REGIONAL DEVELOPMENT GRANTS

HC Deb 07 February 1980 vol 978 cc758-857 4.13 pm

Dr. John Cunningham (Whitehaven)

I beg to move amendment No. 21, in page 7, leave out from beginning of line 14 to end of line 20 on page 8.

Mr. Speaker

With this, we can discuss the following amendments:

No. 22, in page 7, leave out line 41, and insert— '(i) Work on the asset is commenced before the passing of this Act and completed before 1st August 1981.'

No. 24, in page 8, line 17, at end insert— '(4)—(1) In section 1(1) of the Industry Act 1972, after the words "The Secretary of State may" there shall be inserted the words "subject to the provisions of subsection (5)(a) below.

(2) At the end of subsection (5) of section 1 of the Industry Act 1972 there shall be inserted the following words: (5)(a) Grant shall only be payable in all cases where the ratio of grant to permanent additional employment estimated to be created by the qualifying capital investment exceeds £10,000 per job where prior approval of Parliament has been expressed by affirmative resolution of both Houses of Parliament".'.

Dr. Cunningham

The purpose of the amendment is to debate issues surrounding regional policy. Regional policy is important to the Opposition. That is demonstrated by the number of occasions on which we have chosen to debate it on Supply days, through Private Members' motions or in similar circumstances. The importance of regional policy is also indicated by the number of occasions upon which issues affecting steel, shipbuilding, coal, engineering and textile industries have been raised at Question Time. Indeed, such questions were raised today during business questions to the Leader of the House.

Scotland, Wales, the North and the North-West are heavily represented by Opposition Members. That is no political or historical accident. Policy towards those regions since the Second World War, and in some respects since the First World War, has varied according to the Administration in power. However, there has been a common thread running through regional policy throughout that period. We recognise that regional policy cannot solve our problems if the economy is in difficulty. I do not think that we shall argue about that today. Persistent changes in regional policy have rendered it less effective than it might have been.

Industrial managers prefer a stable environment when making decisions about industrial policy and investment. I think that all hon. Members will agree with that. Stability should be one of the foundation stones of our approach to regional and industrial policy. We must bring stability and consistency to regional policy. I do not mean that there should not be any changes. Obviously, if policies are clearly ineffective, they must be changed, reviewed and in some cases abandoned. During the past 30 years, too many changes have gone to the heart of regional policy. They have affected basic areas such as that of investment grants. Investment grants were changed to tax incentives. We have now returned to investment grants. Investment grants are a good example of such changes. Decisions on planning and the control of industrial development certificates provide yet another good example.

It may be accepted that there is some effective direction of industrial development. However, if industrialists believe in the likelihood of change and further change, it will cause only hesitation and anxiety about the location of industry. Hesitation will arise because some people may not wish to be directed. I understand that. Anxiety may arise because those who accept the policy might become anxious if competitors were not forced to accept the same considerations. Changes can have only a deleterious effect on regional policy as a whole.

Successive Conservative Governments, such as the Macmillan Government, the Heath Administration and that of the right hon. Member for Finchley (Mrs. Thatcher), have also made changes. The record shows that change inevitably causes a hiatus in terms of investment in the regions, of industrial development and of new industrial locations. At best there is a pause, at worst a falling-off in industrial development and employment opportunities. I hope that hon. Members will accept that point, as there are many statistics which confirm it. I shall not bore the House by giving details of those statistics.

Mr. John Patten (Oxford)

Does the hon. Gentleman agree that some of those changes are induced not only by changes in Government policy but by changes in economic circumstances? Such changes force alterations in regional policy.

Dr. Cunningham

I agree. We cannot stick our heads in the sand. Economic circumstances cause changes whether or not there has been a change in regional policy. However, if the hon. Member is saying that Governments must of necessity change regional policy as a result of adverse economic circumstances, I would disagree. I contend that the worst time to jeopardise investment in the regions or to weaken incentives is during a recession. That is the very time when the regions need more protection or assistance than other sectors of the economy.

It is that aspect of the Bill more than any other that causes deep resentment and anger among those in the regions and their representatives. I feel very angry about what is happening in the Northern region, part of which I represent. As a result of changes and their consequential effect on other policies—including educational and training opportunities—young people in particular will be denied the opportunity to work, develop their character, gain employment and contribute to the economy for many years ahead.

Mr. Nick Budgen (Wolverhampton, South-West)

Will the hon. Gentleman at some stage deal with the message that he would like to give to Wolverhampton and other areas of the Black Country which were once very prosperous and which have been severely impoverished, at least to some extent as the result of the success of the regional policies which he is advocating?

Dr. Cunningham

Yes, it is my intention to deal with that point, as the hon. Gentleman will discover. I recognise at least some truth in what he says, but I do not concede for a moment that the structural problems of industry in the Midlands can be laid solely at the door of regional policy. As long as the hon. Gentleman accepts that, there is some common ground between us. What he says has wide implications for the development of the British economy as a whole. Whatever else we want to do in advocating regional policy, we do not want to disadvantage communities and workers in those parts of the United Kingdom which are not beneficiaries.

Mr. Budgen

That is the object of the exercise.

Dr. Cunningham

No, it is not the object of the exercise. I shall come back to the hon. Gentleman's point.

Mr. Budgen

To give a comparative advantage to one area is to give a comparative disadvantage to another. It is a matter of logic.

Dr. Cunningham

I accept that, but if the hon. Gentleman says that it is our intention to do that in such a way as not simply to want to solve problems in areas where they are long-standing and deep-seated but also to want to damage and disadvantage other areas, that I do not accept.

Mr. Budgen rose—

Dr. Cunningham

I shall come back to the hon. Gentleman's point. He is intervening at the beginning of my speech. I hope that he will let me proceed. Whether or not I half agree with the hon. Gentleman, he has made two interventions on which I have given way and several more from a sedentary position, repeating his performance in yesterday's debate, after which he disappeared for long periods. If he wants to be treated seriously and to participate in the debate, I suggest he stays and lets me put my argument, and I will come to the point he raised.

The Secretary of State for Industry (Sir Keith Joseph)

Is the hon. Member for Whitehaven (Dr. Cunningham) seriously maintaining that he will treat properly only the interventions of hon. Members who stay throughout the debate? His hon. Friend the Member for Vauxhall (Mr. Holland) yesterday made a great denunciation of Government policy but when I turned to face him courteously in my speech to answer his points he was no longer in the Chamber.

Dr. Cunningham

I think the right hon. Gentleman and I are in some agreement on this. My hon. Friend the Member for Vauxhall (Mr. Holland) will reply for himself.

Mr. Budgen

He will not be here.

Dr. Cunningham

The deleterious effect of the actions of the hon. Member for Wolverhampton, South-West (Mr.Budgen) are apparent, because we are wasting valuable time talking about behaviour in the Chamber.

Mr. Budgen

The hon. Gentleman started it.

Dr. Cunningham

In response to the Secretary of State, may I say that hon. Members have to leave the Chamber from time to time, but his hon. Friend was not in that category; he was away for very long periods.

Sir Keith Joseph

Come to the argument.

Dr. Cunningham

I shall come to the argument if I am given the opportunity.

In spite of regional policy over several decades, the deep-seated problems remain. It is clear that regional policy has had some successes and some failures, just as market forces have had some successes and some failures. The difference between us is of emphasis and consistency of purpose rather than of ideology, except perhaps for the Secretary of State, who, I assume, would argue that he does not believe at heart in any regional policy but goes along with it. The problems of unemployment remain widespread in Wales, Scotland and Northern England. It is no accident that they are the areas which were developed in the first Industrial Revolution, areas in which there is heavy engineering, shipbuilding, coal, steel and other industries. Textiles is a classic example.

This unemployment represents a loss to the whole of the British economy, not just to the economy and society in the regions. It is a drain on financial resources. It is a denial of opportunity, particularly to young people. It is in the interest of all regions that these problems should be vigorously tackled and, if possible, overcome. That is what is important in respect of the interventions of the hon. Member for Wolverhampton, South-West. It is to the benefit of his constituents and of the industries in the area that he represents that these deep-seated problems should be resolved. It is not to their long-term disadvantage. I hoped at least that we would be at one on that point.

There is too narrow a base of industry in the regions. There is too narrow a spectrum of employment opportunities for young people leaving school and university in the regions. Naturally, as there always has been, there is a drain of talented young people away from these areas. I am not suggesting that they should all stay there—it would not be in their interests so to do; but, in spite of high and deep-seated unemployment, we find a lack of skills in the regions. The Government are intent upon closing skillcentres, to the supposed advantage of the taxpayer, to reduce public expenditure, leaving the problem of the lack of skills in the regions unresolved and inadequately tackled. I do not regard that as in the national interest or to the benefit of the taxpayer. It is another denial of opportunity for people themselves to take initiatives to resolve the problems.

Mr. John Bruce-Gardyne (Knutsford)

Will the hon. Gentleman address himself to the point that those who leave skillcentres more often than not are unable to find employment for which they are qualified because of the attitude of a trade union which prevents their taking up employment?

Dr. Cunningham

I shall address myself briefly to the point. I do not accept that that occurs more often than not, and the Government's statistics would not bear out that assertion. If the hon. Gentleman is saying that in some areas trade unions have frustrated attempts to retrain people, I agree with him. I regret it, but there are good reasons for it, perhaps in too many cases selfish reasons, and it is a problem which we genuinely need to overcome. I concede that point. Trade unions have a responsibility to discharge in that respect. But I do not agree with the hon. Gentleman's assertion that more people are out of jobs after training than before. Perhaps someone else will tell us the accurate figures.

I would expect right hon. and hon. Members on the Conservative Benches to agree with us about incentives. They talk about giving incentives to managers and giving incentives by reducing taxation. Apparently, when it comes to incentives to industrial investment they are not quite so fulsome in their praise.

One of the main purposes of regional policy has been to provide incentive to invest in particular areas of the United Kingdom economy. There is evidence that over the years that approach has had successes. My right hon. Friend the Member for Swansea, West (Mr. Williams), who discharged his responsibility so effectively throughout the period of the previous Labour Government, knows better than most of us how industrialists welcomed those incentives, how much the incentives influenced their decisions and how the industrialists applauded that approach. Whether by way of regional policy, selective financial assistance or accelerated project investment, they had a measurable impact on the rate of industrial development in the regions. Those matters are jeopardised as a result of Government policies. The same is true about the weakening of IDC control.

4.30 pm

Many industrialists do not like relocation. There are problems about that. We find offensive statements such as that made recently by the directors of Inmos, who said that they could not persuade people of the right calibre to live and work in the regions. There must be many industrialists with large and small concerns throughout the economy who would laugh at that kind of remark.

I take one example in my constituency. The Marchon division of Albright and Wilson has developed a successful worldwide industry based in Whitehaven with excellent management and trade union relationships. It is based on the periphery of the North-West of England. That has not prevented the division from obtaining people of the calibre needed to manage the enterprise, which is the biggest profit centre in the group, based in one of the regions of the United Kingdom.

Mr. Gregor MacKenzie (Rutherglen)

My hon. Friend made a constituency point about the excellent work being done by Marchon in Northumberland. Perhaps he would extend his argument marginally as we are discussing regional policy. We are always concerned about Government dispersal policy. Projects such as Marchon in my hon. Friend's constituency, as well as in my own, have profited from Government assistance in the matter of dispersal as an important part of solving the problem.

Dr. Cunningham

I am grateful to my right hon. Friend. The Government's about-turn on dispersal policy is yet another example of how commitments to people living in the regions have been reneged upon. That is a strong word, but it applies at least to our experience in Cumbria.

In the last general election campaign—I dare say that it was the same elsewhere—candidates of all parties campaigned for dispersal. The Home Secretary and the Patronage Secretary, who both represent constituencies in Cumbria, campaigned on this basis. The Government had not been in office for five minutes before the project was abandoned. That breeds cynicism and defeatism among young people, especially those in the regions, which can have only a major long-term disadvantage for the Government and politics as a whole.

Other areas of the United Kingdom economy and other communities have suffered similar disappointment literally within weeks of this Administration taking office—again, to the disadvantage of between 30 per cent. and 40 per cent. of the population of the country. That is the size of the problem expressed as a percentage of our population.

The Government attitude to public enterprise is yet another threat to employment in the region. Public enterprise, traditionally and historically, has played a major part in helping to resolve those problems, as has public expenditure through local authorities and organisations such as the English Industrial Estates Corporation. Why has that been so? The market forces, the traditional Conservative Party approach to the economy, has failed. It has not worked in the regions.

There may be many reasons for that failure. Some of them may be laid at the door of Labour Governments. We even go as far as to say that. However, in the present circumstances, there is not a shred of evidence to support the contention that now, in the depths of a recession and with the world trading situation as it is, the market forces will solve the problems of Scotland, Wales and the Northern region of England. There is not one iota of evidence to support that contention. Against that background, we deplore moves to reduce the effect of regional policy.

"Confidence" is a word that figures in our debates, whether on monetary or industrial policy or whatever. Many industrialists—many examples are on the record; they were discussed in Committee—have lost confidence in the Government's approach to regional policy. They will not make decisions for the moment until the situation is clarified. They fear further changes. They will not take risks, in many cases, with investments. There is also the fact that the Government decision on the dates on which changes will be made, which is the subject of another Opposition amendment, has had a serious effect on the cash flow of many companies now involved in expansion.

When this matter was discussed in Committee, the Under-Secretary of State for Scotland advised us to write to him quoting individual cases. We all did that. Several letters were already in the pipeline. As he knows only too well, it did not make a shred of difference. Many companies have been placed in serious difficulties because of this kind of change. Ministers should be the last people to defend actions or decisions that interrupted the cash flow of industrial investment, given all the other difficulties surrounding industry, about which the Minister is so fond of telling us in his lectures. I have not yet received his 7,000-word essay on the subject. I thank my lucky stars for that.

