§ 10.28 p.m.
§ The Minister of State, Northern Ireland Office (Mr. Stanley Orme)
I beg to move,That the Industries Development (Northern Ireland) Order 1976, a draft of which was laid before this House on 22nd March, be approved.The draft Order has two main purposes. In the first place, it establishes the Northern Ireland Development Agency as the successor to the Northern Ireland Finance Corporation and defines the functions and the powers of the new body. Secondly, it replaces the present Section 1 of the Northern Ireland Industries Development Act of 1966 with a new section which expands the purposes for which selective financial assistance may be given.
As hon. Members may recall, the Northern Ireland Finance Corporation was established in 1972 following the recommendations of the Joint Review Body on economic and social development in Northern Ireland—the Cairn-cross inquiry. It had a statutory life of three years, which was later expanded by a further two years, and its main role was to rescue Northern Ireland companies which, because of the troubled political and security situation, might have had difficulty in raising finance through the normal commercial channels. Within this field the Corporation has tackled many difficult problems, and I would like to express my appreciation of the work which it has done in the past four years.
The decision to establish a new body is not a reflection on the Corporation, but the outcome of the Government's overall industrial strategy as set out in the White Paper "The Regeneration of British Industry", which has already led to the establishment of the National Enterprise Board, and Development Agencies in Scotland and Wales. It is important that Northern Ireland, which has many deep and difficult economic problems, should have available to it a similar type of body. The Development Agency in Northern Ireland has therefore 1724 been fashioned very much on the lines of the Development Agencies in Great Britain.
The Agency will be a much more positive body than the Finance Corporation, with a major role to play in the economic reconstruction of Northern Ireland. I see it setting about this task in two broad ways. In the first place, it will be the agency for setting up State industries, whether on its own or jointly with others, especially in areas of high unemployment where private industry has so far failed to go. In the second place, it will be expected to take positive steps to improve and strengthen existing Northern Ireland firms. It will encourage joint ventures, it will be able to acquire licences and patents and to introduce these to firms tn Northern Ireland, it will search out new products and new processes suitable for introduction into Northern Ireland industry, and it will initiate moves to help in the reconstruction of industries in Northern Ireland.
In this role of improving and strengthening industry, the Agency will also have power to give advice on management, finance and administration, and, most important, marketing. It has been represented to me strongly in my discussions—and there have been full discussions with all interested organisations, and especially with the Northern Ireland Economic Council—that there is a need for a body to assist Northern Ireland companies in the marketing of their products. I believe that this need fits in well with the broad role that I have outlined for the Agency, because successful marketing usually brings with it substantial rewards in terms of trade and employment.
The Agency will be expected to adopt a commercial attitude towards the carrying out of these functions. It will invest in a project only where it believes that there is a reasonable prospect of viability. That is not to say—and I should like to make this quite clear—that the Agency should be over-cautious in its approach to investments. A level of acceptable risk cannot be legislated for and a decision to invest will be a matter for the judgment of the Agency. In reaching such decisions, however, it is right that it 1725 should take into account a wider range of considerations than would apply in the case of a normal business. For example, it may have to wait longer for a return on investment, or locate in areas which might not be the most attractive commercially, as the price for bringing much needed investment and employment to areas of high unemployment.
In rescue cases, where social considerations play a much greater part, it is for the Government to take the decision, for the Government to direct the Agency to act as their agent in implementing those decisions, and for the Government to provide the cash or other assistance that is needed. The Order before the House provides the machinery for doing this. It is important that this side of the Agency's work should be kept quite separate from activities undertaken on its own initiative, and steps will be taken to ensure that this distinction is brought out clearly in the Agency's annual report.
Hon. Members will have noted recently the publication of guidelines for the operation of the National Enterprise Board. These are felt to be necessary in view of the generous scope of the functions and powers given to that body, and the desirability of establishing certain operating rules and practices to ensure proper co-ordination with the Government and fair competition with private industry. The same considerations apply to the Northern Ireland Development Agency, and I have sent draft guidelines to the Economic Council for discussions. These will also be made available to hon. Members, and published.
The main responsibility for promoting new investment from outside Northern Ireland will continue to lie with the Department of Commerce, and I need hardly remind hon. Members of this House of the great success which the Department has had in this field in the past. The distinction between the functions of the Department of Commerce and the new Agency will have to be drawn closely. We do not want them to to overlap or to contradict each other's functions. I have spent a great deal of time examining this question and would welcome the views of hon. Members. It is important to get it right.
1726 The Department's powers derive from Section 1 of the Industries Development Act 1966. That Act was amended in 1971 to give the Department powers to assist in the maintenance of employment. The Order now before the House repeals those early provisions and replaces them with a new Section 1 fashioned much more on the lines of Section 7 of the Industry Act 1972. I am sure the Opposition recognise that Act.
The new Section 1 powers will enable the Department to provide selective financial assistance for a much wider range of purposes, including the reconstruction of industries, and for ensuring the orderly run-down of an industry. The selective financial assistance provisions should be seen as complementing the work of the Agency, since any undertaking in the Agency's control will stand in the same position regarding entitlement to standard or selective financial assistance towards capital expenditure as will a company in the private sector.
