HC Deb 27 June 1967 vol 749 cc379-416
Mr. Terence L. Higgins (Worthing)

I beg to move Amendment No. 23, in page 32, line 10, to leave out paragraph (a).

When we debated the regional employment premium in Committee we made it clear that we were opposed to the principle of it, a view which had some support on both sides of the Committee. We accordingly registered our disapproval in the Division Lobby. My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) said on that occasion that we intended to consider the matter in greater detail on Report, and this is what we are now seeking to do with this Amendment and the group of Amendments which follows it.

I should stress that within the terms of the Money Resolution governing the regional employment premium it has been very difficult to find an Amendment which can do very much to improve the form of the premium arrangements. Certainly, we found no way of removing the anomaly which the premium creates in development districts between manufacturing industry and those service industries on which many of the development districts depend so heavily.

The purpose of the Amendment is to remove the paragraph to which I referred in my opening remarks. As it stands, subsection (5) reads: The Treasury may by order made by statutory instrument— (a) substitute for all or any of the amounts specified in subsection (1)(a) to (d) of this section such other amount or amounts as may be specified in the order … In other words, it is taking power to alter by Statutory Instrument the rates of regional employment premium which the Government are proposing to pay to manufacturing industries in the development areas.

We believe that this provision is quite contrary to the intention which the Government have declared, because the whole basis of taking an investment decision, and the selection of factors which are allowed to determine an investment decision, depends on the confidence one has that it will be of advantage or disadvantage to one. This has certainly been so in the case of other investment allowances which successive Governments have given, and cash allowances for investment which have also been given. Unless the company which is concerned with taking a decision is certain that the allowance is likely to be permanent, and will have effect over the life of the asset, it is almost certain that it will disregard that factor in reached its decision.

I am sure that hon. Members on both sides of the House who have been or are now concerned with advising on or taking investment decisions will know that the normal practice of a board room, unless there is certainty that the allowance will be paid, is to disregard any allowance or cash hand-out of a kind like the regional employment premium.

It seems to us that the insertion in the Bill of a Clause providing that the Government can alter the amount quite arbitrarily by Statutory Instrument is not the right approach, and is not likely to produce the confidence which we regard as necessary if the scheme is to have any meaning. We believe that the basic conception is misguided, but at least the Government should be consistent within their own terms of reference.

The fact that the Government can alter the rates means that they have almost the power to abolish the allowance cornpletely—they cannot quite do that, as the Chancellor of the Exchequer has ex- plained—or to replace it by a quite different arrangement.

I want to quote from the Green Paper setting out the original proposal for the regional employment premium. Paragraph 27 says: The proposal"— that is to say, the regional employment premium proposal— is not advanced as a short-term contra-cyclical measure. Though there should be some immediate impact, on the whole it is believed that the effects in the very short-term would be rather limited. But over a period of, say, 3–5 years it could narrow the unemployment gap". That is in the regions. If it is not to be a short-term contracyclical measure there is no need for the provision that we are now discussing. That is why we feel that there is a strong case for eliminating it. It seems to shake confidence without giving the Government any powers which we might otherwise have felt it necessary for them to have.

Some explanations were given in Committee why the Government needed these powers. They are set out in the arguments put forward by the Chancellor on 14th June, 1967, when he said: Subsection (5) provides that the rates may be varied by Treasury Order, subject to affirmative Resolution in both Houses of Parliament. It does not give power to reduce the premium to nil, which would terminate the scheme, and I have already said that the Clause does not run down. With this qualification, it gives the Government considerable flexibility in carrying out the purposes of the scheme and the necessary powers to carry out the intention in regard to tapering, to which I referred in our earlier debate". It seems to us that this statement conflicts with the Chancellor's own White Paper, which had been published earlier, in which, in respect of this provision, it says that the intention is that payments of this magnitude in respect of manufacturing employment in the Development Areas should continue to be given until their purpose has been achieved—and in any case for not less than seven years in the existing Development Areas. We shall come to the question of the period of seven years in a later Amendment. The point is that the Chancellor's Amendment in Committee was clearly in conflict with his own White Paper, which says that the magnitude of the amounts will not be altered. That is why we feel that the Government ought to accept the Amendment.

The argument which the Chancellor put forward for increased flexibility is, first, that the ratios of the rates paid between the various groups—men, women and part-timers, for example—may need to be altered. He added: Paragraph (a), read with the last five lines of the subsection, provides that the rates can be varied up or down without limit for men or women, boys and girls and part-timers, together or separately. Surely the argument put forward for setting the present ratios and the amounts to be paid for men, for women, and so on, are clearly based on some idea of what is the right rate and what are the various wage rate ratios for those groups. If the Government intend to oppose the Amendment, I hope that the Chief Secretary will advance some argument why, in any circumstances the Government should wish to alter the rate paid to the various sub-groups—men, women and part-timers—in conformity with the statement which the Chancellor made. We believe that there is no reason why this flexibility should be written into the Bill.

Secondly, the Chancellor added: I come now to the point of the hon. Member for Belfast, East—that different rates may be fixed for different development areas, whether in existence now or scheduled in future, or for parts of such areas."—[OFFICIAL RFPORT, 14th June 1967; Vol. 748, c. 584.] We wish to know what the Government have in mind about this. If they are to go around altering, within the development areas, the regional employment premiums paid to one group or another in different parts of quite a small area, we shall have to consider what the Government guarantee about the certainty of the regional employment premium is worth. Clearly, if one merely knows that one will receive some rates without knowing what they are, business confidence in the scheme is not likely to be increased.

It is doubtful what the situation would be for the so-called grey areas surrounding development areas. Are we to understand that it would be possible for the Government to extend a development area to cover the grey areas that surround it and then to grade the premiums paid between what used to be the grey area and the new development district?

The third reason why, we are told, the Government need to take the powers in the paragraph which we are seeking to delete is that the powers are necessary because of the tapering arrangements which the Government have in mind at the end of the period for which the regional employment premium will be paid. Why is that necessary? It shakes confidence in the whole scheme and the Government's word on the subject if they build into the Finance Bill a tapering arrangement and take powers to make the alteration by Statutory Instrument, when these tapering arrangements are not likely to be needed for five or seven years ahead. Would it not be much more sensible for the Government, instead of building in these arrangements, to say that when they decide to give up the scheme some arrangement will be made for tapering, it off? They have not built into the Bill a provision for the termination of the scheme at a specific date, and we see no reason why it is necessary for the Government to build tapering arrangements into the Bill so far in advance of what they say they regard as the minimum time limit for the termination of the regional employment scheme.

I hope that the Chief Secretary will give us clear answers on these points. It seems to us that the powers which the Government are seeking to take in paragraph (a) are excessive and likely to defeat the whole object of the scheme. We do not believe that the scheme is a good scheme. We do not believe that it is likely to have the results which the Government say they want to achieve. But at all events those results are likely to be jeopardised if the Clause and subsection remain in the Bill.

9.45 p.m.

Sir D. Glover

I support my hon. Friend the Member for Worthing (Mr. Higgins) and congratulate him on an able speech.

I do not understand the Government's thinking. I am wholly opposed to the regional employment premium which is trying to buy employment at about £7,000 a job—

Mr. Speaker

Order. We cannot discuss the whole issue of regional employment premiums on this Amendment. We are discussing the taking out of paragraph (a).

Sir D. Glover

That was just an opening remark, Mr. Speaker. I was leaving that matter. I apologise to the House.

I do not understand why paragraph (a) should have been included. As a practical man and not an economist. What is the object of the regional employment premium? It is to try to persuade me or the hon. Member for Heywood and Roy-ton (Mr. Barnett) to establish a factory in a development area. Anyone who does so will cost the profitability and discover that productivity is lower than where he is at present, in Birmingham for example, and the additional transportation cost and the other expenses of any business will mean that with this premium it would be worthwhile to establish a factory there, provided that each man receives a premium of 30s.

But, if the paragraph remains, the Government obviously hope that many firms which would consider going to such an area would consider it profitable and sensible; but, after all the expense of establishing a factory, admittedly with a 45 per cent. premium under other legislation, the Government may next year alter the premium from 30s. to perhaps 10s. and then that firm's castings would be up the pole. Instead of a profit it would make a loss, and would not be prepared to take the risk—

Mr. Barnett

Is the hon. Gentleman arguing that with paragraph (a) large numbers of firms, knowing that they had the 30s. and that it would not be altered for seven years, would be prepared to enter a development area and that the Clause would be wholly successful without this paragraph?

