INDUSTRIAL DEVELOPMENT CERTIFICATES

HC Deb 18 July 1977 vol 935 cc1343-52

Motion made, and Question proposed, That this House do now adjourn.—[Mr.Frank R. White]

1.0 a.m.

Mr. Hugh Fraser (Stafford and Stone)

I wish to explain how the refusal of an industrial development certificate will increase national unemployment and add several million pounds to our balance of payments deficit.

I raise the matter of the loss of at least 300 jobs caused by the refusal of the Secretary of State for Industry to grant an industrial development certificate to the French firm of Manitou to build its rough terrain fork-lift equipment in the town of Stafford.

With national unemployment running at around 1½million and rising, it is a serious matter. The loss of jobs is not just a local loss; it is a national loss. Having been refused Stafford, Manitou manufacture remains in France. With the sales of Manitou equipment booming in this country—it is now major in the agricultural as well as the constructional field, with sales likely to top the £8 million mark this year—not only have jobs been lost; our balance of payments will be worsened by about £4 million, and knowledge of the Government's idiotic decision will adversely affect potential EEC investment in this country.

I have never believed in the industrial development certificate. Statistics of IDCs granted—and about 1,000 were granted last year, as opposed to nearly 1,800 in 1973—simply do not reveal the number of investments frustrated or abandoned because of them. Of these figures, of course, the Government keep no record.

Of all the controls on industry imposed by post-war British Governments, the industrial development certificate is the most arbitrary, the most centralised, and the clearest epitome of the principle of the "gentlemen in Whitehall knowing best".

It is a veto imposed by central Government on local county or district planners and local aspirations, on local industry and on local work forces. It is a veto set to defy business judgment, the forces of supply and demand, and the whole harmonious process by which new industries grow and develop through a myriad of individual commercial judgments. It attempts to apply and applies macro-economic considerations to what must be micro-economic decisions.

If ever there were a dead hand, it is that of the IDC. It is a principle that has frozen development, cost real jobs, and littered the country with unused advance factories, empty because too few want them, and costing the taxpayers millions of pounds. There are now over 80 such advance factories unlet or abandoned in the development areas, and yet the Government have announced plans to build a further 100.

Not only hell but most of Whitehall is paved with good intentions. When IDCs were introduced, with the Town and Country Planning Act 1947, they were hailed as instruments to bring jobs to the depressed areas. It has not worked that way. The depressed areas remain depressed. All that has happened is that dynamism has been denied to the strong, and by that denial there has been no national spill-over of investment into the less fortunate areas, while with few exceptions the depressed areas still remain clusters of declining industries, unenlivened by major new investment.

In my own constituency of Stafford and Stone, and in Whitehall, I have fought both particular and general battles to get the dead hand of the IDC lifted. A few years back the Government—I think a Conservative Government—did something to ease the problem. The limit of factory space that was free of the veto was first lifted to, I think, 10,000 sq. ft. and it is now 15,000 sq. ft. It took months of meetings and persuasion.

Of two major cases of denial of IDCs to manufacturers in my constituency, we won one by advising a scientific instrument firm simply to threaten that it would go overseas. The Minister—I think Conservative—climbed down and an IDC was granted, and 400 or so jobs were gained for the people of the Stafford area. The other case, the topic of this evening's debate, was lost. The French firm of Manitou refused to accept an alternative site, Government grants, and inducements in a fringe or intermediate development area. The Minister refused to climb down. Manitou refused to budge. As I have said, it remains manufacturing in France.

At this point I should like to quote a few lines from the letter that the Secretary of State for Industry sent to me on 20th December 1976. He said: I have looked into this case carefully. —that is, the Manitou case— You will know, of course, that the main purpose of the IDC control as an instrument of our regional policy is to encourage mobile industrial developments to locate in the assisted areas. In this case it was decided that the project must be regarded as mobile and capable of being located in an Assisted Area. The IDC for Stafford was refused accordingly. I draw attention especially to the words in the last sentence that I have quoted from the Secretary of State's letter, that the project must be regarded as mobile and capable of being located in an assisted area. For pure Whitehallese, that sentence just about takes the bun. Without respect to 19,400 Ministers and civil servants employed by the Department, it is crappy, political, macro-economic nonsense.

Are component manufacturers mobile? Are lines of communications mobile? Are skilled work forces mobile? Is worker accommodation mobile? Are traditions of good labour relations mobile? Mobile! The only sort of mobility that would be relevant would be for the Minister and some of his acolytes to resign.

Already Manitou aims to sell 1,500 or so units of its 34,000 world production into the United Kingdom. Already engines from Bradford, electrical systems from British CAV and many components are being exported to France for re-import into this country. Some 60 per cent. of machinnes are British made. If Manitou had been allowed into Stafford adjacent to the Black Country, 85 per cent. of components would have been British.

