry gave me in a skirmish in the midlands a couple of years ago, he knows that I have always believed that regional aid does not, in the long term, create jobs. It simply moves jobs from A to B. So long as south Wales, Liverpool and the north-east offer attractions which other areas do not offer, companies will move from my constituency, and others like it, to those areas

The hon. Member for Yeovil (Mr. Ashdown) drew attention to the remarks that I made on 28 November. However, he wrongly believed that I was advocating specific projects for my constituency. I was not. I have always advocated sectoral aid. In that debate, my hon. Friend the Minister of State indicated that the salvation of my constituency was tourism and that the proper way to fund tourism was by means of section 4 grant assistance. I agree entirely with my hon. Friend. On that occasion he said that we in Thanet, North could do much to promote tourism. I believe that that is not the only future for Thanet, North. We shall certainly attract new industry too.

However, to take the point made by my hon. Friend, if one looks at grants under section 4, one sees that in the past jobs have been created under regional aid by means of the expenditure of about £30,000 to £35,000 per job. On 28 November, my hon. Friend indicated that the Government wished that figure to be reduced to about £10,000. Under section 4, a new job in the tourist industry is created for expenditure of £4,500. Roughly 50 times as much is spent on regional aid as is spent on section 4 aid. Under section 4, we make available just £8 million for the whole of the tourist industry in this country. We have heard that regional aid is projected to be £400 million and that it is currently more than £400 million. I ask my right hon. Friend to consider reallocating some of the money that is now spent on regional aid to the tourist sector and to reallocate it as sectoral aid under section 4. In terms of job creation, that money would certainly be more effective. I also ask my right hon. Friend to try to cut some of the red tape which surrounds the award of section 4 grant. That would be of enormous assistance.

If emphasis is to be placed upon service industries and upon grants under section 4, will the Government consider making a declaration that section 4 money is aid money? If the Government were to make such a declaration, we should be able to compete on at least equal terms for the European assistance that is so very readily available.

I endorse entirely the measures that have beer taken by my right hon. and hon. Friends to reduce the waste in terms of the money that is spent on regional aid. I applaud the cut of £300 million that is to be made in regional aid if that money can be reallocated—

Photo of Roger Gale Roger Gale , North Thanet

If the hon. Gentleman had been listening earlier, he would have heard that this particular part of the prosperous south-east has the highest unemployment in the country, apart from areas similar to his which are receiving assistance. That cut of £300 million would be well made if the money could be reallocated for a better purpose. I shall endorse that policy, as I shall endorse any policy which redirects money from capital expenditure under the old regional aid programme to sectoral aid and job creation.

Photo of Mr Robin Corbett Mr Robin Corbett Opposition Whip (Commons) 8:10 pm, 17th January 1985

I am proud to speak for Birmingham and it will be noted in that city that not one Conservative Member from it is seeking to take part in the debate.

A brief circulated by the Regional Studies Association states: Regional disparities do not merely represent a 'social problem'; they involve the national economic interest". If only the Secretary of State and his colleagues would understand that and stop treating the issue as something on the fringe of charity, how much better things would be.

There can be no proper economic recovery without the rebirth of the manufacturing capacity of Birmingham and the west midlands. The extension of aid to the service industry may help, but Britain has no proper economic future based purely or mainly on the service sector—taking in each other's washing, as the right hon. Member for Old Bexley and Sidcup (Mr. Heath) so rightly called it the other day. I assert the critical need for the renewal of our manufacturing base to safeguard our future.

Regional aid needs to be seen in a wider context—the spending by local authorities on housing, education, social services, and so on, because either that money creates jobs, or the absence of it destroys jobs. Under the Government less money means fewer jobs and poorer services in return for a doubling of the rates. It also has to be seen in the context of the state of the infrastructure of the region and the need for the repair, renewal and development of that.

In opening the debate the Secretary of State rightly said that we should ask what the policies do for jobs. I will tell him what they do for jobs in Birmingham. Second XI status for Birmingham, which is what we have, will do little or nothing to staunch the continuing loss of jobs in that great city. Unemployment in Birmingham is now one third higher than it was in 1979. In my constituency more than 7,000 people have been out of work for more than a year. Over the whole constituency, unemployment runs at 22 per cent. The Government deny jobs, hope and dignity to those people and to Birmingham in general.

Birmingham argued for development area status for its decaying inner city areas where up to 40 per cent. of people are jobless—areas such as Sparkbrook, Small Heath and Ladywood. The dangerous underlay in those inner city areas is that in many parts of them the ethnic communities make up around 50 per cent. of the population. For black and Asian youngsters in those parts of the city, leaving school almost certainly means immediately joining the dole queue.

During the argument over Birmingham and the west midlands the Government hid behind the new travel-towork areas—boundaries which the Government revised. The new Birmingham travel-to-work area is a complete farce and brings the danger of sucking jobs out of the inner city areas to greenfield locations on its edges. However, I must say that the miserable assistance offered to Birmingham reduces that danger because it is so inadequate.

In Manchester the travel-to-work area for the purposes of regional aid has been split and there is nothing in the legislation to prevent the Government from treating Birmingham in the same way and to define parts of those inner city areas for full development aid on a local authority ward basis.

The Secretary of State also said that urban aid should be taken into account. Of course it should, but his hon. Friend the Member for Ealing, Acton (Sir G. Young) at the Department of the Environment made it clear a few days ago that under the Government urban aid next year in real terms will be cut by 4 per cent. Therefore, there is no joy in that.

Birmingham has been shabbily treated. Our job loss has been among the highest in the United Kingdom and it is near the top in the Common Market unemployment black list. The dole queue is still growing. That is why the city council, on an all-party basis, Members of Parliament and the Birmingham chamber of industry and commerce, got together to argue the case for better first-class treatment for the inner city area of Birmingham.

Will the Minister give serious consideration to five quick points, which will test how serious the Government are about wanting to assist Birmingham properly to get back into business?

Firstly, given the will, there is nothing to stop the Government deciding to give full development area status to certain inner city wards as defined on the basis of local authority boundaries.

Secondly, they can give some assistance to work of regional importance—the development of a convention centre in Birmingham and the rapid transport system, the upgrading of Birmingham airport, the improvement of the rail link to London and all that that means, and the improvement of roads to east coast ports.

Thirdly. they can establish a high-powered, dedicated, committed, knowledgeable task force for Birmingham to knock heads together, to slice through the red tape and to see that the money that is available is spent in the most effective way.

Fourthly, the Government can increase the urban aid programme fund, and fifthly, they can create a special local authority power related to grant-related expenditure assessment for economic development in the surrounding intermediate area.

Birmingham will judge the seriousness of the Government by their attitude to unemployment and by their response to those and other points which have been made on behalf of the city. I have no real faith in a positive response from the Government because they have demonstrated that they just do not care about people being forced into, and kept in, the dole queues. Already, the Minister's colleagues are trying to cut the throat of the West Midlands county council which fathered the west midlands enterprise board, which has a record of creating real jobs through its activities, not at £10,000 or £50,000 per job but at about £2,600 per job. The tragedy is that such an organisation cannot create enough jobs to make up for the large-scale losses in the manufacturing sector. None the less, the abolition of the West Midlands county council at least puts a question mark over the future activities of that board.

The Government have shown that they prefer to cut and destroy. I urge and plead with them to assist Birmingham to get back into business as a major manufacturing centre. That is what we are good at. We have been knocking metal about for a century and that is what we want and need to do if our battered city is ever to recover.

Photo of Mr Patrick Nicholls Mr Patrick Nicholls , Teignbridge 8:17 pm, 17th January 1985

My hon. Friend the Under-Secretary of State is well aware from correspondence that I have had with him, from debates in the House and from a delegation which I led to see him before the decision was made how I feel about the withdrawal of aid from my consituency.

Whatever objections my delegation might ultimately have had about the final decision, it is right that I should say that it appreciated the way in which it was dealt with. It is one thing to be given a decision which one does not like, but it is something to be given a decision by someone who is clearly on top of the issues with a grasp of the facts. I was told today—I have no knowledge of this myself—that there are Ministers who, when delegations are led to them, do not seem to have a grasp of the facts. That was not the position in this case.

I do not want to detain the House unduly by setting out the reasons why I object to what was done in my constituency. I have made my views on that known and there is no point in taking up time trying to urge the Government completely to change their policies to fit in with my views and predilections. However, the central problem with which we are dealing here, and the essential problem that affects my constituency, is that the principle of regional aid, as we are forced to operate it at the moment, rewards the profligate and, in the end, punishes the industrious. As long as we have a system that works primarily on the basis of unemployment statistics, without looking at why there is unemployment in that area, in the end the industrious areas are bound to suffer. It ill behoves Labour Members to refer to areas as regional deserts when vast amounts of public money have been poured into them through the years. For hon. Members to refer to their areas as regional deserts when in some cases they are nothing better than regional plug holes approaches cheek.

Photo of Mr Patrick Nicholls Mr Patrick Nicholls , Teignbridge

I do not know whether the hon. Gentleman is trying to intervene, but from the way in which he is making interjections it is clear that he has recently come from a place where he finds the company more convivial. If he wishes to make his own speech in due course, I am sure that we shall be delighted to hear him. In the meantime, if he will contain himself and not waste other Members' time, that will be of assistance to us.

Even if my hon. Friend the Minister does not agree with the way in which I have set out the dilemma in which my constituency finds itself, he will agree thus far—it was not Teignbridge's fault. If there was ever an example of an area using regional aid well, effectively and to the benefit of the community, Teignbridge was such an example. In saying that, I pay tribute to the work that the Teignbridge district council has done in putting a range of schemes together.

If my hon. Friend the Minister agrees with that and he agrees that Teignbridge cannot be held at fault for what happened to it, it must be clear that he and I will be united on another point. If anything can be done in the ambit of the policy on which the Government have decided to mitigate the effects that Teignbridge will suffer, that should appeal to my hon. Friend. Therefore, to that extent, and perhaps only to that extent, I can bring him glad tidings from the west country, because there is one obvious way in which Teignbridge and possibly other such constituencies can be assisted.

Transitional plans are available for European funds. The worst vice in the way in which the system works at the moment is that if an area loses national aid, it loses access to European funds as well. The transitional arrangements have two basic ingredients. First, the application has to be made within the next four months, and, secondly, the majority of the expenditure concerned has to be made by 29 November 1985. Politics is the art of the possible. I suggest that to insist that applications should be made by the end of March is going a little too far. However, I concede that in many cases it might be possible to accelerate that application and to bring it within the transitional arrangements.

However, in the practical world in which we live, it is asking too much to insist on a concession that says that the majority of the expenditure has to be made within the year. The consequences of that were extremely well set out in a report prepared by the chief executive of the Devon county council and the property services manager, Mr. Macklin, and Mr. Smy, of the economic committee of the Devon county council. The report pointed out that, if that transitional arrangement is allowed to stand, in the next five years the west country will lose about £18,600,000 of European funds.