The questions about public enterprise, local government expenditure and confidence in Government policies towards the problems of the regions are crucial to the areas in which these problems exist. As I have said many times, those areas are represented by the Opposition. People living in those areas see a lack of commitment from the Government to them and their communities. They see that as every day passes and as every further announcement of Government policy is made.

I hope that when Ministers reply—here I come back, at some risk, to my reading list to the right hon. Gentleman—they will not tell us simply that there is a need for change and that the unions are preventing the changes. History shows us that activities in these regions have changed. Coal mining has practically disappeared. I live in a town that was totally dependent upon coal mining. I cannot see even the remains of a coal mine today. No one there is employed in coal mining any longer. There has been a change in the area I represent from a rural community to one that now supports the most advanced and complex nuclear site in Europe. There cannot be much bigger change than that. There have been changes on the Clyde, the Tyne, the Wear and the Tees and in South Wales. There have been changes in discipline and in whole communities. People are not opposed to change if change presents them with an opportunity. However, they are opposed to change that is a euphemism for unemployment—and rightly so. Who would think otherwise? Government supporters would take the same view, as do the professional organisations representing the people.

The unions should not be castigated for opposing change when it means no alternative to the dole. Unions have been among the leaders of those seeking change and investments in organisations, such as Inmos, through the NEB, which were openly opposed by some Government supporters. That is a choice and a decision that Conservative Members make. But it is they who, in taking up that stance, oppose change—change which is being supported by industrial trade unions.

I turn to the suggestion that in fighting for policies to bring advantages to the regions we inevitably disadvantage other regions. I suppose that when misery is so widespread it is difficult to sub-divide it. In that sense, I concede the point. Nevertheless, over the years we have seen overheating in the economies of some United Kingdom regions. Nowhere is that more obvious than in London and the South-East, where pressure builds up and over employment effectively exists in some areas. In itself, that is inflationary. It produces pressures for more public expenditure.

Mr. John Patten

How?

Dr. Cunningham

Would the hon. Gentleman like to intervene?

Mr. Patten

I should like to ask the hon. Gentleman how that causes increases in public expenditure.

Dr. Cunningham

I am sure that the hon. Gentleman knows the answer to that. Overcrowding in areas demands more schools, more hospital facilities, more subsidies for commuter services, more road building. Need I go on?

Mr. Stuart Holland (Vauxhall)

I am sure that the hon. Member for Oxford (Mr. Patten) should also be aware that there is wide empirical evidence that the cost of social overhead capital in these areas increases with the density of population, thus causing congestion. The concept is known as "congestion cost", and there is wide evidence of it in other countries as well as in the United Kingdom.

Dr. Cunningham

My hon. Friend the Member for Vauxhall has added to the force of my reply to the hon. Member for Oxford (Mr. Patten).

There is growing evidence that those who live in London and the South-East are now responding. There is growing protest about congestion and commercial and industrial development. For example, there are the problems of the London airports and road developments in those areas. Such matters have become the subject of more and more objection by communities. I need hardly remind the House that such communities are not noted for returning Labour Members. Therefore, in no sense is it a political reaction, but it is a genuine and understandable reaction from people who feel threatened by the imbalance in the national economy. Inevitably, such areas continue to attract more and more people from the regions where the disadvantages are so obvious.

Whatever else we accept from this Administration, their frequent references to "one nation" must be the most bogus claim of all. It is absolutely incredible that they should continue to say that they believe in the creation of one nation when they pursue policies of division, policies which are manifestly unfair between different sectors of the community. It is a bogus claim and one which is increasingly exposed to the electorate.

4.45 pm

We believe, as I have tried to explain at some length, not only that regional policy is of benefit to the areas that we represent but that it is mutually beneficial. It is beneficial to the United Kingdom economy as a whole. We also believe that plans should be made for areas such as London and the South-East, although they may not be assisted areas.

Further dismantling of regional policy is now taking place. I have mentioned changes in grants, area status, IDC control, training facilities, special temporary employment programme and public expenditure.

Mr. Peter Hardy (Rother Valley)

I wonder whether my hon. Friend is aware of a question which affects much of my constituency. My constituency contains colliery spoil heaps, some of them current and some of them old ones. They cannot be cleared unless there is public support. That support depends upon the area retaining assisted area status. My hon. Friend may be aware that I made representations to the Minister about the matter a few months ago. The Minister promised that it would be dealt with. We are still waiting in South Yorkshire and our patience is not inexhaustible. I hope that my hon. Friend will comment on that matter.

Dr. Cunningham

My hon. Friend has anticipated my next point. However, I welcome his intervention. He draws attention to the fact that regions have been disadvantaged because of the market forces economy. Dereliction, in the form of spoil heaps, outworn industrial areas and the rest, has been left by and large, until comparatively recently, to the communities themselves to deal with and to bear the cost. Now, of course, central Government provide substantial funds for such work, but, among other things, the support depends on the status of the area involved, as my hon. Friend has made clear.

The point was pursued at some length by my hon. Friend the Member for Newton (Mr. Evans) and others in Committee. We sought to table an amendment but, unfortunatey, because of the money resolution, the amendment was ruled out of order.

Mr. John Evans (Newton)

Is my hon. Friend—indeed, is the House—aware that the Government have indicated that they hope to do something about the matter in the new local government Act? The real problem is that under the Local Employment Act 1972, when certain areas were designated as derelict land clearance areas, assisted areas were automatically classified as derelict land clearance areas. Because that status has been removed, the by-product has been that the areas have lost the derelict land clearance status. The Government should recognise that many areas have embarked upon long-term programmes to clear derelict land. Surely, the Government should take that on board and put the matter right in the other place to bring relief to those areas.

Dr. Cunningham

My hon. Friend is absolutely right. He has spelt out the problem clearly. I am inclined to be generous to the Government and say that the matter is an aspect of the changes that they have overlooked or did not anticipate. However, I am bound to say that they have had ample opportunity to correct the matter. We drew it to their attention in Committee, but they refused to amend the Bill then. They have not tabled an amendment on Report, and they have one further opportunity to remedy the difficulty when the Bill is discussed in the other place. I hope that they will take that opportunity.

It is clear from correspondence and meetings that my hon. Friends and others have had—not only with Labour local authorities but with Conservative authorities in the Greater Manchester, Merseyside, Yorkshire and other areas—that there is a great deal of ill will about the matter. It is a petty change and it is disadvantageous in the sense that it makes doubly difficult, if not impossible, the job of trying to improve the environment in the regions. The savings will be paltry—if there are savings at all. Much of the land has been reclaimed and used for industrial development and, in some cases, for agriculture. It must be beneficial to us to bring land back to use rather than to leave it sterile and derelict as much of it has lain for so many years. Again, I ask the Government to take the point on board.

My right hon. Friend the Member for Rutherglen (Mr. MacKenzie) referred in yesterday's debate to the fact that there is little foot-loose industry in the economy at the present. We have a high rate of inflation that is likely to increase. We have a high rate of VAT and a high minimum lending rate. They seriously disadvantage the development of new small businesses. There is not much activity on the small business front at the moment. Even existing successful industrial undertakings are threatened by the high sterling policy of the Government. Their exports are being damaged. Increasingly they are drawing in their horns, whether they are affected by the changes in regional policy or not.

In other words, the prospects for industrial expansion in the economy and in the regions as a whole are not good. The Government's own forecasts show that they understand and believe that, and against this background they take decisions to change the effectiveness, the advantages and the incentives of regional policy. We regard that as a very serious matter, and it is against that background that we seek to move the amendment, which would, in effect, delete the clause.

Before hon. Gentlemen leap to rebut my case, let me make one or two final points. I want to refer briefly to amendment No. 22, which would have the effect of changing the dates for the effectiveness of the Government's decision. It would have some effect in assuaging cash flow difficulties. It would give some extension to the notice that companies would have about the changes in regional policy.

I believe that the industrial situation, the attitude of the Government to regional policy, their Rugby Union "hand-off" to the trade unions, their cuts in public expenditure and the effect of their financial policies on VAT, MLR, inflation and the rest and on investment planning add up to disaster for further industrial development in the regions of the United Kingdom. The people who live in the communities in these areas cannot afford these changes any more than they could afford the real price of the public expenditure cuts and taxation cuts which have not benefited them but have benefited other people and other communities in the United Kingdom.

Mr. Peter Hordern (Horsham and Crawley)

As I understand it, the purpose of the amendment is to leave out an important part of the Bill providing regional incentives. Of course, I appreciate that that is not the real purpose behind the hon. Gentleman's amendment, and he has spoken very clearly in criticism of my right hon. Friend's policy towards regional development.

It seems to me that this is not a debate in which we should spend much time quibbling about whether one form of regional incentive is superior to another form. I know that it is very easy to criticise this Government and my right hon. and hon. Friends for narrowing the base upon which regional incentives can be given. I know that that was the purpose of the hon. Member for Newton (Mr. Evans), who has just spoken, but I wish to direct my few remarks to regional policies as a whole and to what I call the long term degeneration of British industry. That has gone on for many years, and I think that what is interesting is the trend away from manufacturing industry towards the service industries, especially towards the Civil Service and local authorities.

Of course, the trend from manufacturing industry to the service industries has been continuing for some time and is by no means unique to our own country. It is a trend that is common throughout the industrialised countries of the world, and we should not be surprised at that. If anything, I suppose that the evidence is that we have over manning in our industries rather than undermanning. Nevertheless, the trend is very striking.

There was an interesting article in a recent edition of Economic Trendswhich showed that between 1961 and 1978 the number of people employed in manufacturing industry was reduced from 8.2 million to 6.9 million. During those same years, the number of people who went into the service industries and into the public sector as a whole was increased by 1.5 million. There was a 60 per cent. increase in local government manpower and a 30 per cent. increase in central Government manpower. However one might describe this trend, it could hardly be described as a trend towards wealth creation. That is the problem from which the country has been suffering. I would not go so far as to say that it is the increasing bureaucratisation of our country, but what is quite plain is that we have been far more intent on wealth sharing rather than wealth creation.

I mention de-industrialisation of the country, which is very much an "in" word at the present. What is worse is that de-industrialisation concentrates on certain parts of the country; it is very patchy. The constituency which I have the honour to represent is in the South-East. We have had almost no unemployment at any time in the 15 years during which I have had the honour to represent my constituency. Furthermore, we have a little further local difficulty in the sense of a large international airport being placed on the borders of my constituency when we are seriously short of skilled labour.

It seems to me that if one looks round the country as a whole one sees patches of industry which are extremely successful. In the South-East there are successful electronics firms and successful engineering firms, with a high proportion of export and a high degree of technology. I do not recall, in all the 15 years during which I have represented my constituency, a single strike of any kind. The reason for that is that there has been considerable technological and productive advance in all the firms in my constituency and a good deal of competition. If one looks at the rest of the country, whether the North-East, the North-West or parts of Scotland, one sees a greater prevalence of strikes and also the deterioration of the older industries. I am not making too much of the prevalence of strikes; I am merely saying that it is not surprising that they take place, because of the serious position of those heavy industries. It does not surprise me for a moment that demarcation disputes break out in older industries when they cannot see many orders on the order book.

5 pm

When one sees the position of the shipbuilding industry and the competitive situation in shipbuilding throughout the world, I think it is true to say that successive Governments have found it difficult to inject any sense of confidence in the future in that industry and also in some of the heavy engineering industries.

In my early business days, it was my job to go visiting factories throughout the country to persuade investment institutions to invest in those firms. In those early days one scarcely saw any foreign-made machine tools in British factories. Now, if one looks at them, one sees that the old machine tools are invariably British and the new ones more often than not come from the Continent, from the United States, from Switzerland or from other countries. I regard that as a trend of the times. It seems to me that it would not resolve the difficulty if, by one means or another, we could redistribute resources from successful companies to those which have very grave difficulties.

After all, to recall how these regions were prosperous originally, it was because they were on the tail of the Industrial Revolution and they were close to the seaport of Liverpool—from which the trade was to go to the United States, the Caribbean and Africa—as well as the other heavy industrial areas. All that has changed, however, and the difficulties in which these industries now find themselves are a result of the fact that they lie in parts of the country that have no direct export base; they suffer from difficulties of transport, and they are not so conveniently placed for export to the European Community as, for example, is the South-East.

In that respect, I am in no position to judge whether one form of regional grant or aid is suitable. All I say is that the sums of money that we spend on regional aid are considerable and must be comparable to the amount of aid that is spent in any other ceuntry. I suggest that we consider a new approach. The problem is that our regional aids and grants are far too discretionary. This Bill and others are laden with grants, all of which are discretionary. I do not blame the Department of Industry. It does a good job, given its terms of reference. However, considerable time is spent negotiating with the Department when applying for grants, some of which are extraordinarily wasteful.

Mr. John Evans

This is an important subject. There will be a fair degree of support for the case argued by the hon. Member for Horsham and Crawley (Mr Hordern). Is the hon. Gentleman aware that, in spite of the changes in the structure of regional policy, the Government have not touched the North Sea oil companies, which are still in receipt of Department of Industry grants?

Mr. Hordern

I am a director of an oil company and my company has been in receipt of such grants. My duty as a director was to point out the advantages of the scheme. Moreover, many projects would have proceeded with or without the grants.

I wish to make a constructive proposal. Regional grants are common to countries throughout the Community. The United States and the Republic of Ireland have different systems to encourage industry to move into certain areas. I refer in particular to the Republic of Ireland. I do not wish to be deprecatory, but a few years ago the Republic of Ireland had a narrow industrial base. Nobody thought it a natural place to start up an industry. The Republic recently introduced a different regional grant system. A simple system which everybody can understand is operated. Companies setting up in certain areas get a 10-year corporation tax-free holiday. In the following 10 years the tax on the profits of such companies is levied at 10 per cent. That system is readily understood and has been remarkably successful.

