The Secretary of State for Economic Affairs (Mr. Peter Share)
With permission, Mr. Speaker, I should like to make a statement on the Report of the Committee on the Intermediate Areas under the chairmanship of Sir Joseph Hunt which is published today. Copies are available in the Vote Office. As the Report touches on the interests of so many parts of the country my statement will be somewhat lengthy, and I apologise for this.
The Committee was appointed in September 1967 and Sir Joseph Hunt and his colleagues have prepared a very full Report on a subject of great complexity. The Government warmly appreciate the Committee's work.
Its principal conclusions and recommendations are as follows:
Four members in three notes of dissent have expressed reservations about some of the Committee's findings.
- (i) The whole of the Yorkshire and Humberside and the North West Regions should qualify for an entirely new 25 per cent. building grant not linked to the creation of new jobs. They should also qualify for training grants and direct training assistance on the same basis as in the development areas.
- (ii) In selected growth zones within these regions there should also be Government estates and factory building with supporting investment including link roads.
- (iii) For these two regions and in the Notts./Derby and North Staffordshire planning sub-divisions there should be an 85 per cent. grant for derelict land clearance as in the development areas. The clearance programme should be speeded up in all these areas and in the development areas.
- (iv) The industrial development certificate control should be relaxed throughout the country by raising the exemption to 10,000 square feet.
- (v) The Merseyside development area should be de-scheduled and treated on the same basis as the rest of the North West Region.
The Government have considered these recommendations against the background of our assessment of general economic prospects for the regions in the recently published Economic Assessment to 1972, in the context of our regional policy as a whole and within the need to limit public expenditure.
We are convinced that it is necessary to retain for the development areas and special development areas a large margin of preference in assistance to industry. Although the massive increase in Government preferential assistance to industry—for these areas—from some £30 million in 1964 to over £260 million—is making a vital and growing contribution to overcoming their still serious structural problems, none of these areas is yet ready for de-scheduling. The Government do not propose therefore to accept the Hunt Committee's recommendation for the de-scheduling of Merseyside.
Against this background we have considered carefully on the one hand the Hunt Committee's arguments for spreading limited resources over the whole of the two regions concerned and on the other hand for concentrating these on a few areas where present and prospective needs are greatest. We have concluded that the better course is to concentrate assistance to industry with an employment link on a strictly limited number of smaller areas. For this reason, we have not been able to accept the Hunt Committee's proposal for a general building grant.
The Government consider that the selection of areas to be given assistance to industry must be governed strictly by criteria of need, especially the level and character of unemployment and numbers of unemployed, the incidence of high net outward migration and the real scope for industrial growth.
I turn now to our proposals.
§ Assistance to Industry: Areas
§ In indicating the areas to which in our view these criteria most clearly point I must emphasise that I describe them in broad terms. We shall take fully into account any further views of the regional economic planning councils. Consultations with them will be completed and the precise boundaries of these new intermediate areas will be announced after the Whitsun Recess. Thereafter we will bring forward the necessary legislation as quickly as possible.
§ These areas are:
§ The Yorkshire coalfield area, the Erewash Valley area of Derbyshire, parts of Humberside, the main industrial areas of North East Lancashire east of the proposed New Town, a substantial part of South East Wales, Leith and Plymouth.
§ We have considered the problems of other areas, but we have concluded that these problems do not at present justify the use of financial incentives to divert industry to them.
§ Assistance to Industry: Measures
§ We propose to seek powers to make available to these intermediate areas certain assistance under the Local Employment Acts. This will not include the loans and grants, for general purposes, which are made in the development areas on the advice of the Board of Trade Advisory Committee.
§ What it will include is:
- (i) Grants at 25 per cent. of factory building costs;
- (ii) Government built factories (both custom built and advance factories) on the same basis as in the development areas;
- (iii) The full range of development area training grants and other training assistance together with assistance for the transfer of key workers.
§ The date from which firms will be eligible for this assistance will be announced later.
§ We agree with the Hunt Committee that industy in the intermediate areas should be encouraged particularly in places which have real scope for growth. The studies made by regional economic planning councils have attached importance 671 to the development of suitable growth zones and we will take councils' views fully into account.