I can give one specific example from many possible examples. It concerns the Roadford reservoir. There cannot be one hon. Member who is not aware of the problems in the west country with the drought this summer and in 1976. Because we shall need access to European funds, the chances are that we shall lose about £9 million of European money to which we would otherwise be entitled. Perhaps, with creative accountancy, it would be possible to cobble something together and to say that most of the expenditure could be done by November 29. I do not know, but I doubt it. The position was summed up in the report to which I referred by a paragraph that read: Such an extension would enable many important schemes to be completed and thus provide a basis of infrastructure upon which to attract inward industrial and commercial investment, and therefore job opportunities in the future.

I do not believe that those transitional arrangements were put in as mere window dressing. They were put in for a very good reason—because it was admitted, even within the ambit of the Government's policies, that there had to be transitional arrangements. I do not think that it is too much to say that in this case it may be necessary for the Government to go back to the European authorities and renegotiate that part of the transitional arrangements that says that the majority of the cost has to be carried out by November 1985.

If those proposals are not mere window dressing, if their purpose is to take account of the fact that areas such as Teignbridge suffer through no fault of their own, it is not asking the Government too much to ask them to put the broad framework right, to go back and get another concession.

If there is any way in which I can sum up why that should be done, it comes down to this—it is common justice. I hope that when the Government find that they have to operate a policy that is fundamentally flawed they will at the very least ensure that the transitional arrangements mitigate its effects.

Photo of Robert Wareing Robert Wareing , Liverpool, West Derby 8:25 pm, 17th January 1985

To call this a debate on regional policy is something of a misnomer. It is more a debate on a policy of sorts of one Government Department—the Department of Trade and Industry. The aim of the policy that we are being asked to endorse this evening is not to aid the regions but to help the Chancellor to make further cuts in public expenditure. We are being asked to endorse a reduction of 54 per cent.—from £643 million to £300 million—in expenditure on regional development grants and selective financial assistance between 1983–84 and 1987–88.

Since the mid-1970s, regional aid is one third down in real terms. Areas such as Merseyside require a comprehensive, interdepartmental strategy—the sort of strategy that was outlined for us immediately after the Toxteth riots when the present Secretary of State for Defence, then the Secretary of State for the Environment, came to Merseyside and established a task force. A number of hon. Members—the hon. Member for Leeds, North-West (Dr. Hampson), who intervened in the Secretary of State's speech this afternoon, and my hon. Friend the Member for Birmingham, Erdington (Mr. Corbett) — have asked for a task force. Merseyside's experience of the task force has led to disillusionment. When it was set up the present Secretary of State for Defence determined its role as being to deal with the overall deployment and effectiveness of public resources in Merseyside. Under the present Secretary of State for the Environment, we have unco-ordinated, project-by-project overseeing. The task force on Merseyside is no more now than an outreach department of the Department of the Environment.

We do not want a task force such as that in an area with substantial unemployment. Merseyside now has about 50,000 or 60,000 fewer jobs than when the Secretary of State for Defence visited it in the aftermath of the Toxteth riots. We have 140,000 people unemployed and 195,000 supplementary benefit claimants. The deprived parts of Merseyside will now have to suffer a loss under the policies that we are discussing this evening.

It will lose its special development area status, and, in consequence, the regional development grant will be reduced from 22 per cent. to 15 per cent. Although new plant will qualify, replacement plant, which many firms require in order to replenish their resources, will not.

The regional policy that we are being asked to endorse has nothing in it to assist the port of Liverpool or the airport. Although no doubt there will be a few dissident voices from the Back Benches, the Conservative party is in the process of establishing a third London airport at Stansted and, to all intents and purposes, downgrading airports such as Manchester, which is already an established international airport. There is nothing in the Government's policy to help Manchester airport.

Conservative Members may protest that Manchester is to be made an intermediate area. What God taketh away, he giveth back. It was the Conservative party that withdrew assisted area status from Manchester on an earlier occasion.

Liverpool airport has pleaded, month in. month out, for an upgrading of its status. It does not even have a duty-free shop, despite the fact that most of the people using it are about to take international flights. They make their way to Heathrow, Gatwick, and other international airports.

There is nothing in the regional policy to help tourism. The much-maligned Merseyside county council has taken very much on board the need to develop tourism in an area that — as the Government themselves recognise — has some tourism potential. Last year, the international garden festival was established. Merseyside county council has brought the tall ships race to the Mersey, arranged the Mersey river festival and developed the Beatles connection as one of the attractions of Merseyside. The area is close to the Lake District and to north Wales. Tourism is an area in which jobs can be created. If the Government looked more kindly upon those who are trying sincerely to develop tourism on Merseyside, we would do much better.

The policy is a loss to the north-west as a whole. The smaller amounts of aid to be made available for regional policy in the north-west are to be diluted. At the moment, 47 per cent. of the population live in assisted areas. Under the new policy, over 60 per cent. will be included. That is not a plus; it is a minus. In the case of Merseyside, pressure was doubtless brought to bear on the Government by the Tory Wirral borough council. As a result, the Chester travel-to-work area is now included in the Merseyside development area. The effect will be to dilute the capital injected into the inner city and the more deprived areas of the county of Merseyside.

Merseyside did not gain much from regional policy in the immediate past. Even within the more confined boundaries of the special development area, when regional development grants were paid to firms moving into Merseyside, most of the capital went to the more prosperous and peripheral parts of the region.

What Liverpool and Merseyside need is for all Government spending to have a regional dimension. It is no use the Government telling us that we are to have suchand-such a sum in regional development grants when, since 1981, they have denuded Merseyside county council of £76·5 million. That money would have been spent on building up the infrastructure on Merseyside. It would have enabled us to develop the area so as to make it more attractive to business men. Do not say that you are helping Merseyside through all your policies. I do not mean you, Mr. Deputy Speaker. I am referring to the Government. They say that they offer regional development grants to firms moving into the area, but, on the other hand, they are making the area a cultural desert by attacking art and culture there.

The Philharmonic hall is a place that many people would want to visit and where the executives, whom we hope to attract, might wish to take their recreation. The Philharmonic hall is under threat because the Secretary of State for the Environment is doing the opposite of what the Secretary of State for Trade and Industry tells us that he is trying to do, because he is taking money out of Merseyside.

If we take all the districts in the county into account, we find that between 1981–82 and 1984–85 the districts and the county council have lost £136 million in terms of loss of block grant and penalties demanded by the Department of the Environment. That loss affects social, community and education services.

One cannot develop a comprehensive regional policy in a vacuum. This is a phoney attempt to lull the public into believing that the Government are making a real attempt to solve the problem of jobs. That claim is false.

The Government should not tell Merseyside to look to the private sector. Over the years we have witnessed the collapse of the private sector of manufacturing industry. When the present Secretary of State for Defence visited the city in 1981, he took a celebrated coach tour around Liverpool with some business men. They set up an organisation called Inner City Enterprises. I challenge the Government to tell me of £1 invested by Inner City Enterprises in any inner city. The Government pretend that they can solve the problem of the gap between the rich and the poor in this country by spending less than 1 per cent. of total public expenditure. That is a complete fallacy. Merseysiders know what the Government are about.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire 8:37 pm, 17th January 1985

It is singularly appropriate that I should speak after the hon. Member for Liverpool, West Derby (Mr. Wareing), because his constituency and mine are in the Liverpool travel-to-work area. On behalf of the many honourable Conservatives on Wirral council, Sefton council, and West Lancashire council, I say that we in the Merseyside sub-region are sick and tired of hearing the Labour party whingeing on about the bad treatment that Merseyside has had from the Government. The Merseyside sub-region has benefited more from grants and Government investment than any other region in the country.

Furthermore, the hon. Gentleman conveniently forgot to mention the fact that freeport status was recently accorded to part of the dock area of Liverpool. That should certainly help to revitalise an undeveloped and unfortunately rundown part of the city.

I am not suggesting that everything in the garden is rosy. but opportunities have been put in Liverpool's way, perhaps more than in any other region. Labour Members should recognise that. It is regrettable that I must observe that if Labour Members who represent Merseyside were more co-operative with Conservatives who have the interests of Liverpool at heart, it would be a much better place. They merely knock and criticise and fight among themselves. They would do far more for Liverpool if they put over a good, progressive and dynamic image of the city, which will have a great future if we work for it.

Photo of Robert Wareing Robert Wareing , Liverpool, West Derby

How many Tory Members are there in Liverpool? None.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

There are at least three in the Merseyside region and there are others like me in the Merseyside travel-to-work area. Many of our constituents work in Liverpool. I am a member of the Liverpool chamber of trade and a member of the court of the university of Liverpool, so I have the interests of the city at heart.

I welcome many of the Government's proposals and was a member of the Committee which considered the Cooperative Development Agency and Industrial Development Bill. My hon. Friend the Minister recently visited my constituency. I must tell him that the people of Ormskirk and surrounding parishes, Up Holland and Skelmersdale are grateful for what the Government have done. People in Ormskirk and surrounding parishes are especially glad to have been given regional development status. It is a marvellous opportunity for an area that has had no assistance for many years to enable it to take advantage of manufacturing and service industry grants and those which are offered by the European regional development fund.

The most constructive aspect of these proposals has been ignored today. The area suffers 15 per cent. unemployment. The payment of grant has been divided into two categories. The first is based on selective assistance—the backing of winners. We want companies that will succeed to receive grants. The second takes employment into consideration. Unemployment is a burning issue in this Parliament and in the country. Grant is to be paid according to the number of jobs that will be created. Many people in the north-west will welcome the £10,000 per job limit and the £3,000 special job grant for labour-intensive industries. We must wave a welcome goodbye to the bad old system of automatic grants which created jobs at £35,000 each at 1982 prices. There will be an end to Sullom Voe projects and the like.

Photo of Mr Barry Henderson Mr Barry Henderson , North East Fife

We have seen not the end of Sullom Voe projects but the end of taxpayers paying money for them. The projects would have been developed anyway.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

I am grateful to my hon. Friend. Grant is to be available only for the creation of new projects. People in the provinces, and especially in the north-west, are interested in the creation of new jobs. There is an enormous difference between such grants and spending £2 billion on training schemes. Jobs that result from inservice training would probably have come about anyway. We want jobs that would not have been created without grants. The Department of Trade and Industry should examine the recipients of grants and ask whether the company would have expanded without grant. It is no good giving grant to companies that will expand anyway merely because they happen to be in the right place.

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

How are jobs to be created without any money?

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

That is one issue on which I agree with the hon. Gentleman. There is deep anxiety about the level of unemployment in west Lancashire, especially in Skelmersdale. I could take Ministers to estates in my constituency where unemployment is as high as 40 per cent. That is devastating. It creates much suffering and hardship. My hon. Friend the Minister should re-examine the money that is being made available for regional development. People want employment.