Many companies have recently moved to Southern Ireland. I shall not list the American, German, Dutch and Japanese firms that have moved to the Republic. A large number of British firms have moved there, even though they face the same market as firms established in Britain—namely, the European Community. Those companies include Beecham, Cadbury's, Courtaulds, General Electric, Glaxo, Parsons, Plessey, Unigate and Wedgwood. Those firms did not move by accident. They know that they can earn profits which will not be taxed for 10 years.

Recently, some of my hon. Friends and some Labour Members visited Japan. The Japanese trade officials said that they were interested in learning about the regional grants available in Britain. They said "You must forgive us for saying that they seem to be extremely complicated. They appear to be changed from time to time, so it is difficult for us to understand the precise position." I could not help but feel sympathy. If one lives a distance away and wants to enter the European market, one must know the rules. A tax-free holiday for 10 years is understandable and attractive.

Mr. Stuart Holland

Is the hon. Member aware that because the Irish Government no longer tax big business and hardly tax farmers, they have had massively to increase pay-as-you-earn? There is now a major tax revolt, a fiscal crisis, because the Government lack resources and have a deficit equivalent to 10 per cent. of GDP. That cannot be called a success story.

Mr. Hordern

If the hon. Member for Vauxhall (Mr. Holland) examines the most recent figures, he will see that the Irish economy is picking up again. I am talking about the long-term trend of the last 10 years. Few of those companies would have moved to Ireland to provide employment without incentives.

Mr. Hardy

I agree that Southern Ireland has made a great deal of progress, but if the United Kingdom, or any country of similar or larger size, sought to pursue such policies there would be a great deal of international concern. I doubt whether we should have been able to get away with such a degree of inducement.

Mr. Hordern

That would be so if a tax-free holiday applied throughout the country. I am not proposing that. The common belief is that a large amount of revenue is derived from corporation tax because it is levied at 52 per cent. However, there is scarcely a manufacturing company which is well advised that pays any corporation tax at all. The companies that are taxed are involved in the service industries, which are taking workers away from the manufacturing industries.

In order to create a revival of industry, we must attract more successful firms from overseas. Some of my hon. Friends and many Labour Members are attracted by the idea of import controls. That has backing from the academics of the Cambridge school. However, import controls would deal with nothing more than the symptoms of the problem. They would not deal with the root of the matter. We must so revitalise our industries, especially in the depressed areas, that they can stand on their own feet. We need new methods and the latest techniques. We shall not get those by shuffling round incentives and money from one part of the country to another.

In all humility, I say to the Secretary of State that I can see no reason why we should not have a corporation tax-free basis in the regions. It would not cost much, because manufacturing companies do not pay much corporation tax anyway. That is not clearly understood by overseas firms, certainly not by Dutch and Japanese firms. We should try to attract Japanese and American firms to provide the latest techniques. We cannot afford to wait. We cannot afford not to have the improved technology which we need to compete in world markets.

Mr. Cyril Smith (Rochdale)

Is the hon. Member saying that he is not opposed to regional policy and that all he argues about is the form that it should take?

Mr. Hordern

I am not opposed to regional policy; I am in favour of it. Our industrial base is now far too small. We cannot export properly and create more wealth unless we enlarge our industrial base. We cannot enlarge our industrial base unless we attract other firms with the technology and expertise that we need. The regional incentives that we provide have been ineffective so far. We still have unemployment that is much too high in the regions. We still have old industry, and we still give far too many resources to the old industries. We pride ourselves on the amount of money that we give per head to those industries.

It is not right to expect the new generation in the North-East to grow up on the basis that the only outlook that it will have is an industry—perhaps shipbuilding—that has no real prospects of selling its product. That is not the way forward for this country.

There are many so-called technical objections to applying differential rates of tax. I simply do not believe that there cannot be a differential form of corporation tax for the firms that are indigenous to those areas. I appreciate that there would be difficulties when dealing with large companies. However, such a scheme would offer attractions to small companies to start up, knowing that for 10 years they would not be paying tax on their profits. It would be a means of helping small firms, and it would draw large international firms into those areas. Goodness knows, we have tried every other method.

With due respect to the hon. Member for Whitehaven (Dr. Cunningham), he put forward a nit-picking argument when he said that our form of regional incentives are not as good as those offered by the previous Administration. Both Labour and Conservative Governments have tried for many years to provide better regional incentives. The result is that we have presided over the industrial degeneration of large sectors of our country. It is time that we tried some other method.

Mr. Lawrence Cunliffe (Leigh)

As a political apprentice serving on my first Committee, I appreciated the help which was given to me to understand the mechanics, intrigue and straight ideological conflicts that take place between hon. Members on both sides in Committee.

The Government's programme and legislation depict their attitude towards a philosophy that is obviously consistent with the sectional profits interest of the economy. Previous Conservative Governments adopted a similar style. However, there is some distinction between the present Government and the Conservative Government of 1972. The 1972 Government recognised and accepted that there had to be some form of intervention and that regional incentive instruments were necessary to adjust some of the disparities that existed within our regions.

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As we debated some of the clauses, it became clear that the Secretary of State had adopted a rigid attitude. If the prime object of the disqualification of regional incentive grants is economic and financial, at the end of the day the real point of the exercise is to save £233 million—the figure given in the Budget.

The area status in my constituency has been degraded, and we are in the unenviable position of facing peculiar problems that have been created by a peculiar Minister. The Secretary of State will remember that he kindly received a delegation of North-West Members to put their case, as he exhorted them to do. He said that if there were special problems he would consider them, put them under the microscope and re-study the position as reported to him from time to time. After putting the case with absolute clarity, I detected that he was somewhat confused about the way in which some of the clauses would activate themselves in practice. There was concern that some of the phraseology used—we faced this when the guidelines were published in Committee—did not mean what it was originally intended to mean.

In my constituency, within the same metro-area, the Minister has drawn an arbitrary line straight through the centre. On a "rob Peter to pay Paul" basis, he degraded my area and upgraded another area within the same metro-area to full development status.

The Minister said yesterday that he wished to find some common ground between the two sides of the House. He could start by extending to me the gesture of acknowledging that when the lines of demarcation were drawn in the incentive areas my constituency, along with its neighbour the Wigan metropolitan district council, ought to have been accorded full development status. We could find common ground on that issue.

I have news for my hon. Friend the Member for Wrexham (Mr. Ellis), who is having problems with the mountains in Wales. The Secretary of State said that we must have faith to move mountains. He said that to be downgraded was a sign of hope. So we have faith, hope—and what else? We have faith, hope and disparity. The argument is about the regional imbalances and social disparity, not only in industrial incentives but in education and every other imperative that is necessary to raise the standard of living in the North-West and Northern regions.

We cannot achieve anything by normal, rational methods of persuasion. I think that Mr. Speaker would have told us to seek divine guidance. I hoped that the Secretary of State would have some message of an industrial messiah—a great paraclete coming down on the industrial arena. I found that the right hon. Gentleman was masquerading. We heard the same old corny comments about the long-suffering taxpayer, that industry must stand on its own feet and that the incen- tives that were introduced by the Government of the right hon. Member for Sidcup (Mr. Heath) were not really appropriate to set industry alight.

I shall not accuse the right hon. Gentleman of Machiavellian moonshine, but his behavour in dealing with some of the regional aid services—the way in which he has decimated our industrial incentive structure—reminds me of some uncontrolled industrial dalek zooming around and shooting down any schemes for regional aid that cost cash. That is what it is all about: regional aid costs cash.

We are not talking about the creation of new jobs. It is a question of the criteria for the existing regional incentive grants. Perhaps the criteria are wrong and ought to be reconsidered before we allocate industrial investment grants.

The proposed charges of successive Governments in respect of the Greater Manchester area hinge on the question of unemployment rates. That is the principal element. Some of us are not convinced that it is the only imperative which must be taken into account when one is deciding whether an allocation of grant is a logical distribution of taxpayers' money.

There is something that it does not do, which clearly accounts for the Wigan upgrading, which I have accepted. There are three serious deficiencies in using this kind of criterion. It conceals a wide variation in unemployment rates within certain travel-to-work areas, which can be as high as 25 per cent. in inner city areas. I do not want to mention names, because other hon. Members will want to talk about their constituencies. However, there are parts of the Manchester inner city area where unemployment is far more serious than in many other areas that are due to become assisted areas. That takes no account whatever of the fact that average earnings in Greater Manchester are significantly below the national average. That should be an element in the criterion, not just to our area but to every other area of the country, because such a formula would be more penetrating and effective.

It also denies the sheer scale of the unemployment problem and the existence of multi-deprivation, which tends to be extreme in the inner areas of the country. Social and environmental problems ought to be taken into account as well as the lack of economic opportunities, otherwise the plight of inner urban residents is worsened because most of them are unable to secure better opportunities elsewhere.

Yesterday the Secretary of State said that he longed for common ground between us. I accept the scenario for this country which is at present on the horizon. There are opportunities. North Sea oil gives us an advantage in securing full employment and rising living standards. The new technologies also hold out the prospect of faster growth and a better quality of life for all. That is particularly true of the micro technology that is on the horizon—the silicon chip. That is a classic example which will have a major impact on all our lives.

For obvious reasons, I believe that only a Labour Government can ensure that our people derive the benefits from these opportunities. However, in order to take advantage of those opportunities, we must improve our industrial competitiveness both at home and abroad. We must ensure that our industries adapt to the new markets and technological changes. It also means easing the cost of rapid industrial change for working people. That is exactly what the previous Government tried to do and partly achieved.

The crude market forces advocated by the Government will not and cannot achieve those changes in a way that will be acceptable to the British people. As I said on Second Reading, the Government's industrial strategy is like the blind leading the blind. There is nothing permanent, stable or solid about it. What we need is a firm industrial employment strategy which increases productivity, adds to investment and creates new jobs.

It is my belief that regional incentives are absolutely imperative if those aims and objectives are to be fulfilled. They are essential if we are to redress once and for all the economic imbalances between region and region. The Greater Manchester, Northern, Scottish and Welsh regions need greater and more urgent consideration in order to take account of the disparities in the South-East, which from time to time the Government in London have imposed upon them.

Mr. John Patten

Anyone listening to today's debate or to the debates in Committee could not but be aware of the passion and commitment felt by many Labour Members. I have listened to the hon. Members for Whitehaven (Dr. Cunningham), and for Wrexham (Mr. Ellis) and other Labour Members. It is quite clear that their regions are the most deprived regions of the country, not only on economic but on social and environmental grounds, and I appreciate that their feeling is deep. I would not want any Labour Member to think that Conservatives who come from more fortunate regions discount any of those feelings.

But I ask Labour Members to reflect whether the course on which we set out in the 1930s—when we began with the special development areas legislation—has turned out to be the right course over the past century. We seem to have set ourselves two tasks. The first was to delineate exactly which regions were in need of help and which regions were not. That is a difficult task which often involves an element of rough justice, rather like boundary redistributions or the granting of independent television franchises.

The second component has been that of trying to assess the amount needed and the amount available in Government aid to give to the economy of those areas as well as to their environment and social structure. Those have been the two most coherent thrusts of regional policy since the 1930s. The hon. Member for Whitehaven referred to the growth of some sort of consensus between the two major parties in their approaches towards the regions. In yesterday's debate, we were reminded by Labour Members how the Industry Act 1972 added to that consensus.

I suggest that that consensus has now been broken on both sides of the House. I believe that it has been broken by Labour Members, because in their desire to extend the NEB—their creation—and other methods and techniques they have decided to go very much further in the direction of investment than regional policy has ever gone in the past half century. That is a valid approach to take, but I believe that it has broken the consensus. Does the hon. Member for Whitehaven wish to intervene?

Dr. John Cunningham

Not really. I do not agree with the hon. Gentleman, because the main burden of the NEB's task was not regionally oriented at all. That is what I disagree with.

Mr. Patten

Many of the NEB's investment decisions, while not specifically directed towards a regional task under the 1975 Act, have, because of the investment opportunities that have been taken up, been directed towards the regions. I hope that that satisfies the hon. Gentleman.

We have also broken the consensus because we have decided that the time has come to take stock and perhaps to change the course of regional policy. Since regional policy began, there has been an inexorable growth of special development and development areas until more than 40 per cent. of the country was covered by areas in receipt of Government assistance.

Mr. Bruce-Gardyne

As my hon. Friend was not here at the time, it is important to point out that, while there may have been consensus across the Front Benches on the subject of the Industry Act 1972, there most certainly was not consensus on the Back Benches on this side of the House.

Mr. Patten

Anyone who reads my hon. Friend's column in the Sunday Telegraphwill realise how little consensus there was then. I was not saying that that consensus was right or wrong. I was merely observing that the 1972 Act could be taken as part of a consensus on regional policy.

The Government have decided to take stock of the whole policy. This is achieved through the clause that the Opposition are seeking to delete. My personal feeling is that the clause does not go anywhere near far enough. My hon. Friends need not fear that I shall not go into the Government lobby, but the clause, I hope, is merely a holding operation for what will be a wider stocktaking of our regional policy over the next five years.

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We should continue to try to define the areas that really need help and relate those areas to the amount of revenue that the country can afford to spend on regional development. We should continue to spend money, possibly more money, in certain areas—for example, on the social structure of some regions and some of the metropolitan centres that dominate them. French planning policy, in trying to correct the imbalance between Paris and the French desert, has tried to stress in its metropole ďequilibre the growth of cultural and other facilities.