I do not wish to encroach on the time available to hon. Members to discuss this Order, and I propose therefore to be brief in reference to its provisions. Part II of the Order establishes the Agency, confers on it certain powers and functions, and makes available to it £50 million. I am pleased to be able to inform the House that, subject to the Order being approved, the important offices of chairman and deputy chairman have been decided. Mr. Kenneth Cork, presently the Chairman of the Finance Corporation, has been appointed Chairman-designate of the Agency, and I am particularly pleased that he has agreed to accept this position. I am appointing two Deputy Chairmen—Mr. Brendan Harkin, currently Vice-Chairman of the Finance Corporation, a member of the Northern Ireland Economic Council and prominent trade unionist, and Mr. Denis Faulkner, a prominent local businessman. Pending the coming into operation of the Agency, these members will constitute an organising committee, so enabling a start to be made in considering a variety of matters related to the operation of the new body.
If the Order gets through the Privy Council and receives Royal Assent by Easter, we hope that the Agency will be in operation by 1st May, though some 1727 of its functions will come into operation almost as soon as the Order is approved by the House.
The provisions in Part III of the legislation replace sections of the Industries Development Act 1966 and the Industrial Investment (General Assistance) Act 1966 respectively. The effect of the new provisions is, broadly, to add further to the powers of the Department of Commerce to provide selective financial assistance to industry, particularly in relation to the objective of maintaining and safeguarding existing employment.
Part IV contains a provision designed to remove any doubt about the ability of the Department to accept the transfer to it of publicy-owned securities, and the Order ends with three schedules dealing with staffing and financing matters.
The new Agency will have a vital role in the reconstruction of the Northern Ireland economy and will, through this Order, be equipped with the powers necessary to do that job. We discussed this last week in the debate on the Northern Ireland economy. Private investment, public investment and public commitment by the Government are essential for the economy, together with assistance to existing firms which wish to extend. I see no conflict there.
Last night I attended a function in Manchester which was organised by the Ulster Office to promote jobs, investment and marketing for Northern Ireland firms. I attended the function as Minister of State with Sir Harry Jones from the Ulster Office. It was the best-attended meeting of industrialists, buyers and people interested in marketing for many years. There were present 330 industrialists from the Greater Lancashire area, which itself suffers from unemployment. I was heartened when the industrialists told me that, despite the difficulties, they would not desert Northern Ireland and regarded the Northern Ireland economy as part of the United Kingdom economy.
I told those industrialists that in the continuation of direct rule the British Government saw themselves as a positive, not a negative, factor in the creation of a thriving economy. In spite of the heavy body blows suffered by the Province recently, I see a turning of the corner. In the two years during which 1728 I have held office as Minister of State I have never heard such expressions of confidence in the future. I went to my own city to advocate the development of industry and marketing in Northern Ireland, and I came back greatly encouraged. That augurs well for the Development Agency, which can play a crucial and vital part in helping to develop the Northern Ireland economy. I wish the Agency well in the tasks ahead and have pleasure in commending the Order to the House for approval.
§ 10.44 p.m.
§ Mr. Airey Neave (Abingdon)
I wish to join in the tributes paid by the Minister of State to the Northern Ireland Finance Corporation, which was established in 1972. We are pleased to hear of the appointment of Mr. Kenneth Cork, the former Chairman of the Corporation, as Chairman of the new Agency. I was also pleased to hear what the Minister said about the meeting in Manchester. It is good news, which I hope will encourage the people of Northern Ireland.
The Opposition do not oppose the Order, but I think the right hon. Gentleman would agree that we would be fooling ourselves to think that by setting up the Agency we shall solve the economic problems of Northern Ireland. We are glad to hear that the right hon. Gentleman thinks the corner has been turned for the economy, and we welcome that, but he will agree that the Government will need the resources as well as an agency. The question occurs to us whether increased intervention will help industry in the Province any more than it has done recently on the mainland.
The right hon. Gentleman acknowledged that the private sector is essential to the development of industry in Northern Ireland. There may be some doubts in the business world about the functions of the agency. The Paymaster-General, on the Second Reading of the Industry Bill, to which the Agency is related, said thatAny idea…that Whitehall can manage British industry, that it can take its investment decisions, its marketing decisions, its research and development decisions, would be an illusion."—[Official Report, 18th February 1975; Vol. 886, c. 1135.]Very similar language was used by the present Secretary of State for Northern Ireland in column 181 of the Official Report of 5th June 1972 in the debate 1729 on the Order setting up the Northern Ireland Finance Corporation, which I have mentioned.
On the other hand, everyone will recognise the special conditions in Northern Ireland, and, above all, the need to stem the rising tide of unemployment. Naturally, we hope that the promotion of industrial efficiency, described in the Order as one of the functions of the Agency, means encouragement to the private sector. Unless it does, we need not expect improvement in the unemployment figures.
I have already referred to the debate on the Northern Ireland Finance Corporation in June 1972. The object of that Corporation was a special measure designed to deal with the industrial and investment problems brought on by the terrorist situation in Northern Ireland, as the right hon. Gentleman said. These problems had been investigated by the Cairncross Committee, which reported thatthe cumulative effect of civil unrest on the Northern Ireland economy justifies its treatment as a special case".In the private sector the objective of the Corporation has been outlined as beingto maintain as much as possible the existing economic fabric of the Province against the day when it will be possible to move forward again.I emphasise those words, because we have to look at the widened powers which the right hon. Gentleman mentioned.
The review body, referring to the NIFC, stated:We see little to be gained by inviting the Government to become directly involved on its own account in the founding and running of new industrial enterprises.It is at this point that I express anxiety about the aims of the Government and their real purpose in terminating the functions of the Finance Corporation under paragraph 14 of the Order, because the Order provides for the Agency to have very much increased powers, much more subject to Government control—for one main reason as it appears to us. The Government want to make industrial policy in Northern Ireland conform to overall United Kingdom policy, and the purpose of reshaping the Northern Ireland Finance Corporation is to bring 1730 it into line with the present policy for the United Kingdom as a whole. I think the right hon. Gentleman acknowledged that that is so.