The House's mind has been concentrated on whether the £1·5 billion that my right hon. Friend the Chancellor has mentioned should be spent on infrastructure or in tax relief. Most of those who have pressed for spending on infrastructure believe that that is the best way to create jobs. Like many of my right hon. and hon. Friends, I believe that people north of Watford want jobs. If it comes to making a choice between having a few extra pounds in our pockets and seeing our neighbours and friends in work, we would opt for jobs. The Government might think that giving £1·5 billion back in tax relief is a good way in which to create jobs, but if there is more it should be spent on job creation. An ideal vehicle for that is regional development grant.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

The burden of the hon. Gentleman's speech appears to be that he disagrees fundamentally with the Government cutting regional aid by nearly one half. Is he aware that that is the central issue here? Can he not find the courage to represent his constituents by voting against the Government? If he really believes what he says, he will do that.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

At this stage I believe that the programme being advanced by the Government is good. The idea is excellent. It removes the bad old system of automatic grants. I am glad to see the back of them. I can support the new system, but I am telling my hon. Friend the Minister

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

That the hon. Gentleman will vote for the Government?

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

—that he should re-examine the amount of money that is being made available. This year's Budget could provide opportunities for job creation. Each Budget should be examined with that in mind. There is to be no cut in regional development grant this year. It stands at £640 million. We still have an opportunity to see whether more money can be made available. But those who criticise this system should bear in mind that it is a much better system than the one it supersedes. It is more likely to create jobs, and is much more understandable to the general public. They will understand that for every £10,000 spent, a job should be created.

Hon. Members may criticise because of the amount of money involved, but they should go into the Lobby to support this good new system of regional grants. They should make it their business if they so wish to write to the Ministers responsible and to the Chancellor of the Exchequer saying that they want more money for more jobs. That is where the pressure should be applied.

Photo of Austin Mitchell Austin Mitchell Chair, Treasury & Civil Service Sub-Committee, Opposition Whip (Commons) 8:51 pm, 17th January 1985

I shall not take up the remarks of the hon. Member for Lancashire, West (Mr. Hind), who has his own particular brand of Law Society economics, partly because he has not left me much time in which to do so. However, I must say that his desire to grovel before the Government seems to have overcome his economic sense.

The Government's measures demonstrate their brazen callousness. It takes real insensitivity, inhumanity and brutality towards those lesser breeds without the south for a Government who have decimated industry, brought down manufacturing employment by 22 per cent. in five years, put 1.7 million people in manufacturing industry out of work, increased unemployment to a level never before known in this country and who have generated long-term unemployment on a scale three times that which existed before the war, to cut £300 million off the budget for regional aid. That seems to be the entire aim of these measures. On 28 November, the Minister of State said their policy represents a considerable lightening of the public expenditure burden". —[Official Report, 28 November 1984; Vol. 68, c. 937.] That is the aim. Just when we need money spent on regional aid, the Government have cut the amount so that they can go ahead with tax cuts. The only consolation offered to the declining areas of this country seems to be that the more they decline, the greater the prospect of a visit from the Under-Secretary of State who is responsible for small businesses. To some areas that is more of a threat than a promise, yet that is the only consolation offered them today.

If this system of regional development and aid was necessary when unemployment stood at between 500,000 and 1 million, it is trebly necessary when unemployment now stands at 3 million. Yet the amount of money spent is being almost halved. Given the industrial disaster that the Government have inflicted on this country, the only logical step was to extend regional policy. If that policy is to be extended to other areas, such as the west midlands, as it should be—due to the damage done to the west midlands—and if the cake is to be cut into more slices, we must have a larger cake. It makes economic sense to spend more on regional policy to help those areas that the Government have brought to their knees through their economic policies. For them to cut back now demonstrates the callous heartlessness that is the economics of irresponsibility.

Photo of Austin Mitchell Austin Mitchell Chair, Treasury & Civil Service Sub-Committee, Opposition Whip (Commons)

I would rather not give way, as I should like to keep to the 10-minute limit, even if it does not apply.

In short, the Government are trying to have it both ways. They claim that they are bringing benefits to new areas. They also claim that areas such as Grimsby, which have their development area status cut, will not suffer any loss. The Government cannot have it both ways. Either there is a loss to areas such as Grimsby, or there is not much of a benefit to those areas such as the west midlands, which are supposed to benefit. The truth is that harm is being done to areas such as mine. As far as Grimsby is concerned, this is a kick in the private enterprise. It has been delivered by a Minister of State who comes from the town. It is a sad reflection that he should be grinning behind the Dispatch Box when he has done that to Grimsby.

Grimsby derived real benefits from development area status. That status was wisely and rightly, justly and fairly given to us by the Labour Government. It brought large sums to firms in regional developments grants for capital projects. It is merely quibbling to say that it has not stopped further decline. In Grimsby, male unemployment has hovered near the one man in five figure over the past few years due to the decline of basic industries such as fishing. In fishing, we are hamstrung because we fall between all possible stools. We do not qualify for help from the Common Market because we are north Britain, or for help from Associated British Ports because it has its own commercial objectives to pursue. The Ministry of Agriculture, Fisheries and Food has no money to offer us. We have no inner urban aid to use at discretion. Thus, that basic industry is declining. We have also seen a decline in the primary processing of fish, and large scale redundancies at Laportes at the graving dock and Courtaulds. The town's exporting industries have suffered because of the rise in the value of the pound, and food processing has suffered because of a decline in consumer demand. We have suffered all round, due entirely to the Government's policies.

Regional policy for us has prevented the decline from becoming worse and has prevented yet more unemployment in Grimsby. That might be a negative achievement, but it is still vital for the constituency that I have the honour and privilege to represent. The aid is vital, for all that its impact has been negative. Now we have lost that attraction.

As a result, we shall become vulnerable to the distortions of regional aid, which regional policy is meant to ease. I shall illustrate two of the distortions as they effect Grimsby. We have seen the closure of one of the Findus factories in the area, and the loss of about 1,000 jobs. They were effectively transferred to Longbenton in Newcastle, as the firm could get better regional incentives in a special development area than it could obtain for its existing operation in Grimsby. Thus regional policy in that area was effectively being used to destroy jobs in Grimsby.

When we saw the Minister to complain about that he said, effectively, "Hard fishcakes. That is the way the world is.." Now that Grimsby has been demoted to intermediate area status there will still be that gap between us and a development area, and the prospect of losing such jobs is still there. Therefore, we are hurt both ways. Our power of attraction is reduced, and we still have the potential for losing.

The Secretary of State, then the Minister of State, also effectively betrayed us over Nissan because he indicated that he would redress the gap between the aid offered to a development area and that forthcoming for a special development area. More than £20 million was involved. He certainly gave the impression to all at the meeting that the gap would be bridged. I think that all there will confirm that. He held out that implicit promise. As soon as he got Nissan's agreement to come, it did not really matter which part of the country it went to, and he found that he could save money by not offering that aid to Grimsby.

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

The hon. Gentleman may be confusing me but I think that he is imagining an entirely fictitious meeting and conversation.

Photo of Austin Mitchell Austin Mitchell Chair, Treasury & Civil Service Sub-Committee, Opposition Whip (Commons)

I am sorry; like this Minister of State I was not at the meeting, but all those who were there agree that that promise was held out. The correspondence later bore that out. On the evidence of those who were there, I am right. The promise was held out, and once Nissan had been secured, and the Minister no longer needed to offer an inducement, he dropped it. Again, we suffered through the distortions of regional policy and are still open to suffer again in exactly the same way. The answer is not to eliminate these disparities but to give the areas more flexibility to attract the industries that they wish to attract.

Another problem is the disruption that the change in policy imposes on a place, such as, Grimsby. We need continuity. Just as we are getting going as a development area and getting the system into gear, it is suddenly brought to an end. Industry needs continuity and prospects to make investment decisions. Chopping and changing, as the Government do, inhibits that.

A further problem is that the measures are unjustified. Our problems are more severe than when the Labour Government gave us development area status seven years ago. We need that status to fight against the continuing decline. The Government are diminishing our ability to do so. During that period our unemployment rate has more than doubled. I am angry at the squalid measure and at the vicious demotion of an area that was deriving benefits, and needing more benefits rather than this cut.

It is as though the Minister were saying to a patient on a life-support machine—be it a heart-lung or a dialysis machine—"You have had your seven years and you are no better. We admit that it is our fault that you are worse, but get off the support system." The Government are telling us to make way for Birmingham, Scunthorpe and other areas that they have harmed more than Grimsby. That is not a regional strategy, but industrial homicide. The Minister is saying to us, "Get off the life-support system, the Prime Minister wants you to stand on your own two knees." We shall fight on, but it will be against greater odds. The Government have compounded every economic problem that Grimsby faces.

The measures are appalling. The cuts are appalling, especially their impact on my constituency. What appalls me most is the small-minded petty viciousness of the measures.

9 pm

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

Before I come to the main part of my speech, may I say how pleased Opposition Members were to see the Secretary of State for Trade and Industry taking part for the first time in a full, three-line Whip debate, and returning to his former strength. I fervently hope for the full recovery of Mrs. Tebbit.

Immediately after the vote, we shall move to the orders, the first of which deals with the new map and qualifying activities. Hon. Members who did not have an opportunity to speak during this debate and who had important constituency-based speeches to make, could make them then. The map, the qualifying activities and the prescribed limits are important issues.

The wording of the motion attains the highest level of the Government's newspeak. John Hurt as Winston Smith in the film of the year could not have done better. We are asked to note with approval that the increased cost-effectiveness of regional assistance will enable the burden upon taxpayers to be substantially reduced. In plain English that means that the purpose of the package is massively to reduce aid to the poorest region in order to make tax cuts available in the next budget for individuals who are already among the best off.

With the economy slithering out of control, the Government are desperately thrashing around to make any cut, no matter the social cost, and to sell any asset, no matter the commercial loss, to reduce Government expenditure. They have no other economic policy. That was the case with the panic sale of British Aerospace shares two days ago. We have heard today of the panic and the disgraceful moratorium imposed on the payment of development grant and on new applications not posted within the next two hours and 57 minutes. The countdown has already started.

In the 1985 version of newspeak, for "economic policy" read, "cut Government expenditure". The Government have no other policy. Public sector housing has already been hacked to pieces, and it is now the turn of regional policy. There is no question of this being a new more costeffective regional policy. Whatever the Minister says, he knows that that is not the purpose of the package. He admitted to the hon. Member for Wolverhampton, South- West (Mr. Budgen), who has been voted trouble-maker of the year — he will be rather pleased that I have mentioned him—that the main purpose of the package was to reduce Government expenditure. The Minister knows as well as I do that there were no new positive ideas in the White Paper. Nor was there one creative contribution from the Government in the debates on the Co-operative Development Agency and Industrial Development Act 1984. All that we have heard tonight—nothing will change when the Minister of State gets to his feet—is a repeat performance, redolent of the staleness of a Government who were self-avowedly devoid of idealism and who are now self-evidently defunct of ideas. Regional policy costs money, so cut it.

In the trenchant words of the right hon. Member for Old Bexley and Sidcup (Mr. Heath), the only answer that the Government have to any problem is to cut, cut, cut. At least they have been consistent in that. They have displayed not so much the smallness of mind that some associate with consistency as a narrowness of vision and an intensity of single-issue focus that have burned out the hearts of regions. Even by this Government's standards, the cuts in regional aid have been unmitigatedly savage. They are matched in their severity by what the Government, out of wilful prejudice, have done to the public sector housing programme. It is an insult to the regions that will never be forgiven by the people who live there that those massive cuts have been made when unemployment in every nation and region is at a record high—yet another unique negative achievement by the Government.