We must continue to spend money on environmental improvements, on infrastructure, on roads and on all the other manifestations of regional policy. Is the money for investment in factories, plants and machinery spent in the best way? I have my doubts. I believe, to use a phrase that was heavy in the air earlier today, that there is broad empirical evidence, a phrase that often falls from the lips of the hon. Member for Vauxhall (Mr. Holland).

Mr. Budgen

What does it mean?

Mr. Patten

I have no idea. I should be happy to be told, at a later stage, by the hon. Member for Vauxhall what the phrase means.

Mr. Stuart Holland rose—

Mr. Patten

I give way happily now.

Mr. Holland

It was not clear to me at what later stage the hon. Gentleman intended to give way. I do not find the general economic illiteracy of some Conservative Members my personal responsibility. Their understanding of the English language is a problem for them.

Mr. Patten

My hon. Friend the Member for Bristol, West (Mr. Waldegrave), other hon. Friends and I have tried to persuade the hon. Member for Vauxhall to answer a direct question. I hope that one day we shall succeed. I believe that there is broad empirical evidence to suggest that the economic subventions given to firms in terms of plant, capital and factories have not had the dominating effect in persuading managements to move into the regions that any of us, 20 or 30 years ago, would have expected. There is no point in having policies unless those policies can be seen to work.

We need to take a long, hard look at our expenditure on economic matters and on investment as opposed to social, environmental and infrastructure matters in special development areas and in development areas. I do not believe that the policies of Governments of either party have produced the results and benefits that hon. Members hoped would occur. I was much taken by the speech of my hon. Friend the Member for Horsham and Crawley (Mr. Hordern), who has broadened our horizons by making us stand back and look at the possibility of other devices for inducing more companies, not only manufacturing companies, to go to the regions that need them. I was distressed to hear the hon. Member for Whitehaven refer all the time to manufacturing industry. I do not believe that the term "service industry" occurred in his speech.

My hon. Friend the Member for Horsham and Crawley suggested that we might consider, as part of our strategy, the introduction of tax-free holidays for corporation tax on new factories. I suggest that this should also apply to old factories in those regions in order to try to create a more attractive portfolio to bring firms into the regions. It is critically important that the techniques applied to the regions for the last half century should not necessarily be regarded as those that will fit us for the next half century. We should perhaps consider changes in employers' contributions in manufacturing and service industries in some of the regions.

The mere giving of 22 per cent. or 15 per cent. grants on plant and buildings in special development areas and development areas, respectively does not seem to have been an adequate carrot. It is my contention that all hon. Members need to stand back from the policies of the last half century and try to make sure that we are not mindlessly carrying on a process that has so far failed to deliver the goods which all of us, 20 years ago, hoped would be delivered.

Mr. John Evans

I should like very much to follow the remarks of my hon. Friend the Member for Leigh (Mr. Cunliffe) in relation to regional policy. I should certainly like to have followed the two Conservative Members, the hon. Member for Horsham and Crawley (Mr. Hordern), who made a thoughtful contribution, and the hon. Member for Oxford (Mr. Patten). In view of the fact, however, that I have made many speeches on regional policy and have made my position clear, I shall not repeat my views.

It is pleasing to know that compassionate common sense has not completely deserted the Tory party, although what the hon. Member for Knutsford (Mr. Bruce-Gardyne) and those on his wing of the party will make of the speeches of their two colleagues, God knows. We shall have to wait, perhaps, for the next issue of the Sunday Telegraphto read about the continuing divisions in the Conservative Party.

I wish to concentrate briefly on amendment No. 22, which deals with the question of the cut-off date. Hon. Members must be aware that this matter is causing serious concern in areas that are due to lose assisted area status. It is understandable that many local authorities that are losing their assisted area status are bitter and angry about what the Government have done. Many of those areas are Conservative-controlled. They are made doubly angry by the cut-off date of 1 August 1980 imposed upon them. Many have made representations to Members of Parliament. They point out that many companies will face severe difficulties if the Government adhere to the arbitrary cut-off date of 1 August.

Apart from the anger and bitterness of local authorities, there is genuine fear among companies now building plants and embarking upon projects in these areas that recognise that they cannot complete them before 1 August. The Bill is quite specific. It states that grants apply if the asset is provided before 1 August 1980. There was a long discussion on this matter in Committee. The Under-Secretary of State for Scotland indicated that whatever cut-off date was imposed and whatever transitional arrangements were made would be arbitrary and would hurt someone. We do not doubt that. We seek in the amendment to make the cut-off date more fair to those who will be involved.

In Committee I read out letters I have received from a substantial number of authorities in the North-West such as Bolton, Bury, Rochdale, Stockport and Tameside. I do not intend to read them aagin. All have made representations to us about the dangers involved in the cutoff date of 1 August. Many of them spell out the projects that are involved. They also indicate the increased dangers they will face as a consequence of the present strike in the steel industry. Even if the strike is settled in the near future, as we all hope, there will in the next few weeks be a delay in the supply of steel to people who are building their factories and plant. In that context, things will be made even more difficult for them.

We have sought in the amendment to indicate to the Minister a much fairer method of imposing the changeover on those who are concerned with it. I asked the Secretary of State, in a written question, if he would indicate to me the number of organisations and authorities which had made representations to him. In his answer he spelt out certain aspects to me, and he concluded: Representations about these changes have been received from a number of sources including local authorities. The detailed information requested is not readily available and could not be provided without disproportionate cost."—[Official Report, 25 January 1980; Vol. 977, c. 409.] In view of that answer, I wonder how many local authorities, at both district and county level, have made representations. Even more importantly, I wonder how many companies have made representations. When these companies entered into agreements to provide plant in the assisted areas, they were acting under the terms of an Act of Parliament. They were dealing with the Department of Industry, they entered into these arrangements, and then suddenly they were told that the rules had changed. They have been told that unless they provide the asset by 1 August 1980 they will lose the grant.

The Minister may say in his reply that the Government will look at the matter sympathetically, but the point is that the Bill will be an Act of Parliament. In our amendment, my hon. Friends and I are proposing the insertion of the words Work on the asset is commenced before the passing of this Act". It is surely right to use those terms, because the measure is not yet on the statute book and we would be dealing only with those projects which were at a well advanced stage in the pipeline and completed before 1st August 1981. I do not think that anyone would then be able to argue that his project could not be completed by that date.

I remind the Minister that projects were agreed and contracts were signed the day before the Secretary of State made his announcement in July. This is not an ideological argument or an Opposition argument designed to score points off the Government. It is a plea to the Government to treat with equity and fairness those companies which have gone to the regions and which are providing jobs. Treat those people fairly, and we shall have no complaint. I ask the Minister to accept the amendment.

Mr. Bruce-Gardyne

I want principally to address my remarks to amendment No. 24, which is grouped together with amendments Nos. 21 and 22—rather like the two parts of a push me-pull you, because they point in somewhat opposite directions.

I want to pick up something that the hon. Member for Leigh (Mr. Cunliffe) said, when he suggested that I was in complete discordance with my hon. Friends who have spoken from the Conservative Benches. I can assure him that he is quite wrong. I found myself very much in agreement with the remarks of the hon. Member for Newton (Mr. Evans). I was also very much in agreement with the remarks of my hon. Friend the Member for Oxford (Mr. Patten). I found myself generally in agreement with my hon. Friend the Member for Horsham and Crawley (Mr. Hordern), although I must admit that I am dubious about having a tax holiday attached to a type of tax which, as was pointed out, the vast majority of sensible companies no longer pay anyway. That is the reservation that I have.

Before turning to my own amendment—

Mr. Hordern

The point, of course, was that the service industries are the ones which pay the corporation tax at the moment, and it would make a considerable difference to them if they were able to go into the development areas and pay no corporation tax at all.

Mr. Bruce-Gardyne

Yes, I see that point, although I am bound to say that I would have thought that the bulk of what the hon. Member for Whitehaven (Dr. Cunningham) described as foot-loose investment, certainly from overseas, would be more likely to be on the manufacturing side. If the Japanese are really unaware that manufacturing companies in this country, broadly speaking, do not pay corporation tax, they will need to get themselves informed more rapidly.

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If I may say so, the hon. Member for Whitehaven advanced his case with great moderation and lucidity. His problem—it has been the problem that all the regionalisers have had from the beginning of time—is that the policy has not worked. The position is as bad as ever, but the regionalisers want more of the same policy. They are like mad doctors who, confronted with the fact that cough mixture has failed to deal with diphtheria, say that the answer is to give more cough mixture and that one day it will work.

Then there is the matter of definitions, which has already been mentioned. How is the area to be defined? This is always a terrible problem. In my experience, every time a Government introduce a new regional weed, there is very little satisfaction among those areas of the country which benefit from it and vast indignation from those which do not. I suspect that there is but one real solution. We must appoint the hon. Member for Vauxhall (Mr. Holland) to an office of profit under the Crown as the grand commander-in-chief, major-domo and strategist of the regionalisation industry, with total power to select each village, hamlet, district or pub to which a form of regional incentive should attach.

Dr. John Cunningham

The hon. Gentleman has used a medical metaphor. In terms of the broad spectrum of economic opinion in the country, he is more likely than I am to be described as a quack. However, as for the efficiency or otherwise of regional policy, he is right to say that it has not succeeded in solving the problem. I agree with him thus far. But that does not mean that he is right to conclude that it is a failure. We are saying that it has to be made more effective.

Mr. Bruce-Gardyne

I am aware that that is what the hon. Gentleman is saying. It is precisely the argument with which I was dealing.

Mr. Stuart Holland rose—

Mr. Bruce-Gardyne

If the hon. Gentleman will allow me.

I think I had better develop my remarks. Like my hon. Friend the Member for Horsham and Crawley and my hon. Friend the Member for Oxford, I be- lieve that we need differential incentives to regional development. But, like them, I believe that we have got the wrong ones. In my view, the best of them was the one that the hon. Member for Whitehaven and his hon. Friends terminated—the regional employment premium. That had the virtues of certainty, a total absence of discretion on the part of civil servants, and, above all, it was labour-identified, labour-oriented and labour-intensive. One of the most foolish actions that the previous Government took was to abolish it. I would be quite happy to see it reinstated and the rest removed.

Mr. Stuart Holland rose—

Mr. Bob Cryer (Keighley) rose—

Mr. Bruce-Gardyne

I do not think that the hon. Member for Keighley (Mr Cryer) has been in the Chamber while I have been making most of my remarks. Therefore, I give way to the hon. Member for Vauxhall.

Mr. Holland

It is quite clear that the hon. Member is still basically opposed to regional policy, despite his sympathy for his hon. Friends the Members for Horsham and Crawley (Mr Hordern) and for Oxford (Mr. Patten). It is also quite clear, from a review that he once wrote, in those hallowed—or should I say sephulchred—columns of the Sunday Telegraph, of an argument of mine on regional development, that he is unaware that regional employment premiums did not work. They did not work partly because of the massive wage differentials between this country and South-East Asia, where the cost of labour is a fraction of the cost here.

The hon. Gentleman proposed me as the major-domo of regional development policy with an office of profit under the Crown. That would at least depend on my acceptance. I would not accept such a post. Despite the fact that many hon. Gentleman believe that there is but a banana skin between the Labour Party's policy for the regions and the concept of a commissar for regional development, it is not so. Labour policy is based on specific negotiations relating to specific circumstances with those involved, including the unions.

Mr. Bruce-Gardyne

Perhaps that intervention has saved the hon. Member for Vauxhall a speech. I must proceed with my own. Amendment No. 24, which stands in my name, lays down that, where it is estimated that a regional development grant will attach to assets from which employment will be created on a scale of £10,000 or more per job to be created, the grant should be subject to the affirmative resolution procedure.

I am seeking to apply some restraint to the super capital-intensive treatment which attracts vast sums in grant and generates no employment. I seek also to extend the scope of parliamentary accountability. I hope that on the latter ground my amendment will command general assent on both sides of the House, and on the former ground I hope that I can demonstrate that there is a good case for support from my right hon. and hon. Friends.

It is common knowledge that we face a major problem in bringing public expenditure—left on a runaway express by the last Government—under control. I do not suggest that the Department of Industry is the only Department which should be looking closely at its books, but in some respects it has a duty in that respect. That is a particular concern of my amendment.

I cite three examples of what I mean. In 1978 the previous Government paid out £27.6 million in regional development grant to the Hoffman La Roche company at Dalry in Ayrshire. It was estimated that that particular investment would ultimately produce 450 permanent jobs. If my arithmetic is correct, that works out at about £60,000 per job to be created.

Last year my right hon. and hon. Friends in their wisdom decided to provide £15.75 million in regional development grants to the Dow Corning Corporation to enable it to extend its factory in South Wales. That grant was for the creation of 125 jobs at a rate of £126,000 per permanent job created. Another project is the giant petrochemical complex looming over the horizon at Moss Morran in Fife. According to the latest accounts, this is likely to create 300 permanent jobs. The cost of this in automatic regional development grant is likely to be in the region of £75 million. That works out at about £250,000 per permanent job created.

Beyond that, there is the prospect of yet another petrochemical complex, this time on the Cromarty Firth. The details of that are not sufficiently advanced for us to know the scale of the employment to be created. However, the amount of regional development grant involved looks as though it might easily be in the region of £60 million or more and—surprise, surprise—the Dow chemical company is the beneficiary once again. That company must sometimes believe that there is at least one country in the world where money grows on trees.

Mr. Alan Williams (Swansea, West)

The hon. Member for Knutsford (Mr. Bruce-Gardyne) is addressing himself to a problem that we have all worried about over the last decade. I negotiated the Hoffman La Roche deal and authorised the payments. Often the payment is made not for the creation of jobs but in order to attract a project into this country which would be of value to our economy and which might otherwise have gone elsewhere.