Indeed, the potential gain—or now loss —in jobs nationwide might have been considerably greater than the 300 Stafford jobs that I have mentioned. In addition, of course, are all the temporary jobs lost to construction workers in the building of a new £500,000 factory which Manitou was prepared to undertake itself.

What, then, can be done? In his letter to me of December 1976 the Minister said that if Manitou apply again for an IDC in 1978 it will be carefully considered. In Stafford dstrict at the last June count we had 1,397 people registered as un- employed. By the autumn that figure will inevitably be higher. Having perpetuated such an error, the least the Minister can do is to write to Manitou this very week and say that any new application will be immediately and favourably considered. This week he has been eating humble pie by the pound. He may as well eat it now by the kilo. If he does not, the Secretary of State and his ministerial colleagues will brand themselves as political and doctrinaire bureaucrats, indifferent to unemployment and hostile to local enterprise. Fortunately, the present Government will not be much longer in office.

My own appeal to the incoming Government is to abolish the whole IDC rigmarole. Of course, there must be a policy to help depressed areas, but, it is not that enshrined in the IDC doctrine. Faced by rising unemployment, faced by the need of more investment from within the EEC and from multinational companies, driven by the need for more wealth creation in a freer society, let the IDCs be the first faggots to light a bonfire of unnecessary and literally counter-productive Socialist controls smothering every personal, local and national initiative.

1.8 a.m.

The Under-Secretary of State for Industry (Mr. Bob Cryer)

In the midst of the invective that I have heard from the right hon. Member for Stafford and Stone (Mr. Fraser), I must say that I am grateful to him for raising this subject so that we can clarify the position on what has become a somewhat confused issue.

The right hon. Gentleman not only raised a number of misleading notions tonight; I noticed that on 24th May the Stoke Sentinel headed an article Frightening away 350 new jobs". The right hon. Gentleman has repeated that sort of claim. Before I take up the specific case and answer the points that have been made, I should say something about IDC control generally, because it is important and the right hon. Gentleman criticised it on a number of counts.

First, it is important to maintain those instruments of our regional policy—both financial incentives and the IDC control—which will help industrial development in the assisted areas. The right hon. Gentleman himself said that there must be a policy to help depressed areas. That is right. The IDC control is one of those policies that were retained by successive Conservative Governments as well as Labour Governments.

Secondly, the IDC control helps us to identify projects that have a genuine choice of location and to encourage their location in the assisted areas. Of course, we recognise that many projects for which IDCs are sought will have clear ties to existing locations; for example, source of supplies, customers' locations, and staff immobility. We accept this. We also take full account of the needs and resources of the location sought by the company concerned, especially if it is in one of the areas of high unemployment outside the assisted areas.

There will be occasions when, in striking a balance between all these factors, it is clear that a project can be considered to be mobile and should be encouraged to locate in the assisted areas. This is the purpose of the control, and in such cases the IDC will be refused even though it may cause disappointment in the alternative areas which have been considered. I should emphasise that the IDC control does not provide any power to direct a project to a particular location—only to withhold approval of the provision of new industrial floor space for it. It is a flexible system—far from the system of Whitehall domination which the right hon. Gentleman suggested—and it may be possible for a firm to acquire existing industrial premises in the area of its choice or to operate within the IDC exemption limit, which was raised by the present Government above the previous limit in May last year because we wanted to see a more flexible application of the policy.

I turn to the specific case raised by the right hon. Gentleman and deal with the applications by Manitou (Site Lift) Limited. These events started more than two and a half years ago, and, in commenting on these applications, one of my difficulties is that the Department deals with applications for industrial development certificates on a confidential basis with the companies concerned. It would be wrong to discuss the case on the basis of information that the Department had received from the company in confidence. However, a certain amount of information has been well publicised by the company and provided to other parties interested in the project. Therefore, I can comment on a number of items.

First, when the application was started, the level of unemployment in the Stafford travel-to-work area was 2 per cent. That was half the percentage in assisted areas generally and less than that of the West Midlands area generally, with 2.3 per cent., and a national average of 2.7 per cent.

I repeat what my right hon. Friend the Secretary of State said when he wrote to the right hon. Member last December, namely, that the IDC was refused because Manitou's project was considered to be mobile and capable of being located in an assisted area. The right hon. Gentleman poured some scorn on this, but "mobile" clearly means that it is not fixed to a specific area, as coal mining, shipbuilding or an industry with a particular geographical or transport centre would be. On the other hand, without prejudging the matter, my right hon. Friend gave an assurance that any proposals made to the Department by the company in the future would receive most careful consideration.

Mr. Hugh Fraser

Would the Minister, therefore, accept an immediate proposal by Manitou, if it came in?