The statistics for the depressed regions speak for themselves. I give the figures in a slightly different form from that in which they were given by some of my hon. Friends, who have made such valuable contributions to the debate, but they are still staggering. In each case, I am comparing the figures for 1979 and 1984—the period for which the Government bear complete responsibility. In Scotland, unemployment has increased by 166,000, or 104 per cent. It has more than doubled. In Wales, unemployment has increased by 93,000, or 120 per cent. In the north of England, it has increased by 118,000 or 111 per cent. In the north-west, it has increased by 247,000, or 136 per cent. In Yorkshire and Humberside, it has increased by 177,000 or 160 per cent.

In the west midlands, that once-proud powerhouse of our industrial base, we find the most staggering figures. Unemployment has increased by more than 220,000 or almost 200 per cent. What sort of record is that? On what basis could any Government defend that record and excuse or explain those figures?

However, faced with those figures and the stark human tragedy that lies behind them, all that the Government did, perversely, was to make a second, even deeper, cut in regional development grant support. They cut £100 million a year from Scotland, £60 million a year from Wales and £150 million a year from the regions of England. All that they can do is to cut. Their logic was brilliantly exposed by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) at the beginning of the debate. The Minister of State said that Government expenditure destroys jobs. Therefore, if we reduce Government expenditure, we can increase jobs. However, he will not follow the logic of his argument and eliminate Government expenditure in the regions. He is not rushing to his feet to give an explanation of the logic of this part of the argument.

I was interested to hear the intervention of the Secretary of State for Trade and Industry, who came to the rescue of his beleaguered Minister. He said that we were forgetting the effect on aggregate employment. What he was really saying was that while they would tail it off as quickly as possible, the Government would continue the aid to the regions but that it should be understood that this would mean job losses in other areas which would not be assisted. If that is what the Goverment think, will the Minister of State have the frankness and honesty to say so? Will he say clearly that they are continuing regional aid for the moment, having cut it by over 60 per cent. since they came to office? They are not doing badly; they are well on their way to ending it.

I see in his place the hon. Member for Lancashire, West (Mr. Hind); he is disappointed that the Government have not stopped the provision of aid already. Let me reassure him that they have cut it by over 60 per cent. Of course, they cannot tail it off abruptly because they have certain commitments that they are legally bound to honour. Although they have gone back on commitments that the Minister of State gave repeatedly during the Committee stage on the transitional arrangements, they cannot break their commitment to make payments that are due. The cuts will come through and they will be felt in the regions. Cuts of £300 million will have been made in about two years' time.

Behind the heartrending unemployment figures that I have just given the House lies the devastation of the industrial base of the regions—nowhere more than in the west midlands where, as I know from personal experience because I represent a Coventry constituency, no less than one third of manufacturing capacity has been lost. The Government reply that we will probably hear tonight is that productivity in manufacturing has improved by 15 per cent. since 1979. Of course, if one third of the most threatened manufacturing capacity is eliminated, productivity is bound to go up. It is not much different from eliminating the bottom third of the first division of the football league and comparing its goal difference with that of the top two thirds of the league. That would show a dramatic improvement in the apparent performance of British footballers. By that method of accounting we should be favourites to win the world cup.

Nobody believes the Government's talk of an industrial recovery. The Minister of State shakes his head in surprise as if I were meant to believe it. How can anyone, least of all the regions, believe it when the deficit last year in manufactured goods on a balance of payments basis was £5 billion? How can we believe that we are in a position to compete in manufacturing when even now investment in manufacturing is down 25 per cent. on the level of 1979? How can the regions believe it when, within this overall pattern of decline, the disparities are greater and are intensifying all the time?

It is understandable that the Government have no positive or creative ideas on regional policy since they are completely schizophrenic about it, as we saw earlier in the debate. They do not believe in it, but they do not want to say so. They brought regional aid in as a social policy. Having cut it by 60 per cent. since 1979 they fatuously try to make it appear to be not too bad. They say that the regions will still get some help. No doubt we will hear again from the Minister to the effect that they will extend the aid to service industries. They are hinting that an increase in discretionary aid under section 8 of the Industry Act 1972 will make up for the massive cut of £300 million in regional development grant. By extending the map as widely as they can—we support the Government—they hope to maximise our take-up of the quota of the European regional development fund. That is about all that the Government have to say.

It is clear that, if the ERDF did not exist, we would not have a map or a policy. We would have nothing at all. As we all know, it is the existence of a regional policy that governs the general eligibility of a country to participate in the European regional development fund. We all know that the ERDF can never be a substitute for national policy. The Commission says that the ERDF shall not be a substitute for policy. The ERDF must reinforce strong national policy at a time when the regional disparities within the Community are worsening and when, in the Commission's words, these disparities are the greatest threat to that unity and coherence of the Community to which the Government pay such lip service.

In principle, we welcome each of the Government's policies. The problem is that their practice does not match up to their principle, and the limits unnecessarily imposed by the Government on those policies do not match up to the regional problems. The Minister has made a great deal of the point that the reduction in regional development grant may be made good—he has not said more than that—by discretionary assistance under section 8. That is fine if a company is a rich, strong multinational such as Datsun and does not really need the money. Datsun had the unique privilege of being sneaked in by the back door for regional development grant as well as discretionary aid. As the Labour party predicted at that time, Datsun is now recruiting some of Austin Rover's best production engineers.

For British companies, beleaguered in the most depressive regions previously benefiting from RDG of 22 per cent. — RDG that was automatically available and built into their cost structures—the reduction in RDG to 15 per cent. and the non-eligibility of modernisation and replacement schemes will come as a body blow as they fight to hold their market share and to increase their competitiveness. We know that competitiveness can be achieved mainly through the capital investment that is desperately needed. For those threatened British companies located in the assisted areas, looking for discretionary assistance from the Government will, I fear, be tantamount to pleading for mercy from Dr. Joseph Guillotin.

All the positive creative thinking in the debate has come from the Opposition. I should like to congratulate my right hon. and hon. Friends on their excellent contributions. In many ways, those contributions had different emphases, and I believe that my hon. Friend the Member for Rotherham (Mr. Crowther) would agree with me. My right hon. and hon. Friends all recognised the reality of the regional problem and the Government's responsibility to do something about it. The Opposition are attempting to do something about the problem. Conservative Members, especially those few hon. Members from Northern constituencies who have expressed their doubts about the policy, have shown a willingness to abstain. I note that the hon. Member for Falmouth and Camborne (Mr. Mudd)—

Photo of Mr John Smith Mr John Smith , Monklands East

He is not from the north.

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

He is not; he represents Cornwall. That area, too, has been devastated by the Government's policies. The hon. Member for Falmouth and Camborne is going to abstain. I urge him to vote with us in the Lobby.

Photo of Mr David Mudd Mr David Mudd , Falmouth and Camborne

I would be willing to do so, were it not for one salient fact. There is massive unemployment in Falmouth. About 1,300 Falmouth shipyard workers were placed on the dole as a consequence of British Shipbuilders' closure plans for Falmouth. Those plans were approved under the Labour Administration.

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

I am quite sure that the job losses in that area, which are staggering already, will be greatly increased when the Bill to privatise the warship yards goes through and those competing in the commercial market are left to their own devices. We have not seen anything yet, in the words of one of my hon. Friends.

What we have had tonight, as we have had throughout this debate, is creative positive thinking from this side of the House and a simple policy from the Government which has been to say that, because Government expenditure is involved, because Government expenditure is wrong, regional policy must therefore be wrong and let us get rid of it as soon as we can and as soon as we dare.

Photo of Mr Bill Walker Mr Bill Walker , North Tayside

I would like the hon. Gentleman to be aware that other Conservative Members will be abstaining, myself included; The reason why I shall abstain is not that I think that principle behind the policy is wrong; it is just that I have never in my life supported anything that cannot happen. There is a travel-to-work area in my constituency and tonight it would be impossible to travel in that travel-to-work area. That happens riot on odd occasions, but every year the roads are blocked and public transport is non-existent, yet it is a travel-to-work area.

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

I will explain to the hon. Member for Tayside, North the reason for that: it is that so badly has aid to local government, regional aid to local government and transport to local government been cut that they do not have any money to salt the roads. Conservative Members may be amused to know that it is rapidly getting to that point in Surrey where I happen to live. When hon. Members talk of the south-east, they should realise that the south-east under this Government has had the highest rate of unemployment increase second only to the west Midlands. It is a unique achievement of the Government that they have managed to turn virtually the whole of the United Kingdom into a depressed area. There is a strong case to be made out in the context of the European Community for classifying the whole of the United Kingdom with the mezzogiorno of southern Italy.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

It is significant that the hon. Gentleman who is winding up lives in an area of relative affluence. While we who represent the Midlands and the north are fighting for a better situation, he is living in the soft southeast. Perhaps there is a lesson in that for his constituents.

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

We could have done without that issue. It lowers the standard and the seriousness of the debate. The debate concerns not where I happen to live but the people of the regions of this country who are suffering from this Government's policies and will suffer even more severely when the cuts come into force. If the hon. Member for Lancashire, West had the courage of his convictions he would vote against the motion on these policies or abstain for the diametrically opposed reason that he does not think that they go far enough. There may be another chance—though I doubt it—to do completely what he wants and that is to cut this altogether. That is what the hon. Member said, as he will see when he checks Hansard. I hope that his constituents in Lancashire, West understand exactly where he stands.

The truth is that not only do the Government not believe in regional development assistance as a tool of economic policy but they do not really believe in social policy either.

With his customary air of nonchalant disinterest, the Minister of State spoke only last December to the industrial editor of The Observer, Mr. Adrian Hamilton. The article stated: 'That regional assistance is being conducted at all,' says Lamont with a smile, 'shows that we are evolutionary, not dogmatic. If it works we'll keep it. It if doesn't, then we will have to look at it again. That is not so much a policy, more a suspended sentence of death. The Opposition accept none of that defeatism. Unemployment in the regions is a social evil and an economic problem.

We must put the same questions to the Government as did the right hon. Member for Old Bexley and Sidcup in his Sunderland speech. How much longer can we afford to gamble with our social stability? How much longer are parts of Merseyside to be expected to put up with over 6 per cent. of their school leavers going into full employment? How much longer must there be 36 people chasing every job vacancy in the west midlands? How much longer must the north suffer an unemployment rate now approaching 20 per cent.?

As the hon. Member for Falmouth and Camborne argued, why cannot Devon and Cornwall have policies geared to their problems? How much longer must Scotland and Wales put up with a Government who have turned their backs on their special needs, and who have slashed Government aid to Scotland under the regional policy by £100 million and to Wales by £60 million per annum?

Do not the Government realise that that policy of nihilism is leading us into a dangerous future? Do they not realise that they are storing up for us perhaps unmanageable social problems and that they are storing up for future generations problems the extent of which we cannot yet see and solutions to which the Government have not provided?

