REGIONAL POLICY

HC Deb 24 July 1979 vol 971 cc361-489

Mr. Speaker

I have selected the amendment in the name of the Leader of the Opposition.

Mr. Arthur Lewis (Newham, North-West)

On a point of order, Mr. Speaker. As one who does not intend even trying to catch your eye—I realise the hopelessness of that—may I ask whether we may have an assurance that if eight Privy Councillors on either side of the House are to be called, as they always are called, thus blocking out ordinary Back Benchers because of this tradition—and it is only a tradition to call Privy Councillors—which is very unfair on ordinary Back Benchers who try to catch your eye, this will not always be so?

Mr. Speaker

The hon. Gentleman has given me an opportunity to say that there there is a very long list indeed of right hon. and hon. Members who have indicated to me that they hope to catch my eye—

Mr. Lewis

They will.

Mr. Speaker

—and that six Privy Councillors on the Opposition Benches are hoping to catch my eye. I have followed the precedent of my immediate predecessor in the Chair, and I never call two Privy Councillors from the same party, one immediately after the other. I call a Back Bencher, who is not a Privy Councillor, in between them. I do not propose to change the time-hallowed custom of giving that precedence to Privy Councillors.

Mr. Lewis

I thank you, Mr. Speaker, for that comment—except for the last part, with respect. Perhaps I may suggest that it would be welcomed by hon. Members in all parts of the House—with the probable exception of a few Privy Councillors—if you were to consider that Privy Councillors should get together in their club and decide which of them should ask to be called, and should try to be a little fairer, just having one or two—which is sufficient—from either side, and not hogging the whole of a debate, as is always the custom.

Mr. Speaker

There is more than a germ of a good idea in what the hon. Gentleman has said. It would be helpful to the House if there were fewer Privy Councillors in a given debate. But I do not wish to change the custom.

Allow me to say, before I call the Secretary of State to move the motion, that I believe that there is an obligation on those who know that they will be called to speak, because they are Privy Councillors, to be brief, so as to give a chance to others.

4.5 p.m.

The Secretary of State for Industry (Sir Keith Joseph)

I beg to move, That this House welcomes the changes which are being introduced by the Government in regional policy in order to concentrate assistance on areas most in need, to make it more cost effective, and to remove anomalies in assisted area gradings. I believe that it is the wish of the House to debate, at the same time as the motion, item No. 2 on the Order Paper: That the draft Regional Development Grants (Variation of Prescribed Percentages) Order 1979, which was laid before this House on 20 July, be approved.

Mr. Speaker

Does that course have the agreement of the House?

Hon. Members

Aye.

Mr. Speaker

Very well. The House will understand that I shall put the Questions on the two motions immediately after each other at the 10 o'clock Division.

Sir K. Joseph

I am grateful to the House and to you, Mr. Speaker.

I have to state that the Government replaced the original order on industrial development because of a possible technical error in it. The order on which the House will be asked to vote this evening is technically correct except that there is an error of 24 hours in the date on the back page. The date as printed will take from the grantees of regional development grants 24 hours' more money than is consistent with the statement that I made to the House. In order not to confuse today's debate, we shall be asking right hon. and hon. Members to vote on the order, and in the autumn the Government will table an order, subject to affirmative resolution, correcting by 24 hours the availability of regional development grant money so that those who are entitled to receive it will not suffer in any way.

The policy changes involved in the Government's regional policy proposals need to be summarised by me at the beginning of this debate, to remind the House.

First, the Government are retaining the three different sorts of areas of regional policy—the special development areas, the development areas and the intermediate areas. But the Government are proposing a change in the map, upgrading a few areas and downgrading many more. These proposals are embodied in an order that has been laid before the House—an order subject to negative resolution.

Secondly, the proportion of expenditure defrayed by grant has been changed, in the case of development areas, from 20 per cent. down to 15 per cent., and that is the subject of the statutory order to which I have just referred. After a transitional period, there is to be no grant available for buildings in intermediate areas. This is provided by discretion under the Industry Act 1972 and will be validated further by the Industry Bill that we propose to introduce this autumn.

The next change is that the threshold of expenditure that entitles an investor to development grant is being raised fivefold—from £100 and £1,000 respectively for plant and buildings to £500 and £5,000. This is being done under the discretion of the Secretary of State and will be embodied, again, in the Industry Bill this autumn.

The impact of industrial development certificates is being changed so that the threshold at which the control bites is raised to 50,000 sq. ft., and there is no need to apply for a certificate hereafter in intermediate areas. That is embodied in an order that has been laid under the Town and Country Planning Act.

There are three other changes that have to be announced. First, we propose that the building of factories will be more entrusted to private enterprise and less to the public sector. We are bringing in transitional arrangements so that the changes that I have announced will bite relatively slowly, in order to honour the commitment in the Conservative Party manifesto that no abrupt changes will be made.

We propose to toughen the criteria for the provision of regional selective assistance under section 7 of the 1972 Act, and for assistance that is not attached to regions but covers the whole country under section 8. Those changes have the effect of concentrating assistance from the taxpayer on areas of highest unemployment and most need for improvement in economic structure. They will focus and concentrate the benefits of regional policy, and that may meet with the approval of the House as a whole.

Mr. Dan Jones (Burnley)

Is there any possibility of changes in the decisions made—for example, to upgrade an area to intermediate status, and from that progressively upwards? Are there provisions for that in the proposals being made to the House?

Sir K. Joseph

It is always open to the Government of the day to introduce changes when circumstances change. The Government have envisaged the possibility of upgrading, for instance, Shotton if in due course closure of the steelworks or part of the steelworks is decided on. It would be a different matter to correct a decision already made on existing circumstances. My colleagues at the Department of Industry and I will be willing to listen to evidence that we have misjudged circumstances in a particular area, but unless we have greatly misjudged them, I would be wrong to hold out hope of correction in the proposals announced.

Mr. Dan Jones

I knew that when I asked the question.

Mr. Dafydd Wigley (Caernarvon)

On that point, which deeply affects my constituency, will the Minister assure us that he will consider objective criteria such as unemployment not just on the current level but on anticipated future levels, where there are positive closures such as Shotton or the CEGB cold storage scheme, employing 2,000 men?

Sir K. Joseph

It is the job of Ministers under the relevant Act to consider future prospects as well as the present position. That does not mean, however, that we must anticipate the prospects; it means only that we must be aware of them.

At least half the purpose of regional policy is to transfer jobs from relatively prosperous to less relatively prosperous parts of the country. That has always been so. From its origin regional policy has had social as well as economic functions. To a large extent it stems back to the depressed areas of the 1930s. To a limited extent there has been some apparent success in regional policy, judging by the disproportionate amount of the total investment—disproportionate in terms of the population concerned—that has taken place over recent years in the regions.

The main purpose of the policy is to encourage investment where it makes sense to the investors to go to assisted areas—areas where there is higher unemployment and a weaker economic structure. It is difficult to sort out the degree to which that purpose has been achieved. There are cases where investment was intended elsewhere and where, because of the availability of grants in the asisted area, it takes place there. To that extent there is a transfer of jobs.

There is a second group of cases where an investment project is so marginal that it becomes viable only with the help of grants available in the assisted areas. There is therefore a small class of investment projects that goes to the assisted areas, which probably would not have occurred anywhere else.

Then there is inward investment—mobile international investment that is attracted to the assisted areas by grants under section 7 or outside assisted areas by grants under section 8 of the 1972 Industry Act.

These inward investment projects are welcome to this country. They are of mutual benefit. We gain from the investment over and above that provided by our own economic resources, and it often provides higher productivity and innovative products and techniques. These projects also benefit the investor who decides to come here in his enlightened self-interest.

In addition to the investments that are induced to go to assisted areas—the marginal cases that go there because only there, thanks to the grant, will the investment be viable, and the inward investment cases—there is the marginal additional effect of the grant in improving the cash flow and profitability of companies that invest in assisted areas and thus have greater resources for expansion or investment elsewhere. I do not want to denigrate any of these, on the whole, bene- ficial effects to the assisted areas, but I shall later explain the cost involved to the country.

Against the beneficial effects we have to offset certain other factors. Although we cannot be sure which they are, there are projects that have been inhibited from going ahead by the effect of the industrial development certificate barrier. Over the years many business men have not even applied for permission to develop because they feared the administrative tangle in which they would be involved, and, as they judged, the almost certain refusal. The country as a whole has possibly lost investment—

Mr. John Evans (Newton)

Where is the evidence? The right hon. Gentleman is making an extremely important statement, which many Labour Members, and, I suspect, Conservative Members also, dispute. Will he prove us wrong by offering one shred of evidence to support the statement that he has just made?

Sir K. Joseph

It is largely anecdotal, but it is not to be dismissed. In the Midlands—and in particular in the West Midlands—there is a strong and widespread feeling that investment has been reduced. There is the much larger and certain class of investments in the assisted areas that would have gone ahead in those areas anyway without the policy of regional assistance.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

The hon. Member for Newton (Mr. Evans) asked for one shred of evidence. I can quote Cadbury-Schweppes in March 1977.

Sir K. Joseph

I do not want the House to ignore my last point, that a substantial number of the investments in assisted areas would have gone ahead anyway because of the imperative of a company's market and existing location. From all these factors we can conclude that over the years there has been a net benefit to assisted areas from the regional policy.

Under section 7, the regional selective assistance that is provided at the discretion of Ministers to investment within the assisted areas, in addition to the automatic regional development grants, has been indiscriminate. There has been no attempt to provide that help at the expense of the taxpayer only to those cases where without it the investment would not have gone ahead.

I think that the House will agree with the proposition that, in general, the assisted areas will thrive only if the economy as a whole thrives. It is intensely in the interests of the assisted areas that the economy as a whole should thrive. That is why the Government's policy of improving the economic climate to encourage decision-making, risk-taking and enterprise is so important to the assisted, as well as to the non-assisted, areas. I instance, as a familiar catalogue and as being directly relevant, the need to reduce Government spending so as to reduce borrowing, crowding out interest rates and direct taxation.

Mr. Jack Straw (Blackburn)

I am interested in what the right hon. Gentleman said about public spending and I have been looking at his earlier pronouncements on the matter. Given his concern about public spending, can he explain why, in 1972, he issued a circular to social service authorities asking them to expand their social service departments over a 10-year period at a rate of 10 per cent. per annum in real terms?

Is not part of the problem that local authorities are facing from Government cuts due to the policies that the right hon. Gentleman was pursuing in 1972?

Sir K. Joseph

I am sure that the hon Gentleman will at least give credit to my heart, if not to my head, at that stage. I had not realised, as much as the history of recent years has taught me, the perverse effect of excessive Government spending. It is no good having the maximum of good intentions if, in seeking to carry out those good intentions, one overloads the economy and the taxpayer as we have done in recent years.

I put it to the House that the better the economic climate, the more likely it is that we shall get expansion in the assisted areas as well as in other areas. The tighter the labour market in non-assisted areas, the more will be the gain to the national economy by the use of labour available in assisted areas.

I know that although there is apparently high unemployment—and, indeed, high unemployment in some parts of the country—there are great labour shortages in many parts, particularly in many of the non-assisted areas.

We are half-way between the position where labour is tight in the non-assisted areas and that where there is plenty of labour available in those areas. I repeat that when there is labour available in the assisted areas but not in the non-assisted areas there is a national gain when investment projects go to assisted areas.

The whole purpose of transfers between non-assisted and assisted areas makes sense only when the map dividing assisted from non-assisted areas is fair. Until now, the map has not been fair. There have been many non-assisted areas with a higher proportion of unemployed and a weaker economic structure than some assisted areas. That is why the Government's proposals to redraw the map, embodied in an order before the House, are an essential part of making sense of regional policy.

Mr. Cyril Smith (Rochdale)

The right hon. Gentleman has talked about changing the map on which the grants apply. Can he give an assurance that grants already committed by Government Departments will be maintained? The right hon. Gentleman has referred to giving grants on assets created by a date in 1980. If a factory is, for example, half- built by 1980, will grant be payable on the whole of the factory, some of which may be completed after 1980?

Sir K. Joseph

The answer to that question is an unqualified "No". Expenditure that will be grant-aided will be only that on plant and buildings that have been provided by the cut-off date. That is the only fair way to proceed. I have provided a long transitional period. The answer to the hon. Gentleman is therefore clear and negative.

I come to the corollary of what I have been saying. We as a country gain from inward investment in the various ways that I have described, but help to the assisted areas is paid for, to at least half its extent, by injury to non-assisted areas. That is inevitable, because the Government have no money. They can spend money only by raising it from the taxpayer or by borrowing. The money available in terms of subsidy has to be paid for.

There are a number of ways in which the projects that go to assisted areas—not inward investment projects—displace investment and jobs that occur in other ways. There is the sheer loss of investment and jobs that occurs as a result of the Government raising the money by extra taxes or extra borrowing to provide the grants. That loss of investment and jobs may occur anywhere in the country, including assisted areas.

Then there is the effect of the transfer of investment—and jobs—that would have occurred in the non-assisted areas but is induced, by reason of the grants, to move to assisted areas. That is a diversion of investment and jobs.

Then there is the displacement of investment and jobs that occurs when a project in an assisted area is subsidised and enabled to compete unfairly with a project anywhere in the country, including an assisted area, that is unsubsidised. That is a transfer of jobs and profits—and perhaps expansion and investment—from an unsubsidised project to a subsidised project.

There is also the displacement when a subsidised project is enabled to bid for scarce labour at the expense of a non-subsidised project. All those are offsets, sometimes in the assisted areas, but generally in the non-assisted areas, to the gain that, socially and economically, may make, to a large extent, good sense in the assisted areas. I explain that to the House only in order to illuminate the reality of the effect of the changes that are being proposed.

Labour Members are apt to speak of a huge loss in existing jobs as a result of changes in regional policy, but it is not like that under the Government's proposals. It may have been like that when the previous Government removed, at a fortnight's notice, £220 million of regional employment premium. That was a subsidy to jobs. I am not defending it, but its withdrawal may have damaged jobs in the assisted areas, though it may have done benefit to the economy and jobs as a whole.

We are reviewing and changing not an REP but the reduction, to some extent, of grants available to the initiation of projects and jobs rather than to the continuation of jobs. It is the removal, to some extent, of help in order to reduce direct taxation. The money that is removed will not be destroyed, demolished or eliminated. It will be removed from one use and restored to the handbag or pocket of the citizen. There is no loss under the Government's proposals for existing jobs in the regions. There is some reduction—I will come to the quantity—in the new jobs that may go to the regions in future.

I shall explain briefly to the House what is familiar to many hon. Members. The best academic assessment that can be obtained of the total effect of regional policy up to date is that the net gain in jobs to the assisted areas, not only in manufacturing but in services, each year during the 1970s has been almost 20,000. I do not underestimate the scale of extra jobs. It is a net gain of jobs for the assisted areas.

Mr. Douglas Jay (Battersea, North) rose—

Sir K. Joseph

I should be grateful if could finish my explanation. I will then give way to the right hon. Gentleman.

Except to the extent of inward investment, the marginal cases that are viable only where there are grants and to the expansion that may result from the increased profitability and cash flow that results from grants, the net gain of jobs in the assisted areas is offset by the loss of jobs elsewhere in the economy—including, to some extent, in the assisted areas. Therefore, it is a net gain that is offset largely elsewhere by the job loss that is consequent upon raising the money to pay the grants by diversion and by the two forms of displacement that I have described.

I shall illustrate the argument at its most intense. After my recent statement, hon. Members have insisted that the loss of jobs from the withdrawal over three years of £230 million from regional policy spending will be savage. Extreme words have been used and I have seen newspaper articles, particularly outside the national newspapers, reflecting that judgment. The best assessment that can be made from the academic work that has been done on the matter is that the loss of potential jobs—not existing jobs—in the assisted areas by that withdrawal over a three-year transitional period of £230 million might be about 5,000 to 6,000 jobs in the assisted areas.

As the money is being used to reduce the direct taxes on the public and because the taxpayers will keep more spending money in their handbags and their pockets, I am advised that the £230 million in the taxpayers' pockets will probably create about 5,000 or 6,000 extra jobs over the same sort of period and all over the country. The House will recognise that that represents a transfer of spending power from the Government to the taxpayer.

Mr. Jay

In order to be clear about the figures if not about the theory, may I ask whether the right hon. Gentleman's reference to 20,000 and subsequently 5,000 jobs means per year or over the whole period of the 1970s?

Sir K. Joseph

I was referring to 20,000 jobs per year.

Mr. Edward Rowlands (Merthyr Tydfil)

Who is the author of this academic work?

Sir K. Joseph

The author from whom I draw the statistics, although I must be responsible for their use, is Mr. Moore—[HON. MEMBERS: "Old Moore's Almanack"?] He has a partner, whose name eludes me at the moment.

Mr. Michael Foot (Ebbw Vale)

Will the right hon. Gentleman guarantee that the document to which he has referred will be placed in the Library?

Sir K. Joseph

It is a published document and I shall adopt any convenient method by which to draw hon. Members' attention to it. Perhaps a written answer would be appropriate in this case.

The analysis, which I draw from independent sources, gives the lie to the totally misleading aggregates that were quoted by the right hon. Member for Dartford (Mr. Silkin) in his capacity as Shadow Industry Minister. Many of the assisted areas projects would have gone ahead, and will go ahead, even when the development grants are reduced. The gain in jobs in the assisted areas is to a large extent, though not totally, offset by a loss of jobs in the country.

Dr. Oonagh McDonald (Thurrock)

If I may help the right hon. Gentleman, the source to which he was referring is Moore and Rhodes. They claim that over a 16-year period 540,000 jobs resulted from regional aids of various kinds that were given to the assisted and development areas. That figure is rather higher than the one that was suggested by the right hon. Gentleman. That was an increase in jobs above what might otherwise have been expected.

Sir K. Joseph

I am grateful to the hon. Lady for the reference to Moore and Rhodes. That corrects my lapse of memory. However, I pointed out that the jobs to which I was referring represented the annual results in the 1970s. Alas, the country's performance in the 1970s was not as good on average as the performance during the 1950s and the 1960s. During the 1960s, the economy was more buoyant for at least part of the time.

Mr. T. W. Urwin (Houghton-le-Spring)

I should like to take up the point that the Minister has made at least twice during his speech. He claims that a large number of projects for extensions and expansions would still have gone to the development areas without the benefit of regional aid. In all sincerity, I suggest that the right hon. Gentleman should produce some evidence to support that argument. From my long experience of matters, I believe that by far the great majority, if not all, of the extensions would have taken place only with the benefit of regional aid. I suggest that he should begin to concentrate upon the planned projects which now will not go ahead in the areas which are deemed to be subjected to reclassification, including areas of high unemployment in South and South-West Durham.

Mr. Rowlands rose—

Sir K. Joseph

I shall not give way to the hon. Gentleman.

There is ample evidence of projects that would have gone ahead anyway. As for the downgrading of some areas and the right hon. Gentleman's reference to projects that would not have gone ahead because of the reduction in grants available, I repeat that the areas have been down-graded only because on average their economic and employment position is better than that of assisted areas. I should be willing to study any circumstances that hon. Members bring to my attention or to the attention of my Department. I cannot be fairer than that.

There is an obstinate gap in the economic vitality of different regions in the country. Earlier, I referred to the origin of the assisted areas. In nearly every case they were the depressed areas of the 1930s. In relative terms the gap has been narrowed, though because of the rise in the aggregate of unemployment the absolute difference between the unemployed in assisted and non-assisted areas has, alas, increased.

I repeat with all the emphasis at my command that redistributing taxpayers' money will not suffice in itself to eliminate the gap between the assisted and non-assisted areas. There has to be self-help in the assisted areas. There has to be enterprise, competitiveness, high productivity and a reputation for co-operation between management and the work force in the assisted areas if they are to reach the level of employment that we all want them to reach. We need more indigenous growth in the assisted areas. That is why the changes in climate and economic context which we have set ourselves to try to achieve are so relevant to the assisted as well as to the non-assisted areas.

I have a parallel announcement to make today on behalf of my right hon. Friend the Secretary of State for the Environment. The House will be aware that in the past there were set up a number of English regional economic planning councils. On these councils large numbers of thoroughly public-spirited and diligent people have served over the years. Their diligence and hard work have not always been rewarded by being heeded by Ministers, particularly in the Labour Government. It is a question whether it makes sense to ask these people to go on giving their services when they have no specific function and when their advice has all too often not been heeded.

I have to say that my right hon. Friend has decided, after careful consideration, that since these councils are not statutory and have no executive responsibility, it will be convenient for all concerned to disband them during the relatively inactive summer period, without waiting for the wider outcome of the Government's review of the public bodies to which Ministers appoint members. My right hon. Friend the Secretary of State for the Environment has therefore decided to close them during the recess and is today telling all the chairmen.

Mr. Eric G. Varley (Chesterfield)

Shame.

Sir K. Joseph

The right hon. Member for Chesterfield (Mr. Varley), who was the Secretary of State for Industry, is now lamenting the death of bodies whose advice he did not much heed when they were around.

The regional planning boards of officials will continue in being under the chairmanship of Department of the Environment regional directors. In addition to their close working relationship with local authorities, the boards will maintain all other appropriate advisory contacts in the regions, by less formal means and with continued involvement of locally elected authorities. This decision reflects the inappropriate nature of these bodies and is in no way a criticism of the qualities of their members, to whom the Government are grateful for past services.

Mr. R. B. Cant (Stoke-on-Trent, Central)

On a point of order, Mr. Deputy Speaker. Are there any constitutional precedents for announcements being made, and being referred to euphemistically as "parallel statements", on behalf of a Secretary of State for another Department? I cannot recall any precedent for this practice during my time in the House. Is this procedure acceptable? May we have your ruling? Will you consider requiring the Secretary of State for the Environment to attend the House to undertake this chopping exercise?

Mr. Deputy Speaker (Mr. Bernard Weatherill)

The content of Ministers' speeches is not a matter for the Chair.

Sir K. Joseph

Further to that point of order, Mr. Deputy Speaker. I think that the House would have less reason to complain about being told this decision at the beginning of a debate than if this information had been given by my right hon. Friend the Secretary of State for the Environment, whose Minister of State is sitting beside me on the Front Bench, by means of a written answer, which he would have been entitled to do.

Mr. Kevin McNamara (Kingston upon Hull, Central)

Further to that point of order, Mr. Deputy Speaker. Is it not equally inappropriate to be given this information via a written answer, as occurred yesterday on two very important matters, as it is to be given it by means of a parallel statement made by a Minister who is not responsible for the matter in hand? Hon. Members are unable to question the accuracy of such a statement because we are unable to quiz the Secretary of State for the Environment about the purposes and ideas of some of the regional councils, which many people thought performed a useful function indeed in focusing Government attention on various matters, even if they did not heed the advice given.

Mr. Deputy Speaker

The Chair is not responsible for what a Secretary of State says. How he makes his announcements—by written answer, statement or speech—is a matter for the Minister.

Mr. Robert Hughes (Aberdeen, North)

Further to that point of order, Mr. Deputy Speaker. I had always understood that Mr. Speaker and the Deputy Speakers had some responsibility in protecting the rights of Back Benchers. Announcements made in this way are difficult to understand and to follow. Is the Secretary of State for Industry speaking only for the Secretary of State for the Environment, or is he also speaking for the Secretaries of State for Wales and Scotland? We should like to know where we are.

Mr. Deputy Speaker

It is for the Secretary of State to answer that question. I repeat that it is not a matter for the Chair.

Mr. Peter Hardy (Rother Valley)

Further to that point of order, Mr. Deputy Speaker. If several Government Departments sought to table statements on the same day, I think Mr. Speaker would deplore the practice. Since Mr. Speaker can deplore an excessive number of statements, surely the Chair can deplore the absence of any statement at all—and we have not had a statement today.

Would it not be appropriate for you, Mr. Deputy Speaker, or for Mr. Speaker to deplore the fact that, although reference has been made to the public-spiritedness of individuals who serve on the regional planning councils, the Government do not share that public spiritedness to the point of ensuring that the relevant Minister will attend the House, or will authorise his Ministers of State to attend, to make a statement to this House to apologise for the decision which has been made? At least one or other Minister should offer a statement of gratitude to those concerned in the normal way.

Mr. Urwin

Further to that point of order, Mr. Deputy Speaker. In all seriousness, despite the laughter and smirking of the Secretary of State for Industry and some of his hon. Friends, did not the manner in which the statement was made constitute a grave discourtesy to the House of Commons? In those circumstances, is it not within the power of the Chair at least to draw to the attention of the Leader of the House the attitude adopted by the Secretary of State for Industry on behalf of his right hon. Friend the Secretary of State for the Environment?

Mr. Deputy Speaker

I have often heard it deplored when statements are not made to the House. It is not a matter for the Chair to rule when information should be given to the House. It is a matter for the Secretary of State how he does that.

Sir K. Joseph

I am offering to the House and to the country a combination of changed economic climate and a more concentrated set of assistance to the assisted areas. I believe that this is good news for the country as a whole and the assisted areas.

Mr. Robert Hughes

Further to the point of order, Mr. Deputy Speaker. In making a parallel statement to the House, the Secretary of State for Industry should tell the House on whose behalf he is making such a statement. What parallel is involved? Does it simply relate to England, England and Wales, or Scotland? We have a right to know what is happening.

Sir K. Joseph

England only.

Mr. Ioan Evans (Aberdare)

Further to that point of order, Mr. Deputy Speaker. Is there to be any diminution of this function in Wales and Scotland? Are those countries to continue with their planning councils? May we have a statement to clarify the position?

Sir K. Joseph

Further to the point of order, Mr. Deputy Speaker. I said specifically "England only".

Mr. Rowlands

As the Secretary of State for Wales is present, perhaps he will tell us the position in regard to the councils in Wales.

Sir K. Joseph

My right hon. Friend the Secretary of State for Scotland will confirm the position when he replies to the debate, but I did say "England only".

Mr. Rowlands

The point is that the Secretary of State for Wales is present in the Chamber. Will he tell the House whether this will apply to Wales?

Mr. Urwin

Further to that point of order, Mr. Deputy Speaker. What the Secretary of State for Industry has just said makes the whole situation even more intolerable. He is now making clear, as many of us have suggested over the years, that there is a good deal of discrimination against the English regions in the policies of successive Governments in institutionalising various organisations in Scotland and Wales. We are now being told, in a greatly discourteous manner, that the English regions are to be denuded of these planning councils but that such bodies will remain functioning in Scotland and Wales. That is quite disgraceful.

Mr. D. E. Thomas (Merioneth)

Further to that point of order, Mr. Deputy Speaker. It is quite intolerable to Welsh Members that we are apparently having a statement by sleight of hand from the Secretary of State for Industry about the position of the economic planning councils in England, and that apparently we are to hear a statement at the end of the debate about regional planning councils in the context of Scotland, but that we are to have no statement from the Secretary of State for Wales about the position of the Welsh councils.

Mr. Deputy Speaker

These are matters to be taken up during the debate.