§ There will be some additional expenditure on roads in the selected areas and proposals for the povision of new housing associated with industrial growth will be encouraged. There will also be an enlarged national programme for derelict land clearance for schemes certified by the Board of Trade as contributing to the development of industry in the area. For the North West and the Yorkshire and Humberside Regions, as a whole, in the areas selected for assistance to industry and in the North Staffordshire and Notts./Derby planning subdivisions, we intend to seek power to make available to local authorities a capital grant of 75 per cent.
§ I turn now to I.D.C. policy.
§ The industrial development certificate control is operated flexibly and with sensitivity to industrial and local circumstances, but it remains essential to relate its operation overall to the priorities of our regional policy, particularly to the needs of the development areas. The Board of Trade will continue to operate the I.D.C. control so as to give the development areas and the new intermediate areas general priority. In the rest of the North West and the Yorkshire and Humberside Regions, the control will continue to be administered liberally except in the congested parts or places otherwise unsuitable for industrial expansion.
§ We do not accept the Hunt Committee's proposals that the general exemption limit should be increased from the present levels to 10,000 square feet or that all control should be removed from moves to overspill towns. But we do see the need for a more flexible policy for such moves where planned development may be held up if the flow of industry to overspill towns from an exporting area is impeded. It certainly is our intention that all approved schemes for new and expanding towns should be properly supported by employment opportunities.
§ When these measures are in full operation their cost will amount to nearly £20 million a year. This will be met out of the very substantial and growing sums being spent on assistance to industry in 672 the development areas. Even so, expenditure in the development areas will remain very high and they will of course retain a very large and continuing preference over the rest of the country including the new intermediate areas.
§ The work of the Hunt Committee and our proposals for the new intermediate areas which have flowed from it mark an important new stage in the development of regional policy.
§ We are pressing on with the recovery of the development areas. We are responding flexibly to the changing needs of the different parts of the country. We will continue to seek through our regional policy to serve the interests of every region and of the whole country.
§ Sir K. Joseph
The House will understand that with a 250-page book available only half an hour ago and a long statement made only a few minutes earlier, it is impossible to arrive at instant judgments. Would the Secretary of State tell us when he expects to introduce legislation? Will the Government note that in addition to the £30 million spent on what were then development districts in 1964, a large share of the £275 million was spent in investment allowances and, in addition, £45 million in a full year on free depreciation in the development districts? In other words, the figure of £30 million used by the Secretary of State is a gross distortion. My hon. and right hon. Friends are very glad that the Government intend to repair some of the damage caused in the "grey areas" by this sharp discrimination in Government policy against them, for it appears that a number of the recommendations of the Hunt Committee are not being accepted. Of course, we cannot judge the sense of that at this stage.
For the moment, I would only press the Secretary of State on finance. Do we understand that the Government intend to find the £20 million, the cost of their proposals in a full year, by cutting the money made available otherwise to the development areas? If that is so, how and where are they going to cut? Would the Secretary of State note that in our view, without touching development area funds at all, there are large sums now going in R.E.P. and S.E.T. refunds to firms that neither need nor seek subsidies that could perfectly well 673 be used to finance the Hunt Committee's proposals, and more, on the "grey areas", if necessary.
§ Mr. Shore
I am interested in the right hon. Gentleman's suggestion as to how savings might be made. I want to make it perfectly clear that R.E.P. has been guaranteed for a period of seven years, and we stand by that guarantee. That apart, the saving, as I have already said, must come from industrial assistance to development areas. This will be considered and we shall make a statement on it in due course.
The right hon. Gentleman asked when we expect to be able to legislate. I hope that it will be some time this year, but I think we must wait until I make a further statement, when I hope to pronounce definitely on the areas which we have selected.
§ Mr. Speaker
Order. I shall be able to call a fair number of those hon. Members who are seeking to put questions if the questions are short.
§ Mr. Jay
Is my right hon. Friend aware that at a time when development area policy is being more successful than ever it would be the greatest mistake to make minor changes in policy, and will he assure the House that before the Government make up their mind on all the further details they will listen to the views of hon. Members as well as to those of the regional councils?
§ Mr. Shore
I shall be most anxious to have the views of my right hon. and hon. Friends, as well as the views of the economic planning councils. I am not proposing major changes in development area policy. I repeat what I have said. They will continue to enjoy a clear and substantial preference over the intermediate areas.