The Hoffman project would have stayed in Switzerland. What eventually led me to make that very considerable payment was not the number of jobs though they were welcome. What convinced me was that the project would bring a production capability into this country which did not exist, which would meet all our domestic needs and give an export potential. Over a 20-year time span the project would bring relief of £750 million on the balance of payments. In that case, in the Texaco instance and in the Moss Morran project, it was the balance of payments argument in relation to international mobile projects that tended to weigh with the Government rather than job creation.

Mr. Bruce-Gardyne

I purposely placed the Hoffman La Roche project at the bottom of my scale of rising values because, of the three or four cases I have mentioned, that one may come nearest to justification. But I am deeply suspicious of the balance of payments argument. I recommend that the right hon. Member for Swansea, West (Mr. Williams) goes back and looks at the files on the aluminium smelters, and considers the balance of payments arguments that were advanced then and finds how matters worked out.

My next point is germane to the argument. The right hon. Gentleman said that the projects I mentioned would have gone elsewhere. He cited the case of Hoffman La Roche and spoke from intimate knowledge. I would not argue with him on that, but I do not believe for a moment that Moss Morran could have gone somewhere else or that Dow Corning could have gone elsewhere. Dow Corning was expanding an existing factory. An existing factory cannot be expanded in Switzerland or Germany. The factory was already there.

The Moss Morran project is designed to make use of oil from the North Sea. Where else can such a project go if not to the East of Scotland? Of course it would have gone there. We are handing over to the petrochemical companies concerned a vast subsidy for doing what they would have done in any case and for projects that create no extra employment.

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Mr. Alan Williams

I am trying to help the hon. Gentleman. Obviously Moss Morran is a matter for the Government—they will have to make the final decision. To keep the record straight on the Dow Corning complex in South Wales, let me say that there was a choice-between upgrading that factory unit or one of the Continental units. The question was whether the company should concentrate its industrial future in Britain or take the option of another existing site on the Continent. For that reason, I originally authorised the grant for Dow Corning. After we left office, my successors also authorised it.

Mr. Bruce-Gardyne

I hope that the right hon. Gentleman will be pleased when ICI closes down its silicon operation, as it almost certainly will as a result of this investment. From this one factory, Dow Corning will supply the equivalent of more than half the global production of silicon—a product that is in surplus at present. The weakest international producer of this commodity at present is ICI, and it will go to the wall. I hope that the right hon. Gentleman thinks that he has done a good job for the British taxpayer in that respect. I am bound to tell him that I do not. As I have already made clear, I believe that my right hon. and hon. Friends are gravely mistaken in picking up this project which the Labour Government left behind.

I wish to deal with the argument that regional development grants should have a cut-off point of job relationship, above which they should not be automatic as at present. The argument put forward by my right hon. and hon. Friends is that this would destroy the effectiveness of regional development grants because it depends on their automat city. I have a two-page letter here from my right hon. Friend on this matter. I was grateful to him for writing at such length and I shall not weary the House by repeating its contents. But in reading his reply I was reminded of Mr. Philip Guedalla's celebrated likening of the civil servant to an inverted Micawber waiting for something to turn down. I do not think that that has disposed of my argument. At a time when we are right to seek some substantial retrenchment in public expenditure if we are to avoid landing ourselves with a public sector borrowing requirement next year which is unfinanceable, except at unacceptable rates of interest, it cannot be good value for money to provide tens of millions of pounds to bribe investment to settle where it would have gone anyway and where it would create no new jobs or virtually no new jobs. We must look at this again.

I do not stand on the letter of my amendment. If my right hon. and hon. Friends believe that £10,000 is impossible and they wish to make it £25,000, I would accept that. However, I find it hard to accept the proposition that there is no way in which we can defend the taxpayer from the obligation to pay out these enormous sums. In each instance we are talking in terms of tens of millions of pounds paid out to persuade people to do what they intended to do in the first place, and all to no purpose in terms of creating employment where it is needed.

That is what I had in mind in drafting the amendment. I beg my hon. Friend the Minister to consider seriously the proposition that, so long as we are handing out money on this scale and for this purpose, it will not be easy to carry conviction for the proposition that we have the retrenchment of public expenditure at heart.

Mr. Cyril Smith

The House will agree that this is an important debate, not only in an economic and political sense but in a constituency sense as well. Therefore, I must express my concern—notin a personally abusive way—that in a debate that affects so many areas of the United Kingdom, particularly the Midlands and the North, we should find a Minister for Scotland sitting on the Front Bench throughout the debate and presumably reply to it. I have great respect for the Minister concerned and this is not a personal attack on him, but I suspect that he knows as much about the North-West of England as I know about Scotland. For him to attempt to answer for some of my constituency points is like my trying to answer a debate on the problems of Edinburgh.

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

I am sure that the hon. Member for Rochdale (Mr. Smith) will take no exception to you—a Welshman—Mr. Speaker, being in the Chair for this debate. The hon. Member and I had a long talk about industrial development in the High Street in Oban during the Summer Recess a few years ago, and he seemed fairly familiar with Scotland then. Perhaps even more seriously, there is hardly an Englishman on the Front Bench in this debate because the hon. Member for Whitehaven (Dr. Cunningham) lives so near to Scotland that he can swim across and another Scotsman, the hon. Member for Hamilton (Mr. Robertson), will wind up for the Opposition. I do not believe that either of those hon. Members or I are in any way disqualified from discussing United Kingdom regional policy, remembering that this House spent two or three years of the last Parliament discussing the affairs of Scotland. Perhaps it is just a little bit of tit-for-tat. I assure the hon. Member that everything he says about Rochdale will be taken into account in my speech when winding up the debate.

Mr. Smith

I am grateful to the Minister for his intervention. Of course, I would not dare to object to your being in the Chair, Mr. Speaker. I can object to the Minister winding up because he has no power over me. I can hardly say the same about the Chair.

I accept the Minister's intervenion in a sense, but I am a little disappointed that Northern problems cannot be dealt with by a Minister responsible for the region rather than one who has no responsibility for England at all.

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

May I assure the hon. Member for Rochdale (Mr. Smith) that there is one Minister from the Department of Industry here who will listen carefull to his speech and who will go through the the whole of Hansardto consider any matters affecting the Department of Industry?

Mr. Smith

I think that we had better get on with the debate. Clearly, I have got under the Minister's skin, and that is something of an achievement.

I believe strongly in regional aid and I reject the arguments that have been so blandly advanced by some Conservative Members that regional policy has failed. I do not accept that and I do not believe there is any evidence to prove that. Of course, there is evidence to prove that some developments would have taken place in some areas eligible for regional aid whether or not that aid had been available.

Of course, there is such evidence. Some industries have been attracted to areas that are in receipt of regional aid. Surely that is the test of whether regional aid is good or bad. Industries and companies have been attracted to areas, certainly in the North-West and in my constituency, because those areas are in receipt of regional aid.

The purpose of regional aid is to attract industry to particular areas of the country where it is deemed—for whatever reason—that industry is needed, and there are clear examples of industries being attracted to a certain area as a consequence of regional aid. I therefore reject the argument that regional aid is a failure.

Mr. Tom Ellis (Wrexham)

If one is judging the question of whether regional policy, not regional aid, has succeeded, the criterion that would presumably apply is whether it has succeeded in establishing economic parity across the country. Taking that criterion, regional policy has manifestly failed.

Mr. Smith

That may be so, but, with respect to the hon. Gentleman, we would have to determine the position had regional policy not been available before we can say that it has failed. My argument and my belief are that the figures would be far worse in terms of parity across the country if there had not been regional aid. To that extent, I argue that it has been successful.

Mr. Geraint Howells (Cardigan)

To prove the point made by my hon. Friend the Member for Rochdale (Mr. Smith), may I point out that Mid-Wales has received regional aid, and during the last three years 188 advance factories have been built and nearly 5,000 more people have found jobs in my part of the world.

Mr. Smith

I am grateful to my hon. Friend the Member for Cardigan (Mr. Howells). If one argues that regional aid—or regional policy, whatever one wishes to call it—is not a failure, the only argument is about the form it should take.

The hon. Member for Horsham and Crawley (Mr. Hordern) made some valuable points. He said that he was in favour of a regional policy, and he asked about the form it should take. The hon. Member for Oxford (Mr. Patten) also made some valuable points. There is a need to review the form of regional aid. I find it disconcerting that the Government are destroying what is there but putting nothing in its place. If they were altering the method, or if they intended to abolish one method and replace it with another in 12 months' time, that would be a different argument.

Mr. John Evans

Is the hon. Gentleman aware that one of the plus points put forward by the Government is that they are concentrating their assistance on areas that are most in need? Is he also aware that they have taken £230 million from the regional aid budget and have given it to the wealthy? If they had put that £230 million into areas with the greatest problems, that could have been justified.

6.15 pm

Mr. Smith

However the Government disguise or dress up the Bill, the fact is that they had to reduce regional aid by £230 million. It was an economic exercise, an exercise in reducing Government expenditure.

The hon. Member for Horsham and Crawley said that in his constituency there was no unemployment problem and that there had not been an unemployment problem for the last 15 years. I am delighted to hear that. He is lucky. That is not the experience of many hon. Members in the North-West.

In my constituency we are heavily dependent on the textile industry, which is slowly bleeding to death. Three mill closures in my constituency have been announced during the nine months since the Government took office. My constituency is one that has been downgraded as I see it and upgraded as the Secretary of State sees it in regard to regional aid. Even without those mill closures, if one were to view the area in social terms as well as mere economic or employment terms, there is no doubt that my constituency would measure up to all the criteria. It is an area of deprivation. It benefited from the Industrial Revolution, but it now suffers as a consequence. The area has lost a great deal of industry, and it has all the problems of inner cities in social terms. That criterion apparently counts for nothing, and the area is to be deprived of its regional classification.

I turn now to skillcentres. There was an intervention about skillcentres during the speech of the hon. Member for White havent (Dr. Cunningham). It was said that people were trained at skillcentres and then were not able to find jobs, because of union policy and so on. In modesty, I claim to be in touch with my constituents, and they have every possible access to me. Never once have I had a complaint from a constituent or anyone who has been trained in the skillcentre in my constituency that he has not been able to find a job because of trade union attitude or action or anything else. My experience certainly does not accord with the apparent experience of other hon. Members.

I turn now to amendment No. 22 relating to the date of completion of a contract in order to attract a grant. This is an extremely important point for my constituency. A company in Rochdale contracted to build a factory before the Government announced their policy. It cannot complete, or it is unlikely to complete, that factory before 1 August 1980. If it is not completed, the company will lose the grant that it would have received. It will not even receive the grant for that part of the building which has been completed.

I understood that the House frowned on retrospective legislation. I put it to the Government that that is retrospective legislation. Indeed, I go as far as to describe it as immoral.

Some companies—and I know of one—have contracted to put a factory in an area and would therefore have been eligible for a regional grant. We are talking not about chicken-feed but of six-figure grants. Those companies will have gone into an area in good faith, believing that they would have a grant. They now find that they will not get a grant even for that part of the scheme which is completed by 1 August 1980. That is immoral.

The Government could at least limit the grant only to projects that were started before they announced their new policy, which I believe is what the amendment does. Even if the Government oppose such grants, surely they will agree that it is grossly unfair for a company which has morally contracted on the basis that substantial Government funds will be available to find, after the contract is started, that the grant that it has been promised is no longer available.

I press that point strongly. When the Minister first introduced the policy, I questioned him on that point and also wrote to him afterwards. It is grossly unfair on any criterion. It is immoral and uneconomic to stop those grants. Companies have gone to the Department of Industry, have been told that sums are available to them and have signed legal contracts for building. They have purchased land and agreed to proceed. The Government then change their policy, and a company loses all the money that it understood it would receive when it signed legal contracts with builders. That is indefensible. I plead with the Government to reconsider that issue if nothing else.

I ask the Government at least to play ball and say that any company that can prove—and it must be on the record—that it entered into contracts in good faith before the Government announced their policy will, on completion of the project, even if it is after 1 August 1980, receive a grant at the level at which it originally believed that it would be available.

Mr. David Mitchell

Will the hon. Gentleman apply his mind to problems that may arise where a large amount of business is not done in the form of a written contract? Many business contracts are made verbally. Firms that have done business together over a number of years often place contracts on the basis of a verbal agreement. Under the hon. Gentleman's proposals, what would happen then?

Mr. Smith

Reasons for not doing things can always be found. With great respect, I accept the Minister's intervention, but those in the Department's regional offices can surely form a judgment whether they are being taken for a ride and being kidded. If they are not satisfied, of course they will not make aid available. However, if there are signed contracts available, even though it is unfortunate for those without such contracts, companies should be exempted from that retrospective legislation.

Mr. John Evans

Does the hon. Gentleman agree that the Minister appears to be suggesting that the Department of Industry has been handing out large sums of taxpayers' money on the basis of word-of-mouth contracts?

Mr. Smith

That would appear to be the implication of the Minister's intervention.

I am in a small business myself, and I find it difficult to believe that companies will enter into contracts involving large sums of money on the basis of word-of-mouth contracts. Surely a bill of quantities and a plan will be drawn up. There will be something in writing about the price. I find it difficult to accept that that will all be done by word of mouth. If companies are daft enough to have nothing in writing, presumably they should accept the penalty of their stupidity.

One thing is certain. There are companies that contracted in writing before the Government announced their policy. They can prove their case and should be exempted from what I believe is retrospective legislation.

Finally, I have one most important point in connection with withdrawal of development area status for many parts of the country. The Secretary of State indicated, more by gesture than by speech, that the Government would be considering the matter. I hope that in this debate we shall have an answer. I should like to know what the effect of that withdrawal will be on grants from the EEC.