Sir D. Glover

If I replied to the hon. Gentleman I should be wildly out of order. I did not claim that but said that a firm—not a shoal of firms—might decide to take a chance on a development area. I do not say that every firm would want to go there, and if the Clause were wider I should like to develop the argument about the employment created by people going to those areas and not by the people who are unemployed there.

If the Government think that the Clause will be successful and that industry will be attracted, they must establish some certainty, which is lacking while paragraph (a) remains. After having worked out the costs and decided that it would be marginally more attractive to open a factory in a development area, a firm might suddenly find that the Government had arbitrarily altered the premiums and that their calculations were up the pole and they now had a factory with a lot of expensive machinery which would run at a loss?

People in business and industry must be certain about the length of time for which they will receive a benefit. Unless the Government can give some certainty about this benefit, there will be no reaction to the Clause. Industrialists will say, "We cannot afford to take the risk. We are spending £250,000 on establishing a factory, installing machinery and encouraging people to go there on the basis of our getting 30s. for each male employee. We dare not take the risk because the Government obviously did not include this provision in the Bill for no reason. They obviously thought that they might want to alter the premium, and in all probability, if they alter it, they will alter it downwards". Firms in such a position will not go to the development areas because an alteration in the premium would upset their calculations and they would find themselves up the pole.

We are all anxious to reduce the amount of unemployment in the development areas. We may have different views about how that should be accomplished, although in discussing the Amendment we cannot go into the broad picture of unemployment. If the First Secretary does not accept the Amendment, I fear that the Government will lose any advantages that may be inherent in the premium.

Mr. Walter Clegg (North Fylde)

I have a deep constituency interest in this matter in that the township of Fleetwood and Thornton has been described by the Lancashire and Merseyside Industrial Development Association as forming the unemployment black spot of Lancashire. At the same time, however, we are not in a development area or geographically near one, unless one considers the other side of Morecambe Bay.

I wish to illustrate the problem mentioned by my hon. Friend the Member for Worthing (Mr. Higgins) in trying to define this provision. My hon. Friend asked the Chief Secretary what effect the Clause would have on what we call the grey areas. It has been suggested by the Lancashire and Merseyside Industrial Development Association that Fleetwood and Thornton should be included in such an area when dealing with these matters, and my hon. Friend asked the right hon. Gentleman to define the areas in which the premium will be paid.

Mr. Speaker

Order. With respect, the hon. Gentleman cannot discuss any of those matters now. We are discussing whether the Government should have the power, for which they have asked, in paragraph (a) or whether that power should be taken away. The hon. Gentleman must relate his remarks to that point.

Mr. Clegg

Perhaps on this issue the House should not give the Government these powers; that is, unless they are prepared to define them more specifically. They are not adequately defined in the Clause and if the provision were deleted the Government would have to take steps to define these areas more closely. What effect will the Clause, as drafted, have on my constituency? If it remains un-amended the powers contained in the provision will allow the Government to make variations in this procedure. I do not know, from the way in which it is drafted, whether or not unemployment in my constituency will benefit from the variations the Government may make.

At present I.C.I. has factories in my constituency and similar factories elsewhere in the country, and the factories elsewhere are in development areas. The Government intend to restrict the premium to the development areas. This may mean that instead of new jobs being created in North Fylde, I.C.I. will create new jobs outside my constituency and make the unemployment situation in my part of the world even worse. If the right hon. Gentleman could indicate the Government's intentions about areas such as mine which have this very difficult problem I would know which way to vote on the Amendment. These powers give the Government a wide discretion, but if the right hon. Gentleman could narrow that discretion and say that constituencies like mine may be helped, I might be able to vote with him.

Mr. Stanley R. McMaster (Belfast, East)

I find myself at variance with my colleagues. I have no doubt at all that these provisions will substantially help Northern Ireland. Last month's unem- ployment figures for Northern Ireland, which have just been published show, that about 7½ per cent. of the population—almost 40,000 people—are out of work. That is the highest since 1957.

This presents a very serious problem to all Ulster Members and it has faced me ever since I came to Westminster. The amount being spent by the Government is very substantial, and is equal to the entire amount spent in other ways in helping the development areas. I do not think that there is any practical alternative to the scheme that the Government are now trying.

Variations in the amount are necessary to make this a workable scheme and I hope that, if necessary, the premium may be graded in different parts of the country. If, for instance, in one development area there is persistent unemployment of 10 per cent., 15 per cent. or 20 per cent., I should like to see the Government able to pay for the period of seven years the full amount of £2 per head. Where unemployment is lower, and in many development areas it is more like 3 per cent. or 4 per cent.—which, while being very serious, is only half the percentage we have in Northern Ireland—somewhat less could be paid.

Such grading might mean that the grey areas would find the whole measure less exceptionable, because the areas where unemployment is persistently high are those where manufacturers seem reluctant to set up new factories and many existing factories are finding it very hard to remain in business. This is particularly the case in a period such as the last 12 months, a situation which we have experienced with depressing regularity since the end of the war, when we have had to impose special measures of restraint, regulators, and the so-called "freeze" or "squeeze" to make sure that our overseas payments kept in balance. In times like this marginal districts like the development areas—and, in particular, my own area—suffer very considerably. The unemployment rate is just an example of this.

I therefore hope that the Minister will be able to wait before deciding by experience, because this is a new idea, whether there is reason to vary the amounts. I hope that he will decide, first of all, whether the scheme as a whole is proving effective and, if it is, whether it might not be improved by some type of regional variation. I hope that the scheme will be applied flexibly, because I am sure that with such a flexible application as is catered for existing firms in an area like Northern Ireland will not only be able to remain in business but will, in many cases, be able to expand, and to increase employment. I am sure that this provision will be effective in drawing in new firms. This persistent unemployment affects many skilled workers.

10.0 p.m.

We see in Ulster a rundown of many of our traditional industries, particularly the linen industry, shipbuilding and, recently, the aircraft industry. Skilled men are being thrown on to the labour market. In this way our case differs from that of areas such as the Highlands of Scotland and agricultural areas in the East and South-East. There are unused resources in Northern Ireland which were spoken about in the Green Paper. A redistribution of industry which these provisions would make possible would be beneficial to the country as a whole. We would then be able to make use of the manpower which at the moment is wasted in Northern Ireland, or which threatens to emigrate and would be lost to the United Kingdom as a whole.

We could make use of capital resources in Northern Ireland which, at the moment, are not fully utilised. With a scheme like this in the shipyards we could introduce a shift system and so reduce the proportion of capital cost attributable to each unit of output and make more use of skilled labour in face of the fierce competition from overseas, from European and Far Eastern shipyards. This boost is welcomed in Northern Ireland. Cabinet Ministers in the Northern Ireland Government have stated publicly since the scheme was announced that they welcome it.

Mr. Speaker

Order. The hon. Member is drifting—I can understand why—into the premium scheme as a whole. He must come back to paragraph (a).

Mr. McMaster

I apologise, Mr. Speaker. I shall come back to it immediately.

With the welcome which it has received in Northern Ireland, there is a good case for these variations which would allow the Government to increase the benefit in an area where persistent unemployment is double that of other development areas. I do not think that there is a practical alternative. The suggestion of a tax holiday could be considered, but without that I cannot see that this sum of money—£100 million, £11 million of which, under the present scheme, will go to Northern Ireland—can be spent in any other way.

The arguments we have heard from this side of the House are conflicting. Some hon. Members from fringe areas say that they object to the scheme because it will damage those areas and take industry away from them.

Mr. Speaker

Order. Again, the hon. Member is discussing the scheme as a whole. He must keep to paragraph (a), which gives the Government power to vary the premium.

Mr. McMaster

I am sorry, Mr. Speaker. I have finished that point.

The case for a variation of the Order depends on whether the scheme itself will be effective or not. If the scheme is effective, I would argue that there is a case for a variation as suggested in paragraph (a). [Laughter.] I do not understand the reason for hilarity, because I am trying to make a very serious point. If the scheme as a whole works there is a case for varying it as between development areas. If it worked as a whole and we varied it, a fortiori, it would help those districts which are in most need of help.