Mr. Cryer

I am not sure what the right hon. Gentleman means by "immediate". If the company wrote to the Department —and I shall come to the contacts that we have had—we would give the matter careful consideration.

When an application for an IDC is refused, we are always ready to reconsider it in the light of any additional information which the applicant submits. This was made clear to Manitou when officials of the Department met the company in February 1975 to discuss why the application had been refused, and these reasons were given to the company in writing also. However, the company did not press the matter then, and there was also no approach from the company following the correspondence with the right hon. Gentleman at the end of last year.

However, following the refusal of the IDC for Stafford in February 1975, far from Manitou refusing to budge, the company investigated the possibilities of an assisted area location in the North-West, and it applied for and received an industrial development certificate for the project. But I regret that, in the event, the company subsequently decided not to proceed, and more recent Press reports indicate that the company has decided instead to expand its import, distribution marketing operations.

The fact that Manitou is a foreign-owned firm did not, of course, affect the decisions on thir IDC applications. Productive investment by both foreign and British-owned firms is considered important if we are to improve our industrial efficiency. However, it is a part of our regional policy tht foreign firms considering new investment in Britain should, where possible, be guided to the assisted areas and encouraged to locate there; such propjects are less likely to have ties to particular parts of the country. This policy was successfully followed in the case of Manitou, for the proposal to assemble fork-lift trucks in Britain was a completely new project, with no tics to existing operations, and the company did —following the initial refusal—decide to locate the project in Winsford in an intermediate area.

Indeed, the company found a site, with assistance from the regional office, and the IDC was granted within six months of the original application for Stafford. The Department contacted the company this year, but there has been no positive response.

Mr. Hugh Fraser

Perhaps I could help here. I was under the impression that the company, having been refused at Stafford, was helped to the Winsford area, was then rejected, and left the country.

Mr. Cryer

The IDC was granted for Winsford in Cheshire, and we made it quite clear when we issued the IDC that there were no further difficulties as far as we were concerned. The decision to abandon it was taken because of the economic climate and not because of IDC refusal at Stafford or the assistance to go to Winsford.

A recent article in the Stafford Sentinel, which suggests that 300 or more jobs were lost to Stafford and subsequently went to Ancenis, near Nantes, in France, is quite incorrect. The number of jobs projected in Stafford was fewer than 70, and at Winsford it was below 90.

Mr. Hugh Fraser

As the Minister knows, there is a five-acre site in Stafford, and within two years the company expected employment to grow from 70 to 300.

Mr. Cryer

We were told that the number of jobs was 70, and that was the number given in the application. We have to take account of the actual basis of the application. We realise that this number is not always accurate, but the figure given for Stafford was 70 and for Winsford 90. The company may have had more grandiose ideas for the future, but the application that we received was for 70 jobs. When considering the failure of the company to take up the position—for whatever reason—it would seem wiser to concentrate on the projected number of jobs available and not on future projections.

There is little more I can say on this particular case except to emphasise what the company was told in February 1975 and the hon. Member was told in December 1976, that any further proposals put to us by the company in future will receive the most careful consideration. This is still the position.

However, in the time left at my disposal, it would be appropriate, I think, to say a little more about the industrial development certificate control and general industrial and regional policy. Between January 1974 and May 1977, 852 IDCs have been granted in the West Midlands and only 16 applications refused —none in 1976 and 1977, to date. The equivalent figures for Staffordshire are 173 and seven. Most of the projects for which IDCs were refused were considered to be mobile to the assisted areas; the rest were for private speculative developments for which IDCs are not normally granted except when they come within the arrangements announced in February 1976 for the replacement of empty obsolete factories in urban areas.

The right hon. Gentleman talked of empty advance factories littering the countryside in the assisted areas and of there being no inducements, but it is our experience that industrialists would rather go to a site with an advance factory than to one without. We do not have Draconian powers to force them. We could only ask Manitou to go to Winsford. Although some advance factories are standing empty we are constantly dealing with inquiries. In the Northern Region, a very depressed area, where unemployment is much greater than in staffordshire, more people are now employed in advance factories than in the shipbuilding and mining industries put together. Delegations from the assisted areas often seek further advance factory building.

As I have said the IDC exemption limits below which the control does not operate were raised in May 1976—removing many smaller developments, in an attempt to make the policy as flexible as possible. I can assure the right hon. Member that the control will continue to be operated flexibly and with under- standing, taking full account of the contribution of a project to industrial efficiency and of the need to encourage industrial investment both inside and outside the assisted areas.

Some discrepancies arose in this case, but every encouragement was given to Manitou to establish a project in this country. Our information differs from that of the right hon. Gentleman; Manitou's decision not to establish was not connected with the refusal of IDC permission. If the company wished to make a fresh approach to the Department we should certainly give it careful consideration.

Question put and agreed to

Adjourned accordingly at twenty-three minutes past One o'clock.