Problems in the regions and in the inner city areas caused by these policies are bound to breed despair and to generate violence. The Opposition are committed to the expansion of public expenditure, and to a constructively selective public works programme that will get the regions going again. We believe in the people and skills of the regions. Each has its own distinctive contribution to make to the industrial recovery that the country needs desperately. We intend that regionally based organisations and local government will play their full role in the recreation of jobs, the rebuilding of our industries and the introduction of new technologies. The regions and nations of the United Kingdom are keen to play their full role in achieving the essential regional objectives that must form part of our overall national economic recovery.

We have heard nothing from the Government tonight that can hold out any hope to the regions. The Government have imposed upon this country the tightest regional policy regime that exists within the Economic Community. They have deliberately reduced RDG to 15 per cent. and the job grant to way below what it could be under EC rules and restricted policy in every conceivable direction. We shall see to it that the regions are given the opportunity to perform their role which is vital and fundamental to the rebuilding of the shambles of a nation that the Government have created.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames 9:30 pm, 17th January 1985

I thank the hon. Member for Coventry, North-West (Mr. Robinson) for speaking so slowly in his peroration when he was in danger of running out of material about four minutes before the end of his speech.

This has really been two debates. On the one hand, we have had a debate between the Front Benches largely about the principles of regional policy and the announcements that I made. On the other, we have had a debate more between the Back Benches about the assisted areas map and how individual constituencies have been affected.

Inevitably, a large part of the debate has been dominated by concern with hon. Members' constituencies, and the reaction to the Government's announcement last November has been rather influenced by the effect it has had on their constituencies. My hon. Friends the Members for Bury, South (Mr. Sumberg), for Glanford and Scunthorpe (Mr. Hickmet) and for Gloucestershire, West (Mr. Marland) have given the Government's policy a warm welcome, and in particular I thank my hon. Friend the Member for Gloucestershire, West for what one might call his baroque welcome with a triumphant coda at the end. Unfortunately, other of my hon. Friends — for example, my hon. Friends the Members for Tayside, North (Mr. Walker) and for Blackpool, North (Mr. Miscampbell)—might be described as having received it with somewhat modified rapture.

I well understand the disappointment of some areas that have been downgraded or excluded. The Government had difficult choices to make, as my right hon. Friend said. Although one would not believe it from some of the speeches, not every constituency, not every travel-to-work area, can be an assisted area. Inevitably the Government have had some hard and difficult choices to make. We have made them, as far as possible, by objective criteria.

Inevitably, at the margin of the 35 per cent. map—which was the maximum coverage that we could go up to and the maximum that would be acceptable within a European framework—an element of judgment came in. But whatever decisions were made, there was bound to be disappointment among those of my hon. Friends whose areas were excluded. As I say, we could not expect to please everyone.

Photo of Mr Bill Walker Mr Bill Walker , North Tayside

I am not objecting to what the Government are trying to do. Indeed, I support the principle of it. However, in no way can one describe an area as a travel-to-work area when it is impossible to do so. COSLA—the Scottish local authorities—accepts that Blairgowrie is unique in this respect because there is no public transport and the roads are blocked every winter, being highland mountain roads.

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

I appreciate that my hon. Friend's objection relates to the travel-to-work area, and I shall be coming to that because he was not the only hon. Member to raise that issue.

Some hon. Members—fortunately, not too many— alleged that there had even been some political bias in drawing up the map. [Interruption.] I am glad to note that the hon. Member for Kingston upon Hull, East (Mr. Prescott) thinks that that is an unworthy accusation, and it is. Of the 32 travel-to-work areas that were formerly assisted and that have now been excluded, those exclusions affected 41 constituencies.

Such was the Machiavellian influence and intervention of Conservative Central Office that 32 of the 41 travel-to-work areas turned out to be Conservative seats that were downgraded, though I do not expect that revelation to be greeted with cheers by my hon. Friends.

While 3 per cent, of the country was excluded by the decisions that were made, 10 per cent, of the working population were brought into the enlarged assisted area map. We were able to make this possible through the extension of the intermediate area status. That means that more areas will qualify for access to the ERDF. Many of my hon. Friends have been disappointed because their local authorities will not have access to the ERDF, but at least, with the decisions we have made, more areas than before will have access to it.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

Does my hon. Friend accept that the most serious deprivation is not the lack of access to the ERDF but the fact that those areas can no longer go to the European Investment Bank, which has been of great assistance in the past and for which there is no quota?

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

That is true, but my observation applies both ways. Some areas will have more access while others have less.

An adjustment to the map was essential because the map was out of date. Some areas have improved relative to others while others have deteriorated in comparison with other parts of the country. Opposition Members have quoted unemployment statistics for their constituencies in absolute terms. But in regional policy we must base our decisions as to which areas should be assisted on the relative position of different parts of the country. The result is a map more closely aligned to the worst black spots. The reduction from three tiers to two allows us to concentrate regional development grants on the worst-hit areas.

Unemployment has been the main criterion, but not the only one. We have also borne long-term unemployment very much in mind. Other criteria such as geographical location and industrial structure were also considered. The average rate of unemployment in the year ended July 1984 for the development and intermediate areas that we have selected was 19·1 per cent, and 15·5 per cent, respectively. Those are average rates and some areas will have been excluded even though they might have qualified on the basis of unemployment statistics because they failed to qualify on other criteria.

Photo of Gordon Brown Gordon Brown , Dunfermline East

If unemployment rates were the main criteria in updating the map, why were unemployment figures for travel-to-work areas calculated on data four years old? Is the Minister aware that unemployment in my constituency is not 16 per cent., as he claims, but more than 20 per cent.? Will he undertake to review the regional map when the new employment census appears and update it properly?

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

The hon. Gentleman is not quite correct. Unemployment was calculated on the basis of long-term unemployment data, but also on data for the year ended July 1984.

My hon. Friend the Member for Tayside, North my hon. and learned Friend the Member for Blackpool, North and others criticised the decision to base the map on the building block of the travel-to-work area or the way in which the travel-to-work area chosen affected their constituencies. Travel-to-work areas are the smallest approximation that we can make to self-contained labour markets nationwide. It does not mean that people living at one end travel to work at the other end. It means that 70 per cent, of the people who work in the area also live there. That has always been a basic building block of the system and it provides reasonable confidence that the jobs created there as a result of regional policy will be taken up by local residents.

The hon. Member for Gower (Mr. Wardell) referred to the conclusions of the Select Committee. His conclusion was that the whole of Wales ought to be a development area. That is an unrealistic and unjustified suggestion on the basis of the unemployment rates in certain areas of Wales. In the period to August 1984, areas like Aberystwyth had 10 per cent., Brecon 9·1 per cent, and Carmarthen 7·1 per cent, unemployment. Despite that unemployment, 89 per cent, of the population of Wales will still be in assisted areas. I did not have the pleasure of hearing the speech of the hon. Member for Dundee, East (Mr. Wilson), but I can guess what he said. I point out to him that Scotland's share in the intermediate areas is unchanged and that Scotland's proportion of development areas has increased.

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

I have many questions to answer and I have already given way three times.

The hon. Member for Dundee, East asked whether the Highlands and Islands Development Board area would continue to qualify for ERDF. The answer is yes.

Photo of Mr Bill Walker Mr Bill Walker , North Tayside

Is my hon. Friend able to give me his assurance that if Scottish local authorities show him that his own criteria do not apply to Blairgowrie he will accept that linking Blairgowrie and the travel-to-work area with Pitlochry and Aberfeldy is nonsense? I am not asking my hon. Friend for more money. I am only asking that there should be an objective and sane basis for what is done and that my constituents should be able to believe in the sanity of the policy.

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

If what I have said does not achieve what is required, I shall discuss the matter with the Department of Employment which draws up the travel-to-work areas.

Many questions have been asked about the moratorium which was announced by my right hon. Friend. He emphasised that the purpose of the moratorium was not a cut but to get expenditure on regional development grants back to the level that was predicted in 1983. We shall continue to spend the same amount on regional development grants as we predicted in 1983 we should spend upon those grants.

The right hon. Member for Glasgow, Govan (Mr. Millan) asked, as a result of the overshoot, how much money we were hoping to prevent being part of that overshoot. The answer is £150 million. It is based upon the assumption that the moratorium lasts for 12 months. [Interruption.] Obviously the House is not clear about this. There is a four-month moratorium which means a four-month delay inpayments from the approval of RDGs. The figure of £150 million is based upon the assumption that that arrangement will last for 12 months. Since the Government have estimated the cost of their regional policy, it is important that we should be able to hold to it. It is important for public expenditure to be contained. That is absolutely vital to the Government's economic objectives.

Faced with the problems of sterling in the exchange markets, Opposition Members have sought during the past few days to argue that this is the result of a fundamental defect in Government policy, or of some perception abroad of a fundamental defect in Government policy. If, however, there is any fear abroad about Government policy, it is the fear that Government expenditure is shooting ahead of target. That is why it is all the more important for the Government to stick to their targets.

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

I shall give way in a minute.

If only Opposition Members understood that — but they do not understand it in terms of their attitude to public expenditure. During the last few days we have seen in the foreign exchange markets a mere tremor of no confidence compared with the earthquake of no confidence which would take place if the Opposition were to implement their public expenditure policies.

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

I have already given way four or five times, Mr. Speaker, so I shall not give way again.

The changes that have been announced will both improve the internal logic of our regional policy and give far better value for money than did the previous policy. Nearly half the £300 million savings will come from the requirement to link grants to jobs and the exclusion of replacement investment.

Surely the Labour party cannot believe that it was right to go on subsidising without choice or discretion large capital projects such as oil refineries and petrochemical plants—plants with little choice of location. That policy did the regions no good. It disrupted them and the effect was often simply to place large amounts of money in the coffers of the multinational corporations and large companies that Labour Members are so anxious to attack.

Labour Members do not like hearing about Sullom Voe, which in one year took one third of Scotland's regional aid and created jobs at a cost of £130,000 a time. But that was far from being the worst example. There were many large projects. At least Sullom Voe created some jobs. Many large projects subsidised by Governments in the past did not create jobs but reduced them.

We are not saying that for industrial or economic reasons the Government may not legitimately wish to subsidise some capital-intensive projects, but the point that we are making is that the Government should have the choice of whether they wish to subsidise those projects. That should not be done automatically.

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

As my hon. Friend the Member for Darlington (Mr. Fallon) pointed out, that change will be made easier by the change that we have made in the balance between selective and automatic assistance. There we follow a change forecast in the White Paper in that we are placing more of the emphasis on selective assistance.

I was asked how much selective assistance would be increased to compensate for the loss in automatic assistance. By 1987–88 we expect selective assistance to have increased by some 40 per cent., or some £50 million.

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

The single most important change that we have made is to link regional policy and regional development grants to the creation of jobs. Our policy will be that if there are no jobs there will be no grant. As an alternative to capital grant companies will be able to choose a job grant of £3,000 for every new job created. The effect of that will be to encourage those projects which may involve little capital but will create many jobs.

Given that the purpose of regional policy is to iron out the differences in unemployment between different areas, and given that hon. Members on both sides of the House are concerned about the current high levels of unemployment, if we are to continue to spend large sums of money on regional policy, as these are, it must be simple common sense to link that expenditure to the creation of jobs. There is little point in spending money on automatic regional assistance for any other reason.