Some say that the scheme will be of no use and imply that industrialists will not be attracted to the areas concerned. The counter-argument is that it will be effective and will damage grey areas in the rest of the country. The arguments advanced on this side of the House are conflicting. They cannot both be right. The scheme will be effective, and for this reason I support it with the variations.

Mr. Richard Wainwright (Colne Valley)

After that outburst of Tory rebellion, I want to endorse the closely argued case adduced by the hon. Member for Worthing (Mr. Higgins) against this paragraph, and particularly his correct insistence that industrialists will require a great degree of certainty before they pay any serious attention to a measure such as the regional employment premium. My quarrel with the hon. Member for Worthing is that he did not go far enough in his criticism. He dwelt eloquently and cogently on the dangers of the premium being reduced under the powers in this paragraph. I remind the House of the equally great dangers of the premium being increased, particularly for what are euphemistically described here as "parts of development areas", areas showing a tendency to be wobbly in electoral terms, an area on whose fringe by-election or local election reverses have been suffered. This is a great danger with a measure of this kind which is financed out of thin air.

I readily agree—this is one reason why my right hon. and hon. Friends and I supported this measure in principle—that it can proceed from very sound economics and, in good hands, it can be an admirable measure. But this paragraph may well lead this measure out of the boundaries of sound economics into those of gross electoral appeasement, because there is no requirement that the Exchequer should face up to the financing of the premium if it is to be increased. Because of the risk of this happening, which is a very real one, perhaps not next year, but the year after, if the Amendment is pressed to a Division I shall recommend my right hon. and hon. Friends to divide against the Government.

Sir D. Glover

Does the hon. Gentleman think that there will be enough money in the Treasury to buy the Labour Party support by the next election?

Mr. Wainwright

Evidently I have failed to explain myself to the hon. Gentleman. I shall not trespass on the time of the House by trying again. My whole case is that money is not required in the Exchequer to finance this operation.

Mr. Michael Alison (Barkston Ash)

Paragraph 38 of the green pamphlet on the regional employment premium contains a useful analysis of the incentive on what might be described as the marginal firm. The analysis relates to a firm for which the gross extra costs of going to a development area, without the premium, are just too heavy for it to move.

Mr. Speaker

Order. The hon. Gentleman appears to be discussing the premium itself. The House is discussing paragraph (a) which gives the Government power to vary the premium.

Mr. Alison

I am hoping to show, Sir, that the power to vary what the Government are taking will have a severe effect on the marginal firm which has just been induced to go to a development area, because the exact last shilling of the premium is just sufficient to overcome the gross costs involved in a marginal firm's moving from a prosperous area in the south to a non-prosperous area in the north. Paragraph 38 says this, and it is relevant to the marginal firm: In the case of the proposed regional premium, the upper limit on the differential costs of firms which might be induced by this scheme to go into the Development Areas would be represented by the amount of the premium payments; otherwise the premium would not be sufficient to induce them to move. There will be a firm—the marginal firm —which is just induced to go to a development area by the last two shillings of the premium. The Government have not paid enough attention to the real difference between a firm which has been attracted into a development area, with the substantial extra costs arising there-from, and those which are already there and which will receive the premium. The overheads, depreciation and everything else of the firms already there are almost certainly lower, and the extra cost will fall on the firm which is drawn into the development area.

Firms which are attracted into development areas will be peculiarly vulnerable to any powers which the Government take to reduce the premium. The incoming firm will be hit, not those which are already there, and it is precisely firms in prosperous areas, firms in growth industries, which we hope to attract into the development areas. Because they will be the most vulnerable, confidence is all the more necessary in their case. We must, therefore, have a firm undertaking from the Chief Secretary that his concept in this matter is not one of reduction in the premium, because reduction would hit the incoming firms earlier and harder than firms already there.

Mr. Diamond

I could not attempt to persuade the whole House to vote either one way or the other on the Amendment because we have had rebellion in both parties opposite on the question of the Amendment and how it would affect the scheme.

The hon. Gentleman the Member for Worthing (Mr. Higgins), who moved the Amendment, is rebel No. 1. In the debate on the main Clause, the official spokesman for the Conservative Opposition, the right hon. Member for Argyll (Mr. Noble) said: I accept that it is very important that we should have flexibility in thinking about how we are to use the powers which the Government have taken, and I am delighted that the Chancellor has said that he has taken the powers in order to be able to vary the amounts and the regions and areas, -because this may well be necessary."—[OFFICIAL REPORT, 14th June, 1967; Vol. 748, c. 681–2.] We have had various speeches tonight. We had an interesting speech from the hon. Member for Ormskirk (Sir D. Gloves), and a most serious speech from the hen. Member for Belfast, East (Mr. McMaster), who knows of these problems at first hand. I shall come back to that speech later, because I wish to meet several of the points which the hon. Gentleman made.

Again, on that earlier occasion, the chief spokesman for the Liberal Party, the hon. Member for Roxburgh, Selkirk and Nebles (Mr. David Steel) gave his party's support for the Clause which it is now sought to amend. He made a long speech without, as far as I recall, any reference to difficulties or the question of flexibility, and he took the whole of his party into the Division Lobby with us On it. [An HON. MEMBER: "All five of them."] All five, or whatever the number was. The whole of the Liberal Party supported the Clause. Let us not spoil my argument.

Mr. Richard Wainwright

I hope that the right hon. Gentleman is not suggesting that my hon. Friend was unreserved in his welcome. He said that it was better than nothing.

Mr. Diamond

I am telling the hon. Gentleman what his hon. Friend said on that occasion. Speaking for the Liberal Party, he welcomed the regional employment premium and he took the whole of his party into the Lobby to vote for it. It is, therefore, by no means clear that the whole of the Opposition are in favour of the Amendment and against the Clause.

The Amendment is designed to give a certain flexibility. Let me come to the essential point. I thought that I had dealt with it fully last time, but I am only too glad to deal with it again. It was raised by the hon. Members for Worthing and for Ormskirk, when they spoke of the attitude of directors sitting round the boardroom table and saying to themselves, "Shall we or shall we not move into a development area, having regard to the Government's regional employment premium scheme?".

10.15 p.m.

That is the question, and, therefore, I want to repeat what I said previously. I am glad to affirm it again. The White Paper is the Government's firm statement. In paragraph 17(vi) the Government's intention is clearly stated. The intention is that payments of this magnitude in respect of manufacturing employment in development areas should continue to be given until their purpose has been achieved and in any case for not less than seven years in the existing development areas.

The first point that I want to make clear is that our conduct must be such as to satisfy a reasonable board of directors looking at all the facts. The hon. Member for Ormskirk is a capable director. He has sat at many board meetings. What he gave us today as the attitude of a board of directors was a travesty. I know full well that he is capable of making the right decision, taking all the facts into account, among which would be the regional employment premium, the level of employment, the potentiality of skilled labour, the cost of raw materials, transport in the area, power and a host of other things. This aspect would be one, though an important one, out of very many.

Sir D. Glover

indicated assent.

Mr. Diamond

The hon. Gentleman is good enough to agree with me.

In connection with that there would have to be sufficient reliance on the intention of the Government that that factor would take its proper place in all the other factors entering into the minds of the board in making that decision. So I make that clear; I repeat and affirm the words in the White Paper and do not detract from them one iota.

Sir D. Glover

Is the right hon. Gentleman telling the House that, on the basis of the premium at present being 30s. for a man, a firm in making its decision would be assured that for seven years the premium would not be less than 30s. but might go up?

Mr. Diamond

I have carefully chosen my words. I am saying exactly what is in the White Paper—not one word more and not one word less. I will explain it in a moment because it is important that there should be confidence in the board members. That is why it is in the Government's White Paper.

The hon. Gentleman and I have been in the House long enough to know what such a document means and the care that goes into its preparation. The hon. Gentleman would know that among all the other elements that he has to take into account there would be this element of the magnitude—the White Paper does not say the exact figure—for all time. It refers to the magnitude.

I want to make sure that a managing director in the board room would be satisfied that the costs in this respect would be reasonably reliable, probably a good deal more reliable than most of the other costs on which a board bases its decisions and over which it has very little control, such as the price of imported material. That is why the statement is in the White Paper.

