HC Deb 16 December 1977 vol 941 cc1214-26

3.8 p.m.

Mr. Eric Ogden (Liverpool, West Derby)

My purpose is to ask my hon. Friend the Under-Secretary of State for Industry for information concerning the activities of the National Enterprise Board in the North-West of England, with particular emphasis on the creation of employment on Merseyside. I emphasise that this is not the wider debate about total Government aid to the area but the comparatively narrow debate about how we can use the NEB to support and create employment on Merseyside.

My inquiries will be on two aspects of the NEB's activities in the North-West. The first aspect concerns the opportunities created by and for the new North-West Regional Board of the NEB. Secondly, I shall ask for information on the Government's actions and progress on the recommendations of the NEB in its special report for the North-East and North-West of June 1977.

I trust that I shall not embarrass my hon. Friend if I say that I want to thank him for being present to answer the debate at what, I understand, are considerable personal inconveniences to himself. I understand—I think that the phrase is "from a reliable source"—that at 6 o'clock this morning my hon. Friend was watching the mail flow past in his constituency of Nuneaton. He was watching his constituents moving the Christmas mail. At 9 o'clock he went underground—not for the first time and not for the last—and spent three hours down a coal mine. My hon. Friend surfaced to come back to London specifically for this debate, and he will be back in Nuneaton again this evening. I think that he could have avoided this debate if he had chosen to do so. I am most grateful that he chose not to take that course, because, before he became a Minister, he gave his support to Merseyside and has continued that support since.

I have no need in this debate, or at any other time, to remind my hon. Friend of the industrial, economic and employment situation on Merseyside, because he knows it already. Indeed, he and his colleagues ought to take some credit for the investment and new opportunities which are coming along on Merseyside.

All too often we hear the bad side of investment and unemployment, but in recent months there has been major investment on Merseyside. I think that it will be useful to list some of that investment. On 18th November the Merseyside Development Office gave information about major investment in the Merseyside area.

Pilkington at St. Helens has invested £70 million for a new float glass plant. Tate and Lyle has invested £10 million for a factory development at Knowsley as part of its diversification plan. Rock-ware Glass has invested £10 million to increase warehousing and to develop glass container technology at St. Helens. Kodak at Kirkby has invested £8 million for the provision of new production facilities for synthetic chemicals.

Ford is investing £8 million to back new production targets at Halewood by spending £3 million immediately and a further £5 million over the next 12 months.

Unilever has an investment of £.6: million at Kirkby for buildings for processing, packing and freezing at Birds Eye Limited. Cadbury Typhoo is investing £5 million at its Moreton plant in the Wirral.

The Mersey Docks and Harbour Company is to invest £2 million following its announcement of a £5 million prat for 1976. Hughes and Ellison Limited is to invest £11 million on new works at Liverpool. Massey-Ferguson is to invest £750,000 at its Knowsley factory. Synthetic Resins Limited is to invest £500,000 on new warehousing and distribution facilities at Speke, Liverpool.

Those are only some of the investments that have been made on Merseyside, but they total £1221 million.

I wish that our successes were given as much publicity as our occasional failures. We have to live with the fact that Merseyside in general and Liverpool in particular are news. Events which take place in other areas, because they are not necessarily news, do not get the publicity that Merseyside attracts. Anything bad seems to be front page news, locally and nationally, and anything good all too often gets two column inches on the back pages.

The investment figures that I have given are proof that manufacturers have more faith in Merseyside than is sometimes assumed. Of course, we need more investment—lots more. We need not only the big ones, but the small ones. In this regard, the £500,000 investment by Synthetic Resins Limited is particularly significant.

I understand—I ask my hon. Friend to confirm this—that the new North-West Regional Board of the National Enterprise Board, whose membership was announced in Liverpool on Wednesday, will be able to initiate and to approve investment schemes up to £500,000 without constant reference back to London before making a decision. When North-West Members of Parliament met Mr. Leslie Murphy on Tuesday, that was how they understood the situation. I now ask my hon. Friend to confirm that and to tell us about any other ideas that he has on the rôle of the North-West Regional Board of the NEB.

In particular, I hope that my hon. Friend will encourage the NEB to give at least as much attention to service industries as it has given to manufacturing industries. We shall not solve the unemployment problem on Merseyside unless we help profitable, viable service industries as well as manufacturing industries.

I give two examples. The Royal Insurance Company, which has its headquarters on Merseyside, is a viable, profitable, major, first-class employer with great invisible export earnings, tremendous growth potential and an international reputation. Littlewoods, with its pools, mail order and general stores, is Liverpool-based and has Liverpool headquarters. It is a major employer and it is viable and profitable.

