HC Deb 24 January 1977 vol 924 cc935-8
1. Mr. Ioan Evans

asked the Secretary of State for Wales what representations he has received from Welsh industry about the regional employment premium; and if he will make a statement.

2. Sir A. Meyer

asked the Secretary of State for Wales what consultation he has had with the Welsh CBI and other interested parties about the effect of the phasing out of the regional employment premium on employment prospects in Wales.

The Secretary of State for Wales (Mr. John Morris)

On 12th January I met a deputation from the Wales CBI to discuss the withdrawal of the regional employment premium. My right hon. Friends the Minister of State, Department of Industry and the Minister of State, Department of Employment were also present.

Mr. Evans

Is my right hon. and learned Friend aware of the deep concern, felt not only by the CBI and the trade union movement, about the decision to suspend the regional employment premium, which has played a major part in attracting industry to Wales? Does he agree that jobs should be the Government's priority? How does he reconcile that with the policy of taking finance out of administration and putting it into manufacturing industry when we are obsessed with establishing new administrations in Wales at present?

Mr. Morris

There is no unanimity about the effect of the premium on attracting industry to Wales. Our aim is to apply available resources more selectively so that we give the maximum help where it is needed. The temporary employment subsidy and the job creation programme, on which we are now concentrating, have played an important part in sustaining employment in Wales.

Sir A. Meyer

Is it not generally recognised that the principal need for a successful regional policy is continuity and predictability? Will not the withdrawal of the regional employment premium cancel any good effects of the job creation programme? Has the right hon. and learned Gentleman any strategy for dealing with the appalling level of unemployment in Wales?

Mr. Morris

The premium was never envisaged as a permanent measure—the hon. Gentleman should know the intentions of the last Conservative Government. The basis of our attack on unemployment is to concentrate available resources where firms really need them. Over the years, the value of the regional employment premium in relation to total wages has steadily diminished; hence the need to look at the whole range of assistance to industry, assistance which in Wales is very large indeed.

Mr. Geraint Howells

What representations has the right hon. and learned Gentleman received from the leaders of industry in rural areas, particularly Mid-Wales? What effect does he think that the ending of the premium will have on future employment prospects in rural areas?

Mr. Morris

If the hon. Gentleman puts down a Question about representations and who made them, I shall seek to answer it. There have been representations and that is why I met the CBI, but no one should be in any doubt of the great value of the temporary employment subsidy and the job creation programme. So far they have saved about 22,000 jobs in Wales. We are being more selective instead of spreading available resources very thinly over the bread.

Mr. Roderick

Is my right hon. and learned Friend aware that many of us are disappointed at the decision to phase out the regional employment premium because, small though it is, it provides the sort of margin that many firms need in order to operate? Will he delay the implementation of the decision because many firms in Wales face new costs and charges from the water authority from the beginning of the year, and a delay in phasing out the premium would help them considerably?

Mr. Morris

I am sorry to disappoint my hon. Friend, but it is not possible to delay the decision. An order has been made and the last payment will be made at the end of March In support of my contention that we are seeking to be more selective I can point to the fact that we intend to give the Welsh Development Agency about £2½ million in each of the next two years.

Mr. Wigley

Will the right hon. and learned Gentleman refute the Prime Minister's statement on Thursday that the regional employment premium represented only a marginal sum? Is he aware that many industries in Wales operate on marginal balances and the ending of the premium could make the difference between their being viable and nonviable? Although the premium may not be the best way of attracting new industry to Wales, does not the right hon. and learned Gentleman agree that there is a strong case for not introducing disincentives to existing industries to remain?

Mr. Morris

As I recollect, the hon. Gentleman has poured cold water on the whole range of Government support to industry. There is no denying that the value of the premium has diminished in relation to the total level of wages. Of course, if we were able to use every possible measure at the expense of other items of Government expenditure, that might be attractive to some hon. Members, but we have been told time and again of the need to cut public expenditure, and in the December measures we sought to use the available money in the best possible way.

Mr. Nicholas Edwards

But is there not a difference between us here? The last Conservative Government said that they would phase out the REP after discussing with industry the method and timing. However, the present Government seem to be cancelling it almost at a stroke, without any proper consultation.

Mr. Morris

I should have thought that the hon. Member should be the last to use emotive phrases such as "at a stroke". We are being pressed all the time to cut public expenditure, so we have to ensure that the level of public expenditure that we do have is used in the best possible way. Already we have seen the strengthening of sterling and the lowering of high interest rates. I should have thought that these factors would be welcomed very much by industry and would be a great help to investment.

Mr. Speaker

Order. If some Questions last this long, we cannot have as long on the remainder.

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