There is the question why we should have flexibility. The argument here is merely, "Shall we incorporate in the Act sufficient powers to enable us to do whatever the House wants us to do from time to time with the minimum of trouble, or shall we not incorporate these powers in the Act so that when anything has to be done we have to have new legislation?" That is the only difference.

The Government are not taking powers to do anything without the consent of the House. They are taking powers to propose courses of action which they will put to the House and which the House on affirmative Resolution will or will not endorse. If the House endorses them, it means that we get our business through much more quickly. If we want to respond quickly to the circumstances of the time we can do it much more readily with the powers that are provided here.

I want to turn now to the point raised by the hon. Gentleman the Member for Belfast, East. I give this purely as an example of the variation content in the powers in the subsection which the Government seek to retain in the Bill. Supposing that in this area there was an aircraft manufacturer, supposing he was trying to sell an aeroplane, supposing, which would not be surprising, that what determined whether the plane was sold was the price, and supposing that a large element in the price was the labour content, and supposing that the cost of the labour content was varied by this R.E.P., and supposing that the Government took the view that in an area—although I am not saying that the Government will take this view—where the unemployment was twice as high as elsewhere, there was an argument for using the flexible powers which are contained here, it would not be impossible, in those circumstances, that an additional rate of premium might have the effect of so reducing the cost to get the order which was otherwise a very marginal possibility.

This would mean that instead of employing a handful of men on a mock-up one could have 2,000 to 3,000 men employed on manufacturing the aircraft. That is something which might happen.

Mr. Barnett

Would this variation upwards that my hon. Friend has in mind, be so flexible as to enable it to be given to just one company in a development area?

Mr. Diamond

I am not arguing that. I am not saying that I have anything in mind. I said quite the opposite, I have not got anything in my mind. It is absolutely clear that the Government have not given consideration to this. As to the specific point my hon. Friend asked, no, there is no power in this subsection to vary in that sense, to give it to one firm only. There is no power at all.

Mr. Barnett

In other words, if one wanted to vary the premium up to, say, £3 per man in order to help a particular aircraft factory, one would have to give it to the whole development area? Is this what he is saying?

Mr. Diamond

I do not say that one wants to vary it in order to help a particular factory. I should make it absolutely clear that I am giving an example of what might happen the other way round. If there were an area such as Northern Ireland, where the employment rate was twice as high as anywhere else, that might be an argument for considering whether the flexibility in the subsection should not he used. I went on to say what one of the results of that might be, and then I gave that purely as an example, out of the top of my head.

Mr. R. B. Cant (Stoke-on-Trent, Central)

Surely my hon. Friend is imparting an entirely new dimension into this concept of regional employment premiums? A number of us who were not really critical of the idea—[Interruption.] I said some of us—might want to know whether this is an authoritative Government statement, or whether the Financial Secretary is just thinking aloud.

Mr. Diamond

All that my hon. Friend 1- as to do is to listen to what I have said twice. I will say it a third time. It is not an authoritative Government statement. We have not given the matter consideration. This is merely an example of what might happen if, in a given area, owing to the high level of unemployment, these flexible powers were used. What I am saying authoritatively is that the difference between having these powers and not having them is that the House can decide whether to vary areas by Order quickly, or by legislation slowly.

The only difference is the time to be spent making use of this flexibility. Having regard to the fact that the chief spokesman for the Conservative Party said that he welcomed them—

Mr. Higgins

The hon. Gentleman quoted a passage from column 682 of HANSARD on 14th June. My right hon. Friend the Member for Argyll (Mr. Noble) went on to say. … the point that the Chief Secretary did not make convincingly enough for me, though it may he the case, is that the firm getting the full premium at the moment will be entitled to believe—if it is to believe in the measure at all—that it will get the full premium for seven years …".—[OFFICIAL REPORT, 14th June, 1967; Vol. 748, c. 682.] This is the same point which we are making in this Amendment and it is in no way inconsistent between one side and the other. He makes a very clear statement, certainly that there might be a case for some flexibility, but also that we need to be quite clear. If we are not to shake confidence in the scheme completely, this Amendment should be accepted.

Mr. Diamond

I answered the hon. Gentleman by saying that there is a statement of intent in the White Paper, and I do not retract one word of that. That can be utterly relied upon. In addition, there is this flexibility which will enable the Act to be used much more fruitfully, much more appropriately and to be tailor-made in appropriate circumstances within the powers already there. As everybody knows, the powers are wide, but they are limited, and they can in no circumstances be enacted without an affirmative resolution of the House.

Mr. Baker

Is the right hon. Gentleman saying that the White Paper has the force of legislation?

Mr. Diamond

No, I am not saying that. Nobody has asked me that. Everybody knows that it is not an Act. It is a statement of the Government's intent. The whole argument about these powers is: what do the Government intend to do? The powers are clear. The question is how are they to be used, in what circumstances, and when? That is what the House is properly interested in. That is why I say that the guideline as to how the powers are used is governed by the statement of intent, which is as clear as a bell. It is in the paragraph which I read out, and it is spelt out in more detail in some of the later paragraphs of the same White Paper.

Mr. McMaster

I should like to get this clear. Is it possible under paragraph (a) of subsection (5) for the Government to differentiate between existing firms and new firms which come into the area?

Mr. Diamond

I must be careful how I answer that. If a scheduled area becomes descheduled after, say, five years from the start of the scheme, existing firms will continue to get for a further two years what was being paid under the original scheme. That is continued. New firms coming in after that will not. So that a new firm would get a different rate from an old firm because the old firm was still covered by the guarantee which the House, I am glad to say, insists on having. That answers the hon. Gentleman's question.

Mr. J. T. Price (Westhoughton)

Would my right hon. Friend give way?

Mr. Diamond

Not yet. Let me finish answering.

But in other circumstances, no. One could not select between firms which had been there all the time and say, "This one can have a greater or smaller amount, but not this one."

Mr. J. T. Price

The hon. Member for Belfast, East (Mr. McMaster) has just raised a valid point. I am all in favour of flexibility and I fully support the Government's request for these powers. But I want to know how they will be applied. These are blanket powers which will give the premium of 30s. a week to all firms already in the area. I want to know how this large sum of Government money, £100 million, will be dispersed. How will the Government justify payment to existing, powerful, successful companies in the development areas, such as in the famous case of Pilkington Bros. of St. Helens to which I have referred on previous occasions? This is where I should like to see the flexibity used to relieve the Government of expense which they should not incur.

Mr. Diamond

I make it absolutely clear that there is no power saying that in a given area where a given figure is being paid to men and women, part-timers, and so on, a particular firm will be excluded. It is not in the Act, and it is not in this Clause.

Mr. Alison

The right hon. Gentleman has stirred the interest of all of us by his thesis on the variations. He has been talking about the vital paragraph 17(vi) of the White Paper which categorically states that payments of this magnitude will be made and, in any case, for not less than seven years. Are we to understand that these variations are applicable only after the passage of seven years, or will they apply before the period of seven years has elapsed?

10.30 p.m.

Mr. Diamond

There is nothing in the subsection to prevent that from happen- ing earlier if the House so decides—upwards, downwards. Upwards, down-wards, variations as between sexes, adults, children, geographical areas—it is all stated quite clearly, absolutely clearly. I am sure all hon. and right hon. Gentlemen opposite have read it. There is nothing to prevent that from happening under this subsection. What the Opposition are saying is, "We do not like it. Therefore, we want a guarantee that we shall have it for at least seven years." It is an argument a bit difficult to follow but I understand that that is their problem.

Mr. Sheldon

I am sorry to interrupt, but my right hon. Friend had mentioned something quite new and something of extreme importance. He has mentioned about firms moving in after an area has been descheduled and these would not be eligible for R.E.P., but existing firms would maintain their eligibility for R.E.P. Does this eligibility for R.E.P. go for increasing the numbers of employees in the existing firms? Does my right hon. Friend get the point?

Mr. Diamond

Yes, the answer is that there would be, of course, if a firm is established, nothing in R.E.P. —in the Clause—to say that the premium to be paid will only be paid to employees in week No. 1 or week No. 2. Firms have powers to reduce or increase their employees in week No. 3, in week No. 4, in every year. There is nothing here to say firms must have an exact number of employees. I am sure that my hon. Friend will agree. It will follow, therefore, as a factor in development in the number of employees.