Mr. McNamara

On a point of order, Mr. Deputy Speaker. There is an important constitutional point at issue. There will be regional economic planning coun- cils for Northern Ireland, for Scotland and for Wales, but all of those for the English regions will be abolished. We have not been given any explanation. In many of the English regions there are unemployment problems which future cutbacks will render far worse, yet all we have at the end of a rather dull speech by the Secretary of State is an odd sentence to the effect that the regional councils are going. That is not good enough. Will you, Mr. Deputy Speaker, protect us?

Mr. Deputy Speaker

I repeat that that is a question for debate. It is not a point of order. Certainly it is not a constitutional issue. It is a question of organisation.

4.52 p.m.

Mr. John Silkin (Deptford)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof condemns the Government's proposals for large-scale cuts in regional aids to industry, deplores the inevitable reductions in industrial investment which will follow them, and places upon the Government the full responsibility for the resultant loss of employment and the other adverse social consequences of its reactionary policies". The Treasury Bench owes the House more than an apology: it owes the House a statement. There is no doubt that the difference between the English position on economic planning councils—I had some responsibility for them some time ago, as the right hon. Gentleman knows—and the Welsh, Scottish and Northern Ireland economic planning councils requires some justification. I do not intend to make heavy weather of what appears to me to be another bungle by the Secretary of State with regard to the order. The right hon. Gentleman said that that order was merely out by one day and therefore it had to be corrected in the autumn. He always tells us that he and his fellow Ministers are capable of running the whole of this country's industry, yet the events of the past week indicate otherwise.

Sir Keith Joseph

The right hon. Gentleman is wrong. That may be what his party thinks. The Conservative Party does not presume to think that it can run industry. Our job is to create the conditions in which industry runs itself.

Mr. Silkin

The events referred to by the Government in this House during the past week are a fair indication of what the conditions will be like in the country as a whole once their policies get under way.

On Friday, the Financial Times quoted one of the right hon. Gentleman's senior officials as saying that he was rolling back the map of regional assistance. No one can object to changes in the map. The right hon. Gentleman is quite right. Areas of assistance need to be kept under review. The more successful policy is, the more changes will be required. There is no doubt about that. But it is not upon that basis that the Secretary of State is rolling back the map. He is doing that for one reason only. Reward, not even for the average taxpayer but for a small minority, is at the root of it. The changes in the higher rate of tax threshold and the rates themselves will cost £662 million in a full year. The Secretary of State is making his contribution, and he has decided that regional aid will bear £233 million of the sum required. It is in that context that he has shaped the new regional aid policy.

The rolling back of the map is a response to the demands of the Chancellor of the Exchequer. It is not a policy in its own right. The Secretary of State has pointed out that the assisted areas currently cover more than 40 per cent. of the employed population. He proposes to reduce that figure to around 25 per cent. in order, he says, to focus on the remaining assisted areas more effectively".—[Official Report, 17 July 1979; Vol. 970, c. 1302.] It is possible to argue that such change provides a better use of resources in part, and that is what the Government argue in the motion. But it is arguable only if the amount of financial assistance as a whole is not cut. It will be cut by more than a third, and we already know where the cuts will come.

Special development areas in Wales, Scotland and the North-East are smashed. The creation of the new special development areas, so few in number, does not need to be considered seriously as an attempt to right the balance. We see the real effect of the Government's policy in the other changes. The whole of Lancashire and parts of Yorkshire lose their intermediate status.

Mrs. Elaine Kellett-Bowman (Lancaster)

The right hon. Gentleman is mistaken. Very important parts of Lancashire, namely, Lancaster and Morecambe, do not lose it. Nor do the coastal regions whose fishing industries have suffered very badly.

Mr. Silkin

The hon. Lady, who speaks here and in other parts of the world, has her own view and her own constituency. I shall come to the constituencies of her hon. Friends in a moment. They are joined by a wholesale downgrading of development areas, which after the transitional period will not be eligible for regional assistance at all. The hon. Lady cannot deny that, nor can it be denied that in many cases it is that assistance alone that has enabled British industry to survive at all, faced with a massive growth in foreign imports. Our footwear, textile and clothing industries are to be the victims of the Chancellor's generosity to that small minority of taxpayers who are already in a far better financial position than the rest of the community.

These changes have been made not to update but to bolster a socially divisive policy of the Government. They will be resisted root and branch by the Opposition. The more that Government supporters learn about the effects in their own constituencies, the more trouble they will become. It will be a case of general approval in public and individual deputations in private as each of them tries to get the axe removed from his own area.

Under these proposals there will not be much joy in getting back intermediate status. The 20 per cent. rate of grant on new building and works will have disappeared in 1982. It is impossible to discover from anything that the Secretary of State told us what advantages will remain. Those hon. Members who breathed a sigh of relief when they learnt that their constituencies still enjoyed development area status may have escaped beheading but they have not escaped major cuts, since the rate of grant drops by a quarter to 15 per cent.

The effects of these changes will soon be felt. I challenged the Secretary of State the other day to tell the House what numbers of unemployed his advisers had told him would be likely to result from the cuts and what number of expected jobs would now not be created. He told me that he had not felt the need to get such advice because the whole of the regional aid policy provided net only 10,000 new jobs a year. I did not accept those figures.

Sir Keith Joseph

Manufacturing jobs.

Mr. Silkin

The right hon. Gentleman did not say that at the time.

Sir K. Joseph

I referred to the net gain of manufacturing jobs in the assisted areas. My figure today was the net gain of manufacturing and service jobs.

Mr. Silkin

I am glad that the right hon. Gentleman, having made that statement, has corrected it now. I make no point about that. He obviously had manufacturing jobs in his mind. Having looked at the figures supplied by the Cambridge Department of Applied Economics, the Secretary of State has passed on to us its figure of 20,000.

My hon. Friend the Member for Thurrock (Dr. McDonald) raised an important point because she took it over a much larger time scale. That is important, because we are projecting into the future. But suppose that the figure was only 20.000 net jobs a year, 20,000 families in work. Is that figure really of such insignificance that a man who has proclaimed that the family must be the centre of our thinking looks upon it now as something that can be so curtly rejected?

The Secretary of State rested his case on two fallacies. The first is that regional policy does not work. But an examination of the relevant facts and figures shows the opposite. Thanks to a strong regional policy, the economies of the less prosperous regions have consistently grown at a faster rate than the national average. Unemployment in the assisted areas, because of regional policy, has risen much less rapidly than in the rest of the country since the onset of the world recession. In other words, aid to the regions has helped them to weather the economic storm. By no means least important, regional policy has saved jobs and has created new ones.

The Secretary of State's second fallacy is that there is a precedent for a slashing reduction in regional aid. The right hon. Gentleman says that the Labour Government did not hesitate to abolish the regional employment premium. That is true. The regional employment premium was withdrawn by the Labour Government. But the Secretary of State neglected to point out that the regions directly benefited from major increases in expenditure or other programmes to compensate for the withdrawal of the regional employment premium.

Various categories of regional aid, such as section 7 assistance, were increased by more than £160 million over the following two years. By this time, too, expenditure on section 8 assistance and the special employment and training schemes, initiated by the Labour Government, had increased by over £300 million, much of which went to the assisted areas.

An effective regional policy must have an effective carrot in the grant system. But there must also be the stick of refusal for certain projects in other areas. That is the basis of the IDC system. I shall not disguise from the House that such a policy has its strains and its difficulties. The hon. Member for St. Marylebone (Mr. Baker), who has notified me that he could not be present after I warned him that I might mention him, suggested recently that the whole of my constituency of Deptford was clamouring for the abolition of IDCs. Deptford,—indeed, most of inner London and inner Birmingham—wants new industry. But before hon. Members representing constituencies in these areas cheer too loudly at the relaxation of IDC control, I would point out that this step will not help to ease their employment problems.

The new limit will mean that factories between 12,500 sq ft and 50,000 sq ft will no longer come to the attention of the Department of Industry for steering to the inner areas. Instead, factories will spring up where they find the environment more congenial, not in inner areas but in commuter land or on the coast. So the inner city will not benefit from these changes in IDC control. We shall have to wait and see whether the inner city programme, started by the Labour Government, is continued or falls victim to the next lot of Tory cuts.

The 50,000 sq ft IDC limt will dramatically cut the number of jobs created in the assisted areas. It is estimated that IDC policy alone—the Secretary of State did not spend much time dealing with this matter—created about 100,000 jobs in the regions in the 1960s. The new limit will make the whole policy redundant. From now on, a factory employing about 200 people will escape the IDC net. Moreover, administrative practice, as the Secretary of State well knows, is normally to allow an extension at least as large as the IDC threshold. Effectively, factories of up to 100,000 sq ft, capable of employing up to 500 workers, would be lost to the regions.

The regions have also benefited from the National Enterprise Board. The Midlands, in particular, gained work from the NEB. By his own admission, the Secretary of State cannot totally kill that goose, although he proposes to flog off some of its golden eggs. As the right hon. Gentleman himself says, … it will take time to restore the full vitality of the private sector."—[Official Report, 18 July 1979; Vol. 970, c. 2005.] The Secretary of State accepts, in theory at least, that an element of regional policy lies with the NEB, namely, that the NEB should continue to exercise an investment role in the North and in the North-West and with small firms. But the right hon. Gentleman goes a strange way about it. His proposals are not so much a policy or a succession of cuts but the flogging off of £100 million worth of national assets.

Neither of these plans is likely to give much assistance to the regions or to the small firms that the Secretary of State consistently tells us are the keystone of industrial success. Small firms in the regions are dealt a body blow by raising dramatically the minimum values at which RDGs are payable.

The truth is that there is no coherent policy behind the Secretary of State's proposals. A full-blooded Selsdon approach would have cut off the regions from any assistance whatever. As the Secretary of State said only a year ago, In aggregate, we believe that these subsidies and grants do more harm than good … Anyway, these grants and subsidies may rescue some jobs but only at the cost of other jobs."—[Official Report, 4 July 1978; Vol. 953, c. 255–56.] The right hon. Gentleman was back on that theme today, but he had modified it somewhat. What has made him change his mind is a small dose of reality. Faced with the power to make the decision, he has faltered and drawn back from the brink. We take some comfort from this backtracking but not much. What is needed is a positive policy, not a negative reluctant drift.

Our business as citizens, said Bernard Shaw, is navigation. Learn it and live, or leave it and be damned. The Secretary of State has chosen to leave it and be damned. Yet there are changes that he could have made. In so doing, he would have had to throw away the half-baked ideas that he has culled from a dozen volumes of out-of-date theory and accept that regional policy is not just an act of rescue in a moment of charity but a vital necessity to the industrial well-being of our country.

There are many lessons to be learnt from our membership of the EEC, for good or ill. We all have different ideas about them. One of them that all of us know is that market forces, left unfettered, created the golden triangle in mainland Europe at the expense of the outer regions of the Community. The resulting social pressures and divisions are the direct result of the operation of these market forces.

A real regional policy will reduce social divisions by creating jobs where they are most needed. Here, as Shaw said, it is navigation that we need. That is why the NEB is so important in the regional and other contexts. It can help channel investment to the regions. It can assist small and medium firms, but to do this it needs more resources. The answer lies in increasing its funds, not in cutting them; in increasing its powers, not curbing them; and in ensuring that initiative in industry can draw upon public sector funds to promote jobs for the future when the private sector, as so often, fails to do so.

There is no evidence that the Secretary of State is assisting in any other way the small firms in the regions. I have referred to the increase in minimum values for RDGs. The right hon. Gentleman has no plans to give these firms any greater assistance. Indeed, the downgrading of so many areas will be a death blow to many of the small firms. It could be argued that the system of aid might be further refined. I agree. The larger companies should have to prove that they will create new jobs and that the money they receive in grant will not merely be an addition to profits with no social return. In general, the Government should be seeking to give more help to the regions, not less, and ensuring that those resources are given selectively rather than automatically.

The Government motion promises that regional aid will be made more cost-effective. In Opposition the Tories made a great fuss about the huge amounts of Government money that were helping to finance capital-intensive projects by chemical and petrochemical firms.

Once in office, did the Secretary of State stand firm on his principles and make such projects ineligible for RDGs? No, he did not. A little arm-twisting from the CBI and from the firms involved and the Secretary of State caved in, as, in the end, he always will.

No serious observer of British industry would try to deny that we need to build up the industries of the future while ensuring the ordered contraction of a number of industries whose future is limited. The Secretary of State's approach will certainly result in the contraction of our basic industries. However, where are the new jobs to come from now that he has emasculated the NEB and cut aid to industry? How will he alleviate the real suffering in the areas most affected by restructuring if, at the same time, he insists on slashing financial assistance to the regions?

Industrial restructuring must mean a more powerful regional policy, not a much reduced one. The Secretary of State for Employment understands that well. He fears the return of a two-nation Britain if something is not done to help the poorer regions.

Earlier this month, in a speech to the Tory Reform Group, the Secretary of State for Employment referred to the gap between the prosperous South and the poorer North. He said: Inequalities of the kind we now see in Britain simply cannot be tolerated. They represent a serious threat to the fabric of society. The Secretary of State for Industry not only tolerates these inequalities but by his regional aid policies he seems determined to make them worse.

That is why only three months after the general election people are already asking the one relevant question "What will the next Labour Government do?" They are beginning to realise just how disastrous the Secretary of State's policies are. I shall answer the question.

Sir Timothy Kitson (Richmond, Yorks)

What about Grimsby?

Mr. Silkin

If the hon. Member for Richmond, Yorks (Sir T. Kitson) wants to have a private conversation, I hope that he will wait until I have finished my speech.

Sir T. Kitson

I remind the right hon. Gentleman that parts of the North-East, of which my constituency forms a part, were taken out of the North-Eastern development area just before the Grimsby by-election. Has the right hon. Gentleman forgotten that?

Mr. Silkin

My complaint was not that the hon. Gentleman made an intervention but that he made it across the Floor of the House and was not addressing me. I regard that as a gross discourtesy to the House. Changes in the map are bound to occur from time to time. There is nothing wrong with that. I was saying that the Secretary of State's reasons for making the changes now are wrong.

Mrs. Kellett-Bowman

Will the right hon. Gentleman give way?

Mr. Silkin

The hon. Lady's mouth is full of questions.

Mrs. Kellett-Bowman

The right hon. Gentleman says that there must be changes in the map. Is he aware that only the week before the Government made Grimsby a development area the Minister said that there could be no changes in Lancaster where the unemployment rate and unemployment vacancy ratio was higher than in Grimsby? On the eve of the by-election, Grimsby was made a development area even though its unemployment rate was better.

Mr. Silkin

I said earlier that of course the map should be changed from time to time. The hon. Lady is wrong to think that unemployment is the only factor to be considered.

I know why we won the Grimsby by-election. We won it because we had a fishing policy and the Conservatives gave the fish away. If the Under-Secretary of State doubts that, he should examine what happened in Grimsby at the general election.

Mr. Straw

The hon. Member for Lancaster (Mrs. Kellett-Bowman) suggested that there was a political motive behind the granting of development area status to Grimsby. Does my right hon. Friend agree that this Government have allowed Blackpool to be an assisted area and left Blackburn out, in spite of Blackburn's higher rate of unemployment? What explanation can there be other than that one area is Conservative-controlled and the other Labour-controlled?

Mr. Silkin

I have no doubt that my hon. Friends, in public and in the House, and the Secretary of State, in private in the Department, will make good constituency points, many of which are political. However, if I had gone through that list my speech would have lasted 46 hours.

What would a Labour Government do? It would be easy to say that we would repeal this or that measure and go back to what it was like before. However, life is not as easy as that. While the Secretary of State continues his present policies we are likely to encounter an economic disaster. That means that we shall have to look carefully at all our policies. The next Labour Government's approach to the regions will certainly contain a number of elements which I shall describe.

First, there must be more resources for the regions, not less, as proposed by the Secretary of State. Second, the resources will be made available selectively rather than automatically. Third, we shall have a system of planning agreements. They will help to maximise the effectiveness of regional policy. They will enable the Government to examine company plans as a whole at an early stage rather than piecemeal and at the last moment. They will mean that the carrot of public money and the stick of IDC control will be used together. Fourth, we shall increase the funds available to the NEB.

One of the most commendable of the Secretary of State's qualities is his total intellectual honesty. As the years go by, he never spares himself—or us—from the baring of his soul. He makes no excuses. He indulges in no prevarication. He simply gives us the benefit of each successive discovery that the whole of his previous policy was wrong. The strength of his previous convictions—and they are strong at the time—are as putty compared with the strength of his conversions when the time comes.

There could have been no more forceful a Minister for housing. I made my maiden speech when he was Minister for housing. He pushed his policy through relentlessly. Today he tells us—not without pride—that he was utterly mistaken.

I recall the days in Committee when we attacked the right hon. Gentleman's reorganisation of the Health Service. We said that it was bureaucratic, undemocratic and cumbersome. He brushed our objections aside. He knew—well, he knew at that time—that he was right. In addition, he had what Disraeli called "the best repartee"—a majority. Now he beams happily while his hon. Friends attack the Health Service that he created and confesses that his policy was totally wrong.

So it will be with the right hon. Gentleman's regional proposals. The years will go by. The damage will be done. Investment, particularly in the areas where it is most needed and where it can do the most good, will fall. The dole queues, which are already too long, will lengthen further.

When at last another Labour Government comes back to deal with the neglect of years, there standing at the head of the queue attacking the neglect will be the right hon. Gentleman. In the meantime, much needless suffering will be caused.

We attack these proposals, conscious that they form not so much a policy of action but a policy of drift. Shaw said that if navigation is our business it should not be entrusted to a drunken skipper. He said: It is the man who lies drinking in his bunk and trusts to Providence that I call the drunken skipper, though he drank nothing but the waters of the River Jordan. There could hardly be a more apt description of the leaders of the present Government. What our country needs now is not drift but navigation. In failing to provide that navigation the Government have failed the nation. I call upon the House to support the amendment in the Lobby tonight.

5.21 p.m.

Mr. John Patten (Oxford)

I am grateful to be called, though I am conscious that the time is never right to make one's maiden speech and I know that this afternoon, when so many others wish to speak, that must be especially so. One of my noble predecessors as Member for Oxford, Viscount Valentia, clearly thought that the time was not right to make his maiden speech for a very long time. He took his seat in 1895 and uttered his first words in the House 11 years later in 1906. I decided that in my case 11 weeks or so is about the right length of time to leave it.

I am honoured to have many noble predecessors in Oxford, and one, my noble Friend the Lord Chancellor, once described the city and constituency of Oxford as nothing but the Latin quarter of Cowley. There is more than a grain of truth in what my noble Friend said, for, great university though it contains, and a notable polytechnic, amidst an urban landscape that makes it one of the most beautiful cities not only in this country but in Western Europe, it depends for a great deal of its prosperity, not only in the city but in the region around, on the prosperity of the British Leyland plant at Cowley.

I am extremely glad that in recent months—indeed, for about the past year—the people who work at the BL plant at Cowley have shown such splended increases in productivity and splendid increases in the quality of the motor cars which they have been producing. At a meeting I had this morning with the chairman of British Leyland, Sir Michael Edwardes, he was pleased to make that point.

My right hon. Friend the Secretary of State for Industry, in reply to a question after his statement last week on the future of the National Enterprise Board, said that he praised the management of BL for the changes in attitude that they had been able to bring about in that company. I am sure that my right hon. Friend will recognise also that those changes in attitude are possible only with the full-hearted co-operation of all who work at Cowley and at other BL plants, and I am glad to see that that has been as forthcoming as Goverment support has been forthcoming.

If there is a financial burden on the Government and a practical burden on management, there also must be a strong moral burden on trade union leaders, in my constituency and elsewhere, to make sure that in a company such as BL—which has had more than its fair share of troubles—increases in productivity, changes in manning procedures and de-manning happen all the more easily.

Both the university element of Oxford, the university, the polytechnic and the great teaching hospitals—the gown side—and the motor industry side—the town side—have been extremely fortunate in those who have represented them in the House. I wish to refer not only to my immediate predecessor but to his predecessor, my old friend and mentor Monty Woodhouse. He worked hard on behalf of Oxford, as did his successor, Mr. Evan Luard. Their epic battles for victory in Oxford in the general elections of the 1960s and 1970s may have resulted in something that sounded rather like a football score—Woodhouse three, Luard two. I should like to reassure Mr. Luard that, although he may have won fewer general election victories over the past 20 years than did Mr. Woodhouse, his services are greatly appreciated by all those in Oxford who were his constituents, including myself, over the past 10 to 15 years.

Oxford has never been, and I hope that it will never be, an assisted area. In that sense, it is an extremely fortunate part of the country. It has never had any assisted area status, although I freely recognise that BL has had considerable direct Government assistance. Oxford has a low rate of unemployment compared to many of the constituencies represented by other hon. Members.

Oxford is approximately in the middle of England, and that location allows me to look north and south rather more dispassionately than can some hon. Members on either side of the House. I shall restrict my remarks on regional policy to England, as I do not feel that I have the experience to comment on other parts of Britain.

It is interesting to speculate on what might have happened to the regions and to regional development in England had the Special Areas (Development and Improvement) Act 1934, and the legislation that followed it, not taken place. The preamble to the 1934 Act—I am speaking only from memory—talks not only about economic development but about social improvement. It is critical to today's debate that we look not only to economic development but also to social improvement.

Looking back at that Act is a fairly gloomy experience, because the first schedule to it, which lists all those places in England and other parts of Britain which were to receive regional aid, demostrates how clearly our regional policy over the past 45 years has failed. The present list of areas receiving assistance in one form or another from the Government is, with a few notable additions such as Merseyside, more or less the same.

Therefore, whatever else we may say about our regional policy over the past half-century, it can hardly be said to have been especially successful in all its ramifications. If we stand back from it, we can see that we are dealing with a historic problem and we will have to use historic solutions to try to solve it. It would be hopeless to think that we could solve it in a very short time.

Looking at the history and geography of England and the rest of the United Kingdom, we see that the sort of regional problems that we are dealing with have a historical inevitability all their own. Throughout the history of England, it has always been in the southern part of the country that the majority of people, for better or worse, have preferred to locate most of their economic activities, except for that brief period in the late eighteenth and nineteenth centuries and the early twentieth century, when coal was king and the whole axis of development turned north-south.

What we are discussing in the debate and trying to deal with in the Government's regional policy is picking up the tabs from the legacy of that movement. If we stand back from the history of regional development, looking not at last year's changes or at whether regional employment premium was put on or taken off or whatever but at the problem in its total historical and geographical context, that must be seen to be true.

We shall, I think, see the northernmost regions of England, in particular, remain- ing in need of substantial assistance from Governments of whatever colour for a substantial time, just as they have needed it for most of the last half-century. Conscious as I am of the need in a maiden speech not to be controversial, I say at once that I do not thereby belittle for one moment the continuing economic, social and cultural benefits that flow from those regions. But we must take a long-term view of those most depressed areas, especially in the northern, north-eastern and north-western parts of England, while, I suggest, using an entirely different strategy for other parts of England—and, I dare say, other parts of the United Kingdom—which have less deep-seated economic and social problems. In the strategy that my right hon. Friend the Secretary of State for Industry has begun to unveil, I can see a much more sensitive attitude towards and identification of the true nature of the problems and, therefore, of their solutions.

I was delighted to hear my right hon. Friend in his introductory remarks point to the importance in regional policy of taking into account not only economic but social desiderata, just as the preamble to the 1934 Act had it. In that respect he is exactly right. He is only too well aware of the effects that changes in policy have upon the economy and the society of the regions that are affected. He has it exactly right in loading such help as is available on the regions that need it most. That is economically sensible and it strikes me as being extremely socially correct.

That is the sort of attitude that we have learnt to expect from my right hon. Friend. I risk praising someone on the Government Front Bench in my maiden speech as I know that it will be the only time that I shall be able to do so without Labour Members shouting "Give him a job."

I believe that my right hon. Friend is a most compassionate man. The elements of regional policy that he is outlining are economically correct and socially compassionate. We need to look long and hard at the real problems of regions and regional development and not imagine that they will be solved merely by an endless amoeba-like growth of assisted areas.

There are different problems in different parts of the country. There are the really depressed regions and other regions that have more disparate problems. I agree that assisted area strategy is economically and socially correct for the areas that have the deepest-set problems, but for other areas—for example, the areas from which the Government are withdrawing—I suggest that other types of aid under the Industry Act 1972 and other forms of Government assistance are much more applicable. It may be that we shall see regional policies taking off in two separate directions, each fitted to suit the problems more than some ideology or idea.

The right hon. Member for Deptford (Mr. Silkin) concluded his remarks by quoting my right hon. Friend the Member for Lowestoft (Mr. Prior). In a recent speech my right hon. Friend said that we must not create two nations in the United Kingdom. I entirely agree with my right hon. Friend and with the right hon. Gentleman. It strikes me that the way of preventing the two-nation concept becoming not merely a threat but a reality is to load such help as we can offer from entirely limited national resources, in an economy which for the moment is growing but slowly, on the areas that need help the most.

5.32 p.m.

Mr. Tony Benn (Bristol, South-East)

It falls to me to congratulate the hon. Member for Oxford (Mr. Patten) on making his maiden speech, which he did without a note, with great confidence, good will and an absence of controversy. My right hon. and hon. Friends will appreciate the hon. Gentleman's kind reference to Evan Luard and will remember Mr. Woodhouse who preceded him, and even the present Lord Chancellor who once represented Oxford.

I leave the hon. Gentleman with one paradox on which he might like to reflect. In Oxford there are two great industries—the university and the motor works. The motor works have to fight in the hard and harsh world of competition. The university, like all universities, is exempt from anyone asking it whether anything it does brings any return to anyone. Yet it is the professors who live in a secure atmosphere free from market forces who are usually the most forward in telling everybody else to face the harsh realities of life. If some of the professors in our universities, who have never been asked to justify any of the work that they do in economic terms, and who are quite properly maintained because what they do is worth while, were to appreciate the necessity of maintaining manufacturing industry even during the difficult years when market forces tend to contraction, we might have less of the two intellectual worlds in the United Kingdom that we now have.

Those remarks take me on to what I wish to say in the debate. My contribution will be brief because I appreciate that there are many hon. Members who want to speak about their constituencies. However, having twice been the Minister responsible for regional policy, I wish to make one or two comments.

The honesty of the Secretary of State for Industry is often commented upon. We have heard his analysis on an endless number of occasions. In the past 40 days we have had an opportunity to understand what his policy really means to the British people. The regions are not exempt from general policy decisions. The significant events that will take place in areas of high unemployment as a result of the first two months of the Government's policy will flow not only from the changes in the boundaries but from the cuts that will be made in public services and that are still being argued about in the Cabinet.

Significant events will flow from the raising of the minimum lending rate, which will have a bad effect on businesses in development areas. They will flow from the terminal grants for shipbuilding—two years and then withdrawal. Shipbuilding, like mining and parts of the steel industry, has always operated mainly in areas of high unemployment. The end of exchange control and the dismantling of controls over international industry, in so far as they existed, will have the effect of accelerating branch factory closures that many development areas have experienced so seriously in the past.