I ask the right hon. Gentleman to tell the House what the relationship will be between the agency and the NEB. This is not clear from the debates that we have had in the House on the Welsh Development Agency and on the Scottish Development Agency.
The Industry Act 1975 removed safeguards from the Conservative Government's Act of 1972, to which the right hon. Gentleman has referred. One of these safeguards was that the Secretary of State had to be satisfied that assistance could not be given in any way other than by the acquisition of shares. He could not acquire more than 50 per cent. of the equity capital, but the Government were obliged to dispose of these shares as soon as possible—that is, as soon as the firm was viable. Where is that safeguard in the Order?
The current policy of Her Majesty's Government seems to be directed as much towards enlarging Government involvement in industry for its own sake as to dealing with specific economic problems. I agree that Northern Ireland is a special case, and we realise that some of these power will be required, but they need to be examined. Government stakes in industry are much more indefinite than they were in the 1972 Act. In this Order one has only to look at the articles relating to investment and acquisition to see the political purposes of the operation.
How far will the setting up of the Agency help to reduce costs to industry rather than increase them? At present the estimated average capital cost for creating a job in Northern Ireland is £6,265. Will the Agency proposals reduce or increase that? Is there not the possibility of heavy burdens on the taxpayer arising from the activities of the Agency in acquiring, as hon. Members will see if they read the Order, securities, plant, machinery and equipment? That may well be expensive for the taxpayer.
We must not forget that the industry of Northern Ireland is dependent on the overall health of the United Kingdom economy and that Northern Ireland is 1731 dependent especially on the private sector of the economy. On the mainland, the Government suppression of industrial enterprise and profitability in the private sector has some relation to the shortage of investment in Northern Ireland. I acknowledge that the right hon. Gentleman has striven hard to put that right, but the overall policy has had the same effect as in the United Kingdom.
I noticed on the tape tonight that the Patronage Secretary said to the British Leather Federation "There is no future unless private enterprise is given all help to do a first-class job." We entirely agree with him, and we welcome what he has to say.
As to the question of investment, because of the international recession I know that the task of getting investment for Northern Ireland from Germany and the United States has been harder and that the overseas investment boom of the 1950s and 1960s is unlikely to be repeated for some time, although I noticed that the Taioseach, Mr. Cosgrave, has had some success in America with regard to the Republic of Ireland. I hope that the right hon. Gentleman's efforts will also meet with success.
The problem is a United Kingdom and Northern Ireland one and indigenous industries need to be developed. Will the Agency be concentrating on areas where bodies such as the Local Enterprise Development Unit and Enterprise Ulster operate, and what will be its relationship with these bodies? Will there not be an overlap? Is there not a danger of too many bodies operating in this field? Will not this danger be increased by removing the Department of Commerce representatives from the board of the new Agency?
The House is entitled to know a little about the accountability of the Agency here. This becomes increasingly important under direct rule since the dissolution of the Convention and in view of the role that this House has to play in the scrutiny procedure.
The Agency will to a large extent be under the thumb of the Department, which does not appear to require the consent of Parliament, except, I presume, to increase the loan limit under paragraph 10 of the Order. The head of the 1732 Department has virtual control over the Agency's functions. I should like to hear to what extent he will be accountable to this House, because it is a matter of considerable importance, particularly now that we are debating the future relationship of this House to the problem of Northern Ireland.
§ Mr. Orme
Perhaps I may make a technical point which will clear up the query about public accountability. The accounts of the Agency will be examined by the Comptroller and Auditor General. The accounting officer of the Department of Commerce will be accountable to the Public Accounts Commitee. So there is adequate public scrutiny of both.
§ Mr. Neave
I am grateful to the right hon. Gentleman for answering my point. Whenever a new agency of this sort is set up it is right to raise the question of accountability. The present Secretary of State for Northern Ireland, when in Opposition, questioned the extent of powers being given to the Northern Ireland Finance Corporation on the Second Reading of that Bill. He recognised that it was putting great power into the Corporation's hands. We are a little afraid about a virtual carte blanche being handed to the Agency. The guidelines show some recognition of this point and the need for some kind of control over what might be described as a State extension. After all, the Government already have considerable power to involve themselves in the Northern Ireland economy, and it is surprising that they should think the existing powers inadequate.
I should like to know about the position of individual manufacturing firms because I know that the right hon. Gentleman has had a lot to do with that. In a Written Answer to one of my hon. Friends on 13th March 1975 he said that 10 manufacturing firms employing over 8,000 people were State-controlled. Apart from the obvious position of Harland and Wolff with 100 per cent. control, one assumes that the number is now greater. However, we must seek to stimulate local enterprise and initiative, and I should like to know whether the Minister of State has additional figures to those in the Written Answer.
1733 We accept, of course, the special problems here, particularly in view of the terrorist campaign, which justifies special assistance. A deterioration of the economic situation in Northern Ireland might not only cause social hardship but further undermine attempts to restore law and order. Although I have expressed doubts and raised questions, we shall not oppose the Order.
§ 10.58 p.m.
§ Mr. Robert J. Bradford (Belfast, South)
I should like to underline three areas of concern by commenting upon and endeavouring to elicit information about, first, the underlying philosophy which gives rise to the Agency, second, the structure of the Agency and, third, its functions. Perhaps I may be permitted to introduce a prefatory statement that it will come as an immense relief and source of encouragement to the work force at Harland and Wolff and Short Brothers and Harland to know that the influence of the Order will not extend to those concerns.