It also follows that if one is to have a guarantee for seven years—I am sure my hon. Friend is as interested in my reply as I was in his intervention—and the area is descheduled after five years then it is essential, if that guarantee is to be implemented, that the firm which was established there must continue in the area for two further years, must continue to receive the premium.

I am grateful for the interest hon. Members opposite have expressed in the need to have this flexibility which they desire, and I would hope that we could now come to a decision.

Question put, That the words proposed to be left out stand part of the Bill: —

The House divided: Ayes 180, Noes 117.

Division No. 396.] AYES [10.35 p.m.
Albu, Auslen Galpern, Sir Myer Milne, Edward (Blyth)
Allaun, Frank (Salford, E.) Gardner, Tony Mitchell, R. C. (S'th'pton, Test)
Alldritt, Walter Gordon Walker, Rt. Hn. P. C. Molloy, William
Allen, Scholefield Gourlay, Harry Morgan, Elystan (Cardiganshire)
Anderson, Donald Gregory, Arnold Morris, Alfred (Wythenshawe)
Archer, Peter Grey, Charles (Durham) Murray, Albert
Atkins, Ronald (Preston, N.) Griffiths, David (Rother Valley) Neal, Harold
Atkinson, Norman O ottenfiam) Griffiths, Rt. Hn. James (Llanelly) Noel-Baker, Rt.Hn. Philip(Derhy,S.)
Barnett, Joel Griffiths, Will (Exchange) Norwood, Christopher
Baxter, William Hamilton, James (Bothwell) Ogden, Eric
Beaney, Alan Hamling, William O'Malley, Brian
Bence, Cyil Hannan, William Oswald, Thomas
Bidwell, Sydney Harper, Joseph Owen, Dr. David (Plymouth, S'tn)
Bishop, E. S. Harrison, Walter (Wakefield) Owen, Will (Morpeth)
Blackburn F. Haseldine, Norman Padley, Walter
Blenkinsop, Arthur HazeII, Bert Palmer, Arthur
Boardman. H. Henig, Stanley Panned, Rt. Hn. Charles
Booth, Albert Herbison, Rt. Hn. Margaret Park, Trevor
Boston, Terence Hilton, W. S. Parker, John (Dagenham)
Braddock, Mrs. E. M. Hooley, Frank Pavitt, Laurence
Bray, Dr. Jeremy Horner, John Pentland, Norman
Brooks, Edwin Houghton, Rt. Hn. Douglas Perry, Ernest G. (Battersea, S-)
Brown, Hugh D. (G'gow, Provan) Howell, Denis (Small Heath) Price, Christopher (Perry Barr)
Brown,Bob (N 'c'tle-upon-Tyne, W.) Howie, W. Price, Thomas (Westhoughton)
Brown, R. W. (Shoreditch & F'bury) Huckfield, L. Price, William (Rugby)
Butler, Herbert (Hackney, C.) Hughes, Roy (Newport) Probert, Arthur
Butler, Mrs. Joyce (Wood Green) Hunter, Adam Reynolds, G. W.
Callaghan, Rt. Hn. James Jackson, Colin (B'h'se & Spenb'gh) Rhodes, Geoffrey
Cant, R. B. Jackson, Peter M. (High Peak) Robinson, W. O. J. (Walth'stow, E.)
Carmichael, Neil Janner, Sir Barnett Rogers, George (Kensington, N.)
Chapman, Donald Jeger,Mrs.Lena(H'b'n&St.P,cras,S.) Ryan, John
Coe, Denis Johnson, James (K'ston-on-Hull, W.) Sheldon, Robert
Coleman, Donald Jones, T. Alec (Rhondda, West) Silkin, Rt. Hn. John (Deptford)
Conlan, Bernard Kelley, Richard Silkin, Hn. S. C. (Dulwich)
Corbet, Mrs. Freda Kerr, Dr. David (W'worth, Central) Silverman, Julius (Aston)
Dalyell, Tam Lawson, George Slater, Joseph
Davidson, Arthur (Accrington) Leadbitter, Ted Spriggs, Leslie
Davies, C. Elfed (Rhondda, E.) Ledger, Ron Stonehouse, John
Davies, Ednyfed Hudson (Conway) Lee, John (Reading) Summerskill, Hn. Dr. Shirley
Davies, Harold (Leek) Lestor, Miss Joan Swingler, Stephen
Davies, Ifor (Cower) Lewis, Arthur (W. Ham, N.) Taverne, Dick
de Freitas, Rt. Hn. Sir Geoffrey Lewis, Ron (Carlisle) Tinn, James
Dempsey, James Lipton, Marcus Tomney, Frank
Dewar, Donald Lomas, Kenneth Urwin, T. W.
Diamond, Rt. Hn. John Loughlin, Charles Varley, Eric G.
Doig, Peter Luard, Evan Wainwright, Edwin (Dearne Valley)
Dunwoody, Mrs. Gwyneth (Exeter) McBride, Neil Walker, Harold (Doncaster)
Dunwoody, Dr. John (F'th & C'b'e) McCann, John Watkins, David (Consett)
Eadie, Alex MacDermot, Niall Watkins, Tudor (Brecon & Radnor)
Edwards, Rt. Hn. Ness (Caerphilly) Macdonald, A. H. Weitzman, David
Edwards, Robert (Bilston) Mackenzie, Gregor (Rutherglen) Wellbeloved, James
Ellis, John Mackintosh, John P. Wel's, William (Walsall, N.)
Evans, loan L. (Birm'h'm, Yardley) McMillan, Tom (Glasgow, C.) Whitlock, William
Faulds, Andrew McNamara, J. Kevin Williams, Cifford (Abertillery)
Fernybough, E. Mahon, Peter (Preston, S.) Winnick, David
Fitch, Alan (Wigan) Manuel, Archie Winterbottom, R. E.
Woodburn, Rt. Hn. A.
Fletcher, Ted (Darlington) Mapp, Charles Yates, Victor
Ford, Ben Mason, Roy
Forrester, John Mayhew, Christopher TELLERS FOR THE AYES:
Fowler, Gerry Mendelson, J. J. Mr. Charles R, Morris and
Fraser, Rt. Hn. Tom (Hamilton) Mikardo, Ian Mr. Ernest Armstrong.
Alison, Michael (Barktton Ash) Burden, F. A. Dodds-Parker, Douglas
Astor, John Chichester-Clark, R. Drayson, G. B.
Baker, W. H. K. Clark, Henry Eden, Sir John
Bessell, Peter Ciegg, Walter Eyre, Reginald
Bitten, John Cooke, Robert Farr, John
Black, Sir Cyril Corfield, F. V. Fletcher-Cooke, Charles
Body, Richard Costtain, A. P. Gilmour, Sir John (Fife, E.)
Boyd-Carpenter, Rt. Hn. John Crosthwaite-Eyre, Sir Oliver Glover, Sir Douglas
Brinton, Sir Tatton Dalkeith, Earl of Goodhew, Victor
Bryan, Paul Dance, James Grant, Anthony
Buchanan-Smith, Alick(Angus,N&M) Davidson, Jarnes(Aberdecnshire,W.) Grant-Ferris, R.
Buck, Antony (Colchester) Deedes, Rt. Hn. W. F. (Ashford) Grieve, Percy
Bullus, Sir Erie Digby, Simon Wingfield Griffiths, Eldon (Bury St. Edmunds)
Gurden, Harold Maclean, Sir Fitzroy Pym, Francis
Hall, John (Wycombe) Macleod, Rt. Hn. Ian Quennell, Miss J. M.
Harris, Frederic (Croydon, N.W.) Magirmis, John E. Ramsden, Rt. Hn. James
Harris, Reader (Heston) Marten, Neil Renton, Rt. Hn. Sir David
Harrison, Col. Sir Harwood (Eye) Maude, Angus Ridley, Hn. Nicholas
Harvie Anderson, Miss Mawby, Ray Rossi, Hugh (Homsey)
Heald, Rt. Hn. Sir Lionel Maxwell-Hyslop, R. J. Royle, Anthony
Hesedtine, Michael Maydon, Lt.-Cmdr. S. L. C. Russell, Sir Ronald
Higgins, Terence L. Mills, Peter (Torrington) Shaw, Michael (Sc'b'gh & Whitby)
Hiley, Joseph Mills, Stratton (Belfast, N.) Smith, John
Hirst, Geoffrey Mitchell, David (Basingstoke) Taylor, Edward M.(G'gow,Cathcart)
Hogg, Rt. Hn. Quintin Monro, Hector Taylor, Frank (Moss Side)
Holland, Philip Montgomery, Fergus Temple, John M,
Hornby, Richard More, Jasper Thatcher, Mrs. Margaret
Hutchison, Michael Clark Morgan, Geraint (Denbigh) Thorpe, Rt. Hn. Jeremy
Iremonger, T. L. Morrison, Charles (Devizes) Turton, Rt. Hn. R. H.
Jenkin, Patrick (Woodford) Mott-Radclyffe, Sir Charles van Straubenzee, W, R.
Johnston, Russell (Inverness) Murton, Oscar Wainwright, Richard (Colne Valley)
Jopling, Michael Nicholls, Sir Harmar Whitelaw, Rt. Hn. William
Kimball, Marcus Noble, Rt. Hn. Michael Wilson, Geoffrey (Truro)
King, Evelyn (Dorset, S.) Nott, John Winstarnley, Dr. M. P.
Kirk, Peter Osborn, John (Hallam) Wright, Esmond
Kitson, Timothy Page, Graham (Crosby) Wylie, N. R.
Langford-Holt, Sir John Peel, John Younger, Hn. George
Legge-Bourke, Sir Harry Pounder, Rafton
Lewis, Kenneth (Rutland) Powell, Rt. Hn. J. Enoch TELLERS FOR THE NOES:
MacArthur, Ian Prior, J. M. L. Mr. R. W. Elliott and
Mr. Bernard Weatherill.
Mr. Higgins