If an area loses its development status, it will automatically also lose its right to Common Market grants. It is sheer chance that that is the criteria used by the EEC. It could have used other criteria, which it has used in the past, before development area status was available. If an area does not have development area status, it can lose the opportunity to apply for EEC grants.

The Secretary of State indicated, although he did not give a direct commitment, that before the opportunity to apply for an EEC grant ran out in about 1982 or 1983 Ministers would negotiate within the EEC to try to establish a different criterion for eligibility. The land reclamation grant is one possibility. An area eligible for that grant might also be eligible for EEC aid.

Have the Government yet started those negotiations? If not, before the present position expires, will they assure us that they will discuss with the EEC a different criterion from mere development area status?

I hope that my remarks are constructive. I should like assurance son retrospective legislation and the effect of not having development area status in obtaining EEC grants. I should not be satisfied that the Government's policy was correct merely because those points were answered, but if I received such assurances I should feel that my contribution had been worth while.

Mr. James Hill (Southampton, Test)

The debate has ranged widely over these three narrow amendments.

The hon. Member for Rochdale (Mr. Smith) asked about development area status with regard to EEC regional policy grants. I played a large part in the formation of the original EEC regional policy programme. I recollect that individual areas have no right to apply direct to the Commission for regional grants. Indeed, they have only a right to apply to their own central Government, who then specify the areas that they think should be allowed to apply for a grant.

There was some discontent at the beginning of the formation of the Delmotte documents and deputations were received in Brussels on this, particularly from Scotland as I remember. Local authorities were very indignant that, the regional fund having been agreed, they could not go direct to Brussels. They had to go via the Minister responsible for regional policy—in those days it was Christopher Chataway who was representing this country—and they felt that they could get their voices heard only through London and that this was a bias against the peripheral areas of the United Kingdom.

When my hon. Friend the Minister replies, I think that we shall hear that the EEC regional policy has not changed. Indeed, the United Kingdom regional policly funding matches it pound for pound. The areas that will be put forward in future will be the new areas as defined by my right hon. Friend the Secretary of State in a debate some months ago. If I have done anything to muddy the water, I apologise to the House. Nevertheless, that is an important point.

6.30 pm

I have not heard of the meeting to be held in 1982–83. That meeting may or may not have new guidelines, or new criteria, for the giving of regional aid to the United Kingdom in conjunction with the EEC. We shall have to follow its progress with great interest, because it will be a matter of some importance, especially when we consider the enormous size of the Community budget, which will climb still more in the years to come.

My fear is that our percentage benefits from the social fund and, perhaps, the regional fund might be increased in a way that will allow the Community to say that our budget input is that much less and that, therefore, there will be no "cash on the table", which is the popular term. Then will come the difficult decision for Her Majesty's Government. The Government will have to decide whether, if the regional policy fund is increased in consultation with the Heads of State, we shall be in a position to match that new increase pound for pound.

We have had a sledgehammer of a debate. The heat that has emanated from many hon. Members is out of all proportion to the amendment before us. One can imagine one or two of the worthy Opposition Members getting together and saying "What would make a wonderful amendment? Why not cut out the whole of clause 13? Let us start with that." There seems to be no point in that, unless they put in alternative figures. They know that they cannot go back to the status quo. Consequently, the first amendment does little or nothing to help. I suppose that it has reduced the totals—this was the main argument in Committee—by 3 per cent.

Some hon. Members who knew that unemployment in their areas was growing were rightly worried that this percentage drop could make manufacturers and investors turn away from some of the peripheral areas. I do not think that it will have the slightest effect. Some of the suggestions put forward by my hon. Friends might have an even greater effect in turning manufacturing and investment money away from the peripheral areas. However, I do not think that a 3 per cent. drop will have any effect whatever in determining whether a manufacturer, an investor or a conglomerate or multinational goes to one of the peripheral areas.

The nub of the question was answered in Committee. Infrastructure is the answer. We heard from some of the charming Welsh Opposition Members a description of a beautiful country, but one could not get from one end of it to the other without climbing many hills. We even went to the extent of talking about the Alps and how it had been possible to drive tunnels through them. It was asked why we could not drive tunnels through the Welsh hills. We began to spend not only the United Kingdom's proportion of the EEC fund but also that of the other eight members.

There is no doubt but that some of the peripheral areas will never be developed to the extent that some Welsh Members would wish. The transport infrastructure, the ports, airports, main roads and distribution centres that are necessary could not be provided. It is not geographically possible.

The original European regional fund was set up to stop population drift, which is one of the problems of peripheral areas. It was also set up to distribute prosperity. Our great problem at present is that the traditionally prosperous areas are no longer prosperous. The original concept of the regional fund was to spread prosperity, and it is becoming more and more difficult to do that.

As my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) so eloquently stated, there is a push-pull effect in the funding for regional policy. It is almost as if when an area is on one side of the road it is entitled to aid, but if it is on the other side of the road it is not. That means that certain manufacturers can move 20 or 30 miles to benefit from nearby regional aid, possibly taking their labour forces with them, which could have a backlash effect on competing industry. That is a worry when we are not actually moving prosperity but spreading the diminishing scale of prosperity over a greater area.

I know now from my right hon. Friend the Secretary of State's speech the new areas of his regional policy. It has now moved away from a little for everybody—the European term for that is the "water can"—over a large area to the "hosepipe" effect—which is my own term—with as much concentration as possible in areas with the biggest percentage of unemployment. As I said in Committee, I am in a good position to talk about regional policy because I have no bias at all. I have no axe to grind. My area has never had any regional aid, and unless things become very bad in this country I do not think my area will ever get regional aid.

Mr. Hardy

Turn the hose on it.

Mr. Hill

Although Labour Members may find the term "hosepipe effect" amusing, they are virtually asking to be bathed from the hosepipe. My right hon. Friend is in great difficulty because he has to take part in these cuts, in which all of his fellow Secretaries of State have to participate. He must find ways of saving a percentage. The percentages here are so small that I think that the outcry is far in excess of what it should be.

I cannot talk about amendment No. 24, in the name of my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) because, frankly, I do not understand it. I am sure that he explained it very well. I was probably not paying attention. Whether it is £10,000 or £25,000 per head, or some other mysterious way of computing, I do not understand it. That is probably completely my fault.

I have no sympathy at all with amendment No. 21, but I think that there is a point to amendment No. 22. The asset has to be completed by 1 August 1980. Anyone who deals with investment development will know that the time scale for that is generally between three and five years. One has the difficulties of planning first, and the difficulties of materials and of the infrastructure. One has all the problems of getting a new factory together. They are not all built like biscuit tins. One cannot walk into them and switch on the electricity in the morning and be ready for production.

On the time scale in the Bill, it is fairly certain that the Bill will receive Royal Assent before July, and it seems to me that, if there is to be any discretion, my hon. Friend the Under-Secretary of State for Scotland—I know that he is listening intently to a southern Member—will probably be able to say at the end of the evening, in conjunction with all whom it is necessary to consult, that this time scale is a bit arbitrary and that the Government will probably be leaning over backwards to make sure that any agreements or developments that are not finished by 1 August will be given every consideration.

I do not think that regional policy is a failure. It has obviously not succeeded. The hopes of many hon. Members have been dashed. But it is not a failure. Within the European context, it is something from which we would be unable to pull away without grave loss. Certainly, if we were to give up 28 per cent. of the European regional fund because we refuse to give the equivalent ourselves, it would be a devastating blow to the economy of the peripheral areas. Although we have not succeeded here, we should not give up hope.

Several Hon. Members rose—

Mr. Speaker

Order. Before I call the next hon. Member, perhaps I may say that I understand that we are in for a long and late sitting but that we might ease our late suffering if a little brevity is practised at this stage. I say that without wishing to cramp anyone's individual style, and there is no reflection upon the hon. Gentleman whom I now call.

Mr. Tom Ellis

Thank you, Mr. Speaker. I am quite heartened.

I preface my few brief remarks by trying to explain to the hon. Member for Southampton, Test (Mr. Hill) why we have moved the main amendment to delete the clause. It is not for any perverse, malevolent or idiosyncratic reason. It is not even simply for the reason that it gives us a peg on which to talk about regional policy in more general terms. Most importantly, it is because all of us on the Opposition Benches question whether regional policy has failed.

That leads me to the point made by the hon. Member for Rochdale (Mr. Smith). Clearly, no one is saying that regional policy has done nothing. It has done a lot. All of us in the peripheral areas would be worse off without it. We accept that. But it is a question of what exactly we are after. Perhaps the best metaphor I can give—if it is not infelicitous this week of all weeks—would be to say that it is pointless for any young woman who is unmarried to say "I am only a little bit pregnant." One either has economic parity or one does not.

6.45 pm

Therefore, when I say that when viewed from the periphery regional policy has failed, I mean simply that if the policy and objective—and I emphasise this—are to establish economic parity broadly, as near as one can, across the regions of the country, manifestly the policy has failed over a long period of 40 years or so.

I want to comment briefly on two remarkable and refreshing speeches from Conservative Members. They were made by the hon. Members for Oxford (Mr. Patten) and for Horsham and Crawley (Mr. Hordern). I found both speeches very refreshing indeed, because they seemed to be independent-minded speeches. They questioned accepted wisdom. I think that independent questioning of accepted wisdom is one of the supreme parliamentary virtues. It was refreshing to see this coming from those two speakers.

The hon. Member for Oxford served on the Standing Committee. Without being immodest and, I hope, without deceiving myself, I think that our discussions on these matters in Committee have proved fruitful. Possibly this debate will prove fruitful if it gives people cause to think seriously and deeply about the issues. The hon. Member spoke about a decided change of policy occurring. The way that he put it was that the consensus had gone. I think that he was partly right. When the Welsh Development Agency, for example, was established, either consciously or subconsciously it marked a sort of parting of the ways, some substantially new policy. Whether or not it would have succeeded we are unlikely to know, because now it appears that the Government are to butcher the thing and it will have no resemblance to the original concept of the WDA, the Scottish Development Agency and, for that matter, the National Enterprise Board.

The hon. Member for Horsham and Crawley was even more interesting. He introduced some constructive, novel and, I suspect, possibly very sound suggestions. He began by talking about service and manufacturing industry. I think that it is important that we do not get muddled into believing that there is a sort of dichotomy—that it is either manufacturing industry or service industry. Of course, that is not so. I hesitate to use the word, but I understand that we are in a quaternary economy. I hesitate because, if the hon. Member for Oxford were present, he would probably want to know exactly what that term meant, and I am not sure—any more than is my hon. Friend the Member for Vauxhall (Mr. Holland)—that I would be able to explain it, but there is a range from the service to the manufacturing industries.

The point that the hon. Member was making was that corporation tax holidays would apply substantially more to service industries of one kind or another than to straightforward manufacturing industry. That is a very interesting point, because many of us in the regions feel that we suffer from what has come to be known as the branch factory syndrome. That might be, apart from any other benefit, some kind of cure for that syndrome.

The hon. Member talked about Ireland, which is a very good example indeed. Traditionally, Ireland has been a poor country. Every poor country normally has three economic characteristics—unemployment, emigration and internal disinvestment. Ireland has suffered from the three. Through policies introduced, I suppose, after the secularisation of the country, after Sean Lemmas basically, there has been a substantial change in the Irish economy. It has succeeded in attracting industry. My hon. Friend the Member for Vauxhall was critical of the deficit in Ireland's balance of payments and of the imbalance in taxation structures. However, for the first time since records have been kept, there has been a net migration into Ireland. That is a remarkable economic achievement by anybody's standards. After all, it is people that count. If one can attract people into a country, there is daylight at the end of the tunnel. Ireland has achieved that by a variety of methods, including that of corporation tax holidays.

Perhaps the debate will prove fruitful. I urgently implore my colleagues not to give vent to cries of outrage at the suggestion of corporation tax holidays. They must pause and think. All parties have myths. The myth of the Labour Party is that we must not cut income tax because such a cut would help the rich. However, statistics show that over the past 30 years income tax has not achieved much distribution of wealth at the lower end of the scale. In 1950, 30 per cent. of taxpayers in Britain were earning 15.9 per cent. of earnings. The figure was exactly the same 23 years later. Therefore, the suggestion of the hon. Member for Horsham and Crawley should be studied by my party. Perhaps his suggestion would do something for regional policy. Perhaps it would introduce economic parity. That would be a substantial achievement.

I was a little worried when my hon. Friend the Member for Vauxhall referred to the problems of Ireland. He was looking at the problems of the periphery with the eye of the centre. One could loosely say that London is the centre of British-Irish relations. He looks at the problem through different eyes. If he looked at the problems of the European Community from London, he would see them in a different way. He would be looking from the periphery and he would draw very different conclusions. We should therefore consider whether our regional policy has succeeded in an absolute sense. Presumably, we shall never achieve the ideal. If we do not succeed, we may find ourselves in serious trouble.

I shall address my final remarks, with respect, to the hon. Member for Wolverhampton, South-West (Mr. Budgen). On numerous occasions he has argued that wealthy areas no longer exist. He asks why the West Midlands should suffer when money is going to Wales, Scotland or the North. Many of those who have studied this issue claim that regional policy is to the benefit of all. I think that the hon. Member for Horsham and Crawley also spoke alongthose lines. One could demonstrate that regional policy is not economically sound, as some areas may prosper while others stagnate. I shall give another typical example. If someone from Mars landed in America, he would notice that 80 per cent. of the population lived on the West Coast—San Francisco and Los Angeles—the East Coast, and the Chicago conurbation. He might think that something was wrong because Western man has not been able to devise a better system. There are many arguments in favour of the suggestion that the United Kingdom would benefit from a successful regional policy.