Very few people will disagree that industry throughout the Kingdom, but certainly in Northern Ireland, from time to time needs a financial boost whether from private capital assets or from interim Government assistance. Few in Ulster, however, would wish to see nationalisation introduced by the back door. If, therefore, the underlying philosophy of the Agency is interim assistance in the hope of future viability, or to maintain employment until a profitable alternative is found, our concern is somewhat reduced. But if it is clear that the direction is ultimate and absolute control of industry, and not temporary involvement, there is much reason for concern when we bear in mind some of the activities of the Finance Corporation, which to some extent was the forerunner of this Agency. It was the impression in the minds of many leading industrialists in Northern Ireland that members of the board who were placed there by the Corporation had the interests of the Corporation at heart more than the future prospects of the company.
No one could reasonably object to Government surveillance when public money is being applied, but much fear will be removed if there is a commitment by the Government to divest themselves 1734 of profitable industries at the earliest possible moment.
§ Mr. Orme
It is not a question of nationalisation for nationalisation's sake. I am concerned about the economy. One may have one's own philosophy about the situation, but all that I am concerned about is creating jobs. Having spent perhaps tens of millions of pounds creating viable industry that the private sector cannot produce, it would be criminal to hand it over to people who at the initial stage were not able to create that industry. We are not going to take from private industry. We are going to provide what private industry cannot provide.
§ Mr. Bradford
If a firm requires interim financial assistance and the Government provide that, there is no reason for the Government maintaining a holding of equity if the firm can proceed from a point in time as a viable concern. That is the simple point that I have tried to make. There should, therefore, be a clear statement that it is not the intention of the Agency to buy into the profitable companies, as it were, or to try to dominate the life of profitable companies.
This approach of realistic assistance for realistic ventures would create a respect for the new Agency which was not enjoyed by its forerunner. I shall come later to my reasons for stating that. There should be an obligation, as it were, on the Agency always to be solvent, in the sense that its money is used so wisely that it should be able to retrieve the loans as easily as possible. This will require skill, insight and discriminatory judgment. However, all those characteristics will soon emerge when it is established that this House will have to agree to its assessments of situations and that final accountability lies here.
I come, I hope naturally, to the issue of the personnel of the Agency and its structure. My preference is for the minimum rather than the optimum number. However, it is vital that there should be proven industrialists and people of real commercial ability and talent involved, plus, as we would expect, a specialist in the rather hazy world of high finance. 1735 There is little place in Ulster for persons with grandiose titles and qualifications who often cannot really appreciate the peculiar needs of Northern Ireland and are very often not in a position to apply themselves. There has been in the past a remoteness in both thought and action concerning some of the personnel of the forerunner of this Agency.
§ Mr. Orme
I should like to clear up this point at this stage. The appointments of the nine members, including the chairman and chief executive, who will be on the board—it will be quite a small board—will consist overwhelmingly of Northern Ireland people. They will be representative of industry and with practical experience. They will not be there as standard bearers, whether it be for the trade union movement or the manufacturing or employing side of industry. They will be there because of their ability. It will be much more directed to Northern Ireland than previously. One of the reasons for excluding the Departments of Commerce and Finance at this time is that we felt that these were not jobs for civil servants. I took that decision myself. I have appointed people with practical industrial experience. These are people who can get the job done.
§ Mr. Bradford
That information will be received warmly and happily in the Province.
I turn to the functions of the Agency. Ulster must cease to be an area of temporary expansion for multinationals and become a base for indigenous industry. Of course, we want to share in the commercial and industrial life of the Kingdom as a whole. It could be argued that the terms of the economic union need to be re-defined so that we can have a greater share in it, but every facet of the United Kingdom industry should be relevant. Even if we did have this total economic parity, it would not avert a contraction in time of recession. The Agency must immediately address itself to the need for indigenous industry.
We welcome the comments which have been made about the marketing advice to be offered to industry. That is needed. Today I spoke to a leading industrialist who was concerned about this operation. Like many of his friends, 1736 he will be encouraged by the Minister's words today.
The Agency must not be guilty of creating unfair competition. The Northern Ireland Finance Corporation did not avoid that trap. Let us take the case of Ben Sherman. I do not want to waste time discussing individual factories, but the fact is that the Corporation voted 500,000 shares at £1.50 each and these were written down at 50p.
The Agency will not work if that type of activity is the order of the day. Not only will it be a drain on resources but it will create problems for similar industries. We must safeguard existing entrepreneurs. Where there is a need for a company to invest and the need for a loan, a lower rate of interest might be considered. The rate of interest payable on loans has been a great problem for some industries in Northern Ireland.
The Agency should be not a drip-feed for dying firms and industry in Northern Ireland but a stimulus which could make successful a company which is ambling. That would be of eternal benefit to Northern Ireland.
§ 11.9 p.m.
§ Mr. John Watkinson (Gloucestershire, West)
I welcome the Order. There are three basic factors affecting the Northern Ireland economy—the recession, terrorism and the peripheral status of Northern Ireland in relation to the British economy. The last factor, although it has not been mentioned tonight, was an argument in the Common Market debate. It became known as the "golden triangle" argument in the argument that economic resources economic welfare and economic development tended to concentrate in certain areas. It was said that there was a danger that if Great Britain joined the Common Market the country would have to endure the sort of economic effects that Northern Ireland and Scotland had had to endure.
The Northern Ireland situation is a historic fact. It is not only over the past few years that Northern Ireland has suffered a decline. It has been long term, because of its being on the periphery of the British economy. An hon. Member shakes his head. He may care to consider the Scottish economy in the same light, although admittedly it now has fine prospects because of the oil boom. Because 1737 of the historical decline, I particularly welcome this Government initiative to stimulate and improve industry in Northern Ireland.