The failure of the Secretary of State, who is an attractive lecturer to the House on his own philosophy, is that he failed to make clear that the policies to which he is attached are to be implemented at a moment when the Western industrialised world is probably dipping from recession into a slump that many world economists believe will continue throughout the first part of the 1980s.

Why does the House imagine that President Carter is so worried about the oil situation? He is worried not only about oil supplies but about the impact that the present situation will have on the United States dollar. OPEC deficits will build up again as a result of the increase in the oil price. There will be the influence of the IMF in forcing countries to cut public expenditure. These factors will tip the world back into a severe recession. As we know very well, the parts of Britain most affected when the country is in recession are the development areas. At this moment a policy that was born out of the 1930s slump is to be whittled away, if not dropped, as we enter a serious world situation made worse by the fact that Britain and British industry have suffered from underinvestment over a long period. When profits were high, companies said that they did not need to invest. When profits were low, they said that they could not afford to invest.

As a result of the clutch of policies announced since 3 May we shall witness substantially higher unemployment. I wish that the Secretary of State, who is so keen about eliminating waste, would take account of the loss of production due to even our present levels of unemployment, which runs to about £10 billion worth a year. I wish that he would consider the cost of unemployment pay and redundancy pay, which comes to about £4 billion a year. If the forecasts are right—they are quite cautious ones—and there are 2 million unemployed in 1980, the public sector borrowing requirement will have to take account of even higher increases arising from unemployment.

The contraction of British manufacturing industry will be made worse by the cuts in support that have been announced, by lower public expenditure, by higher imports that are coming in as a result of the oil revenues and by keeping the pound high. Hon. Members, especially those representing development areas, are bound to be concerned because if there is a world recovery so much damage will have been done to our manufacturing industry that when British industry tries to re-equip there will be a flood of imports and a short fevered boom followed by a balance of payments crisis that will blank off British recovery at the moment when the recovery of some of our major competitors can go ahead.

It would be wrong for this debate to continue without this being plainly said. When our manufacturing industry has been cut back in a way that is inevitably going to follow present Government policy, including regional policy, and we must re-enter the world oil market when oil will be $60 a barrel, we shall not have the money to pay for it. This country will be confronted, as were other countries in the past, with emigration of our skilled people as the only way in which we may manage. The whole of development area policy was designed to check as far as possible the emigration of people from Scotland, the North-East and the North-West to the South of England. There will be an accelerated export of capital, for the Government have carefully said that they want profitable industry at home with no restraint on the export of that profit as a result of lifting exchange controls.

The House would be foolish if it did not look one stage ahead at what can happen when unemployment levels reach the levels we may experience, on the basis of present policies, before the 1980s are out. Anyone who thinks that unemployment does not matter any more—as there is neither starvation nor destitution as there was in the 1930s—misunderstands the disruptive effect of unemployment, even in a society that has minimum levels of unemployment pay. It is divisive, it creates bitterness and it is destructive of business confidence. If business men see the social disruption that will inevitably follow from the Government's divisive policies, they will not invest in the regions of this country. They will seek greater security elsewhere.

We should be foolish not to consider the possibility that if the Government's industrial policy has the effect that is widely expected we might end up, in some respects, in a law and order situation. Anyone who looks at Northern Ireland, where there are a sectarian dispute and high levels of unemployment, can see what social disruption does to an area that is deprived of hope, employment for its youngsters, and a perspective for its people.

The policy will fail economically, industrially and morally. Many people—I am one of them—believe that high public expenditure is a moral obligation on a society and not just something that must be justified by its economic return. Some people believe that maintaining proper standards of education, health, housing and the environment is what a civilised society owes to its own people. If there is a scaling down, as is expected, of the levels of public provision, which over several generations people have been led to expect, and if there is a withdrawal of the Government from the economy on the basis that market forces will necessarily benefit the community as a whole, the opposition to the Government's policy will be much more formidable than they imagine.

Perhaps the Government are dreaming of a danger, as they see it, of a re-run of the 1970–74 confrontation. It will be much more than that. The people of this country are entitled to expect that the Government that they elect, whatever their political philosophy may be, will see it as their job to try to maintain full employment. They expect the Government to ensure that areas adversely affected by market forces—which may affect the prospects of an industry but for which there is no moral responsibility on those who work in those industries—are given a perspective of growth and development comparable to that in areas where, perhaps for other reasons, market forces are working better. People are entitled to expect that the benefits that flow from those areas of the country where industry is successful shall be deployed, in part, in maintaining and expanding public provision in other parts of the country.

Indeed, if we consider the 1930s, to which I referred on a previous occasion, it was massive public expenditure, in the form of rearmament, that ended the slump. Nobody wants to return to that solution. However, the Government, at exactly the wrong moment in our history, have decided to cut back on public expenditure which alone can bring our own people back to employment in the whole country and especially in the development areas. The Government are setting us on a course that will deepen the depression. shut out the hopes for young people leaving school, make it harder to develop the new technology, and reduce the quality of life.

In the end the mandate argument will not be sufficient to overcome that criticism, for a mandate is a wasting asset. No one disputes the outcome on 3 May. The Secretary of State for Industry, as the main architect of this policy, is trying to reverse a consensus around which many generations of Ministers have been working to improve the lot of our people. The niggling, mean policy of scaling down regional aid will cost him dear when he and the Government have to account to the people who elected them.

5.46 p.m.

Mr. Michael Colvin (Bristol, North-West)

Thank you, Mr. Deputy Speaker, for calling me in this important debate.

I begin by adding my congratulations to my hon. Friend the Member for Oxford (Mr. Patten) on his excellent maiden speech. I am glad to have postponed my maiden speech until now as it has given me the opportunity to make many new friends on both sides of the House and to appreciate that probably 90 per cent. of us in this place agree on 90 per cent. of what we are trying to do. There is much common ground and great willingness to be kind and helpful to new Members like myself that we all greatly appreciate.

This evening is a far cry from my first day in the House when we assembled, with the dust of the hustings in the air, to re-elect Mr. Speaker to preside over us with his Welsh wizardry and humour. On that first day I looked at the members of the Opposition who were uncomfortably seated, wearing red ties, glum expressions and revolutionary looks. I was shocked to realise that part of what I said about them in the election was probably true. However, I realise that to achieve anything in this place it is important to see the other side's point of view. I travelled by a tortuous route to the opposite Gallery and viewed the Government side of the House. What I saw was rather worse—row upon row of navy blue suits. I am glad to say that we have now all regained something of our original individuality.

It is hardly surprising that on that first day, when the Chaplain arrived to take his place before the Chair, he first looked at the assembled Members and then prayed for the nation.

It is for the good of the nation that we debate this evening. Although this is a debate on regional industrial policy, it is more than anything a debate about people. Regional policy is a carrot-and-stick business. I applaud the way in which the Government concentrated the carrots in those areas of the kingdom in most need and, at the same time, reduced the stick with which they can deny industrial investors, by means of industrial development certificates, the freedom to go elsewhere.

The second part of the policy will cause the flags to be hung out on 6 August in the great and historic city of Bristol, whose electors have sent my hon. Friend the Member for Bristol, West (Mr. Waldegrave) and myself to join the three other distinguished right hon. and hon. Gentlemen who also represent Bristol constituencies.

I am about as different from my predecessor, Mr. Ron Thomas, as he was from Martin McLaren, who preceded him, but one thing upon which we are all agreed is the dictum of an earlier Member of Bristol, Edmund Burke, who said that he wanted to be a Member of Parliament, to have his share in doing good and resisting evil. Ron Thomas's methods may have been a little different from my own, but I believe that his heart was absolutely in the right place. He certainly did his best to continue the unparalleled standard of constituency service of his predecessor, Martin McLaren, for whom the people of Bristol, North-West have a lasting devotion and affection, quite irrespective of the way in which they usually voted. I am sure that all Members of this House, Mr. Deputy Speaker, will join me in wishing Martin McLaren a very speedy recovery from the most serious illness which now besets him.

For many years the city of Bristol has enjoyed a balanced economy, but over the last decade there has been a growth in the proportion of commercial and service jobs, at the expense of manufacturing. Unemployment, having been traditionally about half the national level in Bristol, has grown to around the national average. I believe that this is due in part to the need to clear the IDC hurdle, with its 15,000 sq. ft. exemption limit. That limit is now to be raised to 50,000 sq. ft., which will enable the wealth-creating industries, which the country needs so desperately, to come to our area if they so wish.

Bristol is typical of many other cities in the land which can act as pump primers for our economic recovery—provided that the Government will first create the climate of confidence in which investors are encouraged to take the risks involved in all new business. It is worth recalling that still by far the greatest proportion of new investment in industry is found from retained profits. If there are no profits, there is no new investment and therefore there are no new jobs.

I believe that the nation's ability to finance support for those remaining assisted areas in our country will depend largely on the wealth that we generate elsewhere. In the past, by restricting new development in the non-assisted areas, we have been cutting off our noses to spite our faces.

Bristol is a city which enjoys great advantages of position, communications, environment and attitude to work. We have an excellent industrial relations record, a highly skilled work force, and a tradition of technical and technological advance and free enterprise, all now waiting for the green light which is soon to come.

The leading industries in my constituency of Bristol, North-West are aerospace and agricultural manufacturing, which, together with the Avonmouth docks and the chemical companies in Avonmouth, employ nearly 20,000 people. Nearby, at Filton, we have the most comprehensive aerospace complex in the world, with facilities for research, development and manufacture of aircraft, rockets, missiles and engines, together with the flight testing facilities which came to us not long ago from Fairford nearby.

The measures proposed by my right hon. Friend the Secretary of State for Industry, though very welcome in our city, are probably not so welcome—at any rate initially—in the Principality across the water from us, or in some of the other assisted areas which may be demoted by my right hon. Friend's plans for, quite rightly, concentrating the help where it can do most good.

It is the nature of this help that I should like to question this evening. It is based on regional development grants of various percentages on capital expenditure incurred for the provision of new plant and machinery, buildings and works. I question whether capital expenditure should be the only basis for grant aid. An objective of my right hon. Friend's regional selective assistance policy is To provide more productive and more secure jobs". In the long term, I am absolutely certain that this is what will happen. But perhaps my right hon. Friend could, in his ongoing reviews of the Government's regional industrial policy, look once more at the concept of employment grants. We are giving aid in order to provide work in the assisted areas, but today, as industry enters a second industrial revolution, no less dramatic than the first, investment will be in plant and machinery that is largely automated rather than in people. Yet it is workpeople whom the aid is intended to help.

There are still many labour-intensive industries in existence. Surely they are the companies which could be encouraged to go to the assisted areas. Many are already there, and there are many small businesses which could start up and expand if grants were based more on the number of people they were to employ rather than on the amount of capital invested.

My right hon. Friend might like to consider, as an alternative to capital grants tied to the investment in plant, machinery and buildings, that grants might be based on the average number of people employed, in order to encourage labour-intensive industries.

We have in the past tried the selective employment tax refunds and the premiums. These were followed by the regional employment premium, which was scrapped by the Labour Government in 1977. Both were payroll subsidies, but in some cases I know that there were industrialists who used the cash to subsidise plant investment. But this often, in turn, reduced the number of jobs that were to be made available. It cannot be beyond the capabilities of the Department of Industry to devise a formula which would enable more help to go to labour-intensive industries than to those that were largely automated.

Such a policy would, I submit, first help to win the co-operation of the trade union movement, without which it will be very difficult to achieve the removal of restrictive practices, and the mobility between trades that is required to increase productivity. Second, it would help to avoid the skills shortage that is so often experienced by capital-intensive industries which go to the assisted areas, when such industries would be better located, dare I say it, in cities such as Bristol, where technology already flourishes and skilled labour is perhaps more readily available.

The structural change in employment to which I have referred will gather momentum. Modern industry will continue to replace workers with machines wherever possible, in factories and in offices. This decline in jobs comes at a time when the number of people who want to work, especially women, is steadily rising. The problem of unemployment among the under-25s, particularly school leavers, is acute. No number of job creation schemes, work experience programmes or community projects can satisfactorily replace work by which a young person can earn a living. That is what young people want to do when they leave school—to earn money, to be independent, and not to be in receipt of State handouts.

I thank the House for the patient way in which it has listened to me this evening. This time last year, I was in a shipyard on Merseyside and I saw chalked on the wall the words "Cheer up, things could be worse." I did cheer up, Mr. Deputy Speaker, and things got very much worse. After a winter of discontent, we now have a new Government and a nation that has the opportunity for a new beginning. There is hope where previously there was gloom. There is a world recession and a shortage of energy. But we have an abundance of the finest resource of all—a patriotic and determined workpeople, waiting for resolute leadership and the opportunity to put their talents to work for the benefit of themselves, their families and the nation. That is why I believe that any regional policy, if it is to succeed, must be designed to release those talents. Nothing less will do.

6 p.m.

Mr. A. E. P. Duffy (Sheffield, Attercliffe)

It is a pleasure to follow the hon. Member for Bristol, North-West (Mr. Colvin). I compliment him on his maiden speech, which, in its preliminaries, was humorous and generous. The House will have welcomed the hon. Gentleman's kind references to Ron Thomas and Martin McLaren. Both gentlemen are well remembered by their colleagues. If the present hon. Member for Bristol, North-West serves the House and his own party as actively and effectively as they both did, he will serve his constituency well.

The speech of the hon. Member for Bristol, North-West was lucid and informed and doubtless, like the speech of his hon. Friend the Member for Oxford (Mr. Patten), it will be seen as an important contribution to the debate. Both speeches, despite the closing passage of that by the hon. Member for Bristol, North-West, were suitably irreverent for maiden speeches—certainly for our taste. I know that they will both be read with great interest by the Secretary of State. Finally, the speech of the hon. Member for Bristol, North-West was fitting for a Member from a city that returned Edmund Burke.

Yorkshire Labour Members were quite clear in the early seventies that the problem with, and potential of, Yorkshire and Humberside could be summed up under three headings: low wages, environmental problems and geographical position. The root cause of the region's economic weakness was a lack of growth industry, aggravated by an outdated industrial structure. It was vitally necessary to bring to Yorkshire more growth industries, particularly those generating employment.

Whilst confidence in the basic industries of coal, steel and textiles remained, they needed to be reinforced by new industry if job opportunities were to be preserved. Such industry could be attracted to Yorkshire only if the environment was improved through tackling dereliction, and road communications were extended across the country to Hull.

The Conservative Government of that time believed that Yorkshire could sustain its level of economic activity without placing much reliance on mobile industries moving in from outside. I am glad to see that some of the Yorkshire group of Labour Members of Parliament are here, because we all worked on a project that eventually led to a debate in this House, the first held on any region and one that gave rise to a three-line Whip of my own party. We look back on that debate as a milestone in the history of the House.

We were in no doubt at that time that the then Government's analysis was wrong in general. Regional economic policy must be based on the planned and induced relocation of industry. Nevertheless, those same Yorkshire Labour Members of Parliament recognised that the new Industry Act of 1972 might provide a framework within which self-help policies would receive the necessary Government support to arrest an ominous decline in industrial activity and job opportunity.

That some progress has been made can be seen from the latest figures for gross domestic product per head—the percentage change for 1976–77—that makes it possible to construct a growth league for Britain. The latest figures confirm that the Yorkshire region has continued its steady movement up the regional ladder since 1971. We know that we could have done better if certain parts of our region had been awarded justifiable development area status.

Labour Members of Parliament were repeatedly frustrated in their representations by a level of unemployment in Yorkshire that was misleading and appeared to compare less unfavourably with other assisted regions. What was never sufficiently appreciated was that Yorkshire's unemployment figures were determined less by frictional or deficient demand factors than by structural change in our basic industries. Moreover, the resultant unemployment level would have been much higher but for migration from the region.

There was a need for a new blend of job opportunities. There was a deficiency in white collar executive and administrative employment. That is why every Yorkshire Member of Parliament on the Opposition Benches attaches great importance to an affirmation by the Government—preferably this week—that the headquarters of the Manpower Services Commission will be relocated in South Yorkshire. South Yorkshire Members and the South Yorkshire county council, though welcoming a recognition of the severity of the problems of the Mexborough/Goldthorpe and Rotherham areas through the granting of development area status, view the weakening of regional policy generally, and the treatment of the rest of South Yorkshire, with the gravest concern.

While Doncaster and Barnsley remain intermediate areas, the benefits of this have been much reduced. These areas still exhibit many of the classic symptoms of declining industrial and mining areas. Both areas suffer from an unduly high proportion of unemployment in coal mining, which is in serious decline in the Barnsley area. Unemployment is high in both areas. My right hon. Friend the Member for Doncaster (Mr. Walker) has asked me to remind the House that in Doncaster the level of unemployment is 7.7 per cent.—higher than in some proposed development areas. Indeed, the rate in Doncaster has frequently exceeded that in the adjacent area of Rotherham which is now proposed as a development area. I hope that my hon. Friend the Member for Rotherham (Mr. Crowther) will not object to my saying that.

Barnsley and the Don Valley also contain small areas with very high unemployment rates. One example is Wombwell, where 10.9 per cent. of the population is unemployed and the situation of which is identical to that of the adjacent Mexborough development area. Even more striking illustrations of local pockets of very high unemployment in the Yorkshire coalfield can be seen in areas such as Hemsworth and South Elmsall. My hon. Friend the Member for Hemsworth (Mr. Woodall) asked me to stress that, like Wombwell, these two parts of his constituency lack the capacity for self-generating growth.

The loss of intermediate area status for Sheffield means that, as well as losing its eligibility for a regional development grant from 1980, it would, from 1982, cease to be eligible for selective industrial assistance under section 7 of the Industry Act 1972, as well as European regional development fund grants. European Investment Bank loans, basic service grants under section 7 of the Local Employment Act 1972, Government advance factories, assistance under the employment transfer and job search schemes and 100 per cent. derelict land clearance grants.

My right hon. Friend the Member for Sheffield, Park (Mr. Mulley), who is my neighbour, knows that we have problems. They are not just inner city problems. They are problems of intense dereliction and deprivation that we cannot imagine can be effectively tackled without the aid of some of the devices I have mentioned, all of which are to be scaled down and eventually removed from us.

Although it is true that Sheffield's unemployment rate has been slightly below the national average in recent years, it has masked structural decline and migration, as I indicated. Moreover, there has been a relative deterioration recently. There were almost 15,000 unemployed in the city last month. The chairman of the city's careers advisory committee wrote to me yesterday expressing concern at the seriously worsening employment position facing school leavers and other young people in the city.

I have already mentioned that the unemployment rate in Sheffield has been kept down by migration from the area. Projections suggest further losses of 15,000 people between 1976 and 1986. To the extent that greater employment losses have been averted by above-average industrial performance, prospects locally must be affected by the removal of assistance. For example, the local economy is disproportionately dependent on steel manufacturing. This industry is passing through a very difficult time. With private sector steel suffering from an average of 30 per cent. spare capacity, poor profitability, import penetration and a United Kingdom demand that is not likely to return to 1973 levels before 1985, rationalisation is inevitable.

This is a process that has cost 5,000 jobs over the past five years and the closure of Swift Levick's steel department only last year. A fierce takeover battle has just been concluded between Edgar Allen, Balfour and Aurora Holdings in my constituency, which the workers fear must result in more job loss. They fear that the Stock Exchange down here is about to fill the labour exchange up there. This takeover represents a significant step in the history of the city's special steel industry, with a major amalgamation in the bars sector. Other sectors—alloy forgings, super alloy steels and low alloy billets—have been substantially reorganised, with Johnson Firth Brown, the country's biggest special steelmaker, playing a big part. Johnson Firth Brown took over part of Hatfields, another of our local firms, earlier this year, resulting in yet further job losses with more threatened.

The House appreciates that the Secretary of State has stayed throughout the debate so far, when there is a great temptation to leave, as so many of his predecessors have done, as I know only too well. I am grateful to the right hon. Gentleman for having sat through the debate thus far. I want to ask him whether he is really sure that this is an appropriate time to remove assisted area status from Sheffield. It is not only Sheffield that is seriously affected, for these sweeping Government changes in regional aid could plunge South Yorkshire into economic warfare. Sheffield will lose all aid. Rotherham and Mexborough will get more, and I am glad. Barnsley and Doncaster will retain some of the help that they already get. Therefore, by 1982, when Sheffield loses its intermediate area status, geography will be all important.

A factory coming to South Yorkshire can site itself in Sheffield and get nothing, or move a few miles up the motorway into the Barnsley area and get a chance of selective assistance under the Industry Act. Alternatively, it could move to Rotherham and Mexborough and qualify for cash grants towards the cost of the new factory and equipping that factory, as well as Industry Act aid. Both towns can also apply for the small firms employment subsidy until March 1980.

As the Secretary of State must know, employers, in time with the unions, are distinctly lukewarm towards his proposals. As my own local employers see it, the danger is that in the present economic recession aid will be cut before a reasonable level of profitability returns. If it is, trade, industry and employment prospects in South Yorkshire will be damaged.

The present structure for regional aid has given rise to many anomalies, as the Secretary of State reminded us. No hon. Member can deny that. The Secretary of State represents a Yorkshire constituency. He is therefore familiar with the problem of Yorkshire and Humberside. I appeal to him to reconsider his proposals and to seek ways of tailoring them to the treatment that the area needs, which is more in keeping wih the problems from which it suffers. They are the problems of a region that the right hon. Gentleman knows only too well.

6.14 p.m.

Mr. Gerry Neale (Cornwall, North)

I thank you, Mr. Deputy Speaker, for this chance of inflicting a third maiden speech on the House. I hope that I may also be forgiven for admitting how much I treasure this opportunity to make my first contribution to parliamentary debate. It is the consummation of many years' involvement in various activities that I have always believed could result in gaining election to this House.

In stating that I represent Cornwall, North, I am well aware that I am known immediately as the victor over John Pardoe rather than as Gerry Neale. My contribution to the debate on regional policy gives me an opportunity to show my respect for my predecessor, who represented the constituency for 13 years. It also allows me to express my own deep concern for the well-being of Cornwall.

John Pardoe championed the cause of Cornwall in a way that won him respect from even his political opponents. In his role as deputy leader of the Liberal Party, and in his spirited espousal of Liberal causes, he left none doubting his resources of energy and determination. Having campaigned against him twice in five years, and having disagreed with him fundamentally on certain issues, I could not bring myself to dislike him or disrespect him. He was as magnanimous in defeat in May of this year as he was considerate in his victory over me in October 1974. I wish to thank him for that, and on behalf of Cornwall, North I thank him for his service to the constituency since 1966. His defeat is undoubtedly a sad loss for the Liberal leader, for whom I feel a little sympathy but to whom I make no apology.

In the context of this debate, it is just as important for the Government to understand why, in my view, Cornwall, North now has a Conservative Member after 13 years of Liberal representation. Cornwall, North may be concerned about the standards of education, law and order and trade union power, but what has increasingly dominated opinion in the constituency has been the economic performance of the country under the Labour Administration. Opposition centred on three aspects—on the level of personal taxation, the extent of Government expenditure and interference and on the level of unemployment. With that opposition came the realisation that the Liberal Party could do nothing to bring about the much-needed change in political direction and leadership. It was the sudden and unexpected support by the Liberal Party for the Labour Government in the spring of 1977 that in my view sounded the death knell for Liberalism in the constituency.

North Cornwall may have all the appearances of a relaxed area of scenic beauty, in which nearly every hon. Member at some time seems to have spent a holiday. But, despite appearances, it is made up of people who thirst after strong leadership and clearer direction. At the same time, they expect greater freedom for private enterprise. Without large-scale employers and excessive trade union representation, its economy depends on small businesses, be they farmers, hoteliers, small factories, shopkeepers, scientists or craftsmen. There is below-average pay and above-average unemployment, although there are shortages of labour in some skills.

For my part, I have known of, and become increasingly involved in, Cornwall's affairs over the past 15 years. I speak as a solicitor who started, and has been involved in, the current expansion of two businesses, one professional and one industrial. I have had the good fortune to have served on a planning committee for the new city of Milton Keynes—an area as different from North Cornwall as one could find. Compared with the wealth of experience in this House, I am aware of my own shortcomings. If I err into controversial areas, I hope that it is not judged as a discourtesy but more as a sincerity of view on this subject.

I am led to the conclusion that the Government, no matter how caring or spendthrift, can do very little to create industrial jobs in any real number. They are limited merely to saving jobs, all too often in industries that are no longer relevant to today's needs. Those jobs are allowed to linger on, soaking up the energy that ought to be applied to encouraging alternative sources of employment. By the very nature of things, some large-scale industries become redundant and obsolete in that their products or services are no longer required by the market. It is rarely even practicable to plan for the immediate replacement of one large-scale employer by another. That is a painful political admission. To indulge in financial inducements to industry is to strike it with an economic flaw that politicians seem too ready to ignore. Governments can only designate development areas, assisted areas, intermediate areas, travel-to-work areas and any other form of area. They cannot make industries develop.

Any form of development area, so-called, in my view, first needs businesses willing to relocate to it, and it has to be remembered that there are many non-assisted areas in this country, with public projects such as new towns and private projects of industrial development, all competing to obtain these prospective employers for their area. What all these areas have discovered—assisted and non-assisted alike—is that there are all too few companies in total actually wishing to relocate; that these companies initially considered assisted and non-assisted areas irrespective of grants; and that these companies very often ignore the carrot of grants, plump for non-assisted areas and then become infuriated by development certificates bureaucracy.

But worst of all, as my hon. Friend the Member for Bristol, North-West (Mr. Colvin) indicated, is that the companies, by the very act of relocation and the installation of increased technology, actually need fewer employees to obtain a higher output.

A wise business judges the merits of any geographical location in terms of the viability of its investment and prospective trade. Can it really make sense, then, to offer financial inducements out of hard-earned taxpayers' money to encourage that business to throw its wisdom out of the window and go to an area which it has already dismissed? On the other hand, if a business can only find a viable future based on State grants and regional aid, can it be wise, on behalf of the taxpayer, in effect to invest in that company?

I cannot take as lenient a view as my right hon. Friend the Secretary of State. In my view, industries, large and small, entrepreneurs and small business men, become established, they expand job opportunities, and they prosper, and they even fail, in spite of rather than as a result of Government grants and central Government and local government planning policies.

For those reasons, I welcome, though not with a full heart, the direction which is now being given to the regional industrial policy by the Secretary of State for Industry. If I were to criticise it, I would say that the cuts are not bold enough. In addition, I am suspicious of the fact that the machinery for regional aid is left intact. It may be thought that I would have been expected to welcome increased aid to Cornwall. I do not. This may surprise my West Country colleagues, but I cannot deceive myself into believing that it is Government aid which will reverse the tide on jobs in Cornwall.

I arrived in this House as concerned as anyone about the levels of unemployment. With that concern I carry a sense of frustration that jobs could so easily become available. To make them available, I believe that the Government must concentrate far less on policies of regional and industrial aid and much more on those relating to employment and planning law. To pursue regional inducements in Cornwall will serve only to distort the Cornish economy still further. But, worse than that, I feel that it will offer the very escape route which serves local planners most and local unemployment least. With grants available and industrial space and zones available, but no prospective tenants, those planners can then blame the short-sightedness of industrialists rather than their own.