If regional policy does not succeed in the long term, political damage may result. We recently had a debate on devolution that was resolved by a referendum. I believe that the argument was wrongly fought on the basis of separatism. However, if long-term discontent arises because central Government are not helping, it will result in political turbulence.

There are few examples of successful regional policy. One example is that of West Berlin. West Berlin is on the periphery. It is in a disadvantageous situation, both geographically and economically. However, with one exception, West Berlin compares favourably with West Germany according to every economic criterion. The exception is that it does not compare favourably as regards the age structure. When someone is 65 years of age, he can cross to the other side of the wall. Of course, there are political reasons why West Berlin must prosper. It is politically important. Those of us on the periphery are beginning to draw the conclusion that it is political will that is important. People may have taken a long time to wake up, but after 40 years many of them are doing so. It is therefore of crucial importance to reconsider the whole question if we are to benefit.

Mr. D. A. Trippier(Rossendale)

I would have thought that the parallel between regional development areas and West Berlin had been destroyed by the hon. Gentleman's own argument. I accept that money is being injected into West Berlin all the time. However, that money is being injected for purely political reasons, and those reasons have nothing to do with economics. There is no parallel.

Mr. Ellis

I am tempted to explain something that would take a long time. However, I shall attempt to give a short lecture on economics that will take one minute. Basic trends have been established over the centuries. In Britain, that trend was towards the centre or towards the South-East. However, that trend was reversed by the Industrial Revolution, because industry was then located near mineral deposits. God put coal in South Wales and in Clydeside. He put iron ore, clay and other deposits around the country. Therefore, there was a reversal of that fundamental trend towards the centre. As a result of developments in advanced technology and of changes in the economic structure of industry, industry can now be located almost anywhere. Advanced technology industry is based on knowledge, not on mineral deposits. If the finest iron ore and coking coal were to be found in Shotton, it would not necessarily imply that Shotton was the best place for a steelworks.

Our criticism of the Bill is that the Government ignore that trend. The Government think that that trend must be helped by market forces. However, that will result in 80 per cent. of the population living in London. The man from Mars would say that that was nonsense and that it was a monstrosity. The hon. Member for Horsham and Crawley recognises that. He realises that it is right for those living in Lancashire, Yorkshire or Northumberland to have their own society, community, culture and so on.

This is an important issue. It concerns the structure and unity of Britain. If the Government cannot understand that. they will play with fire. They will do a great deal of harm. I think that it is too late. The Bill will go through. However, the damage to this country and to its political structure will be enormous.

7 pm

Mr. Budgen

I had not expected to trouble the House with my views on this subject because I felt I had too often expressed views about regional policy, but when the hon. Member for Whitehaven (Dr. Cunningham) suggested that I was not prepared to put forward my views in a speech and to subject myself to the risk of his rigorous cross-examination I felt I was obliged to say something, and I hope I shall be forgiven for doing so.

The hon. Member for Whitehaven said that the Tory Party was a free market party, a party of market forces. That is too simple. I am sure the hon. Gentleman would not wish to speak in such simple terms. There are some of the less wise of my hon. Friends who would talk of the Labour Party as though its members were all Communists, Marxists or Trotskyites. All political parties are coalitions. The Tory Party is and should be a coalition. It is a coalition between the Tory paternalists who in recent years, certainly in the early 1970s, have dominated our affairs and the Manchester Liberals. None of us would wish the Tory Party to be universally dominated by the point of view of one section of the coalition. As one who on many issues is a Manchester Liberal, I believe that we have no absolute insight into the truth. We wish only to have a constructive and fierce dialogue with the Tory paternalists so that a happy compromise may emerge out of the fruitful tension that comes from discussion.

Surely my right hon. Friend the Secretary of State for Industry has in the past in other Ministries been an outstanding exponent of Tory paternalism and compassion, both in theory and in practice. What he is doing in the present regional policy proposals cannot be described as being wholly the work of a free market economist. The proposals for the intensification of regional policy in some areas and the withdrawal of regional policy from some areas are to be phased over three years. In the first three years, very little cutback in public expenditure is expected. That is what was expected in July of last year. Since then there have been promises of substantially increased public expenditure in Wales, and I dare say that those on my side of the coalition will be appalled at the size of expenditure on industrial problems when the public expenditure White Paper is published before the Budget.

Mr. John Patten

Does my hon. Friend agree that a second and serious defect in the argument advanced by the hon. Member for Whitehaven (Dr. Cunningham) in his assertion that we were a free market party is that even after our changes in regional policy 25 per cent. of the country will still be in receipt of development aid either in special development or assisted areas? What is free market about that?

Mr. Budgen

There never has been, either in theory or in practice, a totally free market. Adam Smith pointed out that, as soon as business men get together, their first desire is to prevent the operation of the free market. Those of us who assert the primacy of the market say that neither the market nor political forces are perfect. We say that if we have to choose between the inefficiency, corruption and sheer unpleasantness of the political process and the free market, it is on the whole better to allow the consumer to be king.

My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) noted that much of the money made available for regional policy was on a discretionary basis. That is true. About £400 million will be made available under the non-discretionary grants system in the financial year 1982–83. If that is compared with the sums made available under the Industry Act 1972, the element of discretion is far and away the most important. That is the most disturbing element in the regional policy.

I am sorry that the hon. Member for Keighley (Mr. Cryer) is not at present able to be in the Chamber. I do not wish to make the rather cheap point made against me by the hon. Member for Whitehaven. I am sure that the hon. Member for Keighley is doing important work elsewhere. A few moments ago I told him that I intended to refer to the useful speech he made yesterday. In it he referred to his fears that individual senior civil servants might get too close to industries and firms with which they had to deal. I do not wish to associate myself with the instances that he particularised, but his general argument was serious and important. So long as a vast amount of aid is being given on a discretionary basis and being given to so many applicants and recipients that there is no possibility of individual Ministers who are accountable to the House knowing the details of it, there must be the risk of our Civil Service being damaged by that relationship.

That is a good illustration of the comment made by Mr. Roy Jenkins just before he left for Brussels. Here I agree with most of the Labour Party in not being a great admirer of Mr. Roy Jenkins, but he is an articulate proponent of a particular point of view. He said that the public sector was reaching such a size that the independence and the freedom of our society were being jeopardised. When public sector handouts are being made on an arbitrary and discretionary basis, the dangers are even greater.

The hon. Member for Wrexham (Mr. Ellis) let the cat out of the bag when he said that the objective of regional policy was economic parity. If that is the Labour Party's view, there can be no consensus, because I am sure that the Tory Party—particularly the paternalistic wing—would say that it was its duty to ameliorate serious economic imbalances, but we are emphatically not the party of parity or equality.

Mr. Tom Ellis

Would the hon. Gentleman be prepared to say what he has just said to the annual conference of the Scottish National Party or the Welsh National Party?

Mr. Budgen

I shall always say anywhere what is my view. Sometimes I am shouted down; sometimes I am listened to. But I try as far as possible to put forward the same kind of view to whatever audience I have the privilege of making a speech.

A Tory regional policy can be only a short-term, makeshift thing. I hope that perhaps in three years' time it will be possible to reconsider the regional policy. One thing is clear. Regional policy has not worked in the regions to bring them the equality, the prosperity, the happiness and justice that is peddled by all those who believe that every problem has a political solution. It has not done that; it has not had the effect that it was meant to have. It has had a harmful effect upon the once-prosperous areas of this country.

Mr. John Evans

Claptrap.

Mr. Budgen

It is not claptrap. The West Midlands and Wolverhampton were regarded in the 1950s and 1960s as "overheated" areas. I suppose it would be said that the levels of unemployment were too low. There were all the indications of overheating. We now have higher levels of unemployment than are experienced by many other areas which at present enjoy the benefits of the regional aid system. I am not saying that the problem is caused solely by the regional aid programme. However, the system of regional advantages and disadvantages has played a significant part.

Mr. John Evans

Rubbish.

Mr. Budgen

This is not rubbish.

On 24 July 1979 my right hon. Friend referred to this matter—this is col. 366 in the Official Report—as something that had been stated to him frequently in the West Midlands. This is not rubbish. It is a fact that the West Midlands, and particularly Wolverhampton, were most greviously damaged by regional policy. Those hon. Gentlemen who believe in economic parity would say that I should be arguing for Wolverhampton to be made a special development area. Where does that end? I suppose that the process has to continue until we disadvantage Birmingham and then Oxford.

Dr. John Cunningham

That is interesting. However, how does the hon. Gentleman explain the fact that the unemployment figures for the West Midlands are still below the national average?

Mr. Budgen

That may be so for the West Midlands. However, that does not apply to Wolverhampton. [HON. MEMBERS: "Fraud."] No, this is not a fraud. Perhaps hon. Gentlemen would say that the Wolverhampton figures were temporarily worse because of the effect of the closure of the steelworks at Bilston. None the less, for the past year or so the Wolverhampton figures have been significantly worse than those for the rest of the West Midlands and those for many of the areas which enjoy some form of special development status. If we are to continue this Socialist ideal of economic parity, the logic is that we keep ruining one place after another. That cannot be right for the whole country.

I try to end on a note of some agreement with the hon. Member for Whitehaven. It is true that the West Midlands want the remainder of the United Kingdom to prosper. Our sense of concern for our fellow citizens is at least as strong as his. We do not criticise the kindliness, compassion and good intentions of those who advocate regional policies. We say that the method that has been tried since 1930 has certainly been found wanting.

7.15 pm

Mr. D. N. Campbell-Savours (Workington)

I shall use the amendment to make a speech that I should like to have made many months ago. On a number of occasions I have come prepared to speak on regional policy, but I have never been called.

I come from a constituency in which regional policy has been of particularly great significance. Since 1935, when West Cumberland was designated as a distressed area, we have built our industrial base on the back of incentives provided by the Government. We have resolved our problems of increasing unemployment by relying on intervention in regional policy.

We now view the Bill with great consternation, which is not unique to Members of Parliament. It is a consternation that is shared by all the local and county authorities in the county of Cumbria. Men and women suffered great degradation in the 1930s. At one period 31 per cent. of my constituents were out of work. Indeed, over a two-year period 4,000 people had to leave West Cumbria to find work in other parts of the country.

Today the same people are confronted with a new looming level of unemployment. Indeed, since the election last year 1,000 people have lost their jobs. Only three and a half hours ago I was informed that 1,000 workers in a small town in my constituency are to be put on a three-day week from next week. That will have a destructive effect upon the economy of that town that is hard to portray in this Chamber.

The response of the Government, although they have been fully aware of these problems developing in my constituency, has been predictable in the light of the statements that were made—or not made—during the general election last year. The Government redrew the assisted areas map in my county, demoting much of my constituency from a special development area to a development area, and parts of it from intermediate to zero status. They reduced the level of grant aid from 22 per cent. to 15 per cent., giving other parts of the Northern region a cutting edge on other parts of the country in the allocation of jobs. The cut led to a reduction in grant of £4 million to one company that is now going through a major investment programme. They reduced the role of the National Enterprise Board, which will inevitably affect every company in every regional assisted area where there is a problem of attracting jobs. They halved the Manpower Services Commission budget, which had a direct effect on job creation programmes and available subsidies. The Opposition strongly object to those parts of the regional policy.

The Government rejected, as did the former Administration, the application for a northern development agency to be set up so that we could effectively compete with the Scottish Development Agency in the powerful way that it is able to put its case across for the attraction of jobs. Even now, as the fight goes on for a northern development agency, they reject the voices of the Northern members of the TUC and CBI who believe that a northern development agency is crucial to the future of my area.

The Government reversed the dispersal programme promoted by Lord Peart, when he was a Member of this House, who did so much for my constituency as its Member of Parliament. That reversal led to great consternation and bitterness. People saw the programme as a real opportunity to acquire the job opportunities that we in our area so desperately need.

The Government phased out the Northern economic planning council, which was involved in the strategic planning of the future of the Northern region. Now they threaten the North of England development council. After a call for an inquiry into the operations of those bodies, rumours are now circulating that the Government are about to reduce the amount of grant aid. In effect, what is the benefit of such bodies? They are essential for the promotion of industry in the North-East and North-West, with a view to attracting jobs. Over the last few months, we have had to fight off an attempt by the Government to end the future of the skillcentres, which are of such vital importance in my constituency. However, I feel that we may have broken through to the Government and sold the case for retaining these centres.

Not only has Government's action been devastating in the regions, but the county authorities, by withdrawing their support for the North of England development council, have endangered the future industrial promotion efforts of the county. They have closed down the small firms employment services that were in my constituency some years ago. By so doing, they have cut into the regional infrastructure service route which is so important for the attraction of jobs. This inventory of effort and destruction is causing great consternation.

I am sure that my hon. Friend the Member for Whitehaven (Dr. Cunningham) would agree that a depression is descending not only over the industrial bases but in the minds of the people there. They have looked to central Government and begun to realise that the Government have lost the objective to support the highly important regions, The response of the county has been to send delegations to London. Last July, they came to see the Secretary of State for Industry about regional policy and dispersal, and they failed. Again, in October, they came to see Lord Trenchard, and again failed. They were unable to convince senior Ministers of the important need to protect the industrial base of West Cumbria and create conditions for new jobs.

I appeal to the Government to think again. Even at this stage, dramatic changes could have an effect.

In a debate before Christmas I raised the question of the possibility of the formation of a regional development bank. The bank would be able to lend to industry at variable rates of interest throughout the country, dependent on the rate of employment in given areas. Since that speech, I have had a large mailbag on the subject and I believe that the idea has the support of much of British manufacturing industry. The industry understands the limitations imposed by the clearing banks on lending to manufacturing industry. I foresee that the new bank would lend not only on overdraft but similarly on the basis of discounted invoice values. That would help to rectify the cash flow problems of many companies. It would help them to expand and create jobs and employment opportunities. Some of the resources now expended under the Industry Act 1972 could be channelled into the funding at the bank. I shall always press for the formation of such a bank because I believe that it has an important part to play.