I beg to move Amendment N3. 24, in page 32, line 13, after 'section', to insert 'would'.

Mr. Deputy Speaker (Sir Eric Fletcher)

I think it will be convenient if with this Amendment we discuss Amendment No. 25, in line 18, after 'period', to insert: 'being a period at least seven years from 4th September 1967', Amendment No. 26, in line 20, to leave out from 'specified' to the end of line 21 and to insert: 'after the end of the said period'. and Amendment No. 27, in line 21, at the end to insert: Provided that while these payments continue similar payments are made on the same terms to new establishments within the same category of the principal Act, beginning operations in the area which has ceased to be part of the development area.

Mr. Higgins

I agree, Mr. Deputy Speaker.

I want to make it clear at the outset that in Committee when we considered this Clause we made it clear, both in our speeches and when we voted in the Division Lobby, that we were against the concept of the regional employment premium, and my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) said then that we would seek to amend it in some respects on Report.

The Amendments fall into two parts, and I think that it is convenient to group Nos. 24 and 27 together, and then to consider Nos. 25 and 26 together. Fundamentally, we are concerned in the first two Amendments with a point which was touched on in the last debate. What we are seeking to do now is to clarify the Government's guarantees on the regional employment premium and despite the Chief Secretary's suggestions in the last debate, I do not think that this is in any way inconsistent with our attitude to the premium as a whole.

We are against the regional employment premium, but if the Government are to give guarantees of its continuance for a set period, these should be written into the legislation, and after the debate which we have just had the House may feel that there is some cause for tying the Government down rather more closely than we have done hitherto to exactly what their much vaunted guarantee entails, and we shall judge them both on the reply that we get to this debate, and on the way they vote in the Division Lobby.

10.45 p.m.

Amendment No. 24 is rather an elegant Amendment merely inserting the word "would" into line 13. The intention is more clearly spelt out in Amendment No. 27, which says that the arrangements should be carried out Provided that while these payments continue similar payments are made on the same terms to new establishments within the same category of the principal Act, beginning operations in the area which has ceased to be part of the development area. The Government guarantee will continue to firms in a development area for a period of at least seven years. Let us suppose that part of that development area becomes descheduled after two years. Presumably, the firm in the descheduled part will have the remainder of that time to run; it will be guaranteed the regional employment premium for the remaining five years.

But what is the position of a new firm which arrived in the descheduled part of the development area after it had been descheduled? Unless it gets the guarantee at least for the balance of the seven years which remain and receives the premium for those years—even though it moves to a location which is no longer part of the development area—it will be competing on very unfair terms with the firms which are already there.

A firm which was there from the beginning of the seven-year period will receive the premium for the balance of the five years, but the new firm setting up next door to it will not receive the premium at all for those same five years. That is the point which we seek to cover in Amendments Nos. 24 and 27.

The whole of the regional employment premium scheme, like S.E.T., is riddled with anomalies, but if we are to have two firms operating next door to each other for five or more years, with one receiving the Government hand-out and the other not receiving it, that is an utter economic absurdity. I hope that the Chief Secretary will make it clear whether that is the intention and, if so, what explanation the Government have for it.

Amendments Nos. 25 and 26 bring us back to the interesting point which the Chief Secretary made in the last debate. He rightly referred to paragraph 17 on page 7 of the White Paper, which reads: The intention is that payments of this magnitude in respect of manufacturing employment in Development Areas should continue to be given until their purpose has been achieved—and in any case for not less than seven years in the existing Development Areas. The right hon. Gentleman made great play of the expression "of this magnitude" and suggested that the fact that the Government are proposing to vary this amount was not inconsistent. This is an odd semantic situation if we are to have any belief in the Government's so-called guarantee. What variation, are we to believe, around the magnitude does not alter the magnitude? Does a 5 per cent. variation around the magnitude alter the magnitude which has been guaranteed—or 10 per cent., 15 per cent., 50 per cent. or 100 per cent. variation around that magnitude?

The Chief Secretary cannot play with words in that way and still expect that the Government's assurance or guarantee will convince any businessman who has the good fortune, in the circumstances, to read this evening's debate. We want to know what variation leaves the magnitude unchanged—

Mr. Cant

If, because of this £100 million, the numbers of employed in the development areas grew, might not the Government have to reduce the premium to keep the total at that figure?

Mr. Higgins

This raises an interesting point, and I hope that the right hon. Gentlemen will deal with it. Does the expression "payments of this magnitude" refer to the total £100 million or to the amount which individual firms receive? No firm will rely on the guarantee if it is to depend on the total amount spent on the premium and have nothing to do with what the firm will receive by conforming to a policy which the Government say will benefit the country.

We deplore the present fall in investment, and this measure is not likely to fulfil the Government's intentions. As we have said, the effect of the premium will spill over into other regions, and I gave several reasons for that in Com- mittee. Nothing in the Committee on the Prices and Incomes (No. 2) Bill has suggested that wage claims are not likely to mop up much of the premium.

The hon. Member for Colne Valley (Mr. Richard Wainwright) asked earlier whether the proposal was self-financing. In the short term, it will not be. The Chief Secretary made it clear that only about half would be covered in monetary terms in the short run—

Mr. Diamond

I am afraid that I have lost the hon. Gentleman. In talking about self-financing, is he discussing the first or second two Amendments?

Mr. Higgins

The second two. We are concerned with a Government guarantee and it is not unreasonable to ask its cost.

The hon. Member for Colne Valley suggested that the proposal would cost nothing, but would be self-financing, but clearly, in the first year, it will cost about £50 million in increased taxation or Government deficit, so can we have much belief in a guarantee which the Government say they will give those thinking of investing in development areas? The Government's proposal to vary the premium up or down is likely completely to invalidate what they say is a straightforward guarantee.

The right hon. Gentleman said that the White Paper is not legislation, but if the guarantee means anything, why is it not in legislation? Of course, this Government's statements do not induce confidence in their promises, so even if it were, it might not be worth the paper it was printed on. It would be a good idea to have it in black and white so that we can see what this guarantee amounts to in this case.

Far from giving a clear guarantee to an area such as that represented by my hon. Friend the Member for Belfast, East (Mr. McMaster), the Government have given a nominal guarantee, but could vary the premium or reduce it under these powers—or, perhaps, even eliminate it to the proverbial penny. This is not good enough and I hope that the right hon. Gentleman will make it clear that the Government are serious about this guarantee, so much so that they are prepared to write it into the Bill. That is the helpful spirit in which my hon. Friends and I approach this matter, although we do not believe that the scheme will achieve the objectives of the Government because people will not have confidence in the sort of nebulous guarantees they are being given.