Cornwall, like any other region, has to face its own set of economic facts of life. In the meantime, the Government must concentrate more on the continued reduction of bureaucracy surrounding employment and on the inhibiting provisions of the Employment Protection Acts. These hit small businesses. Their relaxation would clear a log-jam of available jobs in my constituency. The National Farmers Union states that there are many such potential jobs in agriculture.

On planning powers for local authorities, Government statements offer a far cheaper and healthier way than regional aid for curing the worst effects of unemployment. The reduction of these powers would enable Cornwall's economy to flourish. The principal planning authority in North Cornwall has succeeded in each of the past three years in reducing the percentage of applications which it approves. It currently processes only one in five applications within an eight-week statutory time limit. But an industry exists which could in large part hold the key to Cornwall's economic future. Tourism offers immense prospects for the county on jobs, yet it is the planners, and not regional aid, that prevent their realisation. Many tourist ventures are able to sustain large staffs all through the winter, yet there are too many examples of applications being refused. No Government money is required, Private enterprise has it available and ready to invest.

In Newquay there are businesses wishing to expand on their own land and premises but they are refused consent. Yet at one and the same time factory space is being constructed by public money and remains vacant for much of its life. The previous Labour Administration distinguished themselves in North Cornwall by presiding over such expenditure, on the one hand, and by witnessing one person losing his job in the constituency for each single working day that they were in office, with another job even disappearing each weekend.

Surely there is a need not to ask whether the regional aid was enough but to ask whether it has any effect at all, because it is so insensitive to local resources and requirements.

The Conservative Party fought its election campaign on individual responsibility and the need to devolve power back to the individual from central Government as well as local government. I am able to stand in this Chamber because a substantial majority in North Cornwall shared that conviction. That majority want their parliamentary representative and their councillors—county and district—to face the fact that Cornwall wishes to do, and believes that it can do, much more for itself. It wants to be taxed less—and, mercifully, the present Government have done that. It wants to be governed less—and, thankfully, the present Government have promised that. But most of all it wants to be subsidised less. Subsidies do not give value for money. They brand Cornwall as an area lacking in enterprise and lacking in local employment opportunities, and neither image is true.

North Cornwall is one of the most beautiful areas of Britain, and I am honoured to represent it. Of course, I do not wish to see it stripped of its charm and beauty. While I support the motion, I urge the Government to be more courageous, and to set a programme to phase out this smothering mantle of regionalism and trust the people. Let them challenge the local authorities to service enterprise in their areas rather than to restrict or contain it. Then stand back and watch Cornwall as an example.

The apparent need for subsidies would dissolve, unemployment would fall and the well-being of these so-called deprived areas would then become a matter of pride to those who live in them and represent them.

6.27 p.m.

Mr. Frederick Mulley (Sheffield, Park)

It is a great pleasure to congratulate the hon. Member for Cornwall, North (Mr. Neale) on his maiden speech. The hon. Members for Oxford (Mr. Patten) and Bristol, North-West (Mr. Colvin) are also to be congratulated on their maiden speeches.

I am sure that the House will have heard with great interest and sympathy the very generous remarks of the hon. Member for Cornwall, North about his predecessor, John Pardoe. It is not for me to get involved in the arguments that the hon. Member evidently had as to whether the Liberal Party should have supported the Labour Party, but I ask him to reflect on whether he would be so confident of his return here if an election were held now, less than three months after the recent campaign.

I do not feel in any sense that the hon. Member for Cornwall, North was in breach of the non-controversial rule, because it is quite proper that hon. Members should criticise their own Front Bench. I rather admired the hon. Member's courage in turning away possible financial assistance to his constituency, rather more, perhaps, than his political judgment in so doing. But that is a matter about which no doubt he will learn as time passes.

What worries me as much as the content of the regional policy before us is the way in which it has been presented. We had problems last week when the Secretary of State had to rely on his Under-Secretary to bring in copies of the written answer to a question in which the guts of the statement was contained. I was very surprised, on reading that, to find that it said that an explanatory note was available in the Library. I went to the Library. The staff there had no knowledge of any such explanatory note. It took several hours for them to procure one from the Department of Industry. To my great surprise, when one was procured, it was marked "Confidential" although its purpose was to explain the scheme and how to apply for grants.

I say that in a light-hearted manner, but it goes to the heart of the matter. The Department has not properly gone into detail in making these proposals. No one would question the passionate sincerity of the Secretary of State in pursuing the cause that he is espousing at the time but one can question his administrative competence. The presentation of the case is indicative of the way that the matter has been handled in the Department, which has not properly gone into the merits of the proposals before the House.

I wonder how long it will be before the Secretary of State changes his mind. As an honourable man, he may resign if he has to do the U-turn that was forced on one of his predecessors whose recent death we all greatly regret. We all remember the brave words of 1970 about lame ducks and the Industry Act that followed in 1972. We hope that such a U-turn will shortly come in the present Government's policy. If they believe that we need a revival of British industry, their economic policy is quite disastrous.

I read in The Daily Telegraph today that the Government are to cut defence expenditure. When I was Secretary of State for Defence, Conservative Members said that I should spend twice as much as I was spending, and when I hear of these cuts I wonder whether the Government have any grip on their manifesto policies or the nation's finances.

In order to be brief, I shall not enlarge on the broad perspective already covered by my right hon. and hon. Friends but will mention briefly the way that these proposals will affect my constituency in the city of Sheffield. Under them we have lost our intermediate status. In his statement last week the Secretary of State said that we needed local initiative in all our cities and counties, so that is particularly ironic. I challenge any party in the country to produce a more active joint operation than that of the city council, the trade unions and chambers of commerce and trade in Sheffield. No one could have done more to promote employment by seeking job opportunities for Sheffield from all over the world. The reward for that enterprise is to lose our intermediate status.

Taking the crude figures, it seems that Sheffield has been harshly treated. The proper criteria for regional aid should be a projected structural change in the employment situation of a city, such as we suffer in Sheffield, with a decline in the manpower requirements of heavy engineering—steel and general metal industries—and where there is a substantial element of migration. Neither of these factors has been taken into account in the current proposals. From the example that I gave of the way that the Secretary of State's written answer was supplied to this House and the Library was given the explanatory memorandum, it is possible that some civil servants merely took a cursory look through crude statistics and decided that one part of the country should be upgraded and another should lose its status.

The published unemployment rates give an unfair picture of the state of affairs in Sheffield. The number of people unemployed in the Sheffield travel-to-work area was 14,788 in June. That area comprises 40 per cent. of South Yorkshire, yet parts of the region have been uprated, others have retained their intermediate status and other areas, principally Sheffield, have had that status taken away.

Relatively speaking, in Sheffield we have a greater problem in finding jobs. We have pockets of unemployment that are larger than Mexborough or Rotherham, whose status has been enhanced—not that I would wish them to lose that. In the inner city of Sheffield in six wards with a population of 100,000, which is larger than the Dearne Valley area, there is an unemployment rate of 8.9 per cent. In a wider area of 10 wards there is still an unemployment rate of 7.9 per cent., which is equivalent to that in the Rotherham travel-to-work area, and Rotherham has been upgraded from intermediate to development area status.

Mr. Stan Crowther (Rotherham)

My right hon. Friend is the second Member from Sheffield who has apparently exhibited a little green-eyed jealousy about the fact that Rotherham and Mexborough are keeping their assisted area status. Twenty-six thousand people travel every day from the borough of Rotherham to the city of Sheffield to work. Surely it will greatly assist the area as a whole if some of those people are able to stay in the Rotherham area to work. That would create more employment opportunities in Sheffield.

Mr. Mulley

I make it absolutely clear to my hon. Friend that in no way do I wish to see Mexborough and Rotherham lose their enhanced status, but it makes complete nonsense to pick out little areas in South Yorkshire when the whole region should be planned as an economic entity. Sheffield is the natural centre of South Yorkshire, and to deprive it of its status will not attract the industry that we need. It would be advantageous if the people from Rotherham who come to Sheffield to work did not do so and my constituents were able to take their jobs, and I should be happy to learn of any steps that my hon. Friend proposes to take to that end.

In Sheffield 15 per cent. of the population consists of retired people. That adds to costs that have to be met from local resources. Also of great concern is the fact that 3,700 school leavers are unlikely to find jobs. In view of the Manpower Services Commission's planned reduction, we shall have over 4,000 young people with poor prospects of obtaining employment. In theory we have a three-year transitional period, but in practice the assistance we have had from our intermediate status disappears. Very little can be done within a year, and it is unrealistic to imagine that a firm can come to the area and establish itself within that time. With the competitive grants available in other areas, we shall not be able to sustain our progress in bringing in new jobs to replace those lost by recession and technological change in our metal industries.

While Sheffield has had intermediate area status, we have enjoyed about £10½ million of regional development grants for building purposes. A total of 33 firms have benefited and about one-half of the 70 firms that have come to local authority leased sites have had some aid from the fund. When trying to get a firm to move into an area, it is important to have available the selective assistance that covers removal costs and so on, and we calculate that about £8 million has come to the city in that way.

In theory, industrial development certificates will be freely available to non-assisted areas, but that will be a bar in practice, particularly to foreign firms, because they are rightly suspicious of the lengthy bureaucratic processes of Whitehall. We cannot give those firms the assurance that they will get a certificate. We could give that assurance if Sheffield were to remain an intermediate area.

In addition, the whole EEC regional programme is tied in with the fact that a project is receiving some aid from the national Government concerned. A number of schemes that would have qualified for European aid will not be able to receive it if Sheffield loses its status. It is impossible to quantify how much money may be involved, but I think that all hon. Members agree that we do not get a return from the EEC which compares with our contribution to Community funds. The fact that we are to be denied EEC aid for a number of social as well as economic and employment projects is probably as important as the fact that we shall lose grants from the Government.

There is an enormous backlog of derelict industrial land in Sheffield going right back to the Industrial Revolution. Sheffield has been trying, with some success, to clear up that land, but if we lose our intermediate area status we shall lose access to the grants under section 8 of the Local Employment Act 1972 which are made available for derelict industrial land clearance.

I am glad that the Under-Secretary who is responsible for small businesses is on the Government Front Bench, because I am greatly concerned about the impact that Sheffield's loss of intermediate area status may have on small firms. I understand that a recent survey has suggested that Sheffield is second only to Birmingham in the number of small firms within its boundaries. If we lose assisted status, the small firms employment subsidy, which has been valuable to a number of firms in Sheffield, will also be lost because it is restricted to development and special development areas.

In assessing the impact of the proposals on my constituency, I must look wider than the immediate impact of the loss of grants for building and to the ancillary consequences, not least for small firms, and the loss of European regional aid.

The Secretary of State said that he would listen to evidence as to why some decisions should be reconsidered. I hope that the Minister who is to reply to the debate will make clear that there is the possibility of a review before the damage is done and that credit will be given to places such as Sheffield that have tried to help themselves—a philosophy which is surely not unwelcome to Conservatives. If the city of Sheffield makes a submission on those points, I hope that its case will be looked at again.

The Under-Secretary of State for Industry (Mr. David Mitchell)

I can assure the right hon. Gentleman that if there are any special factors that we have not appreciated in drawing up the arrangements, we shall be happy to receive him, or a deputation from the city of Sheffield, in order to examine details that, it is felt, should be brought to our attention.

Mr. Mulley

I am grateful to the Minister, who is, as always, extremely courteous. I shall seek advice and I think that we may wish to take advantage of his offer. One has the impression that the package has been put together with the same level of skill as that with which it was presented to the House, which, everyone agrees, was less than the desirable standard.

6.46 p.m.

Mr. Kenneth Carlisle (Lincoln)

There is no doubt in my mind that the time has arrived to subject regional policy to a rigorous scrutiny. After all, the purpose of the aid is to be selective and to pick out those areas of the country that are genuinely in need of help. Now that about 40 per cent. of Britain is covered by selective assistance, what was meant to be selective has become common-place. In the words of Gilbert, When everyone is somebodee, then no one's anybody. The existing schemes have become riddled with anomalies and absurdities. Perhaps that can best be shown by a practical example. My constituency is not an assisted area, but is surrounded on three sides by intermediate areas—Horncastle, Louth and Gainsborough. The current level of unemployment in Horn-castle is 5.3 per cent., at Louth it is 5.4 per cent., but in Lincoln it is 7.2 per cent.—way above the East Midlands average of about 5 per cent. Our unemployment is exceeded only by that of Gainsborough. Even Grimsby, which is a development area and not an intermediate area, has an unemployment rate of only 6 per cent.

Despite its higher unemployment, Lincoln is not assisted. Because of that fact, industries have been discouraged from coming to the city. We have suffered under the shadow cast by the surrounding intermediate areas. Until May, the only course open to us was to apply for intermediate status. The city council and industry in the city urged me to do so, and I did so. Had Labour won the election, I would have continued to fight for intermediate status for Lincoln. Why should Lincoln suffer unfair competition in the drive for new jobs?

If Lincoln had won intermediate status, who would have doubted that in a matter of months Sleaford to the south would have applied for similar status, and then Stamford further to the south and then Peterborough? Where would the movement south have stopped? It would have been just like the advance of the last ice age which reached its climax 12,000 years ago when all but the very South of Britain was covered by ice. Even the South was a barren tundra inhabited only by mosquitoes and gnats.

Fortunately, the advancing tide of assisted areas has been reversed and the anomaly of Lincoln and other such places has been relieved. I believe that such a reversal will not cost jobs. It will certainly save money.

The assisted areas have been reduced to about 25 per cent. of the area of the country. Those parts with harsh unemployment problems, such as Merseyside and Clydeside, have been made that much more attractive, relatively, to new jobs. Surely, if we are to have selective assistance, such a move is sensible. It must be right to give help to those areas in greatest need and to keep it to them.

The areas of the country that have lost their assisted area status this time have two years to adapt to the change in status. I am glad that section 8 of the 1972 Act has been made available to attract international projects and companies to the United Kingdom.

Altogether, the reforms are far from being dogmatic. They are pragmatic and sensible. For parts of the country such as Lincolnshire they are a boon. I recommend the review and its pragmatic results to the House.

6.50 p.m.

Mr. Donald Stewart (Western Isles)

I apologise to the House for my unavoidable absence during the opening part of the speech by the Secretary of State for Industry.

I associate myself with the tributes that have been paid to the maiden speakers, the hon. Members for Cornwall, North (Mr. Neale), for Bristol, North-West (Mr. Colvin) and for Oxford (Mr. Patten). They put their arguments forward with considerable fluency and I was surprised at their self-restraint in postponing their maiden speeches until today.

I take issue with the view of the hon. Member for Oxford that regional policy has failed. All hon. Members should consider what the state of the United Kingdom would have been today if those policies had not been tried. The policies were devised to prevent the concentration of industry in one small sector of the United Kingdom—the South-East corner of England. They gave the right to all areas to share in the prosperity of the country.

The Secretary of State for Industry has dished out impressive medicine during the last two weeks. Considering what he told us last week, it is surprising that he did not tiptoe into the Chamber, drop the statement on the Table and make for the hills. However, he had to come to the Chamber and make his speech to the House, and we heard something about that matter yesterday.

The last Administration took away the regional employment premium, and that resulted in a severe loss of jobs to Scotland. Therefore, both Labour and Conservative Governments are responsible for the increase in unemployment in Scotland. The alteration in the status of development areas must be an unpleasant surprise for hon. Members from areas such as Aberdeen and Edinburgh, particularly the new Conservative Members. I am sure that their voters would not have supported that move. However, if that is the kind of government that they wanted, it is certainly the kind of government that they are getting.

I believe that there should be an increase in the funds for the Scottish Development Agency and a change in the way in which the agency is permitted or not permitted to make its decisions. We lost the Mostek development to the Republic of Ireland which represents 1,000 jobs in a few years' time. An article in the Electronics Times states that the Scottish Development Agency is more than a little angry … not with the success of its Irish counterpart but with the Department of Industry. … The Irish Development Authority had one advantage that must have been very important. They have, as we do not, the authority to act as a single agent and the right to make decisions for industrial investment. Assistance is vital for the declining industrial sectors. Within the last few days there has been notification of the measures that will affect these areas—the shipyards, the steelworks and so on. Something must be done about the inevitable unemployment that will follow the implementing of these measures. They come at the worst possible moment, tied up with the worldwide recession. The Government could not have acted in a more irresponsible way.

I hope that when the Secretary of State for Scotland replies, he will be able to tell us the effect that will be felt upon the Highlands and Islands Development Board. I hope that he will also refer to the regional aid that the EEC councillors have proposed in my constituency. That aid is dependent upon a sum of money coming from the Treasury. Many people in Scotland, not only in my party, believe that funds allocated by the EEC have been pocketed by the Treasury and deducted from funds that would have gone to the areas.

The Conservatives are taking a panic-stricken approach to these aids, Civil Service jobs and so on. Within the next few weeks it will be realised that the Conservatives are engaged on the destruction of these jobs in Scotland. The status of the development areas must be reinstated and each area should be allowed the chance to survive. In the devolution debates it was charged against my party that we were aiming for the break-up of the United Kingdom. This Government are now dividing the United Kingdom into two nations in a way unknown since Disraeli made that remark.

The Opposition amendment that refers to the "reactionary policies" of the Government is entirely accurate, and my hon. Friends and I will support it tonight.

6.56 p.m.

Mrs. Elaine Kellett-Bowman (Lancaster)

I congratulate my hon. Friends the Members for Bristol, North-West (Mr. Colvin), Cornwall, North (Mr. Neale) and Oxford (Mr. Patten) on their excellent maiden speeches.

One of the great weaknesses in regional policy in the past has been the appalling waste of public money that poured funds into politically sensitive areas which could not, on any objective criteria, be said to need it. Alternatively, money was given for projects in needy areas which would have gone there in any event. I am glad that my right hon. Friend's proposals will prevent either of those alternatives from taking place in the future.

The proper function of regional policy should be to encourage the creation of permanent productive jobs in depressed rather than affluent areas. The Secretary of State's intention to provide the funds only if without them the project would not go ahead in an assisted area makes sound common sense. However, I feel that he may need the assistance of a lie detector to be certain of achieving that.

The money that is saved can be used where it will really help to provide more jobs. On behalf of the citizens of Lancaster, I thank my right hon. Friend for listening to our pleas and removing the bias against us that has prevented us for years from overcoming the scourge of unemployment. It is the first time that we have had the occasion to thank a Minister from the Department of Industry since the days of my hon. Friend the Member for Harrow, Central (Mr. Grant), who gave us our intermediate area status. He took the trouble to come and see our difficulties for himself.

In a Government survey of two years ago, North Lancashire, Morecambe and Lancaster, was described as relatively isolated with a small and vulnerable employment base and high unemployment". Unfortunately, the description was only too accurate. However, the Socialist Government did nothing about that and any successes that we have achieved in keeping the rate in Lancaster down below the present abysmal total are a result of local council initiative and superb co-operation within industry. The first almost fatal blow to our industrial prospects for jobs came in 1968. The Labour Government's regional policy at that time left us out of account. Our main employer, Nairn Williamson, took a large part of its work force to Scotland, where massive grants were available.

From that time on, blow succeeded blow. The Post Office savings bank was transferred to Durham with the loss of 290 jobs and British Rail Carnforth cut its work force by 70 per cent. In 1952, ICI employed 2,000 people. That figure has now been reduced by 75 per cent. The Shell refinery closed down and in the years up to 1976 500 shore-based and 250 sea-going jobs were lost by British Rail at Heysham. We have indeed endured industrial death by a thousand cuts.

Despite a strongly argued case, backed by solid evidence, that was put forward to various Ministers, no help was provided. The only help that was provided came from our status as an intermediate area, but that was gradually whittled away by the increasing aid that was given to development and special development areas. Now for the first time we shall be on level pegging with the areas around us.

I wish to refer to the tremendous amount of help which has been given to this country by the regional fund of the EEC and to us in Lancaster and Morecambe in particular where the European regional committee came to see our prob- lems for itself. This country has complained for a long time that the EEC budget is out of balance and that too much money goes to agriculture. If we can tilt the balance the other way so that less goes to agriculture and more to regional development, I believe that we shall do a great service to our country.

Many people, when they consider aid from the regional fund, think of it only in terms of the inner city areas. But there are many areas in the uplands, such as Cumbria and Lancashire, which are becoming almost fossilised. Sometimes we tend to overlook the seriousness of the problems produced by an ageing population and population drift. I do not wish to see these areas becoming dead parts of our nation or regarded as antiquated museums. The Cumbrian NFU has brought forward a most imaginative and useful scheme, the "East Fellside Project", to try to assess the potential of the hills and uplands and to develop this potential and keep them as vital living communities. This is the kind of scheme for which the regional and social funds and the guidance fund of the EEC could be made available. But they are eligible for such help only if the area concerned maintains some form of assisted area status or if the regional fund regulations are changed, as they must be changed in 18 months, to allow for this factor.

There are schemes in other parts of the intermediate areas which would also suffer if this umbrella status were removed from them. Some time ago the delegation from the regional policy committee of the EEC was kind enough to visit the intermediate area of Lancashire and a visit was made to an area containing a vast old colliery site of 91 acres known as the Rowley tip. That site at present is an eyesore, but it has now been proposed by the Lancashire county council for a complete transformation. It is to be used as a regional gathering ground for the processing of industrial waste. In addition, the scheme provides for a lovely lake and recreation area, which will be of great benefit to the surrounding district. This is an imaginative project, but it will not be eligible for regional fund aid unless the area retains some form of assisted area status or unless the regulations are amended in order to take advantage of regional fund aid for such schemes.

I beg my right hon. Friend the Secretary of State for Industry to keep this point very much in mind so that we shall not lose the benefits which we can obtain from the EEC if we play our cards right.

7.3 p.m.

Mr. Cyril Smith (Rochdale)

I, too, wish to congratulate the hon. Members for Oxford (Mr. Patten), Bristol, North-West (Mr. Colvin) and Cornwall, North (Mr. Neale). We have seen a great change in the representation of Cornwall, North when we remember the speeches of the former Member and compare it with the speech we heard today from its new representative. However, that is a matter for the electors of Cornwall, North to decide. Certainly we would have had a very different speech this afternoon if it had been delivered by the previous representative of that constituency. He would have argued for more help for his area rather than less help, which was the case put forward by the present incumbent. However, I hope that we shall have many contributions from the constituency's new representative, even if only for the lifetime of this Parliament.

There are one or two matters which require clarification from the Minister this evening. I am glad to see the Secretary of State for Industry in the Chamber to hear me put these points. The Secretary of State for Industry, in answer to an intervention, mentioned the case of a company in an area which is to lose its status. I understand that such a company will not receive Government financial assistance for a project if that project is not completed by an agreed date in 1980. In other words, the Government do not intend to honour their financial commitment. I hope that this point can be elucidated in the Minister's reply.

I have received a letter from the North-West Industrial Development Association expressing concern on this point. The letter makes the point that certain companies are already committed to expenditure on projects for which grant applications have already been made and approved. However, grant will not be paid if projects are not completed by 1 August 1980. The letter makes clear that this could well affect certain factory building projects.

If the Government take the view that even though companies have been promised grants they will not receive them if the projects are not completed by the due date, I hope that they will think again. If this is their view, the Government are, in effect, introducing restrospective legislation. We all know that it takes 12 months or more to build a factory and to equip it. If a company has set out on a project believing that it will receive grant, it is most unfair if it suddenly discovers that a proportion of money promised when the scheme was capitalised will not now be made available. I hope that the Government will reconsider the implications of their decision.

There are one or two other matters which require clarification. The hon. Member for Lancaster (Mrs. Kellet-Bowman) has cleared the first item relating to EEC grants. I hope that the Government will assure the House in the reply to this debate that when the Minister meets his ministerial colleagues in the EEC he will press for changes in EEC legislation to enable the EEC to give assistance to areas even though they do not enjoy assisted area status. I accept that, as things now stand, such assistance may not be available, but I hope the Minister will assure the House that the Government will press for changes in EEC legislation at the appropriate time.

I should like to ask whether grants under the regulations on tourism will be made available in non-assisted areas and whether the 100 per cent. dereliction grant will continue to be made available to local authorities in such areas. Those are my queries, and I hope that the Minister will answer them.

I wish to refer to a recent written answer which makes clear that intermediate area grants will be stopped by use of ministerial discretion. I understand that eventually legislation will be enacted to vary the provisions of the Industry Act. I hope that the Minister in his reply will clarify the use of ministerial discretion.

Over the past few days we have had all sorts of Government announcements affecting industry. I remember that at one stage in my short political career I was accused of behaving like a bull in a china shop. I must say that the Government's actions over the past few days affecting industry and the encouragement of industry have led me to the conclusion that the present Secretary of State has a tendency to behave in exactly the same way.

The Government's action surprises me. As I have interpreted the scenario painted by the Government, certainly in terms of employment, in which I also have an interest, the policy appears to be to withdraw money from public expenditure, which means that, temporarily, there will be an increase in unemployment when people are declared redundant as a consequence and, ultimately, those people will be taken up by private industry because that is where the growth is to come. That, as I understand it, is to be the scenario over the next two or three years. In other words, we have to be patient and we have to understand that inflation will rise again temporarily and that there will be an increase in unemployment but that all this will be taken care of once the economy turns round and private industry begins to grow.

Bearing that in mind, the Government's attitude towards private industry seems very strange. It is incompatible with the desire to see the growth of private industry to withdraw from the financial encouragement to private industry more than £230 million which previously was used from Government sources to encourage it.

There are many areas in the North of England, from where I am proud to come, which are deeply concerned about and distressed by the Government's treatment of them, bearing in mind the policy which is to be adopted. I do not want to argue a constituency matter at any great length, but even my own constituency of Rochdale is no longer to have assisted area status. What none of us is sure about is exactly the criterion which was used in deciding which areas should have assisted area status and which should not. Was the criterion merely the level of unemployment, the future prospects of unemployment, the ability of the area to attract industry, the desirability of attracting industry to an area or the depopulation of areas? What was the criterion which decided which areas were to have assisted area status and which were not?

Rochdale is a constituency which until a few years ago relied for as much as 60 per cent. of its employment on the textile industry. We have seen the industry almost bleed to death over the past few years under successive Governments. I make no party political point when I say that. The textile industry has gone down and down, and places such as Rochdale have had to fight very hard to try to attract new industry to replace the textile industry.

But the story does not stop there. Even now a proportion of our textile industry in Rochdale is involved in such activities as the manufacture of fabrics for the tyre industry. We all know that the importing of tyres for cars and lorries is on the increase. We are importing more cars, and they come in with tyres on them which, obviously, are foreign made. What is more, anyone who has a foreign car tends to buy a foreign tyre to replace one which has worn. There is a considerable increase in imported tyres, and that trade, too, is likely to affect the level of employment in my constituency.

The conservation of energy may not be thought to have any connection with employment, but it has in Rochdale. It is now established that my part of the world, including Rochdale and Heywood and Royton, is very much in the centre of the country in terms of distribution. That is why we have been able to attract firms such as Woolworth and many other similar companies which use our area as the centre of distribution for their goods. It is in the centre of a motorway complex, with connections to various parts of the country. If we want to encourage a decrease in the volume of petrol used, we have to attract industries, especially distribution industries, to the centre of the country in order to distribute their goods. I suggest that that is another reason why we should be encouraging industry to come to places such as Rochdale.