The Government's decisions announced in November were taken after an intensive period of consultation and a lengthy analysis of the effects of regional policy. After 50 years of regional policy it is surely right to re-examine and reappraise the policy. That inclination does not seem to be shared in any way by the Labour party which seems to think that the effectiveness of regional policy is simply to be judged by the amount of money that is spent on it.

Our White Paper suggested that regional policy had created some 500,000 jobs over 20 years in the assisted areas. That sounds a lot, but it is not such an impressive figure for the expenditure of some £20 billion. Many of those jobs would have come into existence anyway. Some are jobs that have simply moved from one part of the country to another. Many of my hon. Friends from the west midlands would say that regional policy had directed firms away from the prosperous areas and added to the problems of a region already burdened with an ailing motor industry.

Sometimes regional policy has diverted high-risk projects to areas where they would not have chosen to go. The simple result has been persistent loss and early mortality. Above all, jobs have been created at the ridiculous cost of £35,000 per net new job. There have been areas where regional policy has had its successes. Undoubtedly, it has helped with inward investment. It has helped to build up the electronics industry in Scotland and Wales. However, in the country as a whole, it is difficult to say that there have been great changes in the league table of unemployment.

The hon. Member for Rotherham (Mr. Crowther) said that the assisted areas map today is depressingly similar to that of five, 10 or 20 years ago, or even before the war. Given that fact, the answer cannot simply to be throw more money and to continue regardless with the same policy. The right hon. and learned Member for Monklands, East (Mr. Smith) asked how much unemployment would be caused by the cuts in regional policy that we have announced. We do not believe that there will be any rise in unemployment, for these reasons. First, the savings are, to a considerable extent, to be achieved on hitherto wasteful expenditure on large capital projects and on projects that did not create jobs. Secondly, all the calculations about the effects of regional policy on the creation of jobs ignore the adverse effects of regional policy, such as the effects that it has on non-assisted areas. We must be concerned about employment and unemployment on a national scale. Thirdly, if Labour Members think that £300 million savings will destroy jobs, why do they not think that £300 million extra taxes will destroy jobs as well?

The right hon. and learned Member for Monklands, East referred to a speech that I made in Birmingham, and to my observation that taxing or borrowing beyond the country's capacity could destroy jobs and that therefore savings in public expenditure could help to create and preserve jobs. He asked what was the difference between the £300 million that we are saving and the £400 million that we shall continue to spend on regional policy. The difference is that the £300 million that we are saving was being spent inefficiently and ineffectively. It was being wasted on subsidising non-job creating investment and subsidising replacement investment, whereas the £400 million that we shall continue to spend will be spent more cost-effectively.

My hon. Friend the Member for Fife, North-East (Mr. Henderson) referred to the fact that many of the jobs that had been created by regional policy were the wrong ones. As he pointed out, regional policy has concentrated on manufacturing, which has been in decline for some 20 years. While regional policy has continued to subsidise manufacturing and move it to the regions, service jobs have not been eligible for regional development grants and have continued to pile up in the south and in the south-east of England.

The hon. Member for Coventry, North-West said that we had not announced anything positive. I thought that he would have welcomed, as it has been welcomed everywhere and by hon. Members on both sides of the House, the fact that we have decided to extend automatic regional development grants to the service sector. That will be of special benefit to the north-east and to areas such as Merseyside that have depended far too heavily on the old traditional industries and on heavy manufacturing. Such areas need more research and development. They need more headquarters activities. The changes that we have announced will make such developments easier.

The hon. Member for Yeovil (Mr. Ashdown) suggested that our cost per job limit of £10,000 is too low. He will be aware that that is the cost to Government. It is 15 per cent, of the investment. A cost per job limit of £10,000 would mean a total investment for each job of £65,000. That is double the average capital intensity of British industry. Our aim has been to remove the bias in the system, which has been heavily geared towards capital-intensive industry.

Labour Members — especially those on the Front Bench—have refused today to face questions about the effectiveness of regional policy. The hon. Member for Coventry, North-West said that all the creative thinking had come from the Labour Benches, but the Opposition Benches have not produced a single idea during the whole debate. As my hon. Friend the Member for Gloucestershire, West said, Labour Members' deepest conviction is that money grows on trees. They believe that the more money one spends on regional policy the better, regardless of its cost-effectiveness.

The problems addressed in the White Paper have not always been ignored by the Labour party. In a document published in 1982 entitled "Economic Planning and Industrial Democracy" we find the statement: Although it is important to increase capital investment and productive efficiency in assisted areas, relying on capital subsidies as the major regional policy instrument is an extremely expensive way of creating jobs and is ineffective in tackling the serious differences in unemployment rates between regions and localities. That was what the Opposition said. "Ineffective" is their word. How right they were. That is why they should welcome our policy, which is targeted much more directly on job creation.

In one of his few sensible utterances, the Leader of the Opposition said: We very much do want value for money, because it is our money. How right he was. It is the taxpayers' money. Regional policy should attempt to get the maximum value in the form of new jobs, and the maximum value for the money spent.

Although in the past the Labour party has shown some recognition of the ineffectiveness of previous regional policy, its only response has been to suggest an enormous array of boards and controls. At the time of the last election, Labour proposed the creation of tripartite regional planning bodies in every region. That was on top of the sector planning committees reporting to the national planning councils, the agreed development plans, the product research unit, the foreign investment unit, the Energy Commission, the Price Commission, and the tripartite investment monitoring agency. All those bodies were to be overseen by some giant department of economic and industrial planning.

Such a policy would certainly have created jobs. It would have created thousands of jobs for bureaucrats and civil servants. It would also have meant six weeks and 10 committee meetings before a local manager was given permission to buy a packet of paper clips. It would have stifled enterprise and doomed the regions and the country to decline.

The fringe publications of the Labour party and of its militant supporters in the constituencies tell us that they do not wish to repeat the mistakes of the past. What they mean is that they will not learn any of the painful and belated lessons that the Labour party learnt in office. They mean that the Labour party should never again recognise the constraints that it was forced to recognise when it was in office. One of the things that the Labour Government learnt, to their cost, was that increased inflation and increased public expenditure result in increased unemployment. As those who are faced with the task of managing the economy always realise, Government expenditure does far more harm than good if the price is the resurgence of inflation.

We have explained why we think that the new policy is more effective in creating jobs. There is no reason to apologise for its producing savings of £300 million. That also is good for jobs. It is good news for my right hon. Friend the Chancellor, for the taxpayer and for everyone inside and outside assisted areas. I urge my hon. Friends to reject the amendment and—

Photo of Mr Jimmy Hamilton Mr Jimmy Hamilton , Motherwell North

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the amendment be made:—

The House divided: Ayes 195, Noes 260.