The hon. Member for Belfast, South (Mr. Bradford) spoke of fears of creeping nationalisation. He does not need to worry too much in view of the amount the Government have allotted to the Agency, which is only £50 million. By whatever run-down standards one uses, that will not take in a great deal of industry. I hope that my right hon. Friend the Minister of State may be able to squeeze a little more money out of the Treasury, because it could be very usefully employed in Northern Ireland.
My right hon. Friend mentioned the guidelines for funds which could be used by the Agency. He said that the fundamental principle would be that of viability. I wondered whether the same principles would apply in Northern Ireland as apply in this country. I serve on the Public Accounts Committee, which has dealt with the Department of Industry and the criteria whereby aid can be given to industry. It is stated quite clearly in those criteria—but I did not hear it from my right hon. Friend—that there may well be overriding social reasons for providing investment where the Department may not see a viable project.
§ Mr. Orme
That is quite correct. In those circumstances the Minister would give a directive to the Agency, and would also therefore be responsible for the finance expended. The Minister would take into account the social and political considerations. That would be the decisive factor. It would remove the commercial aspects to which the Agency is now tied.
§ Mr. Watkinson
I am grateful to my right hon. Friend for that intervention.
The hon. Member for Belfast, South referred to rates of interest. Under the Industry Act favourable rates of interest may be charged to a firm in this country in given circumstances. I hope that that will apply in Northern Ireland as well, because it is clearly needed there.
I repeat my welcome for the proposal, which I see as a positive attempt by the Government to break into the recessionary spiral in Northern Ireland. We should see it as an attempt to create jobs in Northern 1738 Ireland, and therefore should all give it a good welcome.
§ 11.15 p.m.
Mr. Wm, Ross (Londonderry)
As the hon. Member for Gloucestershire, West (Mr. Watkinson) referred to me shaking my head, I should point out that traditionally industry arises where its resources exist. The hon. Gentleman made that point when he referred to Scotland's prosperity deriving from the oil which has been found off the Scottish coast. That is an extremely important resource in this day and age.
In general, I welcome the setting up of this Agency for the purposes set out in the Order:
These are laudable objectives. I welcome them and the intention behind them. However, I am sure that the Minister of State will be among the first to recognise that the Government's intentions, and the success of those intentions, are not necessarily the same thing. We have a saying in Northern Ireland—that the road to hell is paved with good intentions. Speaking of Regna in my constituency, the road to liquidation is paved with £3 million. That is not a matter which either I or my constituents welcome.
- "(a) the development or assistance of the economy;
- (b) the promotion of industrial efficiency;
- (c) the provision, maintenance or safe guarding of employment."
There are other ways of helping industry. I hope the Minister will consider them. For example, taxation rates in the statement which the Chancellor of the Exchequer will be making next week could have a great effect on the viability or otherwise of industry in the coming year.
Efforts made by one Department can be undermined by efforts in a different direction made by another Department. Indeed, the hon. Member for Gloucestershire, West touched on this matter when he referred to the danger of the Department of Commerce and the Agency working at cross-purposes to one another.
I draw particular attention to the example of the Minister of Agriculture's statement today which alters the beef support arrangements for Northern Ireland, leaving it apart from the rest of the United Kingdom and affecting the entire meat industry there.
1739 Looking at page 10, we see that isthe investment or financial assistance is likely to provide, maintain or safeguard employment in any part of Northern Ireland".I am tempted to wonder, in view of the announcement made today, what the Agency will be able to do in that kind of situation. The change announced today removes competition and creates a monopoly. Such a monopoly is traditional. However, it means hardship and unemployment in an ever-widening circle. Will the Agency be prepared to step in to help to correct any difficulties which may be caused by the action of another Department? That is an important aspect of the problem for the Government. I hope that the Minister will be able to clear that up.
We see that plant and machinery are to be made available. The Minister will be aware that the farmers' union is about to launch a new meat plant. Will the Agency help there? Is it prepared to help the industry to stand on its own feet? That would be cheaper than selling meat into intervention, and it is also more socially acceptable.
The Minister mentioned social considerations. Perhaps he will spell out more clearly what those social considerations are. Do they cover the employment of the small hill farmer as well as the factory worker? Many of my constituents are worried about that matter.
Any upset in the pattern of farming and, indeed, of beef support leads to social upsets. There is a great deal of concern about the package announced today. Social upsets in Northern Ireland tend to become dangerous affairs. There is always the danger that irresponsible people will jump on the bandwagon created by the Government's foolishness.
I hope that the Minister will bear in mind the unfortunate results that the action of one section of the Government can have on the viability of the policy of another section of the Government. We have the problem of action not only by one section of our own Government but by other Governments and by the EEC. I regret that the Minister of Agriculture was unable to see me regarding this problem in the last 10 days. This is a matter which is clearly within his sphere of responsibility. He, and he alone, is the person who deals with EEC 1740 matters. Perhaps this is a matter which could be sorted out in terms of the green pound.
It is further complicated by the border difficulties and the failure of the Southern Government to enforce their laws, rules and regulations. All these matters affecting industrial efficiency do a great deal of harm to employment prospects in Northern Ireland, not only in farming but in the meat industry generally. The Meat Industry Employment Scheme was drawn up to get over this problem on the border. Perhaps the Minister will be good enough to say precisely what the Government intend to do about that.