I return to what I said earlier about my constituency. What was the criterion used by the Government? How have they decided that one area should have assisted status and another should not? I hope that we shall get some indication from the Government about what has been their policy and, what is more important, what is to be their policy in determining which areas have assisted status and which do not.

Mr. Dan Jones

Is the hon. Gentleman aware of any commission of any kind attached to the Department ever visiting Rochdale to establish the facts so as to be able to advise the Secretary of State? If he is, the hon. Gentleman is very fortunate, because no such research has been carried out in my own constituency.

Mr. Smith

The hon. Gentleman's experience is the same as my own. Tories do not come to Rochdale. There are no Tories in Rochdale for them to visit. To be fair, I would not have expected such a visit to every area involved. But certainly Rochdale has had no visit from a Minister. It might have been better if such a visit had taken place.

In my view, regional grants help industry and attract it. For many years before coming to this House, I was chairman of a committee in my constituency which was concerned to attract industry to the area. I know from experience that the existence of grants in one area as opposed to another has an effect in determining where a company places its business. Therefore, I believe that it is wrong to reverse the regional aid being given by the Government, and it is a reversal if a Government reduce the amount of help available by more than £230 million.

It is likely that the companies affected by this change of policy will be new companies and small companies. When he was in Opposition, the Under-Secretary of State was given the special responsibility of speaking on behalf of small businesses. What is more, I remember how, during the general election or shortly before it, the Secretary of State appeared on television and received a tremendous ovation from a meeting of the self-employed or the proprietors of small businesses somewhere in the South of England. His party declared its aim of assisting small businesses. The Government appear to be assisting them by withdrawing from them £230 million of aid which they received from the previous Administration. That seems to be a very strange way of assisting small companies.

What is more, it is often the small companies which have occupied industrial units. Today, we hear that those units are to be reduced in number and transferred to local authorities. Local authorities have not enough money to do the job which they are trying to do at the moment because of the Government's policy of taking money away from them. In other words, the Government are taking money away from local authorities and saying at the same time that if they want advance factories they must build them. I suspect that the net result will be that they are not built.

These small factory units have encouraged and helped many small businesses to be started in the past 15 years. If this policy attracts any section of industry more than another, it is the small business. For that reason if for no other, the Government's policy must be opposed.

Even if it were correct to withdraw help to industry to get it going, to start it and to attract it to various areas, surely the policy is ill-timed. Industry is facing very high interest rates. Earlier today the Prime Minister refused to give the Leader of the Opposition any indication of an easement in interest rates. She refused even to indicate that she would not continue them for any longer period than the right hon. Gentleman's own Government did.

At a time of high interest rates, everything is moving against industry investing in new plant and machinery and in building. The cost of borrowing money is astronomic. But this is the very moment at which the Government decide to announce that they intend to reduce grants to small businesses by £230 million. One can argue that this is not a matter of aid but a question of regional policy. It may be regional policy. But, in the end, it boils down to the fact that industry will receive £230 million less aid a year under this policy than it received under previous policies. For that reason, my colleagues and I will go into the Lobby with the official Opposition.

7.21 p.m.

Mr. Iain Sproat (Aberdeen, South)

Before giving my own view on the changes in regional policy announced recently by my right hon. Friend the Secretary of State for Industry, which he has expanded and clarified today, I should like to comment on the speech of the right hon. Member for Western Isles (Mr. Stewart), who has now left the Chamber, although no doubt temporarily. His speech was uncharacteristically ungenerous and carping. It was more typical of the whining note we were accustomed to hearing from Scottish National Party Members in the last Parliament.

The right hon. Gentleman made no mention whatever of the striking tribute to the success of our regional policy, including some of the regional policies of the last Government, shown by the fact that another 1,300 jobs, we read today, are to be located at the semiconductor plant at Greenock. This must be one of the biggest boosts to Scottish employment, tragic though the jobless figures are, for a long time. In one sense, all the criticisms that my right hon. Friend the Secretary of State for Scotland had to take over the new regional policies have been wiped aside by the fact that 1,300 new jobs are to be located in Scotland under the new conditions. We have the proof of the pudding this very day.

Mr. Robert Hughes

The hon. Gentleman might contrast with those new jobs the singular failure to persuade the Government to bring Civil Service jobs to Scotland. I gather that 6,000 were due to move, but only 600 are actually coming.

Mr. Sproat

The hon. Gentleman must wait and see what we get. Under the last Government, we were promised that a lot of civil servants would be dispersed under the Hardman report but none came. If the figure is only 600 under this Government, it will at least be 600 more than under the Labour Government. I shall be grateful for that.

I want to direct my relatively brief remarks first to the way that the changes in regional policy affect Scotland in general and then to deal with the situation in Aberdeen. I strongly welcome the overall package that my right hon. Friend has presented to the House. The old system had to go. My right hon. Friend was right to change a system under which we had laboured for too long in Scotland. The system was not fair and it was not working.

Examples have been given, mainly from the Labour Benches, of the unfairness of the old system. We were told that Rotherham was getting something but not Doncaster, that Sheffield was getting something but not Mexborough. An example of the ridiculous unfairness of the system, as it affected the region that I represent and the wider oil-related region, is the fact that oil companies were getting Government grants for locating themselves in places where they would have gone without the giving of any grant. The oil companies, which did not need the money, were benefiting whereas other traditional companies in my constituency, for example, the fishing industry, were not getting the help that many of us would have liked to see.

There can be no argument: the old system was not fair. Also the old system was not working. One cannot say that any system was working sensibly when there was a doubling of unemployment in the country, as happened in Scotland. No one can defend the old system as being other than unfair and ineffective.

Another reason why I welcome the overall package that my right hon. Friend has presented to the House is that it concentrates the greatest aid on the worst hit parts of Scotland. I can say this in a spirit of political altruism. My constituency is not included, but the West of Scotland, which needs the help most, will get it. We heard a statement yesterday by my hon. Friend the Minister of State, Department of Industry on the future of the shipbuilding industry. We recognise, with sadness but realism, that contraction of the industry had to come and that such contraction will hit the West of Scotland. It is therefore appropriate that aid should be concentrated on an area that will be fairly swiftly hit by contraction.

Scotland now gets a higher percentage of development grants than it got under the Labour Government. While that is welcome in percentage terms, it is well to realise, particularly as far as the West of Scotland is concerned, that it is not just a question of a higher percentage. In actual cash terms, the worst hit areas of the West of Scotland will get more money. I understand that the increase is likely to be from £70 million to £90 million a year. I hope that all those political people in Scotland who, according to one Scottish newspaper, reacted with fury to the proposals of my right hon. Friend will think again when they realise that more money, not just a higher percentage for Scotland as a whole, will be directed to the worst hit area of the West of Scotland.

Mr. Dan Jones

The hon. Gentleman is very lucky.

Mr. Sproat

I am glad that the hon. Gentleman recognises the benefits that my right hon. Friend is conferring on Scotland. It is always pleasant to have those benefits recognised by the Opposition. I hope that the same sentiments will be expressed from the Opposition Front Bench in the winding-up speech tonight. I look forward to that speech, but I am astonished that the Shadow Secretary of State for Scotland, after all the so-called fury that was supposed to exist in Scotland, is not speaking for the Opposition. My right hon. Friend the Secretary of State for Scotland is winding up for the Government. The Opposition clearly realise that the package that the Conservative Government are putting forward is better for Scotland than the position that existed under the last Labour Government.

We are glad that my right hon. Friend is to phase in these changes with relative slowness. We all remember the all-too-brief notice of the withdrawal of the regional employment premium, a sum about equal to that now being cut by my right hon. Friend. At least, we are to have a period of phasing in. Every business man in Scotland trying to plan for the future will be glad to see that practical change of attitude.

I have explained why I welcome the package which my right hon. Friend has presented. I shall now be more specific about Aberdeen. Aberdeen is my constituency. I mention it not because of that but because it illustrates a general principle of which I hope to convincè my right hon. Friend.

I can understand why he suggests that the Aberdeen travel-to-work area should be demoted and should cease to be an intermediate area in three years' time. I do not agree with his suggestion. I do not know why the hon. Member for Aberdeen, North (Mr. Hughes) laughs. He may find that we are successful in persuading the Secretary of State for Industry and the Secretary of State for Scotland. We have three years in which to make our persuasive arguments before the axe can fall.

I can see that the Government have taken into account our low rate of unemployment. It now stands at about 3.3 per cent., which is less than half what it is for Scotland as a whole. The glossy veneer of prosperity which North Sea oil has provided creates the aura of a boom city. That impression does not tell the whole truth. Beneath that glossy veneer are other aspects which are not as rosy and glossy as in the oil-related industries.

I tried to persuade the Labour Government. I took delegations to meet them and tabled questions. I tried to put the truth before them. I tried to convince them that employment statistics are too blunt an instrument by themselves to judge exactly the prosperity of an area. They did not accept my argument. They did not accept that the statistics masked the true position in Aberdeen.

I am pleased that the Secretary of State for Scotland has recognised that statistics which show that unemployment is low in Aberdeen do not reveal the whole truth. That is why my right hon. Friend has set up a committee to review the impact of oil on the North-East of Scotland. That shows that the Government are determined to look beneath the surface.

If the Government did not do that, I should fear a major recession in the North-East of Scotland in the next 10 to 15 years. I fear that there will be a major recession unless the Government, before the status of Aberdeen is changed, take long-term economic steps to maintain and, if necessary, restore the area's economic strength.

Mr. Dan Jones

Does the hon. Member agree that his argument about unemployment statistics applies equally to other parts of the country?

Mr. Sproat

I agree. I was going to deal with that.

I fear that Aberdeen will change from a boom city to a ghost city within the next 15 years. We must avoid that. Traditionally, the indigenous industries of Aberdeen have one disadvantage and one advantage. The disadvantage is the geography of the city. Aberdeen is a long way from the main consumer centres. The industrial competitive advantage of Aberdeen is that wage rates are lower than the national average. That may not be an advantage to the individuals receiving wages, but it is an advantage in terms of selling goods.

Before oil came to Aberdeen, wage rates were about 10 per cent. below the national average. Since the development of North Sea oil, the traditional industries have retained the disadvantage of distance from the main consumer centres, but the oil industry wage rates have pushed up the rates in traditional industries. The wage rates in Aberdeen are now between 10 per cent. and 15 per cent. above the national average. Overall, oil has indeed been a boon to Aberdeen—but it has not been a boon and a blessing for the traditional industries. It could prove to be a disaster for Aberdeen unless the Secretaries of State for Industry and Scotland examine the long-term implications of North Sea oil.

I hope that the promised oil review will turn up the evidence to prove that Aberdeen should not lose its status at the end of three years. That is what I shall seek to prove. I do not know why Opposition Members laugh. They should hang their heads in shame because they did nothing. They would not even set up a review.

The Under-Secretary of State for Scotland (Mr. Alexander Fletcher)

Where are all the Scottish Opposition Members?

Mr. Sproat

I also wonder where they are and why they are not attending this vital debate.

Mr. Robert Hughes

Will the hon. Member give way?

Mr. Sproat

I have already given way. I am just concluding my speech.

I want to see Aberdeen thrive because it is my constituency. However, it is not a question of that alone. Aberdeen is a typical example of a general situation. I seek to persuade the House of a general principle in relation not only to the subject of today's debate but to the dispersal of civil servants. It is essential for the social and economic health of our country that prosperity and job opportunity be spread as widely as possible. That is why it is essential to keep the prosperity which North Sea oil has brought to Aberdeen after the oil has run out.

I dislike any socially unhealthy concentration of prosperity or economic opportunity in the South of England or anywhere else. Prosperity should be spread as widely as possible. That is why I shall fight on this issue and why I am fighting on the Civil Service job dispersal issue. It is why I welcome the bold beginning which the Government have made to provide us with a strong regional policy.

7.39 p.m.

Mr. Alan Williams (Swansea, West)

I apologise to my hon. Friends for intruding in this debate. I was the Minister responsible for regional policy in the past three years and the Minister who, in 1967, took through ministerial committee the proposition to establish the SDAs, many of which have been downgraded. In 1969, with my right hon. Friend the Secretary of State for Economic Affairs, I set up the Hunt committee to look into the problems of the grey areas which, in Lancashire and Yorkshire, were condemned to becoming grey yet again because of Tory Party decisions. It is, therefore, appropriate for me to comment. I shall try not to speak for too long.

After three years of listening to the Secretary of State agonising on the Opposition Benches about the merits and demerits of selective aid and non-selective aid, it is fascinating to see the typically and uniquely logical solution he seems to have arrived at. He has come to the conclusion that regional development grants are not good because they are not selective, and he has equally reached the conclusion that section 7 and section 8 grants are not good because they are selective. It seems to me that the absurdities that we heard from him when in Opposition have now been tragically turned into policies for which many areas of this country will suffer in the next few years.

The right hon. Gentleman dismissed previous regional policy against the criterion of net job creation. That never has been a criterion against which regional policy has been determined. In his opening speech today he said that regional policy is especially about the transference of jobs, about the movement of job opportunity, about the diversification of industry in the traditional areas.

Indeed, in a time of recession, it would have been astonishing if regional policy had been able to pass the net job creation criterion or yardstick that the right hon. Gentleman set out. In a time of recession, regional policy is defensive. It is about keeping as many as possible of the jobs that one has and, if possible, if there is mobile industry, securing a reasonable share of that industry. That is something that the right hon. Gentleman overlooked with his criterion.

Over a 10-year period 400,000 jobs were lost in Wales, the North of England and Scotland in three industries alone—in coal, steel and shipbuilding. So let no one listen to this nonsense of net job creation. It is an irrelevancy to justify an axe decision that the right hon. Gentleman has taken.

Regional policy has never been about employment alone. It is about social factors as well. We inherit a population pattern which reflects the energy availability and energy resources of the nineteenth century, but in that population pattern we have the cumulative social capital—our schools, universities and hospitals—and it is an absurdity to think in terms of allowing a drift away from traditional areas of employment, a drift down to London and the South, forced there because that will be the only place where jobs will be available but where the existing social capital is already under congestion. The roads are congested, there is excessive utilisation of school facilities, hospitals and so on.

Let us not assume that regional policy is only in the interests of Wales, the North, Lancashire and the other assisted areas. It is essentially also in the interests of the prosperous areas of this country.

Last week's announcement was not the only attack that has been made upon the assisted areas. It follows others. It follows the cuts in finance for the Scottish Development Agency and the Welsh Development Agency and the abandonment of the office development permit system. Fascinatingly, it should also have followed the announcement of Government policy on dispersal of Government jobs. I wonder what innocent motive the Government have for failing to issue a statement today, before this debate, on what they intend to do about the dispersal policies that were announced by the previous Administration. They did not care to come to the House after such an announcement and hold this debate today.

In addition, we have had a major change in the industrial development certificate system, and we must not underestimate the significance of that change. It is massive in its impact. It means that in future only the largest projects need be vulnerable to regional policy, because, with a 50,000 sq ft initial factory that can employ between 200 and 300 people, an automatic second phase is granted, with another 200 to 300 people employed. Then there is a rooted, large factory. It is well within the wit of most business men to so phase their development that if they might exceed the 50,000 sq ft—other than in very extreme cases—they will ensure that they build in two phases and so escape the regional net.

We shall see an even lower share of mobile industry coming to the assisted areas. This is where these proposals represent a major and massive swing in favour of the South of England and the Midlands. Only yesterday, in The Guardian, one of the right hon. Gentleman's hon. Friends, the Member for Chippenham (Mr. Needham), said: In some parts of the country, particularly in the south, the pressure on wages will come not only from union claims but from real shortages of labour of all types. In his opening speech today, the Secretary of State referred to the shortages of labour that are already appearing in the South and the Midlands. Yet at this very time the Government increase fourfold the size of factories that can be built without any control by the Government at all. Clearly, they believe that they can leave it to market forces. But they left it to market forces in the 1950s. My maiden debate as a Minister in 1967 was on regional policy, when my hon. Friend the Member for Ealing, Southall (Mr. Bidwell) pointed out that at that time in London there were 11 vacancies for every unemployed person on the register. That was the result of leaving it to market forces. Everyone leaves it to someone else to carry out regional policy.

Let no one think that regional policy can be left to the local authorities, as the CBI suggests, on the ground that local authorities are already involved in planning. Some officials not very far from where I am standing at this moment will recollect that last year there was an occasion when a certain local authority came to see me and said that it hoped that I would be sympathetic to a project for a smelter that it would be putting forward in the near future. It was to be inland, in a densely populated area. When I asked what sort of smelter, I was told that it would be a lead smelter. I pointed out that not many people liked lead smelters and asked "Do you think you will get it through in your area and have the approval of your constituents?" Back came the reply "Do not worry. The winds are westerly, we will bung the site on the extreme east of our area, and all the pollution will go into the next local authority area." That is an absolutely true story. That is the sort of logic of the obsession with getting rateable value. We cannot expect regional policy to be administered by local authorities. It is not their job to do it.

Now, as a result of the changes in the industrial development certificate policy, there is a danger of regional policy being substantially eroded. At this time, surely, the logic is that the loss of the stick should be counterbalanced by increasing the persuasive value of incentives. Yet, again, the opposite has been done. At the very time when it will cost more to persuade a business man to leave the comfort and security of the South, the regional development grant is to be removed from intermediate areas and cut in the development areas.

The right hon. Gentleman said that these areas must look more to self-help. At the same time, the Government have taken the regional development grant away, effectively, from very small companies by the way in which they have raised the threshold at which it applies, because in small companies a larger proportion of their total investment is made up of relatively small investment units.

We are told that selective finance is to be increased under section 7. Having lost the support of the IDC system and having seen the regional development grant incentive reduced, surely selective incentives should be increased. Indeed, they need to be increased. Regional development grant as a percentage of total cost is inevitably index-linked. Its value increases as the cost of machinery increases. There is no such linkage under section 7. Therefore, one would expect the Government to try to sustain the real value of selective assistance. That would mean an increase of at least 10 per cent., and 30 per cent. by next spring, to retain the administrative ceilings that were introduced only a little while ago. In fact, actual and real values will diminish under section 7.

As the right hon. Gentleman indicates, and as we all recognise, Britain, especially the regions, depends on inward investment. At present, 20 per cent. of manufacturing industry is overseas-owned. My colleagues in Lancashire and in assisted areas in Scotland know what a high proportion of industry in those areas comes from abroad. The right hon. Gentleman said that we gain from inward investment, yet the cuts in regional development grants and section 7 assistance mean that we cannot reach the ceilings for financial assistance that are permissible under the EEC regulations. Therefore, France, Germany, Belgium and our other Common Market colleagues will be offering packages of incentives that we shall not administratively be able to match because of the changes that the Government have made.

We shall be disadvantaged in obtaining internationally mobile industry at a time when there will be the minimum of domestic mobile industry. Two years ago private sector investment was increasing by 13 per cent. in British manufacturing industry. Last year it was increasing by 14 per cent. This year, under the Labour Government, it was expected to increase by 4 per cent. We now find in the Red Book that investment will not give us growth. We shall see a fallback of ½ per cent. in private investment and 4½ per cent. in public investment. As others have said, that is probably a grave understatement.

There will not be domestic growth and there will not be domestic mobile industry. The Government's decisions have cut us off from much of the internationally mobile industry. All that has happened at a time when the world is moving into a deepening recession. At this stage the Government choose to cut £1,000 million over a five-year period from the assisted areas.

The right hon. Gentleman gave us a load of economic claptrap about the effect of raising finance on alternative industry. The £233 million is ½p on the standard rate of tax. According to the right hon. Gentleman, that ½p would be a major debilitation for industry. Until the middle of February the Labour Government, under section 8 of the Industry Act, offered £385 million worth of Government assistance, the equivalent of 1p on the standard rate of tax for a year. That generated £2,400 million worth of investment projects. Does anyone genuinely believe that 1p off the standard rate of tax for one year could have achieved the same result? That demonstrates the nonsense of the argument advanced by the Government.

We have seen a cut in regional aid. We have seen a change in the industrial development certificate system. Within the assisted areas we shall see bitterness and contention. That is already beginning to emerge from the contributions made by my right hon. and hon. Friends. It will arise because of a descheduling and downgrading of various areas. The Government treat these matters with the utmost cynicism. In an interview a year ago, it was reported in the Financial Times that the then Opposition saw as a logical step the need to redraw assisted area boundaries. They stated that there was no intention to undertake that exercise before a general election because it would be seen more as a matter of administration than of principle. Over 300 names appear on the list of areas that have been downgraded. Is that mere administration? It is certainly policy for every area.

Would the Conservatives have won Nelson and Colne and Rossendale if they had had the guts to tell people in those areas and elsewhere in Lancashire, Yorkshire and Wales what they intended to do about the incentives that are so essential to their survival?

As a result of the changed IDC policy, we have a new policy. It does not involve steering non-assisted areas into assisted areas. The result will be that Merseyside and the SDAs of the North will draw the industry that may have gone to Yorkshire and Lancashire. The South will continue to be largely free of industry loss and we shall have a regional policy based on areas of need having to subsidise neighbouring areas of even greater need. That is what the Government advance as a regional policy.

We have been through all this before. The Secretary of State will say complacently that his policy will work. In 1970 I well recollect standing on almost this same spot and trying to persuade the then Conservative Government not to abolish the old investment grants. They had introduced tax cuts and they cut regional policy. What happened? Investment in manufacturing industry when the Conservative Government took office had been running at £4,200 million a year. Two years later, under their tax-cutting policy, it had fallen to £3,500 million. It never recovered. What did that mean to the regions? As I have already said, investment, according to the Red Book, will fall again in the next 12 months.

The consequence of the previous Conservative Government's policies was that in development areas and SDAs between 1969–70 and 1971–72 we saw a fall of 50 per cent. in the amount of new industry entering those areas. It fell from 28 million sq ft to 14 million sq ft. Wales suffered even more grievously. It saw a decline from 8.1 million sq ft to 2.9 million sq ft.

We have been through these cuts in regional policy before. As it was obvious that there would be no time and no opportunity for many Welsh Members to participate in the debate, nor Scots Members—I appreciate that every region is having difficulty getting its voice heard—I asked the Secretary of State for Wales a week ago to arrange a sitting of the Welsh Grand Committee before the Summer Recess so that Welsh Members could debate the cuts that will be made in Wales. The same could have been done for Scotland.

As unemployment moves inevitably towards the 2 million mark, the assisted areas will have to carry more than their share, especially those that have been downgraded. The tragedy is, having been through all this before, that too late will the South and the Midlands realise that what is bad for Wales, Scotland, Lancashire, Yorkshire and the North generally is also bad for the South. As I say, that realisation will come too late.

Mr. Bob Cryer (Keighley)

On a point of order, Mr. Deputy Speaker. I rise to refer to the statement on page 481 of the current Order Paper relating to the draft Regional Development Grants (Variation of Prescribed Percentages) Order 1979. The following words appear: "The Instrument has not yet been considered by the Joint Committee on Statutory Instruments." As Chairman of the Joint Committee, I must tell you that this afternoon the Committee considered the order, which was finally laid, and reported it to the House. Copies of the extract of the fourth report of the Joint Committee, which refers to the order, are now available in the Vote Office.

The Committee indicated that, in its view, the order could be withdrawn and a new corrected draft made. There is a defect in the order which I understood was referred to in the opening speech of the Secretary of State for Industry.

In the view of the Committee, the proposed procedure is less than satisfactory. I hope to catch your eye, Mr. Deputy Speaker, to elaborate briefly on the views of the Committee as, quite clearly, they are important and relevant to the decision that will be taken later.

Mr. Deputy Speaker (Mr. Richard Crawshaw)

I was alerted to the fact that the hon. Gentleman intended to raise this point of order. If he seeks to catch my eye, he may have the opportunity of elaborating on that point.

8.2 p.m.

Mr. Robert Hicks (Bodmin)

I have always believed that the primary purpose of, indeed the justification for, our having an elaborate regional policy was assistance in the attainment of an economic and social structure in the United Kingdom whereby each region contributed to and shared in the nation's prosperity.

It is often argued by those who are opposed to State intervention of this kind that the most effective regional policy is a fast-growing national economy. Even if there is an element of truth in that viewpoint, it does not alter the position that regional disparities still remain. Thus the nation as a whole has an obligation to try to improve the level of economic activity in the less prosperous parts of our country. In addition, in this age of rapidly changing technology and patterns of demand, there is the problem of our declining industries, especially key industries in an area's economy. Here again I believe that the nation has an obligation to those regions, although not necessarily to any industry.

Therefore, for those brief reasons, I am an unashamed supporter of the principle of regional policies. Indeed, I was one of the Government supporters who, to put it at its best, were somewhat apprehensive in advance of the Secretary of State's announcement last Tuesday. In practice, in general terms, I was rather relieved at some of its contents. However, some parts of my right hon. Friend's statement this afternoon gave me cause to worry.

I accept that regional policies, in their own right, do not create jobs. Regional policies influence the location of investment in this country. In turn, that investment, wherever it is made, we hope, creates jobs. To justify this significant reduction in the amount of money that is to be made available, my right hon. Friend said that regional policies had created only 20,000 jobs per annum on average over the past few years. With respect, that misses the fundamental point.

Regional policies are essentially a defence mechanism. They help to preserve the status quo. We cannot quantify the numbers of jobs that are saved as a consequence of having regional policies at any time. It would be impossible to quantify the number of jobs that would have been lost had we not had effective regional policies. Furthermore, I take the view that without regional policies we should have seen an even more pronounced drift—a movement of people and economic activity—from the North, the West and the South-West to London, the Home Counties and the Midlands. That is the justification for positive regional policies.

I agree that my right hon. Friend was right to try to sharpen the differential between the development areas of the United Kingdom and the non-assisted parts. I was somewhat relieved by the fact that where there is to be a loss of status it will be spread over three years. At least my right hon. Friend has learnt of the experience of Members on both sides of the House of the difficulty and problems that arise as a result of abrupt change.

Another point in my right hon. Friend's statement that I commend to the House is the fact that he refrained from changing the basic structures of our regional policy. The Industry Act 1972 remains. There has been an intended change in the level of grant, but the principle of the regional development grant still remains. Sections 7 and 8 of the Act remain. As one who spoke in the Second Reading debate in 1972 and served on the Committee, I am at least relieved that this is one area where we remain consistent and have not given in to current trends that may be popular at present.

One wider aspect that concerns me is the fact that, even at the end of 1982, if everything proceeds according to plan, we shall still be spending almost £400 million on regional policies. It is right to ask ourselves how we shall use the most effective means of achieving regional regeneration and holding the level of economic activity in the regions, especially at a time of world recession.

Hon Members on both sides have said that over the past few years regional disparities in the United Kingdom have been reduced. But, sadly, in my part of the United Kingdom, the far South-West, that has not happened. Whatever criterion we choose—whether it be unemployment or the level of average incomes—we find that the disparity has increased. Whether we compare average unemployment in our region with that of the rest of the United Kingdom or average income in Cornwall with the national average, we find that the gap has widened.