Mr. Diamond

The hon. Member for Worthing (Mr. Higgins) questioned me about Northern Ireland. As the Government of Northern Ireland will be making these payments, any questions the hon. Gentleman has to ask about the position in the constituency of his hon. Friend the Member for Belfast, East (Mr. McMaster) should be addressed to the Northern Ireland Government.

It is difficult for me to say much more on the general case. The hon. Gentleman went over the same ground as we debated on the last Amendment. I have tried to make it perfectly clear that the prime consideration is the intention stated in the White Paper. It follows from that that if a firm moves to one of these areas on the basis of that intention, and if the area fortunately becomes descheduled—this is in the context of the area, or part of the area in which the firm has been established for five years, becoming descheduled within that time —then that will mean that the policy has proved successful and the prosperity of the area has improved.

Nevertheless, a guarantee has been given, on the basis of which certain capital expenditure and early losses may have been made as a result of the firm moving to the area. It is only right, in these circumstances, that the guaranteed payments should continue to be made. This being so, the hon. Member for Worthing goes on to ask whether this creates an inconsistency for a new firm going to the area. Any new firm going to an area which is other than a development area does not get development area treatment; the range of benefis under this treatment, including special grants and allowances. If a firm moves into an area which is not a development area, it does not get these benefits, and that is an end to the matter.

The hon. Member for Worthing complains that such a new firm might be only a few miles from another firm which is getting these benefits. That is always the case as between firms inside and outside development areas. If the hor. Gentleman wants us to give a clear, firm and sufficient guarantee on which a board of directors can rely in making this move, it must follow that, under that guarantee, the payments should continue to be made, even though there may be no economic need for them should that firm find itself in an area which has become descheduled.

This does not create an anomaly. It recognises the fact that the benefit, in terms of the premium, is being paid to that firm for the expenditure it incurred in difficult times. If a new firm comes in later, after the area has become de-scheduled, the difficulties will have gone, general prosperity in the area will be broadly equal with non-development areas and, in this situation, I do not see how an anomaly arises. We are giving the undertaking for which the hon. Gentleman is asking.

11.0 p.m.

That, I think, deals with Amendments Nos. 24 and 27. So far as the other two are concerned, the powers which the Government ask are necessary for a variety of reasons; for example, for the "tapering" which the hon. Gentleman mentions and if he has to have the premiums which are relevant to all the purposes I have already mentioned in the previous debate. These are permissive powers which cannot be put into operation without the support of the House.

Mr. John Hall (Wycombe)

The right hon. Gentleman has not answered the point about the phrase "of this magnitude". What is meant by it? If, for the sake of argument, I have a factory which I want to locate in some area and I am influenced by the thought of getting this payment, then can I look forward to a guaranteed period of seven years at a figure very near to those now in the Act, or am I likely to have that figure reduced considerably over that seven years?

Mr. Diamond

I do not think the hon. Member was in the Chamber during our previous discussion, or he would have known that that point was gone over very fully. The statement in the White Paper is such as would satisfy any reasonable board of directors who, sitting round the table for the express purpose of considering the setting up of a factory in a development area, or moving from one development area to another, in that they would know this was one of many elements to be taken into consideration. They would know that this was one consideration they would have to give to the removal, and this element would fit into the scheme and could be sufficiently relied upon for them to take their decision. That does not mean that they would have a guarantee for all time for a substantial sum.

The hon. Gentleman knows very well that no firm can expect that in relation to many ordinary activities. It could not expect it in wage costs, transport costs, availability of labour; in its raw materials cost, especially in material from abroad, and no firm seriously considering this—which, if I may say so, I do not think the hon. Member is doing—takes all these fluctuating factors into account.

In that context, the purpose of the White Paper is to make it absolutely clear that a firm, on moving could rely on the Government's attitude for the seven years, notwithstanding that it is "descheduled", as provided for in this Clause.

Mr. John Hall

The right hon. Gentleman is not being frank. When a board of directors is considering all the facts it also considers the costs incurred over a period of time and, by and large, it will be able to say fairly accurately what these considerations are likely to be. Directors can take it on trust that the Government will not move the figures by any method or amount sufficient to influence their decision not to go into an area. Is that what the right hon. Gentleman is saying? Surely the Government can give a better guide as to limits on movements over seven years. Or could a firm go into a development area and then, within three or four years, if that place ceases to be a scheduled development area, find that the amount is reduced to practically nothing?

Mr. Diamond

With permission, I recognise that this is an interesting point, and I am grateful for it, because the Government naturally want the business community to be satisfied. If I were speaking as a director in a board room I would not find this difficult at all, but the hon. Gentleman is not speaking as a director. If he were considering the elements I have indicated, and recognising the fact that one cannot control any one of them to these very fine limits, and recognising that they are all moving, he would know that the Government's statement of the intention to continue payment of this magnitude is a much firmer guarantee than directors would get on any other element in their costs over seven years.

No supplier will give a guarantee price over seven years, no supplier of power will give a guaranteed price for power over seven years—nothing is guaranteed over seven years. But the Government say that payments of this magnitude will continue, and for seven years, and will then taper off. They will not stop at a moment's notice. And if the policy proves successful in the particular area and it is descheduled, these payments will notwithstanding continue. I assure the hon. Gentleman that such a statement is more than satisfying to any reasonably enterprising business man who wants to make a success of his business.

Mr. Geoffrey Hirst (Shipley)

I have followed the discussion very closely, and I think that there is justice in the point that has been made, but the Chief Secretary is not making very clear the reference to magnitude. I have had some connection with business, and I appreciate that there are a lot of other considerations which one cannot expect to be guaranteed—that is fair comment—but in the period of years concerned one is in no doubt that, basically, electricity charges, for instance, will not go up by 200 per cent. or 100 per cent. There will be some movement, which may be roughly estimated from past movement. It may be 5 per cent. or something like that, but within reasonable limits one will know what that movement will be, and so will all one's competitors in all parts of the country. It is not a factor that would be considered to be any different from that affecting anyone else. The charge would have to be paid in any other part of the country whether it was a development area or not.

But this provision is within the caprice of the Government. The words in the White Paper about the payment continuing to be paid really mean nothing at all, and they are unusual words to be used in a Parliamentary paper of any sort. I should have thought that they meant that the payment would continue in very close proximity to the amount stated at the beginning. We know that White Papers are not legislation. They may state an intention but I have been in this House for a number of years, and I am sorry to say that I find neither White Papers nor Ministerial statements of any real value in the last analysis. What we want is an interpretation of the law.

In this case, we want to give guidance to the Government to carry out their promises, but we want some clarification. If the Chief Secretary really means that the words "of this magnitude" imply that there would be no more than a modest adjustment of the amount at the beginning we are getting to some place, but otherwise assurances as to magnitude cease to have any meaning. It may well be half. It is not a consideration that any board or directors would think about.

The right hon. Gentleman inferred that my hon. Friend the Member for Wycombe (Mr. John Hall), who has great experience, is not speaking as a director, but I should be extremely unhappy if he said the same of me. I would take offence, because I speak very much as a director and I say that such assurances as this get no credence. Directors want to know what "of this magnitude" means, and the right hon. Gentleman owes it to the House to be more clear.

Mr. Costain

The Chief Secretary said that no firm would get a guarantee for seven years, but it is quite simple to get a rent guarantee for seven years.

Question put, That "would" be there inserted in the Bill:—

The House divided: Ayes 113, Noes 167.