Division No. 69][10 pm
Adams, Allen (Paisley N)Craigen, J. M.
Alton, DavidCrowther, Stan
Anderson, DonaldCunliffe, Lawrence
Archer, Rt Hon PeterCunningham, Dr John
Ashdown, PaddyDavies, Rt Hon Denzil (L'lli)
Ashley, Rt Hon JackDavies, Ronald (Caerphilly)
Atkinson, N. (Tottenham)Davis, Terry (B'ham, H'ge H'l)
Bagier, Gordon A. T.Deakins, Eric
Banks, Tony (Newham NW)Dewar, Donald
Barnett, GuyDixon, Donald
Barron, KevinDobson, Frank
Beckett, Mrs MargaretDormand, Jack
Beith, A. J.Douglas, Dick
Bell, StuartDubs, Alfred
Benn, TonyDunwoody, Hon Mrs G.
Bennett, A. (Dent'n & Red'sh)Eadie, Alex
Bermingham, GeraldEastham, Ken
Bidwell, SydneyEllis, Raymond
Boothroyd, Miss BettyEvans, John (St. Helens N)
Boyes, RolandFatchett, Derek
Bray, Dr JeremyFaulds, Andrew
Brown, Gordon (D'f'mline E)Field, Frank (Birkenhead)
Brown, Hugh D. (Provan)Fields, T. (L'pool Broad Gn)
Brown, N. (N'c'tle-u-Tyne E)Fisher, Mark
Brown, R. (N'c'tle-u-Tyne N)Flannery, Martin
Brown, Ron (E'burgh, Leith)Forrester, John
Bruce, MalcolmFoster, Derek
Buchan, NormanFoulkes, George
Caborn, RichardFraser, J. (Norwood)
Callaghan, Jim (Heyw'd & M)Freeson, Rt Hon Reginald
Campbell, IanFreud, Clement
Campbell-Savours, DaleGarrett, W. E.
Canavan, DennisGeorge, Bruce
Carlile, Alexander (Montg'y)Godman, Dr Norman
Carter-Jones, LewisGolding, John
Cartwright, JohnGould, Bryan
Clark, Dr David (S Shields)Hamilton, W. W. (Central Fife)
Clarke, ThomasHancock, Mr. Michael
Clay, RobertHarrison, Rt Hon Walter
Clwyd, Mrs AnnHart, Rt Hon Dame Judith
Cocks, Rt Hon M. (Bristol S.)Hattersley, Rt Hon Roy
Cohen, HarryHaynes, Frank
Coleman, DonaldHealey, Rt Hon Denis
Cook, Frank (Stockton North)Heffer, Eric S.
Cook, Robin F. (Livingston)Hogg, N. (C'nauld & Kilsyth)
Corbett, RobinHolland, Stuart (Vauxhall)
Corbyn, JeremyHome Robertson, John
Cowans, HarryHowells, Geraint
Cox, Thomas (Tooting)Hoyle, Douglas
Hughes, Dr. Mark (Durham)Powell, Raymond (Ogmore)
Hughes, Robert (Aberdeen N)Prescott, John
Hughes, Sean (Knowsley S)Radice, Giles
Hughes, Simon (Southwark)Randall, Stuart
Janner, Hon GrevilleRedmond, M.
John, BrynmorRees, Rt Hon M. (Leeds S)
Johnston, RussellRichardson, Ms Jo
Jones, Barry (Alyn & Deeside)Roberts, Ernest (Hackney N)
Kaufman, Rt Hon GeraldRobertson, George
Kennedy, CharlesRobinson, G. (Coventry NW)
Kilroy-Silk, RobertRowlands, Ted
Kinnock, Rt Hon NeilRyman, John
Kirkwood, ArchySedgemore, Brian
Lamond, JamesSheerman, Barry
Leighton, RonaldSheldon, Rt Hon R.
Lewis, Ron (Carlisle)Shore, Rt Hon Peter
Lewis, Terence (Worsley)Short, Ms Clare (Ladywood)
Litherland, RobertShort, Mrs R.(W'hampt'n NE)
Lloyd, Tony (Stretford)Silkin, Rt Hon J.
Lofthouse, GeoffreySkinner, Dennis
McCartney, HughSmith, C.(Isl'ton S & F'bury)
McDonald, Dr OonaghSmith, Rt Hon J. (M'kl'ds E)
McGuire, MichaelSnape, Peter
McKay, Allen (Penistone)Soley, Clive
McKelvey, WilliamSpearing, Nigel
Mackenzie, Rt Hon GregorSpeller, Tony
Maclennan, RobertSteel, Rt Hon David
McTaggart, RobertStewart, Rt Hon D. (W Isles)
Madden, MaxStott, Roger
Marek, Dr JohnStrang, Gavin
Marshall, David (Shettleston)Straw, Jack
Maxton, JohnThompson, J. (Wansbeck)
Meacher, MichaelTinn, James
Meadowcroft, MichaelTorney, Tom
Michie, WilliamWainwright, R.
Mikardo, IanWardell, Gareth (Gower)
Millan, Rt Hon BruceWareing, Robert
Miller, Dr M. S. (E Kilbride)Weetch, Ken
Mitchell, Austin (G't Grimsby)Welsh, Michael
Nellist, DavidWhite, James
Oakes, Rt Hon GordonWigley, Dafydd
O'Brien, WilliamWilliams, Rt Hon A.
O'Neill, MartinWilson, Gordon
Owen, Rt Hon Dr DavidWinnick, David
Park, GeorgeWoodall, Alec
Parry, RobertWrigglesworth, Ian
Patchett, Terry
Pavitt, LaurieTellers for the Ayes:
Pendry, TomMr. James Hamilton and
Penhaligon, DavidMr. John McWilliam.
Pike, Peter
Aitken, JonathanClark, Dr Michael (Rochford)
Alexander, RichardClark, Sir W. (Croydon S)
Ancram, MichaelCockeram, Eric
Arnold, TomConway, Derek
Atkinson, David (B'm'th E)Coombs, Simon
Baker, Rt Hon K. (Mole Vall'y)Cope, John
Baker, Nicholas (N Dorset)Currie, Mrs Edwina
Baldry, TonyDorrell, Stephen
Biffen, Rt Hon JohnDouglas-Hamilton, Lord J.
Boscawen, Hon RobertDunn, Robert
Bottomley, PeterDurant, Tony
Bottomley, Mrs VirginiaEdwards, Rt Hon N. (P'broke)
Brittan, Rt Hon LeonEmery, Sir Peter
Brooke, Hon PeterFallon, Michael
Brown, M. (Brigg & Cl'thpes)Fenner, Mrs Peggy
Browne, JohnFletcher, Alexander
Bruinvels, PeterFookes, Miss Janet
Burt, AlistairForman, Nigel
Butcher, JohnForsyth, Michael (Stirling)
Butler, Hon AdamForth, Eric
Carlisle, Kenneth (Lincoln)Fowler, Rt Hon Norman
Carlisle, Rt Hon M. (W'ton S)Fox, Marcus
Carttiss, MichaelFranks, Cecil
Cash, WilliamFreeman, Roger
Chalker, Mrs LyndaGale, Roger
Chapman, SydneyGalley, Roy
Clark, Hon A. (Plym'th S'n)Gardiner, George (Reigate)
Gardner, Sir Edward (Fylde)Malone, Gerald
Glyn, Dr AlanMaples, John
Gow, IanMarland, Paul
Grant, Sir AnthonyMarlow, Antony
Greenway, HarryMarshall, Michael (Arundel)
Gregory, ConalMates, Michael
Griffiths, E. (B'y St Edm'ds)Mather, Carol
Griffiths, Peter (Portsm'th N)Maude, Hon Francis
Grist, IanMawhinney, Dr Brian
Ground, PatrickMellor, David
Grylls, MichaelMeyer, Sir Anthony
Gummer, John SelwynMiller, Hal (B'grove)
Hamilton, Hon A. (Epsom)Mills, Iain (Meriden)
Hampson, Dr KeithMitchell, David (NW Hants)
Hanley, JeremyMoate, Roger
Hannam, JohnMonro, Sir Hector
Hargreaves, KennethMontgomery, Sir Fergus
Harris, DavidMoore, John
Harvey, RobertMorrison, Hon C. (Devizes)
Havers, Rt Hon Sir MichaelMorrison, Hon P. (Chester)
Hawksley, WarrenMoynihan, Hon C.
Hayes, J.Murphy, Christopher
Hayhoe, BarneyNeale, Gerrard
Hayward, RobertNeedham, Richard
Heathcoat-Amory, DavidNelson, Anthony
Heddle, JohnNewton, Tony
Henderson, BarryNorris, Steven
Heseltine, Rt Hon MichaelOnslow, Cranley
Hickmet, RichardOppenheim, Phillip
Higgins, Rt Hon Terence L.Oppenheim, Rt Hon Mrs S.
Hind, KennethOsborn, Sir John
Hogg, Hon Douglas (Gr'th'm)Ottaway, Richard
Holland, Sir Philip (Gedling)Page, Richard (Herts SW)
Holt, RichardParris, Matthew
Hordern, PeterPatten, Christopher (Bath)
Howarth, Alan (Stratf'd-on-A)Patten, John (Oxford)
Howarth, Gerald (Cannock)Pawsey, James
Howe, Rt Hon Sir GeoffreyPercival, Rt Hon Sir Ian
Howell, Rt Hon D. (G'ldford)Pollock, Alexander
Hunt, John (Ravensbourne)Porter, Barry
Hunter, AndrewPortillo, Michael
Irving, CharlesPowell, William (Corby)
Jenkin, Rt Hon PatrickPowley, John
Jessel, TobyPrice, Sir David
Johnson Smith, Sir GeoffreyProctor, K. Harvey
Jones, Robert (W Herts)Raffan, Keith
Jopling, Rt Hon MichaelRaison, Rt Hon Timothy
Key, RobertRees, Rt Hon Peter (Dover)
King, Roger (B'ham N'field)Rhodes James, Robert
King, Rt Hon TomRhys Williams, Sir Brandon
Knight, Gregory (Derby N)Ridley, Rt Hon Nicholas
Knight, Mrs Jill (Edgbaston)Rifkind, Malcolm
Knowles, MichaelRippon, Rt Hon Geoffrey
Knox, DavidRobinson, Mark (N'port W)
Lamont, NormanRoe, Mrs Marion
Lang, IanRowe, Andrew
Latham, MichaelRumbold, Mrs Angela
Lawler, GeoffreyRyder, Richard
Lawrence, IvanSackville, Hon Thomas
Lee, John (Pendle)Sainsbury, Hon Timothy
Leigh, Edward (Gainsbor'gh)Sayeed, Jonathan
Lennox-Boyd, Hon MarkShaw, Sir Michael (Scarb')
Lester, JimShelton, William (Streatham)
Lewis, Sir Kenneth (Stamf'd)Shepherd, Colin (Hereford)
Lightbown, DavidShepherd, Richard (Aldridge)
Lilley, PeterShersby, Michael
Lloyd, Ian (Havant)Silvester, Fred
Lloyd, Peter, (Fareham)Sims, Roger
Lord, MichaelSkeet, T. H. H.
Lyell, NicholasSmith, Tim (Beaconsfield)
McCrindle, RobertSoames, Hon Nicholas
McCurley, Mrs AnnaSpeed, Keith
Macfarlane, NeilSpence, John
MacGregor, JohnSpencer, Derek
MacKay, Andrew (Berkshire)Spicer, Jim (W Dorset)
MacKay, John (Argyll & Bute)Squire, Robin
Maclean, David JohnStanbrook, Ivor
McNair-Wilson, P. (New F'st)Steen, Anthony
Major, JohnStern, Michael
Malins, HumfreyStevens, Lewis (Nuneaton)
Stevens, Martin (Fulham)Viggers, Peter
Stewart, Allan (Eastwood)Waddington, David
Stewart, Andrew (Sherwood)Waldegrave, Hon William
Stewart, Ian (N Hertf'dshire)Walden, George
Stokes, JohnWaller, Gary
Stradling Thomas, J.Ward, John
Sumberg, DavidWardle, C. (Bexhill)
Tapsell, Sir PeterWarren, Kenneth
Taylor, John (Solihull)Watson, John
Tebbit, Rt Hon NormanWatts, John
Temple-Morris, PeterWells, Bowen (Hertford)
Terlezki, StefanWheeler, John
Thomas, Rt Hon PeterWhitney, Raymond
Thompson, Donald (Calder V)Wiggin, Jerry
Thompson, Patrick (N'ich N)Wilkinson, John
Thorne, Neil (Ilford S)Winterton, Mrs Ann
Thornton, MalcolmWinterton, Nicholas
Thurnham, PeterWolfson, Mark
Townsend, Cyril D. (B'heath)Wood, Timothy
Tracey, RichardWoodcock, Michael
Trippier, DavidYoung, Sir George (Acton)
Trotter, Neville
Twinn, Dr IanTellers for the Noes:
van Straubenzee, Sir W.Mr. Michael Neubert and
Vaughan, Sir GerardMr. Tristan Garel-Jones.

Question accordingly negatived.

Main Question put:—

The House divided: Ayes 261, Noes 192.