§ Mr. Heath
Is the right hon. Gentleman aware that this afternoon he has given yet another example of the Government's entering into financial commitments, namely, £20 million to help the intermediate areas, to be cut from development areas, without having a clue as to how it will be done, without being able to tell the House where the cuts will be made, without having worked out any of the 674 sums, let alone being able to tell the House when the legislation will be brought in to put this into effect? This again, like the failure to tell us what the insurance contributions will be, is the mark of a totally incompetent Administration.
§ Mr. Shore
The right hon. Gentleman should not over-play his hand. He thought that he made a good point earlier this week, but he has made a bad one now. We are not entering into financial commitments. I have not yet reached the point at which I have even agreed with the E.P.C.s and others the precise areas which are to be helped.
The questions which are worrying the right hon. Gentleman will be made clear certainly not later than the time when I make my statement on which areas we have selected to help.
§ Mr. Simon Mahon
As Merseyside has a 3.9 per cent. unemployment problem, and is beset by massive social problems, may I, on behalf of people from the North-West, welcome the Government's statement and hope that the wisdom which they had displayed on this occasion will be echoed by better industrial relations on Merseyside?
§ Mr. Geoffrey Lloyd
Is the right hon. Gentleman aware that the Hunt Committee very closely argued its proposal for what it called a relatively modest change to increase the exemption limit for I.D.C.s? In the light of that, and the abrupt and summary dismissal of this policy by the Government, it will be felt in the West Midlands that the Government have sacrificed a strong economic case to the political prejudices of the Labour Party.
§ Mr. Shore
I do not think that is so. I understand the right hon. Gentleman's concern and interest in this matter, but I 675 think that one of the things that has come out very clearly in the discussions which Sir Joseph Hunt has had, and in the evidence that he has received, is that there is a great deal of misunderstanding about the way in which I.D.C. control is operated. It is not the same thing to say that there is, as it were, a limit beyond which people cannot go without getting a certificate, as it is to say that this is, as it were, a veto on new developments. It is nothing of the kind. All it means is the more industrial expansion is brought within the possibility of being steered into development areas than would otherwise be the case, and I think that we must give that priority.
§ Mr. Anderson
Can my right hon. Friend confirm that in delimiting new areas one of the criteria will be the contribution which border firms make to the employment needs of areas within an existing development area? If not, surely it would be ludicrous if firms such as those in South Monmouthshire which get more than two-thirds of their work force from within a development area received no assistance under the new scheme.
§ Mr. Wall
I regret what appears to be a considerable watering down by the Government of the Hunt Committee's proposals for Yorkshire and Humberside. Will the right hon. Gentleman bear in mind that it is no use trying to attract industry to a growth area such as Humberside unless, at the same time, we provide good communications, both roads and the Humberside bridge which was promised in a certain famous by-election about three years ago?
§ Mr. Barnett
Is my right hon. Friend aware that, much as one would want aid in one's own area, he is right not so to water down the assistance to development areas as to get the worst 676 of all possible worlds? On the other hand, will he reconsider this question of the R.E.P. and save the £100 million involved, bearing in mind that most industrialists do not take this into consideration in working out their projects? Will he, therefore, use that money towards the help that he is now proposing to give for the development of derelict land and other things?
§ Mr. Richard Wainwright
Is the right hon. Gentleman aware that his proposal, even after the legislation is eventually passed and Government policy has got under way, will amount to less than £20 million, compared with the £260 million a year now being devoted to development areas? Is he further aware that in abandoning the idea of intermediate areas and scaling them down to intermediate districts he is surrendering to Conservative policy, accompanied by a strong flavour of party political lobbying? Does the right hon. Gentleman agree that if the intermediate regions were protected by powerful and democratic regional councils the Government would never have been able to get away with the repudiation of this Report?
§ Mr. Shore
I shall consult the councils about the Hunt Committee's Report as a whole and about my proposals.
The hon. Gentleman has made for me the point that I made earlier, that there will remain a strong differential in favour of the development areas. I do not apologise for that.
Secondly, with regard to the scope of the intermediate areas, what we have done is to narrow the area, but we have made available within the intermediate areas which I have defined, or we are proposing to make available, just that assistance which Sir Joseph Hunt proposed, with one exception, namely, that building grants will be employment linked, and not simply without such a link.