These difficulties all come about because of a failure to treat international boundaries as international boundaries and because of a great failure on the part of the Government of the United Kingdom to see to it that industry in Northern Ireland is protected from the activities of other Governments. The plain truth is that if this Agency is to succeed it must be backed by the Government, and I hope that the Minister will ensure that this matter is looked at very closely by his right hon. and hon. Friends.
§ 11.22 p.m.
§ Mr. Kevin McNamara (Kingston upon Hull, Central)
I am surprised that the hon. Member for Londonderry (Mr. Ross) did not end up with a plea that the Agency should man the border roads. He managed to cover practically everything else in his diatribe against the Government.
I am concerned about the degree of welcome which has been envisaged for the Order. If this is a welcome, I hate to think what a polite refusal would be. But what it really amounts to, of course, is a marked reluctance to say "No", because the Opposition understand the importance and significance of the Order for Northern Ireland.
I regret the statement of the hon. Member for Belfast, South (Mr. Bradford) about Ben Sherman, bearing in mind that 400 jobs were saved by the Government. I am as keen for the jobs to be saved there as the Opposition are for the jobs which have been saved by Government action in Harland and Wolff or in any other industry in Northern Ireland or, for that matter, on the mainland.
1741 I am concerned not only about the obvious problems arising from terrorists in both communities and the effect that they have on unemployment in Northern Ireland. More basically, I am concerned about the unemployment of anyone, about any home without a wage earner and about any family having to live on social security rather than having the dignity of wages coming into the house. Therefore, whether it be Ben Sherman, Harland and Wolff or anywhere else, I apply the same criteria in deciding whether the Government should try to give assistance.
I welcome the appointments of the chairman and the two vice-chairmen which my right hon. Friend announced today. The persons appointed have given considerable service already to Northern Ireland and have done a great deal to try to help the country of the Six Counties to prosper in most difficult circumstances. Their further example of public service is to be welcomed considerably.
However, there are a number of matters which I am concerned about and a number of questions that I should like to ask in welcoming the Order. I think the hon. Member for Londonderry was wrong when he said that the Agency and the Department of Commerce might be working in contrary directions. My right hon. Friend was careful to say that he did not want an overlap, which is not necessarily the same thing. I would like my right hon. Friend to define these fields more clearly and directly, if it is possible. For example, when he talks about licences and patents of goods to be manufactured in Northern Ireland, are they patents and licences from abroad? Will the Agency or the Department of Commerce deal with them? My right hon. Friend said that the Department of Commerce was dealing with all industry coming into the Six Counties. Did he mean on a foreign basis or on a United Kingdom and Northern Ireland basis?
My right hon. Friend, and hon. Members opposite, also spoke of the question of overlapping concerning such things as Enterprise Ulster, the local industry enterprises and similar schemes. Are any of these matters going to be subsumed within the new Agency, or will they remain in existence continuously? It 1742 could be that matters which have grown up in an ad hoc manner could create their own continuity. As we all know, committees can be formed which become self-perpetuating. One may have a plethora of organisations and individuals but often little is achieved. I should like to know what the relationship between these organisations will be. In the past they have been put there to good purpose, or have arisen in times of difficulty. However, with the creation of new agencies, and this new Agency in particular, they might have outrun their useful life.
Another matter of tremendous importance—it has been mentioned from both sides of the House—is that one has to have within Northern Ireland the creation of indigenous industries—a large number of small indigenous industries—rather than one or two large industries. It is most important that the industrial base of the Six Counties should be as wide as possible.
One of the lessons we have learned on this side of the Irish Sea in large towns dependant either on motors or heavy engineering of a particular type or on textiles is that a recession in one of those industries, a change in world demand, or even fashion, can create a tremendous problem. This could be cushioned, and could almost be avoided, if one had a wider industrial base than has existed in the past. Therefore, what I have argued for my own area of Humberside is equally applicable to the Six Counties—the need not only for the eye-catching multinational company but for the small firms which can bring prosperity, skill and technical expertise and create the cushion which is so important.
As in my area, the multinational company can create unemployment overnight. In my area, 2,000 jobs have been lost in that way. That has been repeated in Northern Ireland when multinationals have cut down on their investment and when a large firm in the United Kingdom has decided to close. Some are State-owned, some are private. Politicians and civil servants dangle carrots to get firms to areas which may still be developing their internal economies. Hon. Members opposite did not care for the reference earlier to the "golden triangle", but it is true that in a recession these firms pull back to the centre.
1743 In Northern Ireland, companies from England, France, Germany, Holland, America or Canada will be in exactly that position. We have to create a local base using the local raw material of men and women and their native skills.
Fifty million pounds sounds a lot of money in relation to the £6,000 that it costs to create a job in Northern Ireland. We voted £10 million last week under Section 8 of the Industry Act for a new chemical complex for BP just outside my constituency at Salt End. Altogether it will cost £50 million. But, after all the temporary benefits of that money, in the end only 140 permanent jobs will be created. That is a lot of money for a few jobs. We must be careful that the use of carrots to attract employers to development areas is not abused.
What does the money allocated to Northern Ireland work out at per head? What are the similar sums granted to the Scottish and Welsh Development Agencies?
§ Mr. Orme
This is an important point. We are not talking about a fixed sum of money which must be spent. With Treasury approval, the sum of £50 million could be increased, so long as that could be justified in the existing economic situation. It compares favourably with both the Scottish and the Welsh Development Agencies. My hon. Friend will recognise that the environmental expenditure on Scotland and Wales has no counterpart in Northern Ireland—clearing up the industrial dereliction of the ninteenth century. So in industrial terms Northern Ireland will be no worse off.
§ 11.35 p.m.