If any of these concerns were to install a computer they would have different Government aid and support from that of a manufacturing firm who put in a capstan lathe—if there are such things these days. The contrast between the service industries and manufacturing industries is considerable in this respect. They seem to receive much less Government interest and support than comparative manufacturing industries.

I ask my hon. Friend to appreciate the needs and opportunities of commercial services and to encourage the National Enterprise Board, locally and nationally, to do the same.

I turn to the NEB recommendations contained in the report of June 1977 entitled "Investment Potential in the North-East and North-West of England". This report was personally commissioned by the Prime Minister after the setbacks in the Plessey Telecommunications Centre in March 1977.

It is necessary to concentrate attention in this debate on the recommendations for the North-West, although the recommendations for the North-East would have support from the North-West. There are 15 recommendations. I shall not discuss them all. Some of them are for the North-East and Merseyside, some for the North-East and some for Merseyside. They are all worthy of support.

I shall concentrate on the major items. The first recommendation is: The Government should consider a widening of the differential in regional assistance which the Special Development Areas enjoy compared with other areas. There are already differences in aid. Development programmes are changing and progress is being made.

Recommendation No. 3 is: The NEB should intensify its efforts to stimulate the growth of smaller manufacturing companies in the Northern and North West Regions by providing finance for expansion and modernisation. This is one rôle for which the NEB is entirely suited.

Recommendation No. 5 is: The Government should devote a larger proportion of the resources available for advance factories to the provision of nursery factories in Merseyside and the North East. I like the phrase "nursery factories", because it gives an idea of something being started and being able to continue.

I shall take three recommendations from the North-East section which are also viable for the North-West and Merseyside. Recommendation No. 6 refers to the need to stimulate the tourist industry in the North-East, and it would be equally applicable to the North-West. Liverpool is a tourist centre for the people visiting the Lancashire fells, the Lake District and North Wales. It should not be neglected, particularly since we are at the hub of the best road and motorway network in the United Kingdom.

Recommendation No. 7 points to the opportunities for major offshore contracting companies to be helped and expanded. If that is viable for the North Sea, I hope that it is equally viable in the not-too-distant future for the Celtic Sea. Coastguard defence vessels could be manufactured on Merseyside. I urge the Minister to ask his hon. Friends not to forget Cammell Laird and Western Ship Repairers in that respect. We were hoping that one of the Polish ship orders would be placed on Merseyside.

The specific Merseyside proposals include recommendation No. 10 entitled. Measures of particular relevance to Merseyside. That recommendation is: To stimulate office employment on Merseyside special arrangements should be made between the Liverpool Corporation, a developer, and the Department of Industry to build a speculative office block in Liverpool to attract office employment from outside the Assisted Areas. This supports my pleas for help for services and commercial activities.

Recommendation No. 11 states: The measures already announced by the Government to provide resources for the inner areas of large cities should be used to stimulate the construction industry on Merseyside and the need for further measures of a similar nature should be kept under review. The Minister already knows of the South Dock scheme which is a pilot scheme and an important centre of focus.

There is a proposal for a new police headquarters in the recommendations for office development. I hope that the proposal will not exclude the provision of a sub-police station in my constituency. Mine is an urban area, although within it there are some large farms. It covers 20 square miles, with not a police station within it, and we want something on the ground where people need that support.

Recommendation No. 15 is The Department of Industry should initiate a study to identify industries which might be attracted to the port area of Merseyside. What developments have there been in this regard?

No one will deny that Merseyside has problems. But we have great achievements. We are part of the North-West, and we do not suggest in the slightest that we should solve our problems of industry and employment in isolation from the North-West or any other part of the United Kingdom. I am asking for information on the narrow question of the rôle of the National Enterprise Board in the North-West. We have received a tremendous amount of Government aid. That is on the record and is much appreciated. I want my hon. Friend to fill in the details and to tell us how he proposes to encourage the activities of the National Enterprise Board especially in the North-West and on Merseyside.

3.21 p.m.

The Under-Secretary of State for Industry (Mr. Les Huckfield)

I am grateful to my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) for his kind personal remarks, and I am grateful to him also for raising what consider to be an important topic even at this late stage before we adjourn for the recess, because he gives me the opportunity to offer some detailed replies to the points which he has so rightly raised on behalf of his constituents. I admire the way in which my hon. Friend has so assiduously made representations on behalf of his constituents both today and on earlier occasions.

Merseyside has traditionally suffered from high rates of unemployment, much higher than the national average. The main objective of the Government's regional policy is to reduce unemployment in areas such as Merseyside. It is designed to attract new industry and to strengthen local firms.

It was because of our concern for Merseyside that we designated it a special development area in August 1974. This means that firms setting up or expanding there qualify for all the regional assistance at the highest rates within Great Britain. In fact, Merseyside is among those places which are given the highest priority in the steering of new investment. I assure my hon. Friend of that. We estimate that Merseyside received some £302 million of regional financial assistance over the five years 1972–73 to 1976–77.