Therefore, in that context, I suggest the concept of some form of South-West development agency, with an agreed budget, whereby the region could sell itself in the national or international market. That is the self-help that my right hon. Friend mentioned earlier this afternoon. Would not it be a good idea if the South-West had its own development agency so that we could go out into the market and attract suitable economic activity to our region? I put that idea forward. It might be a more than worthwhile experiment. Such an agency would have the responsibility for encouraging the indigenous economic activities within the region.

In the South-West we do not have a Scottish Development Agency; we do not have a Highlands and Islands Board; we do not have a Welsh Development Agency; we do not have a Development Board for Rural Wales. The only assistance through an agency that we have is through the Development Commission which serves all the English rural regions. When we look at the average assistance that the South-West region obtains, compared with its counterparts in Scotland or Wales, we find that the budgets in Scotland and Wales for the development agencies, plus the regional development structure, are very considerable indeed compared with our receipts.

This may be the reason, or one of the reasons, why we have an unemployment problem in the South-West at a higher percentage now, compared with the national average, than the figure of five or 10 years ago. That is why average earnings in Cornwall are the lowest of any part of the United Kingdom, namely, 83.8 per cent. of the national average income.

I find myself in a difficulty this evening. As one who has always supported the concept of an active, strong and effective regional policy, I dislike these significant cuts of one-third, yet I find myself in the ironic position that whereas before last Tuesday seven-eighths of my constituency was in a development area and one-eighth in an intermediate area, now the whole lot comes within a development area.

I want to see a meaningful and vigorous regional policy. I am relieved that there has been no dismantling of the structures. Circumstances may change over the next three years, but it is incumbent upon us all that we have a cost-effective regional policy.

One or two speakers have mentioned during the debate the dangers of a divided Britain, with the more prosperous South-East and Midlands and the less prosperous North and West and my own South-West. I believe that this is the greatest single economic and social problem facing the country. The distribution of seats at the last general election tended—sadly, in my view—to catalyse this division politically.

I therefore ask my right hon. Friend to remember that the decisions that he and his colleagues make in respect of regional policies will, in both the short term and the long term, have a real influence on whether we have a divided nation. I hope that nothing that he does will contribute to the emergence of a divided Britain over the next decade.

8.13 p.m.

Mr. Bob Cryer (Keighley)

I am grateful to you, Mr. Deputy Speaker, for calling me. I know that many of my colleagues are pressing to enter the debate. I shall, therefore, be brief. I believe that my contribution is both relevant and important, in that in addition to the motion we are debating a statutory instrument. The House has established a Statutory Instruments Committee, the purpose of which is to examine those instruments to see whether there is, for example, an abuse of power, an unusual use of power, an unusual use of public expenditure, whether the instrument is ambiguous, and so on. We take those responsibilities seriously.

I think, therefore, that where an instrument is being debated, it is relevant and important that the House should be reminded for three or four minutes of the reasons why the Joint Committee on Statutory Instruments should, out of the hundreds of orders that we have to examine, report to the House the draft Regional Development Grant (Variation of Prescribed Percentages) Order. An extract from the report relating to this instrument is in the Vote Office.

The brief background is that the original statutory instrument that was laid was described to us by one of our counsel as ultra vires because of defective drafting, with the result that the amendment to the table in the original Act would have been done in such a manner as to be outside the powers allotted to the Secretary of State for that purpose.

When this was drawn to the attention of the Department, and we asked for witnesses from the Department to come to the Select Committee, the Department, presumably being apprised of that fact, then withdrew the original instrument and laid a fresh instrument before the House. We were therefore in the position of having witnesses available, and we chose to examine the witnesses, because during the course of examination of the fresh instrument we learned that it was also defective.

It might seem to be a relatively trivial defect. The Secretary of State has power to name the date, but he had named the date that was relevant in his speech of 17 July and it did not match up with the date adumbrated in the new, amended, replacement instrument. We therefore thought that the Department was not exactly shining at producing instruments that were clear and without fault. We addressed these questions to the witnesses so that they could say what they proposed to do. I understand that the Secretary of State referred to this in his opening remarks and said that the Department proposed to put down an amending instrument to alter the date in the replacement instrument from 17 July to 18 July.

As this is an affirmative instrument, it can be debated by the House for an hour and a half. If hon. Members chose to exercise their debating rights in regard to the instrument, they would be debating the narrow point whether the date in one of the articles should be 17 July or 18 July. Clearly, in my view and in the view of the Committee, it would be a waste of parliamentary time to argue for one and a half hours when there are much more important and urgent matters to be brought before Parliament, but that is the position.

The Committee, therefore, in its report has suggested that the instrument, rather than being pursued tonight, could be withdrawn and that an amending instrument, which is complete and comprehensive—one hopes that the Department will be lucky on the third occasion and get it right—could be placed before the House and put through before the recess. The report points out that officials have indicated that an amending draft order will be laid to correct the mistake and that the motion to approve it will be taken after the Summer Recess. The Committee considers this to be a most unsatisfactory course. It points out that the present draft order could be withdrawn and that a new corrected draft could be laid, and that approval could be sought to it before Parliament rises for the recess. The regional issues having been discused tonight, there is no reason, in the Committee's view, why this could not be done.

Mr. Graham Page (Crosby)

I support the hon. Member for Keighley (Mr. Cryer) in what he is saying to the House. Does he not think that it would be a complete farce for us to approve a draft order tonight, knowing perfectly well that it is wrong, for another place to approve it tomorrow night knowing perfectly well that it is wrong, and for the order to be made the following day, everybody knowing perfectly well that it is wrong, and to have an amending order in three months' time? It would be quite possible to withdraw what is before us tonight, to amend it in ink, put it on the Table, and lay it tomorrow. I am sure that both sides of the House would allow it to go through without further debate.

Mr. Cryer

I am grateful to the right hon. Member for Crosby (Mr. Page). As a former Chairman of the Joint Committee on Statutory Instruments, obviously his remarks are relevant and to the point. We understand this process, because it occasionally occurs. People outside would regard it as plainly daft to pass an order which is defective, knowing that an amending order will be processed in three months' time. In addition, the people affected by the order may well find that they have been given misleading guidance by the order and be discouraged from making application for regional grants which they are perfectly entitled to do, grants which hon. Members have indicated tonight are relevant and important.

If that is so, it seems to me quite wrong for the House to put through an order which could be misleading, discouraging and which we know full well will be corrected at the end of the recess. Therefore, I urge the Secretary of State to withdraw the order and substitute a full and proper order, so that the House is not brought into disrepute and its legislative processes can be seen for what they are—clear and unambiguous.

Sir Keith Joseph

On a point of order, Mr. Deputy Speaker. I do not wish to dispute one word of what the hon. Member for Keighley (Mr. Cryer) said or what my right hon. Friend the Member for Crosby (Mr. Page) said. The responsibility is mine. There was a defect in the second order by 24 hours. As the hon. Member for Keighley has acknowledged—I do not think that he was present but I explained this in my opening statement—the House agreed to the proposition that we should take the motion and the order at the same time. Therefore, according to the decision of the Chair, there may be two or three votes at the end of today's proceedings. In order to change that and do what the hon. Mem- ber for Keighley and my right hon. Friend the Member for Crosby suggest, the Government would have to withdraw this order. The question is whether that would not make the intervening few months more uncertain than if we were to go ahead, as the Government propose, and vote tonight on the understanding that before the House rises for the recess an order will be tabled revising the date by 24 hours. Everyone in the business community will then have clear warning of the correct date.

By its decision the House has already opted not to spend an hour and a half debating the order separately tonight. It is true that the amending order, as it is subject to an affirmative resolution, can be debated after the recess. Whether it is debated will be for the House to decide. It may be that the House will decide not to debate it, in which case no time will have been wasted. If the House decides to debate the order, it will be one and a half hours then instead of tonight.

Mr. Graham Page

Surely it is possible to withdraw the draft order which is before the House at present and to lay the corrected draft order tonight, before 10 o'clock. It could then be voted on tomorrow, when I would hope that the Opposition would allow it through, having debated the whole subject fully today, without a further one and a half hours being necessary.

Mr. Cryer

The interjection by the Secretary of State was less than satisfactory. I was not here for the opening of the debate, simply because the Committee was sitting and hearing evidence from Department of Industry witnesses. The Committee considers—we made it quite clear in our report—that to proceed as the right hon. Gentleman suggests would be unsatisfactory. It would be simpler for this order either to be withdrawn and another order laid, or an amending order laid in conjunction with this order, so that we did not have the daft situation of a three-months gap.

As I said in my earlier remarks, it is simple for us to understand, but our legislative process affects millions and we should strive, where it is within our ability, to make things as simple and clear and as easily understood as possible. The process that the Secretary of State is suggesting will not do that. The process that the Committee is recommending can be got through. The debate has been held. The amended order can be placed before the House and it will be up to the House to decide what to do with it. But the House would at last have one correct order. That is the procedure that I believe we should follow.

Sir Keith Joseph rose—

Mr. Deputy Speaker

I feel, with the greatest respect, that we should proceed with the debate.

Sir K. Joseph

On a point of order, Mr. Deputy Speaker. A new proposition has been suggested to the House. Obviously I want to co-operate with the Committee, but I am advised that there is a problem about the amount of notice that is necessary before an amended order can be voted upon. I should like to have a few minutes to consult to see whether what the hon. Member for Keighley suggests is, or is not, practical. If I may, I shall intervene again later.

Mr. Les Huckfield (Nuneaton)

Further to that point of order, Mr. Deputy Speaker. Though I take note of what the Secretary of State said about the House having agreed to consider the order and the debate at the same time, he will recall that when he said that it would be convenient for the House and asked the leave of the House, we had not heard his statement on what he proposed to do to the order. By our silence we assented to taking the two issues together before we heard the right hon. Gentleman's explanation. Having heard his explanation, I place great weight on what was said by my hon. Friend the Member for Keighley (Mr. Cryer), who is the Chairman of the Committee. On behalf of my right hon. and hon. Friends, I can say that we certainly take very much to heart what my hon. Friend the Member for Keighley said.

8.27 p.m.

Mr. Fred Silvester (Manchester, Withington)

My hon. Friend the Member for Bodmin (Mr. Hicks) and I must share the distinction of being among those on the Government Benches most favourably disposed towards regional policy. Therefore, it is of some interest how we approach the present proposals of the Government.

I take the view that regional policy is not a temporary matter. As my hon. Friend the Member for Oxford (Mr. Patten) said clearly earlier today, regional policy is something which will, and should, continue. It arises because there is a fundamental imbalance between various parts of the country, and the natural pull and economic advantage of the South-East is not something that will go away. The fact that the capital remains here makes that inevitable. An active and effective regional policy is not a palliative for the regions of the country but a permanent and everlasting policy for a country which is as highly centralised as ours.

Having said that, I think that we must judge how we approach the present proposals. I have no difficulty regarding the present proposals. The Secretary of State has disappeared to consult on the procedural point, but it may come as a surprise, in view of our previous battles on these matters, that I compliment him on his present proposals.

The man who tackles the question of the boundaries is, I believe, a brave man indeed. It is inevitable that whatever one does there will be people who have particular axes to grind or particular local interests. Manchester will disappear altogether from the assisted area list. No doubt that will cause me a great deal of local aggravation. Nevertheless, it is true that the map had become wholly indefensible. It is therefore important, if one is redrawing it, to try to do so in such a way as to give the basis of fairness between one region and another. To do it on the basis of the unemployment statistics, together with some understanding of what is likely to develop in the near future, is the best way of going about it.

Therefore, I compliment my right hon. Friend on tackling this problem. But, as T. S. Eliot said, The last temptation is the greatest treason: To do the right deed for the wrong reason. I would share the disquiet of some of my hon. Friends if I thought that changes were made not because the map had become unfair but because it was desirable to produce a quick £200 million out of the regional assistance budget. I say that because I do not think that people generally understand the extent to which there is a considerable bias in public expenditure in favour of the South-East. It is generally overlooked—my right hon. Friend showed this again today—since regional aid is so easily identified as something that can go into one region or another, that a lot of other public expenditure is heavily biased towards the South-East and London, not least the salaries of civil servants and others. Therefore, one must be careful when one talks about the need to prop up the regions by giving them extra public expenditure, especially when they may he doing nothing other than trying to equate their share.

For example, my right hon. Friend talked about one of the effects of the cost of regional policy as imposing taxes upon other businesses. I suspect that he would not do that with other forms of tax cost. It is rather like supposing, as is sometimes argued with the car tax, that there is a discreet industrial fund. It is to argue that the money that has been spent out of the general tax pool for the North-West or the North is somehow a burden upon industry, whereas taxation for the purpose of roads, hospitals and so on is not. I do not believe that argument to be tenable. It is, therefore, not one that I hope my party will advance too often.

Nevertheless, to those of us who support some kind of active regional policy, it is of great importance not to try to do it on the basis of maintaining the sacred cows and vested interests or the barnacles that have become encrusted on the whole structure. I was delighted to hear about the end of the economic planning councils. I could suggest a few other bodies that could well be axed. In the process of trying to get industries into these areas an enormous industry has developed, and it is about time that there was some pruning there in order to get back to the nitty-gritty—the spending of money on the provision of jobs rather than spending it on talking about the provision of jobs and the setting up of yet more conferences and plans to do so.

We are therefore faced with the opportunity as well as the difficulty. I have no doubt that it is right that regional policy, like every other part of public expenditure, should bear its fair share of the burden that has arisen because of the enormous increases in wage costs within the public sector. I understand that these are likely to run at about £4½ billion. They are large and additional sums. It is, therefore, inevitable that all areas of public expenditure should play a part, including regional policy.

However, we should not forget that there are areas that are not labelled "regional policy" that do not come under the Department of Industry's Vote and that are of immense importance. I refer particularly to those areas which come within the sphere of local government and concern various forms of infrastructure improvement. We in the North-West, like many other areas, are faced with essential problems that bear as heavily on industrial development as anything else. For instance, Manchester is faced with a rate burden and a diminishing rate base that makes it extremely difficult for small companies and other new companies to make a rational decision to go into the centre of the city. The rate burden is enormous, partly because of the way in which the council runs its policies, but also inevitably because of the drift of people from the city centre.

Similarly, we have whole areas of backlog to be cleared up. I cite local examples because I know them best—but they will be duplicated in other parts of the country—such as the sewer system, which is totally collapsing. If that is a matter which has to be borne by the local community, and a community which has a smaller industrial base and a weaker rate base, it will be very difficult for them to do it.

Therefore, I hope that in looking to making savings in public expenditure, the Government will nevertheless remember that there is a real necessity on the part of any Government, Conservative or otherwise, to make a continuing commitment to the recycling of some of the resources of the country back to the regions to make up for the inevitable drift to the South-East. That may well be better done by spending money on infrastructure changes and matters that come under the rates rather than by the regional development grants about which we have been talking today.

8.36 p.m.

Mr. D. E. Thomas (Merioneth)

This is probably the most important debate affecting Wales and other regions in England and the national region of Scotland that we have had in this Parliament. The effect on both my constituency and on the whole of Wales is potentially disastrous. The Blaenau Ffestiniog special development area in my constituency is downgraded to a development area. The Llangollen travel-to-work area becomes an intermediate area. Barmouth, Machynlleth and Towyn move from being development areas to being completely non-assisted areas.

I have received a letter on this subject from the director of one of the three remaining slate quarries in the constituency—hardly a mobile kind of industry—and it is typical of the comments that I have had from employers. It states: The consequences of such action would be disastrous for our company, as its future capital expenditure will naturally he drastically reduced. These days we are continually hearing in the media, as we have since before the general election, about the self-styled philosophy of the Secretary of State for Industry. It appears to me—I think that this was confirmed today—that his philosophy is none other than a very simplistic ideology, based on a very inadequate economic analysis—on the reliance on market forces.

As someone who represents a less-developed region, I know that we have been on the receiving end of the operation of market forces for many years. Regional imbalance in the case of Wales and of the other regions, as the hon. Member for Manchester, Withington (Mr. Silvester) has pointed out, is not a geographical accident. It is not a natural tendency. It is a factor in the very economic system in the countries of Britain. It results from the domination of peripheral areas by central areas. It is a geographical inequality, a horizontal inequality, which compares with the vertical class inequality. I think that the Secretary of State for Industry, in all his speeches, exhibits his devotion to the maintenance of both.

We have an uneven development in the concentration of capital in the South-East and the Midlands which affects adversely the development of new jobs in the regions, not only in Wales but in the other regions of the United Kingdom.

There is a dependent economy which has been created in Wales and the other regions by the centralisation of capital. Local development is inhibited by lack of local capital. There is a lack of infrastructure for diversified manufacturing, and the peripheral regions become narrowly specialised. They become export economies. Our most valuable exports are not only Labour Members to serve English constituencies from the Opposition Benches but also young technologists, who are still exported. Indeed, over 500,000 of our working population, throughout this century, have been exported from the economy of Wales to serve in the central areas.

From what we have heard this evening, it seems that the Secretary of State for Industry, with his euphemisms about the mobility of labour and a labour shortfall in the overdeveloped or more developed areas of the economy, tends to perpetuate and, indeed, to intensify that very system.

We have had quotations from George Bernard Shaw and T. S. Eliot. I hope that I shall have the forgiveness of the House for quoting Marx: The territorial division of labour … confines special branches of production to special districts of a country". That is not merely a Marxist quotation from "Das Kapital", but it is appropriate to the economic system from which Wales and the other regions of this country suffer. I do not expect the Secretary of State to accept that analysis for a moment, but at least he ought to look at it and realise that regional policy is an attempt to intervene in the centralisation, in the centrifugal forces of capital accumulation. Indeed, the whole history of regional policy, inadequate as it has been over the years in its effect on Wales, teaches us that we cannot leave the location of jobs entirely to market forces.

The hon. Member for Vauxhall (Mr. Holland) has writteen a major book on the theme, "Capital versus the Regions", which I recommend to all civil servants in the Department of Industry. The analysis stresses that if the market system is to be adequate for correcting regional disparity and for creating new investment, the investment opportunities in the less developed region will have to be greater than those in the more developed region if a re-entry of savings and a cumulative growth process are to be started by the free working of the market in the less developed areas. He goes on to stress that there is no once-and-for-all element in a successful regional policy. For even if the productive structure and regional competitiveness of a less developed region is improved to the point at which it can be said to be 'aligned' with a more developed region, then the free working of the market will initiate further cumulative imbalance unless monitored and offset by government policy. Clearly, by their withdrawal of regional aid the Government are determined not to offset the operation of market forces.

In the 16 years from 1960 to 1976 the net benefit to Wales of regional policy was the creation of 76,000 new jobs. That did not offset job losses in basic industries, and those losses will be increased by the decision of the Secretary of State for Industry to axe steel making in part of my county of Clwyd, at Shotton.

The Secretary of State partly quoted from the study of Barry Moore, John Rhodes and Peter Tyler on the impact of regional policy in the 1970s. That study indicated that the total effect on Wales was that increase of 76,000 jobs, and I am therefore appalled to see the Secretary of State for Wales so warmly associated with the package that is before us today. He is clearly presiding over a further disastrous collapse in the Welsh economy, and I am not surprised that he is not prepared for us to discuss these cuts in the Welsh Grand Committee and he chickened out of making a statement on the issue.

The Labour Benches are not free from criticism. The right hon. Member for Swansea, West (Mr. Williams) earlier appeared as a major defender of regional policy, but there has been a progressive weakening of regional policy throughout the 1970s under Tory and Labour Governments. The strength of IDC policy has declined by about half during the 1970s. Even if the withdrawal of REP was forced on the Government by European policy, the fact remains that about £30 million was lost in specific investment in the Welsh economy through that withdrawal.

It is not good enough for the Secretary of State to pretend that the fact that 40 per cent. of the United Kingdom is now an assisted area—the so-called plateau effect—prevented the regional policy from being effective. The major factor preventing that is that the strength of the policy has been withdrawn and its bite has declined under both Labour and Tory Administrations.

If the Secretary of State can quote Moore, Rhodes and Tyler, so can I, and I shall get my figures right this time. The projected estimated total loss of manufacturing jobs as a result of the cut in regional employment policy in the assisted areas from 1976 to 1980 is between 23,000 and 45,000. There are also jobs lost indirectly through unemployment. We are therefore facing not only the effect of the cut in REP but this further reduction in regional policy.

The link between regional policy and taxation has been clearly exhibited in these proposals. What is regional policy if not transfer payments to the less developed regions out of the income of the richer classes in the more developed regions? That is the aspect which angers me most. The Government's decision on regional assistance is part of their whole policy of favouring their supporters and blatantly favouring the class that they represent. The working people of Wales are taking note of what the Government, for whom we did not vote, are doing to the Welsh economy.

Several Hon. Members rose—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

Mr. Barry Henderson.

Mr. Robert Hughes

On a point of order. Mr. Deputy Speaker. I regret having to raise this matter, because I appreciate the great difficulty of the Chair in calling speakers in such a major and serious debate. However, I wish to put on record my strong concern that no Labour Back Bencher from Scotland or the North of England has been called. We have had two Conservative Members from Scotland, one right hon. Member representing a minority party in Scotland and one hon. Member representing a minority party in Wales. Of course, they are entitled to their point of view, but the major Opposition party is also entitled to a proper share of the debate.

Mr. Robert C. Brown (Newcastle upon Tyne, West)

Further to that point of order, Mr. Deputy Speaker. I am a member of the Northern group of Labour MPs and, with four of my colleagues, I have been in the Chamber all day waiting to be called. I take a dim view of the fact that not one hon. Member from the Northern region—including the hon. Member for Newcastle upon Tyne, North (Sir W. Elliott), who came in earlier prepared to make a speech—has had an opportunity of contributing.

We have seen the spectacle of the hon. Member for Manchester, Withington (Mr. Silvester) being called to speak just after walking in from the cold and sitting down. You have now called another hon. Member who has not been in the Chamber for more than 10 minutes. It is monstrous that five hon. Members from the North of England have sat here all day and you, Mr. Deputy Speaker, have not seen fit to call any one of us—not even my right hon. Friend the Member for Durham, North-West (Mr. Armstrong), who is a Privy Councillor.

Mr. Deputy Speaker

We still have 25 minutes before the winding-up speeches begin. If hon. Members exercise control over their eloquence, it is conceivable that we may be able to fit in all hon. Members from the remaining areas.

Mr. Dan Jones

Further to that point of order, Mr. Deputy Speaker. I join the complaints of my good friends from the North-East and Scotland. I represent an area in which the textile industry has been decimated, but no Labour Member from that area has been called to speak in the debate.

8.48 p.m.

Mr. Barry Henderson (Fife, East)

I shall seek to be brief, but I should point out that I have been in the Chamber all afternoon except for a period of about one hour.

I could prove to the hon. Member for Merioneth (Mr. Thomas) that the Government's proposals are not politically inspired, as was all too often thought to be the case under the previous Government. I warmly welcome the general principles underlying the redistribution of the development areas. The redrawing of the map was long overdue, as was the need to get better value for taxpayers' money.

Scotland as a whole benefits substantially from the changes, but my constituency suffers more than most. Indeed, it is the only constituency in the kingdom of Fife that has had its development area status reduced.

It is in the context of general approval of the measures that I should like to raise a number of points that I hope my right hon. Friend the Secretary of State for Scotland will answer or at least bear in mind for future consideration. They emerge from the desire to improve the selectivity of the regional development measures and to avoid abrupt changes.

In the context of avoiding abrupt changes, I envisage the following problem. A major capital project may have received stage payments before 18 July 1979 for goods which will not finally be delivered until after 1 August 1980. Many people outside the House are anxious to know how that problem will be handled. What happens when a genuine project has already been submitted to the Government for consideration, say two months ago, under the energy-saving scheme, which could have been initiated before 18 July 1979 but for the time taken in consideration in Government Departments? Will the contribution from regional development aid be given to those people when even an order that is placed today could not physically be delivered within the period of a year? If delivery is genuinely and reasonably expected to be made before 1 August 1980 but that delivery is not met through no fault of the purchaser, for example, because of an industrial dispute on the supplier's premises, what will happen? That important point should be considered.

I believe that my right hon. Friend the Secretary of State for Industry should acquire powers to be able to deal with anomalies of the sort that I have mentioned, where everything is done genuinely and in good faith and yet, for one reason or another, ground may be lost, thereby losing substantial sums of money to major capital projects. I hope to see greater selectivity exercised in the matter.

Several areas in my constituency have been reduced from development area status to intermediate status and some have moved to non-assisted status. One has moved from special development status to development status. The Cupar employment office area is geographically large but it is sparsely populated. I accept that, on the broad principles by which the Minister may be guided, it is probably correct that the whole area could not reasonably be considered to maintain development area status. However, within that substantial geographical area there are serious pockets of deep unemployment. I draw my right hon. Friend's attention particularly to the town of Newburgh, which is many miles away from any other significant centre of population. It is unfortunate for the town that it is on the extreme periphery of the Cupar employment office area. It is also on the periphery of another area. Yet it is a town which has seen the catastrophic failure of the major employer within the past two or three years. There is severe unemployment in the town and it is not part of the general economic activity of what in bureaucratic terms is referred to as the Cupar employment office area. I hope that it will be recognised that that is too broad a bureaucratic brush with which to work and that my right hon. Friend will hold out some hope that special cases of individual towns in isolation within the area will be given some consideration.

The Scottish Development Agency is scheduled to build an advance factory before the end of this year. I should like an assurance that that project will still go ahead. In addition, there has been a substantial amount of private enterprise activity to build up what is, in effect, a private enterprise industrial estate on a tiny scale, which so far has cost no public money. I believe that that effort needs especial encouragement of the type provided by these selective measures.

The next area on a selective basis comes within the St. Andrews employment office area which will lose its development area status. The town of Guard Bridge is on the periphery of that employment office area, one mile from the border of the special development area based on the Dundee employment office area. One company engaged in the production of paper employs a third of the working population of Guard Bridge. That is a cyclical industry which has faced particular problems. That company, with the aid of able management and great co-operation from an efficient work force, has managed to survive the rigours of the past five years because of its own efforts. I hope that those efforts will not by stymied at this stage by a lack of sensitivity in selectivity and the placing of development area boundaries.

The last area to which I should like to draw attention is that of Levenmouth. The area embraces both Leven, which is in my constituency, and Methil, which is in the constituency of the hon. Member for Kirkcaldy (Mr. Gourlay). I am surprised that the area has been reduced from special development area status to development area status, because it is next door to Glenrothes new town, which has substantial advantages in attracting industry and retains special development area status. I look forward to discussing with my right hon. Friend whether an injustice might have been inflicted in changing the status of Levenmouth.

In short, the employment office areas, seem to be a bureaucratic, blunt instrument in the more sparsely populated areas. It is not the inhabitants' fault that they must travel so far to reach an employment office. I hope that my right hon. Friend will take serious note of these points in seeking to help a constituency which, because of the efforts of its people and the activities of small businesses, has done very well for itself. It recognises that in broad terms the general trend of Government policy is right but that it will be made more effective if more selective measures are employed in some instances.