Division No 70][10.13 pm
Aitken, JonathanForth, Eric
Alexander, RichardFowler, Rt Hon Norman
Ancram, MichaelFox, Marcus
Arnold, TomFranks, Cecil
Atkinson, David (B'm'th E)Freeman, Roger
Baker, Rt Hon K. (Mole Vall'y)Gale, Roger
Baker, Nicholas (N Dorset)Galley, Roy
Baldry, TonyGardiner, George (Reigate)
Biffen, Rt Hon JohnGardner, Sir Edward (Fylde)
Boscawen, Hon RobertGarel-Jones, Tristan
Bottomley, PeterGlyn, Dr Alan
Bottomley, Mrs VirginiaGow, Ian
Brittan, Rt Hon LeonGrant, Sir Anthony
Brooke, Hon PeterGreenway, Harry
Brown, M. (Brigg & Cl'thpes)Gregory, Conal
Browne, JohnGriffiths, E. (B'y St Edm'ds)
Bruinvels, PeterGriffiths, Peter (Portsm'th N)
Burt, AlistairGrist, Ian
Butcher, JohnGround, Patrick
Butler, Hon AdamGrylls, Michael
Carlisle, Kenneth (Lincoln)Gummer, John Selwyn
Carlisle, Rt Hon M. (W'ton S)Hamilton, Hon A. (Epsom)
Carttiss, MichaelHampson, Dr Keith
Cash, WilliamHanley, Jeremy
Chalker, Mrs LyndaHannam, John
Chapman, SydneyHargreaves, Kenneth
Clark, Hon A. (Plym'th S'n)Harris, David
Clark, Dr Michael (Rochford)Harvey, Robert
Clark, Sir W. (Croydon S)Havers, Rt Hon Sir Michael
Cockeram, EricHawksley, Warren
Conway, DerekHayes, J.
Coombs, SimonHayhoe, Barney
Cope, JohnHayward, Robert
Currie, Mrs EdwinaHeathcoat-Amory, David
Dorrell, StephenHeddle, John
Douglas-Hamilton, Lord J.Henderson, Barry
Dover, DenHeseltine, Rt Hon Michael
Dunn, RobertHickmet, Richard
Durant, TonyHiggins, Rt Hon Terence L
Edwards, Rt Hon N. (P'broke)Hind, Kenneth
Emery, Sir PeterHogg, Hon Douglas (Gr'th'm)
Fallon, MichaelHolland, Sir Philip (Gedling)
Fenner, Mrs PeggyHolt, Richard
Fletcher, AlexanderHordern, Peter
Fookes, Miss JanetHowarth, Alan (Stratf'd-on-A)
Forman, NigelHowarth, Gerald (Cannock)
Forsyth, Michael (Stirling)Howe, Rt Hon Sir Geoffrey
Hunt, John (Ravensbourne)Portillo, Michael
Hunter, AndrewPowell, William (Corby)
Irving, CharlesPowley, John
Jackson, RobertPrice, Sir David
Jenkin, Rt Hon PatrickProctor, K. Harvey
Jessel, TobyRaffan, Keith
Johnson Smith, Sir GeoffreyRaison, Rt Hon Timothy
Jones, Robert (W Herts)Rees, Rt Hon Peter (Dover)
Jopling, Rt Hon MichaelRhodes James, Robert
Key, RobertRhys Williams, Sir Brandon
King, Roger (B'ham N'field)Ridley, Rt Hon Nicholas
King, Rt Hon TomRifkind, Malcolm
Knight, Gregory (Derby N)Rippon, Rt Hon Geoffrey
Knight, Mrs Jill (Edgbaston)Robinson, Mark (N'port W)
Knowles, MichaelRoe, Mrs Marion
Knox, DavidRowe, Andrew
Lamont, NormanRumbold, Mrs Angela
Lang, IanRyder, Richard
Latham, MichaelSainsbury, Hon Timothy
Lawler, GeoffreySayeed, Jonathan
Lawrence, IvanShaw, Sir Michael (Scarb')
Lee, John (Pendle)Shelton, William (Streatham)
Leigh, Edward (Gainsbor'gh)Shepherd, Colin (Hereford)
Lester, JimShepherd, Richard (Aldridge)
Lewis, Sir Kenneth (Stamf'd)Shersby, Michael
Lightbown, DavidSilvester, Fred
Lilley, PeterSims, Roger
Lloyd, Ian (Havant)Skeet, T. H. H.
Lloyd, Peter, (Fareham)Smith, Tim (Beaconsfield)
Lord, MichaelSoames, Hon Nicholas
Lyell, NicholasSpeed, Keith
McCrindle, RobertSpence, John
McCurley, Mrs AnnaSpencer, Derek
Macfarlane, NeilSpicer, Jim (W Dorset)
MacGregor, JohnSquire, Robin
MacKay, Andrew (Berkshire)Stanbrook, Ivor
MacKay, John (Argyll & Bute)Steen, Anthony
Maclean, David JohnStern, Michael
McNair-Wilson, P. (New F'st)Stevens, Lewis (Nuneaton)
Major, JohnStevens, Martin (Fulham)
Malins, HumfreyStewart, Allan (Eastwood)
Malone, GeraldStewart, Andrew (Sherwood)
Maples, JohnStewart, Ian (N Hertf'dshire)
Marland, PaulStokes, John
Marlow, AntonyStradling Thomas, J.
Marshall, Michael (Arundel)Sumberg, David
Mates, MichaelTapsell, Sir Peter
Mather, CarolTaylor, John (Solihull)
Maude, Hon FrancisTaylor, Teddy (S'end E)
Mawhinney, Dr BrianTebbit, Rt Hon Norman
Mellor, DavidTemple-Morris, Peter
Meyer, Sir AnthonyTerlezki, Stefan
Miller, Hal (B'grove)Thomas, Rt Hon Peter
Mills, Iain (Meriden)Thompson, Donald (Calder V)
Mitchell, David (NW Hants)Thompson, Patrick (N'ich N)
Moate, RogerThorne, Neil (Word S)
Montgomery, Sir FergusThornton, Malcolm
Moore, JohnThurnham, Peter
Morrison, Hon C. (Devizes)Townsend, Cyril D. (B'heath)
Morrison, Hon P. (Chester)Tracey, Richard
Moynihan, Hon C.Trippier, David
Murphy, ChristopherTrotter, Neville
Neale, GerrardTwinn, Dr Ian
Needham, Richardvan Straubenzee, Sir W.
Nelson, AnthonyVaughan, Sir Gerard
Newton, TonyViggers, Peter
Norris, StevenWaddington, David
Onslow, CranleyWaldegrave, Hon William
Oppenheim, PhillipWalden, George.
Oppenheim, Rt Hon Mrs S.Waller, Gary
Osborn, Sir JohnWard, John
Ottaway, RichardWardle, C. (Bexhill)
Page, Richard (Herts SW)Warren, Kenneth
Parris, MatthewWatson, John
Patten, Christopher (Bath)Watts, John
Patten, John (Oxford)Wells, Bowen (Hertford)
Pawsey, JamesWheeler, John
Percival, Rt Hon Sir IanWhitney, Raymond
Pollock, AlexanderWiggin, Jerry
Porter, BarryWilkinson, John
Winterton, Mrs AnnYoung, Sir George (Acton)
Winterton, Nicholas
Wolfson, MarkTellers for the Ayes:
Wood, TimothyMr. Michael Neubert and
Woodcock, MichaelMr. Mark Lennox-Body.
Adams, Allen (Paisley N)Foulkes, George
Alton, DavidFraser, J. (Norwood)
Anderson, DonaldFreeson, Rt Hon Reginald
Archer, Rt Hon PeterFreud, Clement
Ashdown, PaddyGarrett, W. E.
Ashley, Rt Hon JackGeorge, Bruce
Atkinson, N. (Tottenham)Godman, Dr Norman
Bagier, Gordon A. T.Golding, John
Banks, Tony (Newham NW)Gould, Bryan
Barnett, GuyHamilton, W. W. (Central Fife)
Barron, KevinHancock, Mr. Michael
Beckett, Mrs MargaretHarrison, Rt Hon Walter
Beith, A. J.Hart, Rt Hon Dame Judith
Benn, TonyHaynes, Frank
Bennett, A. (Dent'n & Red'sh)Healey, Rt Hon Denis
Bermingham, GeraldHeffer, Eric S.
Bidwell, SydneyHicks, Robert
Boothroyd, Miss BettyHogg, N. (C'nauld & Kilsyth)
Boyes, RolandHolland, Stuart (Vauxhall)
Bray, Dr JeremyHome Robertson, John
Brown, Gordon (D'f'mline E)Howells, Geraint
Brown, Hugh D. (Provan)Hoyle, Douglas
Brown, N. (N'c'tle-u-Tyne E)Hughes, Dr. Mark (Durham)
Brown, R. (N'c'tle-u-Tyne N)Hughes, Robert (Aberdeen N)
Brown, Ron (E'burgh, Leith)Hughes, Sean (Knowsley S)
Bruce, MalcolmHughes, Simon (Southwark)
Buchan, NormanJanner, Hon Greville
Caborn, RichardJohn, Brynmor
Callaghan, Jim (Heyw'd & M)Johnston, Russell
Campbell-Savours, DaleJones, Barry (Alyn & Deeside)
Canavan, DennisKaufman, Rt Hon Gerald
Carlile, Alexander (Montg'y)Kennedy, Charles
Carter-Jones, LewisKilroy-Silk, Robert
Cartwright, JohnKinnock, Rt Hon Neil
Clark, Dr David (S Shields)Kirkwood, Archy
Clarke, ThomasLamond, James
Clay, RobertLeighton, Ronald
Clwyd, Mrs AnnLewis, Ron (Carlisle)
Cocks, Rt Hon M. (Bristol S.)Lewis, Terence (Worsley)
Cohen, HarryLitherland, Robert
Coleman, DonaldLloyd, Tony (Stretford)
Cook, Frank (Stockton North)Lofthouse, Geoffrey
Cook, Robin F. (Livingston)McCartney, Hugh
Corbett, RobinMcDonald, Dr Oonagh
Corbyn, JeremyMcGuire, Michael
Cowans, HarryMcKay, Allen (Penistone)
Cox, Thomas (Tooting)McKelvey, William
Craigen, J. M.Mackenzie, Rt Hon Gregor
Crowther, StanMaclennan, Robert
Cunliffe, LawrenceMcTaggart, Robert
Cunningham, Dr JohnMadden, Max
Davies, Ronald (Caerphilly)Marek, Dr John
Davis, Terry (B'ham, H'ge H'l)Marshall, David (Shettleston)
Deakins, EricMaxton, John
Dewar, DonaldMeacher, Michael
Dixon, DonaldMeadowcroft, Michael
Dobson, FrankMichie, William
Dormand, JackMikardo, Ian
Douglas, DickMillan, Rt Hon Bruce
Dubs, AlfredMiller, Dr M. S. (E Kilbride)
Dunwoody, Hon Mrs G.Mitchell, Austin (G't Grimsby)
Eadie, AlexNellist, David
Eastham, KenOakes, Rt Hon Gordon
Ellis, RaymondO'Brien, William
Evans, John (St. Helens N)O'Neill, Martin
Fatchett, DerekOwen, Rt Hon Dr David
Faulds, AndrewPark, George
Field, Frank (Birkenhead)Parry, Robert
Fields, T. (L'pool Broad Gn)Patchett, Terry
Fisher, MarkPavitt, Laurie
Flannery, MartinPendry, Tom
Forrester, JohnPenhaligon, David
Foster, DerekPike, Peter
Powell, Raymond (Ogmore)Skinner, Dennis
Prescott, JohnSmith, C.(Isl'ton S & F'bury)
Radice, GilesSmith, Rt Hon J. (M'kl'ds E)
Randall, StuartSnape, Peter
Redmond, M.Soley, Clive
Rees, Rt Hon M. (Leeds S)Spearing, Nigel
Richardson, Ms JoSpeller, Tony
Roberts, Ernest (Hackney N)Steel, Rt Hon David
Robertson, GeorgeStewart, Rt Hon D. (W Isles)
Robinson, G. (Coventry NW)Stott, Roger
Rowlands, TedStrang, Gavin
Ryman, JohnStraw, Jack
Sedgemore, BrianThompson, J. (Wansbeck)
Sheerman, BarryTinn, James
Sheldon, Rt Hon R.Torney, Tom
Shore, Rt Hon PeterWainwright, R.
Short, Ms Clare (Ladywood)Warden, Gareth (Gower)
Short, Mrs R.(W'hampt'n NE)Wareing, Robert
Silkin, Rt Hon J.Weetch, Ken
Welsh, MichaelWoodall, Alec
White, JamesWrigglesworth, Ian
Wigley, Dafydd
Williams, Rt Hon A.Tellers for the Noes:
Wilson, GordonMr. James Hamilton and
Winnick, DavidMr. John McWilliam.

Question agreed to.

Resolved,That this House takes note of the Government's statement on 28th November announcing changes in regional industrial incentives; welcomes the closer alignment of the new Assisted Areas map to areas' relative needs for increased employment opportunities; agrees that it is right at a time of high unemployment to relate assistance more directly to jobs; and notes with approval that the increased cost-effectiveness of regional assistance will enable the burden upon taxpayers to be substantially reduced.