§ Mr. Arthur Davidson
Is my right hon. Friend aware that his words would appear to be deserving of a great and 677 warm welcome in North-East Lancashire, despite the predictably grudging response by hon. Gentlemen opposite? Is my right hon. Friend also aware that if he said these recommendations would be implemented very soon he would receive an even warmer welcome in North-East Lancashire?
§ Mr. Shore
I know my hon. Friend's keen and continuing interest in the problems of intermediate areas. Having said that, I hope to make a definitive statement shortly after Whitsun; I hope that my hon. Friend will not think that we are dragging our feet when he takes account of the need to have proper consultations with the E.P.C.s and other bodies.
§ Mr. Hirst
Although the right hon. Gentleman's reply to my right hon. Friend the Leader of the Opposition rather devalues his statement, may I ask whether he will nevertheless bear in mind that the failure of the Committee to recommend higher investment grants for the wool and textile industry will be deplored, and will he give serious consideration to reversing that decision? In that regard, will the right hon. Gentleman bear in mind that the difficulties of the Committee in arriving at that decision are by no means understood, and that the situation is quite simple and easy to investigate?
§ Mr. Eadie
Would my right hon. Friend make it clear that the central theme of Government policy is the proper redistribution of industry? Would he also make it clear that he rejects the philosophy of the laissez faire economy as espoused by hon. and right hon. Members opposite, which would mean disaster for Scotland, Wales, the North-East and other areas? Is my right hon. Friend aware that the people of Leith, and particularly my hon. Friend the Member for Edinburgh, Leith (Mr. Hoy), who has fought very hard for some alleviation of this policy, will be very grateful for what he has said?
§ Mr. Tilney
I welcome the decision not to de-schedule Merseyside, but would the right hon. Gentleman bear in mind that what Merseyside needs more than anything else to become a growth area is better communications between north and south and between Merseyside as a whole and the M6?
§ Mr. Milne
Has my right hon. Friend noted that the solution to the problems of the intermediate areas is similar to that for the development districts, namely, full employment? Until there is an intensification of Government policy towards that end, the problems of both types of area will remain unsolved.
§ Mr. Shore
The major purpose of the policy is to deal with the problems of unused resources and, above all, unemployment. Although my hon. Friend has spoken of development areas as opposed to intermediate areas, only 18 months ago we defined special development areas in recognition of particular problems in development areas.
§ Mr. Stodart
Is the right hon. Gentleman aware that, despite the remarks of the hon. Member for Midlothian (Mr. Eadie), there will be no rejoicing in the City of Edinburgh tonight as a result of the Report? The right hon. Gentleman mentioned a concession to Leith. Would he make clear whether it covers the whole of Leith or merely the dock area? Will the Government's review of the situation in Edinburgh recommended in the Report be continuous?
§ Dr. John Dunwoody
I congratulate my right hon. Friend on his response to the Hunt Report, and particularly on his continued concentration on the development areas and his rejection of the proposed modifications of I.D.C. policy. 679 Does he accept the suggestion that there should be a comprehensive review of existing development area policy?
§ Mr. J. H. Osborn
May we have a definition of the new development districts? For instance, will the definition of the South Yorkshire coalfield include the area covered by the 44 Group and be incorporated with North Derbyshire and include Sheffield?
§ Mr. Mikardo
While welcoming my right hon. Friend's statement, may I ask him whether he recalls that in a previous incarceration he was the author of Labour Party policy documents which argued that the Conservative policy of bribing enterpreneurs to go to development areas to provide employment was inadequate and that it would have to be supplemented by measures to bring public enterprises to the development areas? May I remind him that the present policy has resulted in a situation in which the cost to public funds of providing every job is very high, running to thousands of pounds? What has happened to his former beliefs?
§ Mr. Shore
I recall very well, as does my hon. Friend, that the Labour Pasty and this Government are pledged to do all in their power to correct regional imbalance at the earliest possible moment. We shall use whatever instruments of policy are to hand, whether public or private enterprise, and inducements to carry out that policy.
§ Mr. Maxwell-Hyslop
Since the Government reduced the maximum square footage which can be built without an I.D.C. from what it was under the Conservative Government, is it not clear that our judgment has been vindicated by the Hunt Report and that the Government are going directly against and not just ignoring 680 the recommendations of the Hunt Report?