8.58 p.m.

Dr. Oonagh McDonald (Thurrock)

I listened with interest to the statements which were made last week by the Secretary of State for Industry on regional policy and the National Enterprise Board. I also listened with care to his opening speech in this debate. Comments have been made about the right hon. Gentleman's passionate commitment to market forces, yet we find when we examine his statements that his commitment turns out to be not so real after all. If one is committed to a belief in free market forces, one would surely scrap regional policy entirely.

However, the right hon. Gentleman has allowed the basic structure of regional policy to remain. He has not taken the opportunity to carry out a thorough review of regional policy. Instead, the withdrawal of regional assistance from various areas has been carried out haphazardly, and this will result in increased unemployment. The right hon. Gentleman has not taken the opportunity to examine changes in the structure of employment or changes in the industrial geography of the United Kingdom, following the discovery of North Sea oil and its implications.

That means that the sharp cut in regional aid will lead to increased unemployment. It also means that many companies which are already likely to face severe financial difficulties in the coming months will find that those difficulties have been increased by Government action. Indeed, we will find over the next two or three years, when regional aid is finally withdrawn from many companies, that they will suffer greatly as a result. The Secretary of State has not helped the traditional development areas, nor has he done anything to help other non-assisted areas such as London and the South-East.

The Secretary of State has made play of withdrawing IDCs, but, contrary to what some of my hon. Friends have said today, those policies have been weakened greatly over the past two to three years. In London and the South-East, in 1977 only two applications for areas up to 50,000 sq. ft. were refused, in 1978 seven were refused, and in the opening months of 1979 only two were refused. That means that there are areas in London and the South-East that are urgently in need of assistance. The inner urban areas have been mentioned already by my right hon. Friend the Member for Deptford (Mr. Silkin). There is a tendancy to look particularly at inner urban areas.

However, I remind the Secretary of State that there are other areas such as my constituency of Thurrock which have had unemployment levels of between 7 per cent. and 8 per cent. over the last few years. The relaxation of the IDC policy over those two to three years has not helped Thurrock.

Unemployment in Thurrock is due to structural changes—the closure of old industries such as quarrying, and the decline of employment in the docks. Thurrock is in need of replacements for those old industries and new opportunities for employment. The right hon. Gentleman's review of regional policy has done nothing to help pockets of high unemployment in regions where the overall level of un- employment has been low and frequently lower than the national average.

If the Secretary of State is seriously concerned about regional policy and wants to continue with it, he should look at the way in which it has been operating and make the necessary changes. Instead, he has allowed the automatic grants to continue. Very often they go to large companies and are in turn invested in capital-intensive industries. Those grants therefore do not provide an adequate number of jobs. Often that money is wasted entirely and is given to petrochemical industries which would have to be situated in Scotland or the North-East, and therefore that is money down the drain.

I am curious because I believe there is some Question of withdrawing aid from the petrochemical industries, and it is only in response to pressure from some of the major companies that that aid continues to be available. Perhaps the Secretary of State will comment on that. The bias of the regional policy with which the Secretary of State has presented us is towards the large companies, some of which do not need it. That bias is directed away from small and medium firms. He has raised the minimum qualifying levels for grants and allowances and, therefore, many small industries which could provide jobs will not receive assistance. Those small and medium firms are firms of the kind to which the Secretary of State claimed to be so committed during the Government's period of Opposition and during their election campaign. It is those firms that supply important jobs that can provide a spread of employment with different kinds of employment opportunities for people in a developing region. It is those firms that will go to the wall, despite the protestations of the Tories, both in Opposition and in Government, that small is beautiful and that small should be helped.

The Secretary of State has also failed to link regional aid with the number of jobs provided. The cost of present regional aid in terms of providing jobs can often be extremely high. The jobs that it produces are few in number. Why has no criterion been introduced? It is used in other countries and should be used here. As in other countries, the criterion shoud be to make sure that the projects to which aid is given are ones that fit in with planning for a region as a whole. The Secretary of State's policy fails to meet that criterion.

Any regional policy undertaken by a future Labour Government should take features such as that into account and their regional policy should conform to that criterion. It should look first at the various agencies that are concerned with regional development and make sure that they work together, are integrated and are not competing foolishly against each other. This has happened with many promotion agencies—for example, Milton Keynes and Peterborough competing against each other in a wasteful fashion. It should not be confined to stimulating manufacturing industry in the regions but should also look at the possibility of stimulating service industries. These industries can widen the range of job opportunities and perhaps provide employment opportunities for women. They have an important income impact on the regions and can perhaps lead to the payment of higher wages.

Small service industries may not only fulfil these functions but, unlike large companies, may draw on other small suppliers in the area. They will not have their own subsidiaries to supply their needs. They will not have their own manufacturing companies to supply their needs. They will therefore draw on other small businesses in the area. In that way, employment opportunities can expand.

The pattern operating in France and Germany is flexible and related to the needs of an area which is tested in terms of employment and lack of employment, in terms of average income, and in terms of the level of infrastructure. The policy is not automatic. In France, tax concessions and local rate concessions are granted only if the project fits in with official regional development priorities. The project has to accord with the plans for the region as a whole. A more flexible policy of this kind, which looks again and again at various criteria and tries to fit in a project with plans for the region as a whole, can provide jobs more effectively even than our regional policy has done in the past.

If the Secretary of State is serious about reviewing regional policy, that is the kind of policy he should have produced instead of merely slashing away at the assisted areas, slashing the amount of money given, increasing unemployment, increasing the depression and poverty in many parts of the country and failing to look at other areas of need. If he had followed the course I have outlined, we might have found what he produced acceptable. Instead, we know that the whole country will have to wait until the Secretary of State's period of office comes to an end and a Labour Government produce a regional policy that will provide jobs and raise the level of income throughout the depressed regions of the country.

9.8 p.m.

Mr. Les Huckfield (Nuneaton)

I am sure that hon. Members have found this an interesting debate. Many hon. Members wished to speak. I should like to preface my remarks by congratulating those hon. Members who made their maiden speeches. It was 12 years ago in this House that I made my maiden speech on regional policy. I know how those hon. Members feel. The hon. Members for Oxford (Mr. Patten), for Bristol, North-West (Mr. Colvin) and for Cornwall, North (Mr. Neale) have one factor in common. Either their constituents already benefit from the National Enterprise Board or they would like to benefit from the National Enterprise Board.

I am sure that the hon. Member for Oxford realises that 30,000 jobs in the Cowley area are dependent upon British Leyland plants. The hon. Member for Bristol, North-West will be one of the beneficiaries from the siting of the Inmos technology centre in Bristol and I am sure that the hon. Member for Cornwall. North realises that Cornwall county council was recently making strong pleas to have Inmos sited in its area. There is a common interest in preserving the NEB. I hope that hon. Members will press that upon the Secretary of State.

I wish that the hon. Member for Cornwall, North had mentioned regional development grants for tin mining, which is important to his area. There was a change of policy under the previous Government, but some of my right hon. and hon. Friends believe that the issue should be reconsidered.

Many hon. Members wished to take part in the debate. For example, my right hon. Friend the Member for Durham, North-West (Mr. Armstrong) wanted to mention the Courtaulds closure at Spennymoor, about which he has been anxious. My hon. Friend the Member for Newcastle upon Tyne, West (Mr. Brown) wanted to mention the Vickers Scotswood threatened redundancies and the Tress redundancies with which he has been involved, as I have. My hon. Friend wanted to ask the Secretary of State whether the type of assistance which the Labour Government were prepared to make available will be available under this Government. I am sorry that my hon. Friend was not able to urge the Secretary of State on that matter.

My hon. Friend the Member for Thurrock (Dr. McDonald) made some valid points about the interconnection between service jobs and jobs in other industries.

One of the most refreshing and realistic approaches was adopted by the hon. Member for Bodmin (Mr. Hicks). His speech was more realistic than that made by the hon. Member for Aberdeen, South (Mr. Sproat), who lavishly praised the Secretary of State's statement and then said that under that policy Aberdeen could become a ghost town. It was an illogical speech. I am sorry that he has drifted away.

The most devastating criticism of the policy was made by my right hon. Friend the Member for Swansea, West (Mr. Williams), who was in charge of the administration of regional policy under the previous Government. He was particularly telling when he rubbed home the point that we are depriving ourselves of the opportunity to invest to the limits to which other members of the EEC still permit themselves. I am sure that in the short time that they have been in office the Government have realised that we must be internationally competitive when bidding for multinationals to invest in Britain.

Perhaps the most fascinating aspect of the debate has been to watch the public wrestling match on the Government side of the House. I am talking particularly of the Secretary of State, who has been wrestling with his own conscience. He cannot see how his theoretical beliefs, which oblige him to say that we should not have any subsidies, can be squared with the need for a regional policy. I am not sure whether the right hon. Gentlemans' conscience or his contact with reality won.

The Secretary of State tried to justify assistance for marginal investment and agreed that in some circumstances such assistance can be justified. In the next breath he said it may be better if the workers move out of the assisted areas to the non-assisted areas. The Secretary of State is being illogical. I am sure that he realises that one cannot operate both those policies at the same time.

The Secretary of State said that he had tried to make the map more fair. What is fair about downgrading an area such as West Cumbria when the rate of unemployment is still increasing and the consequences of the Secretary of State's shipbuilding statement are still to come? What is fair about downgrading an area like that? What is fair about upgrading Blackpool and downgrading Blackburn?

Mrs. Kellett-Bowman

They have not. The hon. Member for Blackburn (Mr. Straw) got his facts wrong.

Mr. Huckfield

What is fair about some of the policy decisions that the right hon. Gentleman announced in that answer which he seemed eager at some stages the other day to want to conceal from the House?

Mr. Hardy

Would my hon. Friend consider the situation fair where in my constituency I have a development area, an intermediate area and an area from which all assistance is to be removed? Would he consider it fair that the area from which all assistance is to be removed has much higher unemployment than the intermediate area, which has slightly higher unemployment than the development area, although I accept that the development area itself will have rather less aid than it had before? Does he not consider that the people of Rother Valley are justified in seeking a reconsideration of this absurd and bewildering state of affairs?

Mr. Huckfield

The more we come across examples such as those that my hon. Friend has given, the more we realise how ridiculous some of the redrawing of these boundary lines will be. All I can say is that it seems that if one voted Conservative at the last election one has a better chance of one's constituency being upgraded.

Mrs. Kellett-Bowman

That is rubbish.

Mr. Huckfield

I knew that that would provoke the hon. Lady. I only hope that in future she will make the right speech in the right Parliament.

If the right hon. Gentleman is trying to be fair, how is it that he predicts, from the policy that he has announced, a job loss of around 5,000 or 6,000 a year? How is it that he predicts that sort of job loss when even the Conservative campaign guide for 1977 was saying that in 1973–74 our regional policies had created 72,000 net jobs? Again, the Conservative campaign guide says that between 1974 and 1975 regional policies had created 87,000 net jobs. That calculation—and I take the words from the Conservative campaign guide of 1977—was excluding the effects of service industry grants and excluding the multiplier effects.

I hope that the right hon. Gentleman believes his own party propaganda. He ought to come to the House with a more accurate and better prepared set of facts and figures instead of making them up as he appears to have done in connection with his series of statements.

Again, my right hon. Friend the Member for Swansea, West made the point that we ought to have had an overall calculation, a total calculation, of the effects on certain areas of the right hon. Gentleman's steel statement, his shipbuilding statement, his NEB statement, his regional statement and the statement on dispersal of jobs in the Civil Service that is still to come. It is lamentable that with each statement that we have had from the Government, whether it be on steel, regional policy or shipbuilding, they cannot give a precise estimate of the number of jobs that are to be lost.

I know that the right hon. Gentleman has had a great wrestling match with his conscience. He even had to get his Minister of State to make the shipbuilding policy statement the other day because he was too squeamish to face the consequences of the job losses. With each of these statements we ought to have a precise indication from the Government of the consequences in terms of job losses, because we on the Opposition Benches see every job lost as a real job lost.

The right hon. Gentleman went into the realms of Moore, Rhodes and Tyler. My hon. Friend the Member for Thurrock referred to this, and I think that if the right hon. Gentleman wishes to quote outside sources he ought to get them right. His so-called Moore, Rhodes and Tyler estimates were not correct. The right hon. Gentleman quite rightly said that there was an estimate of some 20,000 jobs a year, and he went on to make his own subtraction from that total for jobs that he deciphered would be lost in other regions as a result of that regional policy. In other words, he presented the Moore, Rhodes and Tyler figures and went on to make the subtractions that he thought should be made. However, if he reads the paper he will learn that the subtractions have already been made. Page 73 states: It is important to point out that this estimate"— I am talking about the estimate to which the right hon. Gentleman referred this afternoon— represents net employment creation and automatically allows for any changes in the number of manufacturing job losses arising directly from regional policy. If the right hon. Gentleman is to quote from the Department of Applied Economics in Cambridge and if he is to give us some independent estimates, let him quote them correctly. Moore, Rhodes and Tyler estimate that from 1960 to 1976, if we take the calculation across from the four development areas to the other development areas, if we include the estimates from shipbuilding policies and include the multiplier effect that must be associated, regional policy between 1960 and 1976 has created some 540,000 jobs.

I understand why the right hon. Gentleman was anxious to misquote the facts and figures. However, if he accepts that the facts and figures that I have stated are the results of regional policy, how can he try to undermine that policy? How can he try to downgrade it as he has been trying to do in his statements?

If the right hon. Gentleman does not accept the Moore, Rhodes and Tyler estimates, let him accept the estimates that have come from the eighth report of the Expenditure Committee. The Committee refers to the creation of 56,000 new jobs and the safeguarding of a further 35,000 jobs in 1976–77. Paragraph 15 states: If this is achieved, at the past average outlay of £1,000–£1,200 per job, it will not make spectacular inroads into total unemployment". Nobody is claiming that. The paragraph continues: but it will be a modestly useful contribution and may perhaps be regarded as good value for money. I hope that the right hon. Gentleman will accept that the Expenditure Committee is fairly independent and will accept its comments on the effects of regional policies.

If the right hon. Gentleman does not trust the Expenditure Committee—I hope that he will, because it went into the issue pretty thoroughly—I ask him to read his Department's annual report on the Industry Act. The right hon. Gentleman's Department is required to submit an annual report to Parliament under the 1972 legislation which the previous Conservative Administration introduced. The most recent report was printed in August 1978. His Department believes that between 1974 and 1978, as a result of section 7 and various regional policies administered under that legislation, there was a total of about 366,000 jobs either saved or created. However, the right hon. Gentleman still comes to the House to say that he does not have any real estimates of the number of jobs that might be created or might be lost.

If the right hon. Gentleman does not accept the evidence prepared by his Department—I hope that he will, because he has some good civil servants working for him—I ask him to accept the comments of the Industrial Development Advisory Board. As my hon. Friend the Member for Keighley (Mr. Cryer) has said, the board does not exactly have a Tribune Group majority on it. In page 17 of the annual report it is stated: The Board welcomed this evidence of a growing level of employment-related investment in Assisted Areas; in particular, the fact that 54 of these projects were for the modernisation of existing facilities where employment would otherwise be jeopardised, showed an encouraging response to the availability of assistance to this type of investment. That is precisely the type of investment that will be cut back under the policies that the right hon. Gentleman has announced.

Every industrial development board annual report and commentary gives testimony to the efficacy of section 7 policies in the regions. However, when my hon. Friend the Member for Thurrock asked the right hon. Gentleman at a recent Question Time what would become of the industrial development boards, it was evident from the expression on his face that he did not know that they existed. However, they have the responsibility of assessing projects for their viability. They speak volumes in praise of the policies that they have been asked to carry out under existing legislation and the efficacy of those policies in generating new employment.

The largest number of areas that we shall have in the category of assisted areas will be the intermediate areas. In view of the cutback in regional development grants, does the right hon. Gentleman think it is worth while having intermediate area status? Between 1972 and 1978, £137 million was given in regional development grants to intermediate areas. Even last year, for example, £32 million in regional development grants was given to intermediate areas. Under the policy, intermediate areas will receive no such grants.

However, the situation is more worrying than that. There will be an absence of regional development grants for building. The regional selective financial assistance for which those areas will compete will be much reduced. In terms of the percentage of the total offers and payments made, intermediate areas receive about one-quarter of the offers and a quarter of the payments made to all assisted areas. I quote rough figures. If the Minister disagrees, I hope that he will say so.

When the new areas with intermediate area status come into being there will be, according to the estimates that I have seen, only about £61 million in total for section 7 assistance. If the intermediate areas are to maintain their same portion—that is, one-quarter of all the offers and a quarter of the payments made under section 7—they will be talking in terms of section 7 assistance by the time that the map has been redrawn of a mere £15 million worth of regional selective financial assistance. Even that will be subjected to the enhanced criterion of additionality.

Whereas under regional development grants and the previous section 7 assistance intermediate areas received a grand total of about £50 million, by 1982–83 a much larger number of intermediate areas will compete for a much reduced total of £15 million. Formerly the figure was £50 million. In future it will be £15 million. Any area classified as intermediate will have a much reduced status. It will be much reduced in its ability to obtain the diminishing amount that will be available. There will be in fact a much bigger reduction than the Minister would have us believe.

Apart from the demotion of areas from intermediate area status to nothing, I am concerned about the downgrading of the regional effects of the National Enterprise Board, to which the Minister made vague allusions. He did not seem to realise that the National Enterprise Board, under the previous Government, was becoming an important instrument of regional policy. As a Minister in the previous Government, I received deputations and letters from Tory Members of Parliament and Tory-controlled local authorities because they wanted the Inmos production centres in their constituencies. They knew that the National Enterprise Board had 12 locations in Scotland, five in Wales, six in the Eastern region, 42 in the South-East, seven in the East Midlands, five in Yorkshire, 16 in the West Midlands and 20 in the North-West. Those figures show that under the previous Government the National Enterprise Board was starting to become—I accept that it could happen much quicker—a critical instrument of regional policy.

With the cutbacks to which the NEB will be subjected, it will not be able to carry out anything like the kind of regional role that it was starting to develop under the last Government. The right hon. Gentleman prefers to downgrade the activities and the role of the NEB, and he still does not tell us anything about the effect on inner city policies of raising the IDC limit.

In Greater London over the period from 1961 to 1971 there has been a loss of about 540,000 manufacturing jobs. How are we to be able to do anything about this, with any kind of inner city policies, when throughout the South-East and throughout the West Midlands it will be very easy indeed to put up a plant, employing ultimately up to 600 people, and still stay below the new IDC limit?

The right hon. Gentleman, in raising the IDC limit, has totally undermined the effects of all the inner city work that the last Government had started to put into practice. If my hon. Friends who represent inner city areas of London, Birmingham, Manchester and Newcastle where hoping for anything under the last Government's inner city policies, they will know from what has been said so far by the Conservative Government that these policies will be very much undermined.

My right hon. Friend the Member for Deptford (Mr. Silkin) said that the next Labour Government would need to be more selective and more comprehensive in its approach. I can testify to that. I do not want to be caught again with the lack of powers to deal with one case after another. I want to be able to ensure that we can get the Vickers Scotswood investment in Newcastle. I want to be able to ensure that we can still have a rubber tyre manufacturing capacity in this country. I want to be able to ensure that we can have the capacity in this country to deal with the Chrysler type of case, where the Labour Government found that, in the face of a foreign multinational takeover, they did not have powers to deal with it.

I hope that the next Labour Government, on the basis of planning agreements, of extending their powers of selectivity, and enabling the NEB to take equity stakes in certain industries and expand its role, will ensure that we shall not simply have assisted areas, development grants, powers under section 7 and section 8, and so on. I hope that, through an extension of public ownership and of planning agreements, we can make our policy work on the ground.

The right hon. Gentleman seems to think that it all depends on entrepreneurs. I quote from a speech that he made to the Federation of Conservative Students at the Collegiate Theatre, London, on Saturday 30 October 1976. I am sure that he remembers it well. In that speech he said: Our competitors abroad foster and encourage their entrepreneurs. They turn them loose upon the world like sleek, well-fed, but still hungry tigers. I have met a few of them. I have had to deal with a few of them up and down the country and some of them have come to see me in deputations. If the right hon. Gentleman thinks that there are tigers in some of those cages waiting to be let out, I am sorry to tell him that when he actually comes face to face with reality he will find quite a few tired, old, shabby tabby cats. The Secretary of State's whole theory seems to be based upon the view that if we can turn entrepreneurs loose, in some weird way investment and jobs will appear. I am sorry to say that elsewhere in this country where that has been tried it certainly has not proved to be so.

When the right hon. Gentleman comes out with statements such as he has, telling us that we cannot save Peter without sacking Paul, and possibly Paul's assistant as well, and that several Peters go on the dole for every Paul kept in a protective job, I want to know how someone with a philosophy such as that can possibly support any kind of regional policy. What the Secretary of State has really said, and what he was trying to say in previous statements he made—including those he made to the House tonight—is that, according to his theory, it is completely illogical to have a subsidy of any kind because subsidies distort the kind of policy he wants to see carried out. I hope that the right hon. Gentleman will eventually have the courage to tell us that he does not believe in regional policy. Much of what he said seemed to underline that. The Act under which we have been administering this grant policy is the Industry Act 1972, which represented a dramatic U-turn for the Conservative Party. That Act was based on the Industrial Expansion Act 1968, which was enacted by a Labour Government.

The Prime Minister is a very determined lady. I certainly would not expect her to draw the Secretary of State's attention to the U-turn that had to take place in 1972. On behalf of my right hon. and hon. Friends whose constituencies are vitally affected, and on behalf of the country, I hope that the Prime Minister will ask the Secretary of State to read the history books to see what happened between 1970 and 1972 before it is too late.

9.37 p.m.

The Secretary of State for Scotland (Mr. George Younger)

First, I should like to congratulate most warmly the three excellent maiden speakers we have had in the debate. My hon. Friend the Member for Oxford (Mr. Patten) made an impressive speech and will, I believe, be an admirable successor to his distinguished predecessors, some of whom he named, including my noble Friend the Lord Chancellor and, indeed, Mr. Evan Luard, whom he replaced. My hon. Friend the Member for Bristol, North-West (Mr. Colvin) made an extremely interesting speech, particularly raising the point about whether the right basis for a regional policy should be capital expenditure rather than employment. We shall look very carefully at what my hon. Friend so cogently said in his speech, but I think that the soundest way to support future investment is by capital investment, which usually produces sound and lasting jobs when investment is completed.

We also had a very forthright and most interesting speech from my hon. Friend the Member for Cornwall, North (Mr. Neale). No one who heard him can be in any doubt that he will be a most effective representative for his constituents in this Parliament.

We have had a most interesting evening and have heard the interesting advice of Opposition Members on the subject of regional policy. I found it particularly interesting because it seemed to me that, in a way that is becoming rather a pattern in this Parliament, a number of right hon. and hon. Gentlemen were suffering from severe bouts of amnesia, following 3 May.

Listening to the advice offered by the Opposition regarding all sorts of matters, such as spending money on various projects all over the country, one would hardly think that we were hearing advice from the very people who so ruined the economy of the country that there will be the gravest difficulty finding the money to keep many of the services going in the way we should like. I thought that some of the speeches were, in that context, very interesting.

Mr. Giles Radice (Chester-le-Street) rose—

Hon. Members

Give way.

Mr. Younger

I am sorry, but I have very little time. The hon. Member for Nuneaton (Mr. Huckfield) made an interesting speech, but ate into my time. I should therefore like to continue.

The right hon. Member for Deptford (Mr. Silkin), who also made an interesting speech, does not seem to have got into his stride as Opposition spokesman on these matters. At least, I do not think that his hon. Friend the Member for Nuneaton quite appreciated what his right hon. Friend was on about. His description of his right hon. Friend's programmes was truly remarkable. Apparently, the new regional policy of the Labour Party, if ever it is again in Government, is to be both more selective and more comprehensive. That seems to be a marvellous prescription for hitting every target at once with the same bullet. I do not think that the hon. Gentleman did justice to what his right hon. Friend had in mind.

But even his right hon. Friend puzzled me. As I understood him, he made three suggestions. The first was that regional assistance ought not to be automatic but ought to be more selective. That seemed to be a suggestion that there should be less emphasis on regional development grants and more on selective assistance. I do not know whether that was what the right hon. Gentleman meant, but it is almost precisely what is involved in the changes that we are presently discussing. He also said something which must have amused many hon. Members on both sides of the House—that one of the keystones of the new regional policy was to be planning agreements. What a tremendous boost that will be. Planning agreements have been rolling around the rafters of this place for live years. I may not be well informed, but so far as I know only one planning agreement has been concluded, and that was with Chrysler. There may have been others. But if that is the right hon. Gentleman's solution to regional problems—a rate of one agreement in five years—it seems to be slightly slow progress. I hope that he will do better than that.

Under section 21 of the Industry Act 1975 anyone who signed a planning agreement would get regional development grants for all that he did in that area. But it is interesting that that carrot has not been taken up by one firm during the time that it has been on the statute book. That is eloquent testimony to the hopelessness of that part of Labour's policy. Planning agreements as a policy are not lame ducks. Frankly, they are dead ducks, and it is time that the right hon. Gentleman recognised that.

Apart from the truly remarkable quotation that I have just given, the hon. Member for Nuneaton also said that every job lost was a real job. I wonder what he thinks of the doubling of unemployment during the period of the Labour Government. Were they all real jobs? I imagine that they were. I was also in some doubt as to whether he really understood what regional policy was all about.

Mr. Radice rose—

Mr. Younger

The hon. Member for Nuneaton kept saying that regional policy creates jobs. With great respect, regional policy may do many things, but it does not create jobs in itself; it shifts jobs. It makes jobs occur in places that they might not otherwise do. I shall return to that in a moment.

Mr. James Hamilton (Bothwell) rose—

Mr. Younger

It is not true, as the right hon. Member for Deptford suggested, that only the cuts are important in these changes in regional policy and that there would be no significant improvement in coverage. For instance, the special development area in West Central Scotland has been significantly improved, bringing in a further 4 per cent. of manufacturing employees. This means that Scotland will now have 37 per cent. of the SDAs in the country, compared with 30 per cent, before. With respect to Labour Members, it is a pity that none of those who represent the area of that SDA said how pleased they were that it was getting a stronger pool of help.

The worst areas have been fully protected. For instance, West Central Scotland and Dundee retain SDA status, as do the five Scottish new towns. In Wales, Wrexham has been upgraded to a special development area, and we have undertaken to consider the situation of Shotton.

Mr. Gordon Wilson (Dundee, East) rose—

Mr. Younger

The changes mean that 80 per cent.—

Mr. Wilson rose—

Mr. Speaker

Order. It is clear that the Minister is not giving way, and he must be allowed to proceed.

Mr. John Silkin

Will the right hon. Gentleman give way?

Mr. Younger

I am sorry, but I do not have time.

Mr. Silkin

Will the right hon. Gentleman tell us how many—[Interruption.] The right hon. Gentleman and I have a private basis of discussion with one another. Will the right hon. Gentleman tell us how many development areas have risen to the status of special development area and how many have been downgraded?