Before I touch upon the National Enterprise Board specifically, I shall refer to one or two other matters. My hon. Friend will know already that, under the Hardman decisions on the dispersal of Government work from London, announced by the Government in July 1974, the North-West Region will receive over 4,000 posts. In fact, it will do best among the English regions. The bulk of these dispersals—nearly 3,000 posts—will go to Merseyside. In addition, Mersey side is scheduled to receive another 2,500 or so Government jobs, through Government decisions on top of Hardman, consisting mainly of the Inland Revenue at Bootle and the Land Registry at North Wirral.

My hon. Friend referred to advance factories, and nursery factories in particular. I can tell him that the Government's advance factory programme has been given a new impetus on Merseyside in the past three years, with the building of nearly 1 million sq. ft. offering the potential for some 4,000 jobs. Much of this is in the inner city. Already factories have been let at Sandon Way and Birkenhead, for example, and more schemes are to follow at Grain Street and King Edward Street, as well as further afield at Knowsley, Speke Netherton, Bronborough and elsewhere.

I refer my hon. Friend also to the selective assistance which Merseyside has received. The Government's measures include various national schemes introduced under Section 8 of the Industry Act to promote investment in certain key sectors of industry and under the accelerated projects scheme and its successor, the selective investment scheme. Up to 14th October, offers of assistance totalling some £2 million had been made in respect of projects on Merseyside, estimated to cost £20 million.

Those are just a few examples of assistance which the Government have given to Merseyside. Of course, in company with my hon. Friend, I recognise that there is still much to be done. The Manpower Services Commission has introduced a wide range of measures with the Government designed specifically to alleviate the increased unemployment brought by the present economic recession. I refer to projects such as the job creation and work experience programmes, the youth employment subsidy, the job release scheme, the temporary employment subsidy and the small firms employment subsidy. Merseyside, in fact, has seen that these measures benefit some 35,000 persons, many of them young people.

If I may refer to the temporary employment subsidy figures by themselves, 14,000 workers in Merseyside have benefited. There is no doubt that without TES many more redundancies would by now have occurred.

Before I refer more specifically to the NEB's role, I want to say how pleased I was with the success of the recent conference in Liverpool on small firms in inner cities. I am sure that my hon. Friend recognised some of the conclusions which emanated from it. What I think it showed was a wide determination on the part of local industry to help in the revival of the inner city areas of Merseyside.

Turning to the NEB itself, I am sure my hon. Friend knows that under its guidelines, which have the force of law, the NEB has a well-defined responsibility towards areas of high unemployment, particularly in the North and North-West. But the NEB cannot create jobs out of nothing. It can invest in companies only where it sees the prospect of an adequate:return within a reasonable period.

My right hon. Friend the Secretary of State has discussed this regional responsibility several times with the NEB's new chairman, and I can assure the House and particularly my hon. Friend that the NEB is fully aware of the importance that the Government attach to it.

I turn now to the report to which my hon. Friend referred. He knows that that was a detailed examination of the problems of Merseyside made earlier this year at the Prime Minister's request in the context of the very disturbing Plessey factory closures on Merseyside and in the North-East. The NEB's report was published in June. A copy of it was placed in the Library. I am bound to say that almost all of its recommendations have been accepted and acted upon by those to whom they were addressed.

The report recommended, for example, that there should be a widening of the differential in regional selective financial assistance in favour of the special development areas. I am pleased to tell my hon. Friend that the Government have accepted this and have also increased the maximum rent-free period on Government factories to five years.

My hon. Friend will recognise that, also arising from the NEB Report, the Government have commissioned PA Management Consultants to identify types of businesses most likely to prosper close to the port of Liverpool. The consultants will want to consider how we might best attract these to the area. They started working in November and hope to report in the spring. Their emphasis will be particularly on creating jobs in inner Liverpool. This, of course, is perfectly consistent with the Government's policy to check the decline in many of our inner city areas.

In Liverpool, partnerships have been established between the Government and the relevant local authorities. I am again glad to tell my hon. Friend that a Bill to give inner city local authorities more power to assist industry had its First Reading on Wednesday. The Government's counselling service for small firms, my fellow Under-Secretary of State for Industry has already announced, following an initial pilot scheme, will be introduced to the whole of the North-West, including Merseyside, next February.

In addition to this, recent Government initiatives to help the inner cities will bring a substantial commitment of central Government resources to Merseyside over the next few years. Some £11 million-worth of capital projects was approved in July 1977 in a programme of construction works for the inner areas of Liverpool. These works included housing improvements, advance factory units, new school buildings and a social services centre.

The proposals, which I believe my hon. Friend mentioned, for an offshore contracting company and a speculative office block are still under consideration, but we hope that the practical and legal difficulties associated with the latter can be overcome.

