Regional Employment Premium (Hansard, 26 January 1977)

§ 2. Mr. Fairgrieve
asked the Secretary of State for Scotland what effects he expects the withdrawal of the regional employment premium to have on the employment potential and profitability of Scottish firms.

§ The Secretary of State for Scotland (Mr. Bruce Millan)
The withdrawal of REP will result in a small loss of employment in Scotland over this year. However, the Government expect that any such loss will be more than offset by additional jobs provided by the further measures to encourage industry and employment, which were announced at the same time as the decision to withdraw REP.

§ Mr. Fairgrieve
Does the Secretary of State appreciate that he is a member of the Government—with responsibility, in this case, for Scotland—who have just produced an economic package that bears more hardly on Scotland than any other part of the United Kingdom, due to the withdrawal of REP'? Is the right hon. Gentleman aware that this may not be unrelated to the fact that the highest percentage rate of unemployment increase has just been announced for Scotland?

§ Mr. Millan
I do not accept that description of the December package. I remind the hon. Gentleman that his Government intended to withdraw REP in the autumn of 1974.

§ Mr. David Steel
Is the Secretary of State telling us that he had made no assessment of the financial impact on firms in Scotland of the withdrawal of REP, carried out so suddenly and without notice? Is he aware that industry requires to plan over a longer period than simply the next eight weeks?

§ Mr. Millan
I did not say that we had made no assessment of the impact. What I said in my answer was that we made an assessment that this, by itself, would be bound to result in a certain loss of jobs. But it had to be taken in conjunction with the other measures that were announced in December.
As for the REP specifically, the studies that have been made of that as a regional incentive, including one by the House of Commons Expenditure Committee in 1468 1973, suggest that compared with other regional incentives this was not a particularly effective way of attracting and retaining industry.

§ Mr. Dempsey
Is my right hon. Friend aware that the figures of unemployed in my constituency, announced this week, are the highest for 10 years? Was it not also stated that when REP was withdrawn it would be replaced by something that would be equally effective? Can my right hon. Friend tell me that this is so?

§ Mr. Millan
On the last point, my hon. Friend, I think, is overlooking the fact that the Government have announced and introduced many other employment-retaining measures, including, for example, the temporary employment subsidy and the job creation scheme. These and other schemes, taken together, have already saved about 43,000 jobs in Scotland. So it is not true that REP is the only measure that the Government have taken to help Scotland.
I expressed yesterday to the House, and I express again today, my extreme concern about the very high level of unemployment in Scotland.

§ Mr. Teddy Taylor
If the Secretary of State has made calculations of the effect of his measures, will he publish them, because, as he will be aware, on 11th January the Chief Secretary to the Treasury in his reply to me said about the measures announced in December: No separate estimates have been made of the effects on employment in Scotland." [Official Report, 11th January 1977; Vol. 923, c. 470.] Is the Secretary of State not ashamed that, while we have had the announcement of the appalling unemployment figures, he has sat in the Cabinet and agreed to the withdrawal of the REP, which will take £60 million a year from Scottish industry, as well as to national insurance surcharges that will add £100 million to its costs?

§ Mr. Millan
I have already said that Opposition Members intended to withdraw REP as far back as 1974. If they had intended to replace it with something else, they did not let the House or anyone else know what that new measure was. In fact, there was a definite commitment on their part to withdraw the REP 1469 in the autumn of 1974. It was this Government who retained the REP as one of their regional employment measures at that time. I have made certain calculations, so far as I can, about the effect of the various measures on Scotland. I would simply rest on what the Chancellor of the Exchequer said for the United Kingdom as a whole as also applying, as far as can be estimated, for Scotland, namely, that the net effect of the measures announced in December will be a small additional increase in employment in Scotland.