HC Deb 04 April 1973 vol 854 cc421-3
7. Mr. John Smith

asked the Secretary of State for Scotland if he will make a statement on his meeting with the Scottish Council of the Confederation of British Industry on 16th March 1973.

Mr. Younger

The main items raised on this occasion were the IMEG report on the possibilities for participation by British industry in oil developments; the way in which industry can most usefully participate in local government after reform; and the CBI's recently revised attitude to the regional employment premium.

I found the discussion useful and informative.

Mr. Smith

Regarding the CBI's revised attitude to REP, may I ask whether the hon. Gentleman is aware thai since the meeting the Confederation of British Industry calculates that if REP is withdrawn there will be extra unemployment of between 20,000 and 50,000 people in the development areas? Is he further aware that if REP is withdrawn Scotland will lose £40 million? Will he tell the House what he and his right hon. Friend are doing for Scotland to try to save this £40 million?

Mr. Younger

First, the delegation which I saw from the Scottish CBI made it clear that it had always considered that REP had great shortcomings as a regional development aid. It said that it had in recent weeks come to the conclusion, however, that it should be carried on until 1978 because it was becoming concerned about its removal. The delegation also spoke to me about its ideas as to what should be done about replacing or phasing-out REP. As the hon. Gentleman knows, we have undertaken to con- sult the CBI and the TUC about the methods of doing this in due course. I assure him that we will take into account the views expressed by all these bodies in considering phasing-out and replacing REP when the time comes.

Mr. Edward Taylor

Was my hon. Friend able to tell the Scottish Council whether, if the Government decide as a result of representations which have been made to continue REP until 1980, the Common Market Commission would allow us to do so?

Mr. Younger

This matter was briefly touched upon, but it was not considered to be a bar to taking sensible action to consider how REP can best be phased out and what steps can be taken to help the Scottish economy.

Mr. Douglas

How did the Minister justify the ending of the regional employment premium in 1974? What devices did he put to the CBI for some form of labour subsidy? On the IMEG report, may I ask how he justified the non-implementation of the proposal for the setting up of a petroleum industry supply board?

Mr. Younger

The hon. Gentleman may like to know that the representatives of the CBI told me that they are examining the practicability of a regional VAT subsidy scheme as one suggestion for what might replace REP in due course. My justification is that, as long ago as six or seven years, the Labour Government decided that this scheme would run until 1974 and we said that it would be phased out thereafter. We are merely carrying out what we said we would do.

I have not yet received a letter of congratulation from the right hon. Member for Kilmarnock (Mr. Ross) or his hon. Friends on the fact that this very week we have abolished SET, which was the most greatly resented tax on the service industries in Scotland.

Mr. Bruce-Gardyne

While recognising the drawbacks to REP, may I ask my hon. Friend nevertheless to pay careful attention to the latest report of the OECD on British regional policies which confirms or tends to emphasise what many of us have believed for some time: namely, that our regional development policies are far too capital-intensive oriented?

Mr. Younger

We shall certainly pay close attention to that and to all the other views that have been expressed.

Mr. Ross

Does the hon. Gentleman accept the figure quoted by my hon. Friend the Member for Lanarkshire, North (Mr. John Smith) that the withdrawal of REP will mean a loss of £40 million a year to Scottish industry? Does he also accept the figure given by the CBI that the withdrawal of REP will result in an increase in unemployment of between 20,000 and 50,000 in the development areas? That being so, and as the hon. Gentleman agreed about the need for some labour-intensive subsidy, may I ask what the Government propose to put in place of REP if they are now to phase it out? I remind him that on 27th October the Chancellor said that it would end, not be phased out. We are glad to know that there is some amelioration of the position.

Mr. Younger

I am sure that we are all glad to have a few words from Mr. SET himself in this particular week. I cannot confirm or agree with the figures that have been quoted. Some are very speculative. I cannot confirm them as being necessarily correct. The right hon. Gentleman knows that we would not wish to phase out REP without consulting the CBI and the TUC. We must do so and we have said that we will do this.

Mr. Ross

I do not want REP to be phased out at all in view of the precarious position of employment in Scotland. Is the hon. Gentleman aware that his Department publishes the amount that Scotland receives per year in REP, and that £40 million is the figure? In fact, the last figure was £40 1 million. Why does he not accept this? Why does he underrate the importance of this matter to Scottish industry?

Mr. Younger

I do not underrate its importance at all. It has been clear for many years what we were going to do about REP. Indeed the Labour Government made clear what they were going to do about it. The right hon. Gentleman cannot get away from the fact that the balance of measures which he introduced involved the inclusion of REP and SET. SET was greatly resented in Scotland because it hit hardest on the service industries. The right hon. Gentleman should be thanking us for having removed it.

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