Mr. Younger

All the information on that is published.

Mr. Cryer

Tell us in numbers.

Mr. John Silkin rose—

Hon. Members

Order.

Mr. Speaker

Order. We cannot have two right hon. Gentlemen addressing the House at the same time, and I think that the Minister is not giving way.

Mr. Gordon Wilson rose—

Mr. Younger

The right hon. Gentleman—

Mr. John Silkin rose—

Hon. Members

Order.

Mr. Younger

I think it is generally agreed that it is my turn to speak now.

Mr. Silkin rose—

Mr. Speaker

Order. Quite clearly, the Minister is not giving way.

Mr. Younger

I hope that the right hon. Gentleman will not treat me as though I were one of his ex-colleagues in the Common Market.

These changes mean that 80 per cent. of manufacturing employment in Scotland will remain within the development areas or special development areas, and the result of this relatively favourable position is that we estimate that the maxi- mum saving likely to occur in Scotland by the end of the transitional period will be less than one-third, whereas in the rest of the United Kingdom, in the country as a whole, it is over one-third.

My right hon. Friend the Secretary of State for Industry promised that I would say something about the future of the Scottish and Welsh equivalents of the economic planning councils which have been mentioned. I shall fulfil that undertaking.

In Wales there is not an economic planning council, but my right hon. Friend has already announced in the House that he is considering the future of the Welsh Council, which has different functions, and he will be making a statement in due course to the House on that point.

As for the Scottish Economic Council, which is the equivalent in Scotland, that body is quite different from any of the English planning councils and the Welsh Council. It sits under the chairmanship of the Secretary of State. That distinguishes it from all the others. So there can be no question but that its views are listened to by the Minister concerned as he is present at its meetings. I have not yet met the council, but I look forward very much to doing so at its next meeting, which is planned for the autumn.

Mr. Gordon Wilson

Will the right hon. Gentleman give way?

Mr. Younger

No, I have no time. [HON. MEMBERS: "Give way."] No. I am sorry.

Mr. Radice rose—

Mr. Younger

No. My time, Mr. Speaker, has been eaten into a great deal. I shall not have time to answer any points unless I press on.

One thing that has stood out in the debate is that there is a considerable misunderstanding among right hon. and hon. Members about what regional policy is really all about. It is not about the general stimulation of the economy or specific aids to particular industries as such. There are many ways of doing that, and the present Government have already embarked on some of them. For instance, cutting personal taxation removes a dead hand from the incentive of both workers and management and will open up a new spirit of enterprise leading to higher productivity and the creation of new jobs. Then there is the removal of administrative and legislative burdens from small businesses. If we introduce safeguards against unfair competition from direct labour departments, ease company law and unfair employment legislation, we can release much energy and drive among small businesses, which I believe can have a dramatic effect on the sagging industrial performance which has been the hallmark and is the lasting legacy which the Labour Party has left to the British economy.

If each one of these small firms were to take on only one extra person, our unemployment problems would be very largely dealt with.

All this is very desirable and necessary, but it is nothing to do with regional policy as such. Regional policy is not about the general stimulation of the economy. It is about the placing of special aids in areas of special difficulty. Judged against these criteria, regional policy has achieved a measure of success in many parts of the country, as my right hon. Friend the Secretary of State said earlier.

Perhaps I may take one or two examples. The overall level of unemployment in Scotland that at times in the past approached twice that of the United Kingdom has in recent years been only about one-third greater, and that still represents a serious problem that we have to tackle. On any analysis, however, it is a measurable improvement. Levels of income and output that for many years lagged seriously behind the United Kingdom have caught up. There has been new investment, much of it from overseas, and these companies have in many cases prospered.

As a result, we must face the fact that the position has been reached where some parts of the country can simply no longer justify maintenance of the regional aid that they have had in the past. That leaves us to concentrate the available resources on those areas where performance has not improved and which continue to need help. Against that background, it is absurd that we have allowed regional assistance to cover as much as 40 per cent. of the population area of Great Britain. Nobody can say that coverage like that is concentrating aid. Moreover, the reluctance of the Labour Government to make changes in regional policy has left many anomalies, many of which have been mentioned today by right hon. and hon. Gentlemen.

Many unassisted areas have higher levels of unemployment than areas that receive regional aid, and the reverse is also true. Unemployment levels are not the only criterion for deciding development area status but they are an important factor. There can be little doubt that the Labour Government, by their failure to face up to the anomalies that have become increasingly absurd, have damaged confidence in regional policy in many areas.

Mr. Robert C. Brown rose—

Mr. Spencer

Order. It is clear that the Minister is not giving way.

Mr. Younger

It is always a sure sign when Labour Members get to the stage that they do not want to hear what is being said that they know when they are on a bad point.

Mr. Robert C. Brown

On a point of order, Mr. Speaker. Will the right hon. Gentleman withdraw the statement that he has just made? I have been sitting here throughout the debate.

Mr. Younger

I apologise if I have offended the hon. Gentleman but I thought that I was saying something that was self-evident. If one wishes to hear what a speaker is saying, it does not help to shout. Perhaps that is too complicated a concept for Labour Members.

It makes total sense to concentrate regional aid on areas with the greatest need. That is precisely what the change of policy does. It concentrates help in about 25 per cent. of the population area of Britain where the need is greatest. A prime example of that is the redefinition of the boundaries of SDAs. A number of areas in England, Wales and Scotland are being downgraded and new SDAs are to be created at, for example, Wrexham, in the South-West of England and in West Central Scotland. Development area status has similarly been adjusted with important upgradings for places like Wigan, Rotherham, Plymouth and Rhyl.

Understandably, concern has been expressed during the debate about areas whose status is being downgraded. Here I must emphasise the generous nature of the transitional arrangements that the Government are making. No area will lose its assisted area status for three years, and before that happens there will be a further review. The various aids now in payment will continue to be available for one year at their present levels so that transition can be as gradual as possible. That contrasts sharply with the experience of industry in the assisted regions when the previous Government decided to end regional employment premiums. That removed £216 million from the economy almost literally over-night.

Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)

Will the right hon. Gentleman give way?

Mr. Younger

No. That cut—

Mr. Ewing

Will the Secretary of State give way?

Mr. Speaker

Order. It is clear that the Minister is not giving way.

Mr. Ewing

Will the right hon. Gentleman give way?

Mr. Younger

No. I always trust the—

Mr. Ewing

Give way.

Mr. Speaker

Order. I appeal to the House. It has been made clear that the Minister is not giving way. He has the Floor. He has been called to speak and he is entitled to be heard.

Mr. Younger

I think that—

Mr. Ewing rose—

Mr. Speaker

Order. I must request the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) not to try to intervene again.

Mr. Younger

The hon. Gentleman must be frustrated at not being able to address the House. The Labour Party criticises us for our change in regional policy, but the previous Labour Government's withdrawal of REP removed £216 million from the economy almost literally overnight.

Mr. Ewing

Will the right hon. Gentleman give way on that point?

Mr. Younger

No. There was no safe-guard in the previous Government's action for special development areas. The cut in Scotland was £79 million, which is well over twice as much in real terms as the £45 million which we estimate to be the maximum likely saving in Scotland in 1982–83 as a result of our policy changes.

While the regional debate is raging and Labour Members are criticising a sensible and practical move to ensure that regional aid is better concentrated in the areas that need it greatest, events outside have moved on. The answer to the criticisms of Labour Members—

Mr. Ewing

On a point of order, Mr. Speaker. Is it in order for the Secretary of State to mislead the House by quoting figures about the withdrawal of REP without saying that the premium was replaced by the temporary employment subsidy, which—

Mr. Speaker

Order. The hon. Gentleman knows that he is advancing an argument.

Mr. Younger

I was being exceptionally kind to the hon. Gentleman because I did not update the figures to take account of inflation as I could have done.

Yesterday we had the announcement that answers the criticisms of Labour Members. The major new development in Greenock of National Semiconductors will produce 1,300 new jobs in a critical area of high unemployment. If that firm had been as doubtful as are Labour Members about the effectiveness of regional policy, it would not have fulfilled its undertaking to come here. That is the answer to Labour Members and that is why I believe that the country will see that we have made a sensible change and a long overdue improvement in the distribution of regional aid.

Mr. James Hamilton

Will the right hon. Gentleman give way?

Mr. Younger

No. This is a subject which affects many hon. Members and their constituencies. I should like to have answered many of the detailed points put by a number of hon. Members. I undertake to write to those hon. Members with the answers to their questions.

Mr. Cyril Smith

This is a disgraceful speech.

Mr. Younger

I hope that the hon. Member for Rochdale (Mr. Smith) will accept that I would willingly have answered his questions if other hon. Members had not interrupted so much.

Our change in regional policy is overdue. It was courageous of the Govern-

ment to decide to concentrate aid where it is most needed. If the Labour Government had had the courage to do so some time ago, there might have been a great deal less unemployment than that which they left behind.

Question put, That the amendment be made:—

The House divided: Ayes 256, Noes 317.

Division No. 78]	AYES	[10.00 p.m.
Abse, Leo	Eastham, Ken	Lewis, Ron (Carlisle)
Adams, Allen	Edwards, Robert (Wolv SE)	Lofthouse, Geoffrey
Allaun, Frank	Ellis, Raymond (NE Derbyshire)	Lyon, Alexander (York)
Alton, David	Ellis, Tom (Wrexham)	Lyons, Edward (Bradford West)
Anderson, Donald	English, Michael	Mabon, Rt Hon Dr J Dickson
Archer, Rt Hon Peter	Ennals, Rt Hon David	McCartney, Hugh
Armstrong, Ernest	Evans, loan (Aberdare)	McDonald, Dr Oonagh
Ashton, Joe	Ewing, Harry	McElhone, Frank
Atkinson, Norman (H'gey, Tott'ham)	Faulds, Andrew	McKay, Allen (Penistone)
Bagier, Gordon A. T.	Field, Frank	MacKenzle, Rt Hon Gregor
Barnett, Guy (Greenwich)	Fitt, Gerard	Maclennan, Robert
Barnett, Rt Hon Joel (Heywood)	Flannery, Martin	McMillan, Tom (Glasgow, Central)
Beith, A. J.	Fletcher, L. R. (Ilkeston)	McNally, Thomas
Benn, Rt Hon Anthony Wedgwood	Fletcher, Ted (Darlington)	McNamara, Kevin
Bennett, Andrew (Stockport N)	Foot, Rt Hon Michael	Magee, Bryan
Bidwell, Sydney	Ford, Ben	Marks, Kenneth
Booth, Rt Hon Albert	Forrester, John	Marshall, David (Gl'sgow,Shettles'n)
Boothroyd, Miss Betty	Foulkes, George	Marshall, Dr Edmund (Goole)
Bottomley, Rt Hon Arthur (M'brough)	Fraser, John (Lambeth, Norwood)	Marshall, Jim (Leicester South)
Bradley, Tom	Freeson, Rt Hon Reginald	Martin, Michael (Gl'gow, Springb'n)
Brown, Hugh D. (Provan)	Freud, Clement	Mason, Rt Hon Roy
Brown, Robert C. (Newcastle W)	Garrett, John (Norwich S)	Maxton, John
Brown, Ronald W. (Hackney S)	Garrett, W. E. (Wallsend)	Maynard, Miss Joan
Brown, Ron (Edinburgh, Leith)	George, Bruce	Meacher, Michael
Buchan, Norman	Gilbert, Rt Hon Dr John	Mellish, Rt Hon Robert
Callaghan, Rt Hon J. (Cardiff SE)	Ginsburg, David	Mikardo, Ian
Callaghan, Jim (Middleton & P)	Golding, John	Millan, Rt Hon Bruce
Campbell-Savours, Dale	Gourlay, Harry	Miller, Dr M S (East Kilbride)
Cant, R. B.	Graham, Ted	Mitchell, Austin (Grimsby)
Carmichael, Neil	Grant, George (Morpeth)	Mitchell, R. C. (Soton, Itchen)
Carter-Jones, Lewis	Grant, John (Islington C)	Morris, Rt Hon Alfred (Wythenshawe)
Cartwright, John	Grimond, Rt Hon J.	Morris, Rt Hon Charles (Openshaw)
Clark, David (South Shields)	Hamilton, W. W. (Central Fife)	Morris, Rt Hon John (Aberavon)
Cocks, Rt Hon Michael (Bristol S)	Hardy, Peter	Morton, George
Cohen, Stanley	Harrison, Rt Hon Walter	Moyle, Rt Hon Roland
Coleman, Donald	Hart, Rt Hon Judith	Mulley, Rt Hon Frederick
Concannon, Rt Hon J. D.	Haynes, David	Newens, Stanley
Conlan, Bernard	Healey, Rt. Hon Denis	Oakes, Gordon
Cook, Robin F.	Heffer, Eric S.	Ogden, Eric
Cowans, Harry	Hogg, Norman (E Dunbartonshire)	O'Halloran, Michael
Cox, Tom (Wandsworth, Tooting)	Holland, Stuart (L'beth, Vauxhall)	O' Neill, Martin
Craigen, J. M. (Glasgow, Maryhill)	Home Robertson John	Orme, Rt Hon Stanley
Crowther, J. S.	Homewood, William	Palmer, Arthur
Cryer, Bob	Hooley, Frank	Park, George
		Parker, John
Cunliffe, Lawrence	Horam, John	Parry, Robert
Cunningham, George (Islington S)	Howell, Rt Hon Denis (B'ham, Sm H)
Cunningham, Dr John (Whltehavan)	Huckfield, Les	Pendry, Tom
Dalyell, Tam		Penhaligon, David
Davidson, Arthur	Hughes, Mark (Durham)	Powell, Raymond (Ogmore)
Davies, Rt Hon Denzil (Llanelli)	Hughes, Robert (Aberdeen North)	Prescott, John
Davies, E. Hudson (Caerphilly)	Janner, Hon Gieville	Price, Christopher (Lewisham West)
Davies, Ifor (Gower)	Jay, Rt Hon Douglas	Race, Reg
Davis, Clinton (Hackney Central)	John, Brynmor	Radice, Giles
Davis, Terry (B'rm'ham, Stechford)	Johnson, James (Hull West)	Rees, Rt Hon Merlyn (Leeds South)
Deakins, Eric	Johnson, Walter (Derby South)	Richardson, Miss Jo
Dean, Joseph (Leeds West)	Johnston, Russell (Inverness)	Roberts, Albert (Normanton)
Dempsey, James	Jones, Alec (Rhondda)	Roberts, Ernest (Hackney North)
Dixon, Donald	Jones, Dan (Burnley)	Roberts, Gwilym (Cannock)
Dobson, Frank	Kiroy-Silk, Robert	Robertson, George
Dormand, J. D.	Kinnock, Nell	Robinson, Geoffrey (Coventry NW)
Douglas-Mann, Bruce	Lambie, David	Rodgers, Rt Hon William
Dubs, Alfred	La inborn, Harry	Rooker, J. W.
Duffy, A. E. P.	Lamond, James	Roper, John
Dunn, James A. (Liverpool, Kirkdale)	Leadbitter, Ted	Ross, Ernest (Dundee West)
Dunnett, Jack	Leighton, Ronald	Ross, Stephen (Isle of Wight)
Dunwoody, Mrs Gwyneth	Lestor, Miss Joan (Eton & Slough)	Rowlands, Ted
Eadie, Alex	Lewis, Arthur (Newham North West)	Ryman, John
Sandelson, Neville	Strang, Gavin	White, Frank R. (Bury & Radcliffe)
Sever, John	Straw, Jack	Whitehead, Phillip
Sheerman, Barry	Summerskill, Hon Dr Shirley	Whitlock, William
Sheldon, Rt Hon Robert (A'ton-u-L)	Taylor, Mrs Ann (Bolton West)	Wigley, Dafydd
Shore, Rt Hon Peter (Step and Pop)	Thomas, Dafydd (Merioneth)	Willey, Rt Hon Frederick
Short, Mrs. Renée	Thomas, Jeffrey (Abertillery)	Williams, Rt Hon Alan (Swansea W)
Silkin, Rt Hon John (Deptford)	Thomas, Mike (Newcastle East)	Williams, Sir Thomas (Warrington)
Silkin, Rt Hon S. C. (Dulwich)	Thomas, Dr Roger (Carmarthen)	Wilson, Gordon (Dundee East)
Silverman, Julius	Thorne, Stan (Preston South)	Wilson, Rt Hon Sir Harold (Huyton)
Skinner, Dennis	Tilley, John	Wilson, William (Coventry SE)
Smith, Cyril (Rochdale)	Tinn, James	Winnick, David
Smith, Rt Hon J. (North Lanarkshire)	Torney, Tom	Woodall, Alec
Snape, Peter	Urwin, Rt Hon Tom	Woolmer, Kenneth
Soley, Clive	Varley, Rt Hon Eric G.	Wrigglesworth, Ian
Spriggs, Leslie	Wainwright, Edwin (Dearne Valley)	Wright, Miss Sheila
Stallard, A. W.	Wainwright, Richard (Colne Valley)	Young, David (Bolton East)
Steel, Rt Hon David	Walker, Harold (Doncaster)
Stewart, Rt Hon Donald (W Isles)	Weetch, Ken	TELLERS FOR THE AYES:
Stoddart, David	Wellbeloved, James	Mr. James Hamilton and
Stott, Roger	Welsh, Michael	Mr. John Evans.
NOES
Adley, Robert	Cormack, Patrick	Hannam, John
Aitken, Jonathan	Corrie, John	Haselhurst, Alan
Alexander, Richard	Costain, A. P.	Hastings, Stephen
Alison, Michael	Cranborne, Viscount	Havers, Rt Hon Sir Michael
Amery, Rt Hon Julian	Critchley, Julian	Hawkins, Paul
Ancram, Michael	Crouch, David	Hawksley, Warren
Arnold, Tom	Dean, Paul (North Somerset)	Hayhoe, Barney
Aspinwall, Jack	Dickens, Geoffrey	Heath, Rt Hon Edward
Atkins, Rt Hon H. (Spelthorne)	Dodsworth, Geoffrey	Heddle, John
Atkins, Robert (Preston North)	Dorrell, Stephen	Henderson, Barry
Atkinson, David (B'mouth East)	Douglas-Hamilton, Lord James	Heseltine, Rt Hon Michael
Baker, Kenneth (St. Marylebone)	Dover, Denshore	Hicks, Robert
Baker, Nicholas (North Dorset)	du Cann, Rt Hon Edward	Higgins, Terence L.
Banks, Robert	Dunn, Robert (Dartford)	Hill, James
Beaumont-Dark, Anthony	Durant, Tony	Hogg, Hon Douglas (Grantham)
Bell, Ronald	Dykes, Hugh	Holland, Philip (Carlton)
Bendall, Vivian	Eden, Rt Hon Sir John	Hordern, Peter
Benyon, Thomas (Abingdon)	Edwards, Rt Hon N. (Pembroke)	Howell, Rt Hon David (Guildford)
Benyon, W. (Buckingham)	Eggar, Timothy	Howell, Ralph (North Norfolk)
Best, Keith	Elliott, Sir William	Hunt, David (Wirral)
Bevan, David Gilroy	Emery, Peter	Hunt, John (Ravensbourne)
Biffen, Rt Hon John	Eyre, Reginald	Hurd, Hon Douglas
Biggs-Davison, John	Fairbairn, Nicholas	Irving, Charles (Cheltenham)
Blackburn, John	Fairgrieve, Russell	Jenkin, Rt Hon Patrick
Blaker, Peter	Faith, Mrs. Sheila	Jessel, Toby
Body, Richard	Farr, John	Johnson Smith, Geoffrey
Bonsor, Sir Nicholas	Fell, Anthony	Jopling, Rt Hon. Michael
Boscawen, Hon Robert	Fenner, Mrs. Peggy	Joseph, Rt Hon Sir Keith
Bottomley, Peter (Woolwich West)	Finsberg, Geoffrey	Kaberry, Sir Donald
Bowden, Andrew	Fisher, Sir Nigel	Kellett-Bowman, Mrs Elaine
Boyson, Dr Rhodes	Fletcher, Alexander (Edinburgh N)	Kershaw, Anthony
Braine, Sir Bernard	Fletcher-Cooke, Charles	Kilfedder, James A.
Bright, Graham	Fookes, Miss Janet	Kimball, Marcus
Brinton, Timothy	Forman, Nigel	King, Rt Hon Tom
Brocklebank-Fowler, Christopher	Fox, Marcus	Kitson, Sir Timothy
Brooke, Hon Peter	Fraser, Rt non H. (Stafford & St	Knight, Mrs Jill
Brown, Michael (Brigg & Sc'thorpe)	Fraser, Peter (South Angus)	Knox, David
Browne, John (Winchester)	Fry, Peter Galbraith, Hon T.G.D	Lamont, Norman
Bruce-Gardyne, John	Gardiner, George (Reigate)	Lang, Ian
Bryan, Sir Paul	Gardner, Edward (South Fylde)	Langford-Holt, Sir John
Buchanan-Smith, Hon Alick	Garel-Jones, Tristan	Lawrence, Ivan
Buck, Antony		Lawson, Nigel
Budgen, Nick	Glyn, Dr Alan	Lennox-Boyd, Hon Mark
Bulmer, Esmond	Goodhart, Philip	Lester, Jim (Beeston)
Butcher, John	Goodhew, Victor	Lewis, Kenneth (Rutland)
Butler, Hon Adam	Goodlad, Alastair	Lloyd, Ian (Havant & Waterloo)
Cadbury, Jocelyn	Gorst, John	Lloyd, Peter (Fareham)
Carlisle, John (Luton West)	Gow, Ian	Loveridge, John
Carlisle, Kenneth (Lincoln)	Gower, Sir Raymond	Luce, Richard
Carlisle, Rt Hon Mark (Runcorn)	Grant, Anthony (Harrow C)	Lyell, Nicholas
Chalker, Mrs. Lynda	Gray, Hamish	McAdden, Sir Stephen
Channon, Paul	Greenway, Harry	McCrindle, Robert
Chapman, Sydney	Grieve, Percy	Macfarlane, Nell
Churchill, W. S.	Griffiths, Eldon (Bury St Edmunds)	MacGregor, John
Clark, Hon Alan (Plymouth, Sutton)	Griffiths, Peter (Portsmouth N)	Mackay, John (Argyll)
Clark, William (Croydon South)	Grist, Ian	Macmillan, Rt Hon M. (Farnham)
Clarke, Kenneth (Rushcliffe)	Grylls, Michael	McNair-Wilson, Michael (Newbury)
Clegg, Walter	Gummer, John Selwyn	McNair-Wilson, Patrick (New Forest)
Cockeram, Eric	Hamilton, Hon Archie (Eps'm&Ew'll)	McQuarrie, Albert
Colvin, Michael	Hamilton, Michael (Salisbury)	Madel, David
Cope, John	Hampson, Dr. Keith	Major, John

Marland, Paul	Pink, R. Bonner	Stokes, John
Marlow, Antony	Pollock, Alexander	Stradling Thomas J.
Marshall, Michael (Arundel)	Porter, George	Tapsell, Peter
Marten, Neil (Banbury)	Prentice, Rt Hon Reg	Taylor, Robert (Croydon NW)
Mates, Michael	Price, David (Eastleigh)	Tebbit, Norman
Mather, Carol	Prior, Rt Hon James	Temple-Morris, Peter
Maude, Rt Hon Angus	Proctor, K. Harvey	Thatcher, Rt Hon Mrs Margaret
Mawby, Ray	Pym, Rt Hon Francis	Thompson, Donald
Mawhinney, Dr Brian	Rathbone, Tim	Thorne, Neil (Ilford South)
Maxwell-Hyslop, Robin	Rees, Peter (Dover and Deal)	Thornton, George
Mayhew, Patrick	Rees-Davies, W. R.	Townend, John (Bridlington)
Mellor, David	Renton, Tim	Townsend, Cyril D. (Bexleyheath)
Meyer, Sir Anthony	Rhodes James, Robert	Trippier, David
Miller, Hal (Bromsgrove & Redditch)	Rhys Williams, Sir Brandon	Trotter, Neville
Mills, Iain (Meriden)	Ridsdale, Julian	van Straubenzee, W. R.
Mills, Peter (West Devon)	Rifkind, Malcolm	Vaughan, Dr Gerard
Miscampbell, Norman	Rippon, Rt Hon Geoffrey	Viggers, Peter
Mitchell, David (Basingstoke)	Roberts, Michael (Cardiff NW)	Waddington, David
Moate, Roger	Rost, Peter	Wakeham, John
Monro, Hector	Royle, Sir Anthony	Waldegrave, Hon William
Montgomery, Fergus	Sainsbury, Hon Timothy	Walker, Rt Hon Peter (Worcester)
Moore, John	St. John-Stevas, Rt Hon Norman	Walker, Bill (Perth & E Perthshire)
Morris, Michael (Northampton, Sth)	Scott, Nicholas	Walker-Smith, Rt Hon Sir Derek
Morrison, Hon Charles (Devizes)	Shaw, Michael (Scarborough)	Wall, Patrick
Morrison, Hon Peter (City of Chester)	Shelton, William (Streatham)	Waller, Gary
Murphy, Christopher	Shepherd, Colin (Hereford)	Walters, Dennis
Myles, David	Shepherd, Richard (Aldridge-Br'hills)	Ward, John
Neale, Gerrard	Shersby, Michael	Warren, Kenneth
Needham, Richard	Silvester, Fred	Watson, John
Nelson, Anthony	Sims, Roger	Wells, John (Maidstone)
Neubert, Michael	Skeet, T. H. H.	Wells, P. Bowen (Hert'fd&Stev'nage)
Newton, Tony	Smith, Dudley (War. and Leam'ton)	Wheeler, John
Normanton, Tom	Speed, Keith	Whitelaw, Rt Hon William
Nott, Rt Hon John	Speller, Tony	Whitney, Raymond
Onslow, Cranley	Spence, John	Wickenden, Keith
Oppenheim, Rt Hon Mrs Sally	Spicer, Jim (West Dorset)	Wiggin, Jerry
Osborn, John	Spicer, Michael (S Worcestershire)	Wilkinson, John
Page, John (Harrow, West)	Sproat, Iain	Winterton, Nicholas
Page, Rt Hon R. Graham (Crosby)	Squire, Robin	Wolfson, Mark
Parris, Matthew	Stainton, Keith	Young, Sir George (Acton)
Patten, Christopher (Bath)	Stanbrook, Ivor	Younger, Rt Hon George
Patten, John (Oxford)	Stanley, John
Pattie, Geoffrey	Steen, Anthony	TELLERS FOR THE NOES:
Pawsey, James	Steward, Ian (Hitchin)	Mr. Spencer le Marchant and
Percival, Sir Ian	Stewart, John (East Renfrewshire)	Mr. Anthony Berry.
Peyton, Rt Hon John

Question accordingly negatived.

Main Question put and agreed to.

Resolved, That this House welcomes the changes which are being introduced by the Government in regional policy in order to concentrate assistance on areas most in need, to make it more cost effective, and to remove anomalies in Assisted Area gradings.