§ Mr. J. Enoch Powell (Down, South)
I want first to make a formal observation about the Order and then two political remarks before coming to the meat of the Order. The formal point is that we have here an Order which is conceived in terms of the 1973 constitution. I shall not labour the point, but we have had a different perspective in the last few weeks from that which we had when we considered previous Orders.
There is an increasing absurdity in legislating for Northern Ireland in terms of the institutions of the 1973 constitution without, as it so happens, the application provisions which translate it all into 1744 reality even being in the Order itself. In order to translate terms such as "Northern Ireland Assembly" and "Head of Department" into what they will mean in practice, one has to look at the relevant provisions of the 1974 Act. I know that the right hon. Gentleman and the Government take this point. I just note that we have to grow out of the period in which we have unrealistic terminology in which we continue to legislate for Northern Ireland.
I come now to my two political points. The Order is clearly closely linked with the Industry Act 1975. As a matter of fact the Industry Act 1975 specifically extends to Northern Ireland, and I shall come to that point later. It would be broadly true to say that by the Order we are constructing an administrative layout in Northern Ireland which is not a mirror image of that created in Great Britain but which corresponds very closely to it. Indeed, some of the articles of the Order are word for word with the provisions of the 1975 Act, and I amused myself for a little time by jotting down the 1975 Act's sections against the Order's corresponding articles.
The 1975 Act, like the organisation it set up, was a Socialist Act of a Socialist Government. It is certainly not the object of my hon. Friends and myself to say that we wish to contract out of the policies of the United Kingdom as a whole, good or bad, Socialist or capitalist. What we want to do is to apply our part in forming that legislation and these policies, criticising them and altering them, as do the representatives of other parts of the Kingdom, but accepting them as they emerge from Parliament altered, amended or developed to apply to Northern Ireland as a whole.
So we want to be integrated into the process of legislation, and I hope that as time goes on we shall play an earlier part than we do now in the formation of United Kingdom legislation which in due course is reflected into Northern Ireland. While, except for the time, one could have a debate tonight on the ideology, I leave that ideology on one side. I accept the ideology as implicit in the framework in which we shall be working, at any rate for some time to come.
My other political observation derives from what the Minister said about his 1745 experience in Manchester, about which he told me personally earlier in the day. Let me say that there was something infectious in the right hon. Gentleman's delight in the experience.
What is instructive about it politically is that it has come just at the time when so many people, including some rather foolish people in Northern Ireland, are seeking to pretend that we are entering a period of increased instability and uncertainty. The reverse is the case. Nothing is for ever. In recent weeks, however, there has been a gain in stability. There has been a gain, humanly speaking, in certainty. I for one was delighted, as was the right hon. Gentleman, to find a quick reaction on the part of business people whose duty it is to detect stability or instability. There was a quick reaction to the change in conditions and prospects for Northern Ireland. That is something that I do not want to see people in Northern Ireland or anywhere else blacking, if I may use a trade union term not quite accurately.
From those political observations I come to the contents of the Order. As I understand the structure—it is quite an interesting one—we have on the one hand parliamentary operations of the Department of Commerce, with its extended powers and scope, and on the other hand we have the Development Agency. If we must use one word to characterise them, I should say that the attitude of the Department is, not surprisingly, departmental, whereas the objective of the Agency is to be managerial.
The functions of the Department are much more direct than those of the Agency. In particular they are directed to the problems of unemployment—namely, the prevention of unemployment and the maintenance and the increase of employment. The instruments which the Department of Commerce uses, although they partly overlap those of the Agency in the provision of capital, include the use of the grant. I might add that the grant is the typical instrument that is used by the Department.
When we turn to the Agency, we find ourselves quite deliberately in a different atmosphere. I noted that the right hon. Gentleman said that we are looking for a commercial attitude. He qualified that 1746 statement somewhat by saying that the Agency, when deliberately operating with Government capital, will not be obliged to apply the same harsh criteria that private capital has to apply so as not to be lost. At any rate, commercial viability is intended to be the touchstone. Investment in one form or another is intended to be the characteristic instrument of the Agency in doing its work. As the right hon. Gentleman and others have realised, the relationship of the boundary line between the two bodies is extremely important. I hope that there will still be time for the right hon. Gentleman to say a little more about that when he replies.
First, I hope that the right hon. Gentleman will make it clear where the National Enterprise Board, under the 1975 Act, comes into this operation, if it comes into it at all. If the 1975 Act extends to Northern Ireland, presumably the NEB relates to Northern Ireland. I hope that the right hon. Gentleman will explain where the NEB comes into the pattern which is established by the Order. I hope that he will deal briefly with some of the overlaps between the Department and the Agency. There are at least two distinctive overlaps. For example, the Department can use the Agency as it is an agent for doing its statutory work.
Finally, I ask the right hon. Gentleman to say a little more about the circumstances in which he envisages that the Department will go on acting directly, and the circumstances in which it will transfer to the Agency the actual work of implementing its statutory functions.
In what class of case will the Development Agency be an instrument of choice by the Department for doing its work under the 1966 Act? A second overlap is that the Order gives the Department the right to transfer public property that it holds to the new Agency. Incidentally, on reading the Order it appears that that ceases to be public property in the technical sense when it is transferred to the Agency. I deduce this by marrying Articles 8 and 18 and because of what is said in Article 3(9):The Agency shall not be regarded as the servant or agent of the Crown…and the Agency's property shall not be regarded as the property of, or property held on behalf of, the Crown.I hope that the Minister will be able to indicate the circumstances in which he 1747 expects the Department to make transfers of property, assets or shares currently in its possession to the Agency.
