HC Deb 11 November 1970 vol 806 cc376-8
23. Mr. David Steel

asked the Secretary of State for Scotland whether, following the Goverment's plans for changes in industrial investment incentives, he will make a statement about their likely effect in Scotland.

Mr. Gordon Campbell

All the measures which were announced on 27th October by my right hon. Friend the Chancellor of the Exchequer are designed to produce an economic climate in which industry can grow again at a satisfactory rate, both in the United Kingdom as a whole and in Scotland.

As paragraph 15 of the White Paper on Investment Incentives made clear, it is estimated that the differential benefit provided to the development areas by free depreciation in conjunction with the additional Local Employment Acts grants and loans will be broadly equivalent to the present cost of the regional differential in the investment grants scheme.

Mr. Steel

Does the right hon. Gentleman accept that that depends on how one interprets the words "broadly equivalent" and that the experience in the Borders so far is that those firms which have come in and started from scratch, without having profits with which to offset depreciation allowances, have found the investment grants on the machinery most valuable, and that these are now being removed?

Mr. Campbell

The technical investment grant system will be removed, but grants for development will be increased under the Local Employment Acts. This is a misunderstanding which must be made clear. It is not a question of doing away with all grants: it is increasing more general grants. The investment grant system, for instance, did not apply to service industries. The fact that we have nearly 100,000 unemployed in Scotland at the moment means that some change was necessary. There could be no doubt about that. The new combination will be much more effective in producing results.

Mr. Buchan

Is the right hon. Gentleman aware that the reason for these continual questions, not only here but by every economist and many industrialists throughout Scotland, is that they do not accept that the total resources will be what they were under the investment grant system? Secondly, is not the right hon. Gentleman aware that in an area like Scotland, the problems of the central valley and of his hon. Friends in the Highlands cannot be solved under a profit-based investment and that the entire shipbuilding industry and shipping industry are anxious about this ending of the basic investment grant situation?

Mr. Speaker

Order. Long questions and long answers cut out hon. Members who are anxious to put questions.

Mr. Campbell

I will give a short answer. Clearly, the hon. Member has not been listening to many of the comments from informed industrial and economic opinion in Scotland. Secondly, I must make it clear that the special free depreciation advantage in the development areas, if not used at the beginning on profits in the first year or two, is not lost but can be continued through the following years. This is rather different from the previous form.

Mr. Small

In the light of that answer, will the Secretary of State study in depth the speech made last night by the chairman of the Chamber of Shipping, Sir John Nicholson, and tell him of the alarm that this is causing on Clydeside, and give full attention to the matter of industrial incentives in terms of shipping and the effect that it will have on the Clyde?

Mr. Campbell

I have seen the newspaper reports about that speech, which was confined to the question of shipping and did not deal with shipbuilding.

Mr. Lawson

The Question asks about the likely effect of the changes. Will the right hon. Gentleman describe the efforts made to study this question—where the information was obtained, who was consulted and what has happened to the report of the inquiry, first mentioned by the Board of Trade in April, 1969, and subsequently taken over by the Minister of Technology, into this very question? Was that report used when the Department made up its mind on this question? Has it been shelved, or when will it be published?

Mr. Campbell

I do not know where the hon. Gentleman has been for the last three years. Over the period when we were in opposition, we carried out a vast amount of consultation. Many informed observers said that no Opposition had ever done so much work in preparation in this field. In our statements and in our election manifesto, we said that we would be replacing the investment grant system, which was widely criticised on both sides of the House and outside the House, by a system of tax allowances and increased and extensive use of the Local Employment Acts. So we have translated into action exactly what we said we would do.

Earl of Dalkeith

Is my right hon. Friend aware that if we get better value for money in Scotland in terms of jobs and new industries, the people of Scotland will be very pleased?

Mr. Campbell

I agree and I would like to add that the Highlands and Islands Development Board will find the new and more flexible system of much more advantage to it than the previous one.