HC Deb 13 November 1972 vol 846 cc9-10
6. Mr. John Smith

asked the Secretary of State for Trade and Industry if he will make a review of the labour subsidy elements in the Government's regional development policies.

The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant)

No, Sir: the Government's new regional policies were decided after a full study of all the relevant factors.

Mr. Smith

Is the hon. Gentleman aware that there is still a large question mark over the future of the regional employment premium? Bearing in mind that the premium injects £100 million a year into development areas is it not disgraceful that there is still no decision on its future after 1974? May I remind the Minister that in 1970 the Government said that they would abolish it in 1974, and then that they would phase it out? What assurances have intending developers moving into a development area that £100 million of Government aid is still available under Government policy?

Mr. Grant

The regional employment premium cannot be considered in isolation from the whole of regional policy. The hon. Gentleman will be aware of the extra steps we have taken to assist the areas. My right hon. Friend the Chancellor of the Exchequer will be discussing the phasing-out of the premium with industry in due course.

Mr. Bruce-Gardyne

During those discussions will the Chancellor consider not only the position of the regional employment premium, about which there may be considerable reservations, but also the imposition of a congestion tax to cope with over-employment of labour in congested areas? Is my hon. Friend aware that such a step would be taken against the background of regional development policies which are in many ways more capital-intensive than they were?

Mr. Grant

I am certain that the Chancellor and the Government will consider all the relevant factors.

Mr. Benn

Is it not a fact that continuity of regional policy, above any other factor, is what determines the investment decisions of industry? If £100 million is likely to be withdrawn in the near future, does not the hon. Gentleman agree that this will not only have an effect on future investment plans but could accelerate decisions by existing firms to rationalise out of development areas and into capital-intensive areas, particularly in the context of the Common Market?

Mr. Grant

These are all matters which will be considered carefully by the Government and discussed in due course.