My hon. Friend made a passing reference to shipbuilding. Of course the Government recognise the contribution made, for example, by Cammell Laird to a viable British shipbuilding industry. Indeed, up to July 1977 loans totalling £21 million and grants totalling £2.5 million had been made available to this company.

There are various schemes of assistance to shipbuilding and, in addition, the Ministry of Defence is always willing to assist in the promotion of sales of all defence equipment overseas. The NEB's report also recommended that the Government should consider a relaxation of the eligibility rules for selective assistance under Section 7 of the Industry Act which at present apply to locally based service industries in the special development areas. The Government feel, however, that locally based service industries depend on local demand, and this would not be increased by giving aid to them.

Of course, I entirely agree with my hon. Friend that the continued existence of locally based service industries is important to the Merseyside economy. Until now, the NEB's resources have been focused on the needs of manufacturing industry, but I assure my hon. Friend that there is nothing to prevent the NEB from investing in service industry where it sees opportunities which meet the requirements of its investment policy.

My hon. Friend has also referred to what the NEB's report said about the need to stimulate the tourist industry. As a development area, Merseyside has already benefited from Section 4 of the Development of Tourism Act 1969, which empowers tourist boards to provide financial assistance to tourist projects, and applications, which are a matter for English Tourist Board, can certainly be considered.

Let me emphasise that only three of the 14 recommendations made by the NEB in its report have not been accepted by the Government, and in each case the rejection has been for sound reasons. I think the House will agree that the Government's response has been a positive one.

As regards the new boards, I think my hon. Friend will understand that the NEB's first problem was the need to secure greater and more direct involvement of local people in the tasks of identifying and appraising potential beneficiaries of NEB finance. A number of hon. Members have made suggestions as to possible candidates for membership of the boards. I know that the NEB has found these suggestions most helpful and has considered them all carefully.

The two new boards will have an active, not merely a passive, say in the NEB's affairs. With the support of the existing NEB regional offices, whose directors will be full members of the new boards, they will seek out opportunities wherever they may be found for NEB investment within their region. They will decide, drawing on the collective experience of management, trade union and financial matters for which they have been selected, whether the NEB should go ahead with proposals to invest in companies in the region. For larger investments, those greater than £1/2 million, they will advise the NEB's main board. They will advise the main board on regional investment matters generally. I hope that that will clarify my hon. Friend's doubts about the NEB's own possible local initiatives.

The second major problem which the NEB is facing in the areas of high unemployment is that of making NEB finance as attractive as possible to industry, to encourage firms to develop in the areas most in need of jobs, such as Merseyside. This task is closely linked with the Department of Industry's work in providing selective financial assistance to firms in the region, and one of the NEB's initiatives is to seek ways of further strengthening the already strong ties between its own regional offices and my Department.

The NEB is, therefore, exploring the scope for investment packages comprising financial assistance from my Department and equity or loans on commercial terms from the NEB. It will be for the regional offices of the Department and the NEB to make the availability of finance in this form widely known. I very much hope—I think my hon. Friend will be able to help in this—that firms on Merseyside and elsewhere in the North and North-West will contact my Department or the NEB to see what help they can secure.

The object of all these measures is to increase the NEB's investment activity in the regions to as high a level as possible. The NEB's regional investment has never been subject to a budgetary ceiling. I make that point particularly in view of what my hon. Friend said. The only limit is the NEB's own financial provision. I am sure that the NEB will be delighted, as I shall be, if we see investment in Merseyside taking up a very much larger part of the total budget in future years.

But I should make one point clear, in view of what my hon. Friend has asked about a more detailed perspective on the part of the NEB. The NEB, in forming a bridge between the public and the private sectors, depends very largely on the good will of the commercial world. It has no special powers, no powers of compulsory purchase, and it is not in the business of investing in companies which lack long-term profitability. It cannot invent jobs. Therefore, to make a real impact, of the sort that all of us would like to see, the NEB needs willing customers for the investment capital which it can make available.

It is not enough for companies merely to hope that the NEB will come along and discover them. The NEB will do its best, but primarily it is for management on Merseyside—I hope that my hon. Friend can provide a degree of assistance in this matter—or on Tyneside or throughout the North and North-West, to contact the regional offices either of the NEB or of my Department to see whether there is any way in which we can help.

I again apologise to my hon. Friend for going through a number of the points on which he asked for a detailed reply. I hope that I have been able to assure him and to give him the information which he sought on the points that he raised. I thank him for giving me the opportunity of giving this information, which I hope will be of use to his constituents. In the same spirit in which he raised the points on behalf of constituents, I hope that he will be able to help the NEB to make a much bigger success of its regional investment activity, particularly on Merseyside.