§ Mr. Shore
I do not know what the hon. Gentleman's judgment was, or what that of his party was, or what period he is speaking of. But I would not accept that we are rejecting the Hunt Report or its proposals on I.D.C.s. We have indicated that we shall make I.D.C.s freely available in the intermediate areas. That is sensible. But if we are to open up the areas in which there is to be a free I.D.C. policy, it is common sense to maintain I.D.C. control strictly over congested and prosperous areas.
§ Mr. George Jeger
Can my right hon. Friend say when he expects his policy to have some practical application? For example, can he advise the local authorities in my constituency, in some parts of which unemployment is running at 11 per cent., that they can take action, in which they have been frustrated up to now, by inviting industrialists to set up their factories in the locality?
§ Mr. Clark Hutchison
Does the right hon. Gentleman realise that, while I am grateful for what has been done for Leith, there is no boundary between Edinburgh and Leith? Why should Edinburgh be excluded when unemployment there is increasing? Would the right hon. Gentleman have another look at the recommendations of the Edinburgh Chamber of Commerce?
§ Mr. Alfred Morris
Is my right hon. Friend aware that his proposals will be received with much pleasure in many parts of Lancashire? Can he say when he is likely to be able to estimate the financial advantage which will accrue to the area of the North-West Economic Planning Council, or can he give that figure now?
§ Mr. Emery
Is the right hon. Gentleman aware that, with the exception of Plymouth, the South-West will be particularly disappointed with the Report and by what the right hon. Gentleman has not had to say about the South-West? Would he accept immediately the one recommendation in the Report to benefit the South-West and give a high degree of priority to the spine road?
§ Mr. Shore
The whole of it to Plymouth will be either completed or under construction by 1975. That is well on the way. [Interruption.] If the hon. Gentleman would consider the length of the road, he might not make such silly comments. As for the South-West as a whole, I am glad to be able to announce the intermediate proposals for Plymouth, which I know will be well received.
§ Mr. Ogden
Would my right hon. Friend pass the thanks of the whole House to the Chairman, members and staff of the Hunt Committee for the work which they have done? Would my right hon. Friend confirm that, far from his statement being politically motivated, the recommendations for the North-West which the Government have accepted are exactly those made by the North-West Economic Development Association, which represents all parties? Would he request my hon. Friend the Member for Bootle (Mr. Simon Mahon) to ask my hon. Friend the Member for Poplar (Mr. Mikardo) to visit the Post Office Giro on Merseyside?
§ Mr. Eldon Griffiths
Is the right hon. Gentleman aware that in many areas of East Anglia wages are lower and job opportunities are scarcer than in some of the intermediate areas which he proposes to help? Does he not recognise that we simply cannot build successful overspill towns unless we get more industry? Is he aware that his own 682 regional policy is denying that industry to us?
§ Mr. Hazell
I welcome the fact that my right hon. Friend is to meet the regional economic planning councils. Will he take full note of what the East Anglian Council will have to say regarding Norfolk, with its high unemployment and low earnings, which are referred to time and time again in the Report, with a viewing to his giving some considerations to these problems?
§ Mr. Eyre
Is the Secretary of State aware that the Report refers to the West Midlands as a seedbed area for new development and goes on to call for the relaxation of I.D.C. control, which affects small firms which provide the new infant industries? Will he give sympathetic consideration to this, which could well be of great importance to the whole country's export potential?
§ Mr. Alexander W. Lyon
Does my right hon. Friend agree that his modifications of the Hunt Committee's proposals will make it much more difficult for areas such as mine which are caught between intermediate districts and development areas? In view of this, is there not something to be said for the Hunt Committee's proposal that there should be some de-scheduling of the fringe areas which do not need the benefit that is at present given to development areas?
§ Dame Joan Vickers
Does the right hon. Gentleman think that what he has given us today fulfils the promise made 683 by the Prime Minister in Plymouth recently that the Hunt Report would make a major contribution to the area? I reiterate that what we need is the spine road and a further study of the airport. We have already had three.
§ Mr. E. Rowlands
Does my right hon. Friend realise that everybody in Wales will welcome the decisions, particularly the decision to include an intermediate area in the South-East? My right hon. Friend referred to a substantial part of the South-East. Will he say which part of the South-East? Does he realise that the real problem in areas like South-East Wales is not so much attracting new industry as preventing industry from leaving and jumping over the border into nearby development areas?