Division No. 397.] AYES [11.10 p.m.
Alison, Michael (Barkston Ash) Hall, John (Wycombe) Murton, Oscar
Astor, John Harris, Reader (Heston) Nicholls, Sir Harmar
Baker, W, H. K. Harrison, Col. Sir Harwood (Eye) Noble, Rt, Hn. Michael
Bessell, Peter Harvie Anderson, Miss Nott, John
Bilffen, John Heald, Rt. Hn. Sir Lionel Osbom, John (Hallam)
Black, Sir Cyril HesDitinc, Michael Page, Graham (Crosby)
Body. Richard Higgins, Terence L. Peel, John
Boyd-Carpenter, Rt. Hn. John Hiley, Joseph pounder, Rafton
Brinton, Sir Tatton Hirst, Geoffrey Powell, Rt. Hn. J. Enoch
Bryan, Paul Hogg, Rt. Hn. Quintin Price, David (Eastleigh)
Buchanan-Smith, Alick(Angus, N&M) Holland, Philip Prior, J. M, L.
Buck, Antony (Colchester) Hornby, Richard Pym, Francis
Burden, F. A. Hutchison, Michael Clark Ramsden, Rt. Hn. James
Chichester-Clark, R. Iremonger, T. L. Renton, Rt. Hn. Sir David
Clark, Henry Jenkin, Patrick (Woodford) Ridley, Hn. Nicholas
Clegg, Walter Johnston, Russell (Inverness) Rossi, Hugh (Hornsey)
Cooke, Robert Jopling, Michael Royle Anthony
Corfield, F. V. Kimball, Marcus Russell, Sir Ronald
Costain, A. P. King, Evelyn (Dorset, S.) Shaw, Michael (Sc'b'gh & Whitby)
Crosthwaite-Eyre, Sir Oliver Kirk, Peter Smith, John
Dalkeith, Earl of Kitson, Timothy Steel, David (Roxburgh)
Dance, James Langford-Holt, Sir John Taylor, EdwardM.(G'gow, Cathcart)
Davidson, James(Aberdeenshire, W.) Legge-Bourke, Sir Harry Taylor, Frank (Moss Side)
Deedes, Rt. Hn. w. F. (Ashford) Lubbock, Eric Temple, John M.
Dodds-Parker, Douglas MacArthur, Ian Thatcher, Mrs. Margaret
Drayson, G. B. Macleod, Rt. Hn. Iain Thorpe, Rt. Hn. Jeremy
Eden, Sir John Maginnis, John E. Turton, Rt. Hn. R. H.
Elliott,R.W.(N'c'tle-upon.Tyne,N.) Marten, Neil van Straubenzee, W. R.
Eyre, Reginald Maude, Angus Wainwright, Richard (Colne Valley)
Farr, John Mawby, Ray Whitelaw, Rt. Hn. William
Fletcher-Cooke, Charles Maxwell-Hystop, R. J. Wilson, Geoffrey (Truro)
Cilmour, Sir John (Fife, E.) Maydon, Lt.-Cmdr. S. L. C. Winstanley, Dr. M. P.
Glover, Sir Douglas Milts, Peter (Torrington) Wright, Esmond
Goodhew, Victor Mills, Stratton (Belfast, N.) Wylie, N. R.
Grant, Anthony Mitchell, David (Basingstoke) Younger Hn. George
Grant-Ferris, R. Monro, Hector
Grieve, Percy Montgomery, Fergus TELLERS FOR THE AYES:
Griffiths, Eldon (Bury St. Edmunds) Morgan, Geraint (Denblgh) Mr. Jasper More and
Gurden, Harold Morrison, Charles (Devizes) Mr. Bernard Weatherill.
Albu, Austen Barnett, Joel Booth, Albert
Allaun, Frank (Salford, E.) Baxter, William Boston, Terence
Alldritt, Walter Beaney, Alan Braddock, Mrs. E. M.
Allen, Scholefield Bence, Cyril Bray, Dr. Jeremy
Anderson, Donald Bidwell, Sydney Brooks, Edwin
Archer, Peter Bishop, E. S. Brown, Hugh D. (C'gow, Provan)
Armstrong, Ernest Blackburn, F. Brown,Bob(N 'c'tle-upon-Tyne, W.)
Atkins, Ronald (Preston, N.) Blenkinsop, Arthur Brown, R. W. (Shorditch & F'bury)
Atkinson, Norman (Tottenham) Boardman, H. Butler, Mrs. Joyce (Wood Green)
Cant, R. B. Howie, W. Oswald, Thomas
Carmichael, Neil Huckfield, L. Owen, Dr. David (Plymouth, S'tn)
Chapman, Donald Hughes, Roy (Newport) Owen, Will (Morpeth)
Coe, Denis Hunter, Adam Padley, Walter
Coleman, Donald Jackson, Colin (B'h'se & Spenb'gh) Palmer, Arthur
Conlan, Bernard Jackson, Peter M. (High Peak) Pannell, Rt. Hn. Charles
Dalyell, Tam Janner, Sir Barnett Park, Trevor
Davidson, Arthur (Accrington) Jeger,Mrs.Lena(H'b'n&St.P'cras,S.) Pavitt, Laurence
Davies, G. Elfed (Rhondda, E.) Johnson, James (K'stOn-on-Hull, W.) Pentland, Norman
Davies, Ednyfed Hudson (Conway) Jones, T. Alec (Rhondda, West) Perry, Ernest G. (Battersea, S.)
Davies, Harold (Leek) Kelley, Richard Price, Christopher (Perry Barr)
Davies, Ifor (Cower) Kerr, Dr. David (W'worth, Central) Price, William (Rugby)
de Freitas, Rt. Hn. Sir Geoffrey Lawson, George Probert, Arthur
Dempsey, James Leadbitter, Ted Reynolds, G. W.
Dewar, Donald Lee, John (Reading) Rhodes, Geoffrey
Diamond, Rt. Hn. John Lestor, Miss Joan Robinson, W. O. J. (Walth'stow, E.)
Doig, Peter Lewis, Ron (Carlisle) Rogers, George (Kenington, N.)
Dunwoody, Mrs. Cwyneth (Exeter) Lipton, Marcus Rowland, Christopher (Meriden)
Dunwoody, Dr. John (F'th & C'b'e) Lomas, Kenneth Ryan, John
Ellis, John Loughlin, Charles Sheldon, Robert
Faulds, Andrew Luard, Evan Silkin, Rt. Hn. John (Deptford)
Fernyhough, E. McBride, Neil Silkin, Hn. S. C. (Dulwich)
Fletcher, Ted (Darlington) McCann, John Silverman, Julius (Aston)
Ford, Ben MacDermot, Niall Slater, Joseph
Forrester, John Macdonald, A. H. Spriggs, Leslie
Fowler, Gerry Mackenzie, Gregor (Rutherglen) Summerskill, Hn. Dr. Shirley
Fraser, Rt. Hn. Tom (Hamilton) Mackintosh, John P. Swingler, Stephen
Galpern, Sir Myer McMillan, Tom (Glasgow, C.) Taverne, Dick
Gardner, Tony McNamara, J. Kevin Tinn, James
Gordon Walker, Rt. Hn. P. C. Mahon, Peter (Preston, S.) Urwin, T. W.
Gourlay, Harry Manuel, Archie Varley, Eric G.
Gregory, Arnold Mapp, Charles Wainwright, Edwin (Dearne Valley)
Grey, Charles (Durham) Mason, Roy Walker, Harold (Doncaster)
Griffiths, David (Rother Valley) Mayhew, Christopher Watkins, David (Consett)
Griffiths, Will (Exchange) Mendelson, J. J. Watkins, Tudor (Brecon & Radnor)
Hamilton, James (Bothwell) Mikardo, Ian Weitzman, David
Hannan, William Milne, Edward (Blyth) Wellbeloved, James
Harper, Joseph Mitchell, R. C. (S'th'pton, Test) Wells, William (Walsall, N.)
Harrison, Walter (Wakefield) Molloy, William Whitlock, William
Haseldine, Norman Morgan, Elystan (Cardiganshire) Williams, Clifford (Abertillery)
Hazell, Bert Morris, Alfred (Wythenshawe) Winnick, David
Henig, Stanley Morris, Charles R. (Openshaw) Winterbottom, R. E.
Herbison, Rt. Hn. Margaret Murray, Albert Woodburn, Rt. Hn. A.
Hilton, W. S. Neat, Harold Yates, Victor
Hooley, Frank Noel-Baker, Rt.Hn.Philip(Derby,S.)
Horner, John Norwood, Christopher TELLERS FOR THE NOES:
Houghton. Rt. Hn. Douglas Ogden, Eric Mr. Alan Fitch and
Howell, Denis (Small Heath) O'Malley, Brian Mr. Ioan L. Evans.
Mr. Iain Macloed

I beg to move. That further consideration of the Bill, as amended, be now adjourned.

I think the end of our discussions and voting upon R.E.P. is the natural break, and I would be confident that we could complete the Report stage of the Bill in the half day that is allotted tomorrow, so I hope the Chief Secretary will agree to the Motion.

Mr. Diamond

I am grateful for what the right hon. Gentleman has said about tomorrow, and I certainly give full agreement to the Motion.

Question put and agreed to.

Bill, as amended, to be further considered Tomorrow.

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