The hon. Member for Abingdon (Mr. Neave) was anxious, as am I, about surveillance. Of course, the operations of the Department are under normal surveillance by the Public Accounts Committee and so on and the Agency's operations and accounts will be handled by the Exchequer and the Comptroller and Auditor General, but this is not sufficient. What is being done, the way in which it is being done and the relationship between the Department and the Agency are so important that we should consider a continuing scrutiny of the operation.
My hon. Friend the Member for Belfast, South (Mr. Bradford) was right to remind the House that the history of the Agency's predecessors—the Finance Corporation—has not been, to put it mildly, unchequered. We should like more opportunity of continual contact with, and surveillance of, what is done under the Order and within the framework of the Bill. This leads me back to the subject—I know this is King Charles' head, but we must have it—of a continuing committee, unlike anything we have now, to maintain a more intimate and investigatory contact with the proceedings of government and administration in Northern Ireland.
I have tried to abbreviate my remarks to enable the Minister to deal with some of the major points made in the debate.
§ 11.48 p.m.
§ Mr. Orme
I make no complaint about any of the contributions to the debate. We are short of time, but I shall endeavour to answer as many of the major points as I can. I shall write to hon. Members—the letters can be made public—with replies to other issues raised in the debate.
When I said that I hoped things were improving, I did not mean that the corner had been turned completely. However, I see strands in the economy of Northern Ireland which give me confidence, and that is the basis for our future development.
Many hon. Members have raised the question of the relationship between the 1748 NEB and the Agency. The NEB will operate in Northern Ireland because it covers the whole United Kingdom and there may be instances where planning agreements with large firms may be implemented by the Board. But the Agency will be independent and will operate without needing the approval of the Board. Obviously there will be close liaison, and I see no conflict between the two bodies. A similar situation will exist in respect of the Scottish and Welsh Development Agencies.
I was asked about the cost of creating jobs in Northern Ireland. It costs a great deal of money to create jobs, but I cannot put a figure on it. My hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara) referred to the amount of money required for that purpose. Our aim is to create jobs, and the Agency will concentrate on doing that.
Questions were raised about the transfer of property and shares fom the Department of Commerce to NIDA. The hon. Member for Belfast, South (Mr. Bradford) welcomed the fact that neither the shipyard nor Short Bros. and Harland was to be placed under the control of the Agency. They will remain in the Department of Commerce under direct ministerial control, which is a more appropriate arrangement. Where applicable, shares and property will be transferred to the Agency, which will manage them as Government shareholders.
Reference was made to the relationship between LEDU, Enterprise Ulster and the Agency. LEDU is concerned with small firms, Enterprise Ulster with direct labour schemes, and the Agency with manufacturinng industry. I see no conflict there. There might in futurre be closer co-operation between, for example, LEDU and the Agency, but we regard the three organisations as being in separate compartments.
I come to the philosophical point raised by the hon. Member for Abingdon (Mr. Neave) and the right hon. Member for Down, South (Mr. Powell) about the division of powers between the Department of Commerce and NIDA. My right hon. Friend the Prime Minister coined the phrase "creative tension" to describe the relationship between the Department of Economic Affairs and the 1749 Treasury. There is bound to be some overlapping, and there will have to be an intelligent approach by the Department of Commerce and NIDA. The Department of Commerce will have responsibility for grants. I am not prepared to hand over that responsibility to NIDA. Arrangements will be made to ensure that when the Agency wishes to help a prospective developer it will be able to present a package which includes provision for grants. The grants will be provided by the Department of Commerce and application for grants will have to be made to the Department of Commerce.
If the Agency wishes to purchase licences and patents from outside Northern Ireland for articles to be manufactured in Northern Ireland, it will be able to do so for the purpose of creating new industry, but investment will still be the responsibility of the Department of Commerce.
Obviously, political points arise in this situation. The right hon. Member for Down, South quoted the 1975 Act. I could quote the 1972 Act. It is of great assistance, certainly in the case of Sections 7 and 8, in protecting employment, not only in Northern Ireland but in other parts of the United Kingdom.
I would not wish to compete with the hon. Member for Londonderry (Mr. Ross) in his great expertise in agriculture, but he would, I am sure, be the first to recognise that in a city like Deny he does not represent simply hill fanners. The hon. Member gives the House of Commons the impression that very little else exists. I have seen a lot of houses and industry in Deny, and he might bear that in mind. I take note, however, of his points concerning the meat industry. I have been involved in matters concerning the meat plant. In this sort of 1750 development, where an important industry like agriculture is involved, the Development Agency could examine the possibilities. But obviously it could come into conflict with other Departments.
As to the question of multinationals, how the Government will use the investment and whether there might be abuse, we need all types of investment in Northern Ireland. We have a major company about to develop a plant which will provide many hundreds of jobs in the Londonderry area. I was talking to the chairman of that company a few nights ago. I asked him why the company was able to expand and to continue its operations at a time when we so desperately need jobs. His reply was "We are satisfied with the workpeople of Northern Ireland and also with the type of Government grants and facilities available."
Private industry needs the Government just as much as the Government need a private sector, and the one cannot exist in this type of mixed economy today without the other. While we have that type of development, I say also to the House that we need industries which are indigenous to Northern Ireland itself to take away some of the strains that we have seen with the closure of firms recently, whether publicly—or privately-owned, in Northern Ireland. To develop that growth we need, in my opinion, the development of such an Agency.
§ It being one and a half hours after the commencement of proceedings of the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business).
§ Question agreed to.
That the Industries Development (Northern Ireland) Order 1976, a draft of which was laid before this House on 22nd March, be approved.