I join my hon. Friend the Member for Whitehaven and other hon. Members—some Conservative—in expressing the view that there has been a bias towards capital-intensive projects over the years. There is evidence from the Northern region that, in the case of some firms receiving these considerable grants, the effect has been to modernize and then to cut the work force. There may well be a case for us to examine far more closely how we expend regional aid and funnel it into the regions. However, that is not an argument for cutting the level of regional aid. Much of the talk in the Chamber from Conservative Members is not on how to use aid but on how to cut it with a view to creating reductions in taxation from which only a few benefit.

There are other areas where changes could be made. I should like to see a national debate on the role of small business in the economy. I should like to see grants funnelled into the local authorities for the splitting up of old industrial buildings into small units. That would help small businesses. I should like to see systems introduced to cover the problems of companies based in development areas with high freight costs. That is a real impediment to companies going into the regions. They have to pay aggressively high levels of freight charges. There is a strong case for looking at the question of national energy prices. The further north we go, the higher is the energy heat component cost in the cost of manufacturing. In the case of some industries, that must be an important consideration to take into account before making the vital decision about where to go.

The Government may choose to take no action and rely on the free market. Let me ask the Secretary of State and his colleagues, is it not fair to plan for a 2 per cent. reduction in output in the economy and accept the need for a 16 per cent. or 17 per cent. bank rate in a few weeks' time when the true rate of lending from the clearing banks is much higher? Is it fair for the Chief Secretary to talk in this place or make statements outside the House about the need for three years' austerity and then tell the regions to resolve their problems by way of an upturn in the economy? I cannot convince the 1,000 people who will be put on short time at Millers today, or the 1,000 people who have lost jobs over the last six months in my constituency, that an upturn in the economy will provide them with the job opportunities that they need so desperately.

I turn to the role that I believe should be played by the local authorities, particularly in industrial promotion. Many counties have set up industrial development units to promote the interests of their sub-regions. My constituency is serviced by an industrial development unit based on the Conservative-controlled Cumbria county council. It is on a pigeon-sized budget and it cannot effectively sell the sub-region of West Cumbria. Despite our protests and requests for an increase in its budget, the necessary resources have not been provided for it to carry out a good selling operation for my constituency.

A few weeks ago I suggested that we should consider doing what was done in 1935. An industrial development unit was set up then to promote West Cumbria exclusively. Over a period of 30 years it attracted much industry, backed up with grants made available by central Government. Of course, such things cost money. I put it to the Secretary of State for Industry and his fellow Ministers that there may well be a case, if regional aid is to be reduced, for money to be funnelled directly into the special development areas to prop up the sort of promotional team that is needed to sell the regions in various parts of the world where decisions about investment are made. In my part of West Cumbria, that would involve a budget of between £60,000 and £100,000. That should be channelled directly from central Government into the area. It would not demand a particularly high level of public expenditure, but it would give every special development area a direct say in the promotional policy that affects its future.

There is a belief that by unwinding regional policy—dismantling it to a certain extent—by minimising the level of public expenditure on regional support and by relying on the free market, the problems of the regions can be solved. Let me refer Conservative Members to comments made by representatives from two companies, one of which may be well known to the House, who, on hearing of the reduction in status as it affected West Cumbria, said that the outcome would be fewer jobs. If they had to raise the entire capital for expansion themselves, that would restrict the extent by which they would expand and slow down the rate of creation of now jobs. That was the comment of Ashley Accessories. Bowater Scott commented that the cuts certainly reduced the attractiveness of a town—this is near my constituency—in relation to other areas which it might be considering. That makes the point.

I sincerely hope that this Government, understanding the particular problems of my sub-region, will make every effort to restore at least some level of regional aid and review the decision which was so wrongly taken last year and which is causing so many people such anxiety today.

7.30 pm

Mr. Allan Stewart (Renfrewshire, East)

I followed with great interest the speech made by the hon. Member for Workington (Mr. Campbell-Savours). I should like to comment on one of the points that he made about the relative importance of industrial promotion. I hope that he will not mind if I do not comment on the bulk of his speech, because the last thing I claim to have is any expertise on the problems of the part of the country which he represents and about which he has told the House.

However, I should like to comment on the speech of the hon. Member for Newton (Mr. Evans) on amendment No. 22, because that speech raised some points of considerable importance about the transitional period. I do not think that there is ever a perfect answer to the problem of changing from one set of incentives to another, nor do I think that the Conservative Government got the answer right in 1970 when that Government changed the incentives. Certainly the most recent experience of a change in regional incentives was disastrous, when the previous Government slashed the regional employment premium without consultation, without notice and without phasing it out. Indeed, they effected it retrospectively, because nobody knew it had happened or what the timing was to be until a month after the decision. That was a disastrous example of how not to do it.

I have no doubt that the Government will wish to move—any Government always want to move—to a new policy as quickly as possible. On the other hand, it is clearly unfair and quite wrong that any company such as that referred to by the hon. Member for Rochdale (Mr. Smith), which has been absolutely committed to an investment decision, should then be forced to take what one might describe as a "windfall" loss where it has no option in the matter. It is those companies which we are talking about, not companies which are planning or thinking about an investment decision but companies which are actually committed to it.

If I may say this to my hon. Friend the Minister of State, I hope that he will deal with this point at some length. I do not think that there is ever a perfect answer, but it is a very real problem whenever incentives are changed.

If I may comment on the ongoing debate with my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne), my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) and a number of hon. Members opposite on the relative success or otherwise of regional policy, the important point is that one has to compare what has happened with what would have happened if there had been no policy. That is the key comparison. I do not, however, agree with the objective of economic parity, identified by the hon. Member for Wrexham (Mr. Ellis). I think in a dynamic economy that is undesirable and un- obtainable. But I should like to come back to his point about the branch factory economy and the danger of having too many branch factories. It is perfectly true that branch factories may be vulnerable, but I think the House should not push that point too far. Certainly in Scotland we recognise the major contribution that has been made to the Scottish economy by incoming manufacturing enterprises, especially American ones. They have not, in general, departed; the great bulk of the companies that came into Scotland in the 1950s are still there providing employment.

The main point is that I do not think that some hon. Members who have spoken from the Labour Benches have quite grasped the essential point that we are now in a new economic situation against which a regional policy must operate. That is true not only of Britain but of other Western European countries. The point is that the mainspring—certainly the prerequisite—of an effective regional policy must be a buoyant national economy. With a buoyant national economy there is the "push" factor, that people want to invest, but they are up against the problem of inadequate physical capacity, so they want to move. There is the "pull" factor of labour surplus in room areas against tight markets in other areas. However, if there is not a buoyant national economy—that is the situation, and it will continue—a regional policy is much less likely to be effective. Regional incentives are like trying to push a piece of string: it is much more difficult to have an effective regional policy if the national economy is not buoyant.

Therefore, it is very sensible of the Government to concentrate resources in particular parts of the country. Obviously, I greatly welcome the continuation of the high priority given to West Central Scotland, because the relative incentive between West Central Scotland and other parts of the country has clearly been increased as a result of the Government's measures.

Hon. Members opposite have made the point repeatedly that the relative incentive is all very well, but in absolute terms the amount of money devoted to regional aid has fallen. That, of course, is true overall. However, the point has not been made by hon. Members to justify a continuation of that total by concentrating the money on the areas which we now identify as priorities. The implication of what is being said by hon. Members opposite is that it would be economically justifiable to concentrate at least some, if not all, of the £230 million in West Central Scotland and the other priority areas. But I think that we have to face the fact that to increase the incentives to, say, 30 per cent. or so for regional development grants in West Central Scotland would not be cost-effective. I very much doubt whether any extra investment would actually reach West Central Scotland, for example, if the level of regional development grants were higher than they are at present.

I think that there is a sense on both sides of the House that we ought to be feeling our way towards a new approach in regional policy. If I may refer to the points made by the hon. Member for Workington about inward investment and industrial promotion, this is inevitably bound to be less important in the future than it has been in the past, for the simple reason that I do not think there will be so many mobile manufacturing jobs as there were in the 1950s and the 1960s.

If I may add one point on industrial promotion, in Scotland we suffer not from a lack of agencies and funds in this field but from an excess. We have the Scottish Development Agency, the Scottish Economic Planning Department, the Department of Industry, the Scottish Council of Development and Industry, the chambers of commerce, the local authorities at district and regional level and the new towns, all in the business of industrial promotion. We certainly need some rationalization.

We must move towards a new phase in regional policy. We must recognise the realities of economies which are not buoyant and the limitation involved in the relatively few mobile manufacturing jobs which will be around in the 1980s. The new approach must concentrate on existing firms and industries. A hard fact of economic life is that the majority of new jobs are bound to come from companies, enterprises and individuals which already exist in our development and special development areas.

Mr. George Park (Coventry, North-East)

In a debate on regional policies it is understandable that the words "the regions" should be used. However, when hon. Members use that phrase the West Midlands area does not figure. The West Midlands area is now experiencing the structural problems which are more often associated with other areas.

In Committee I said that the regional policy of successive Governments was far too blunt and that it should be more selective. I have argued that there should be more accountability of the money invested so that it is not fritted away. Factories are sometimes equipped and then the firms move, leaving behind them a worse situation than existed before they were established in the area.

In the last decade, fundamental changes have taken place in the West Midlands. There is increasing anxiety about future prospects. There has been a considerable decline in prosperity. There is no evidence that there will be significant economic growth. Employment in the West Midlands is dependent on the traditional metal-based industries. Those industries account for nearly half the male employment. That compares with a Great Britain figure of about 22 per cent. There is notable absence of new technology and of growth industries.

In the seven years from 1959 to 1966 there was an average growth in employment in the West Midlands of about 23,000 jobs a year. That was the time when the area gained the reputation of being a Klondike. In the 10-year period 1966 to 1976, there was a consistent decline in the number of jobs available by about 23,500 a year. That decline was much greater than the growth in jobs in the previous 10 years. There has been an overall loss of about 75,000 jobs since 1959. We must add to that the recent redundancies at BL, Dunlop, Bilston, Alfred Herbert and several thousand more redundancies which are pending. The effect on male employment is severe. Male employment has declined by nearly 200,000—a loss of 20 out of every 100 male jobs available in 1966. Jobs in the metal-based industries have declined at an annual rate of 18,000 in the 10-year period 1966–76.

The growth in the service industries in the West Midlands has been slower than the national rate. It has not been sufficient to compensate for the decline in the manufacturing sector. The reduction in employment opportunities in Wolverhampton, Coventry and Birmingham is alarming. As a result of the concentration of the work force in manual occupations and the decline in manufacturing employment, there has been a rapid rise in unemployment.

In the decade up to the mid-1960s, the unemployment rate in the West Midlands was about half the national rate. However, in recent years Birmingham, Wolverhampton and Coventry have experienced unemployment rates which are higher than in areas which qualify for assistance under the Government's regional policy. The proportion of those who have been unemployed for more than a year is higher than the national average.

7.45 pm

The growth in unemployment is reflected in a decline in male earnings. Between 1974 and 1978, the earnings level-of male manual workers fell from the highest position in the metropolitan areas to one of the lowest. The level of investment in manufacturing industry fell from 12.9 per cent. of the Great Britain figure in 1963 to 9.8 per cent. in 1974. It continues to decline. That relatively low and declining share of industrial investment cannot be attributed simply to the region's industrial structure. Other factors have systematically caused investment in industries to be lower in the West Midlands than in the country as a whole.

The poor investment record is reflected in the relative decline in the region's productivity. The region has benefited only slightly from the decentralisation of offices in the private and public sectors. Out of a total of 2,026 firms which moved from London between 1963 and 1977—involving 145,000 jobs—only 19 firms, involving 341 jobs, moved to the West Midlands. The West Midlands got three of the 24,000 Civil Service jobs which were relocated.

The West Midlands is a major industrial centre, but only 20 of the 500 largest manufacturing companies have their headquarters in that county. Future prospects and projections of employment trends suggest that there is little prospect of any significant improvement in the number of jobs available in the county up to 1990. Estimates of the future labour supply level indicate that the number of people looking for work in the county could increase by up to 54,000. There is every likelihood that the present high levels of unemployment will persist, with a shortage of jobs amounting to about 100,000—that is, if one is not too pessimistic.

The major initiative for the regeneration of the local economy must come from local industry and commerce. However, central Government and local authorities have an important role in providing the economic and physical environment in which industry and commerce can prosper. The local authorities have done their best to make the area attractive to industry. We have built and refurbished small factory units. We have reclaimed derelict land. Because the area is not regarded as one which needs help, it receives only 50 per cent. towards the cost of the relamation of land when it should receive 100 per cent.

We accept that an important role of local authorities is to provide industrial land of the right quality and in appropriate locations to ensure that a lack of land does not act as a restraint to industrial development. Equally, the local authorities in the West Midlands accept that they could assist in industrial and commercial expansion by ensuring that planning applications are dealt with speedily and sensibly.

The role of central Government is critical. They have the opportunity, if they wish to take it, either to encourage or to constrain the development of the local economy. I do not share the sanguine hope, expressed by the hon. Member for Oxford (Mr. Patten), that there is to be a holding operation only, and that the Department will go into the matter more carefully and produce a more comprehensive and understandable policy with regard for the variations within an area.

We are in the difficult position, and have been for some time, of trying to convince the House that there are structural difficulties in the West Midlands which regional policy must take on board. Regional policy should be devised to try to assist the West Midlands in the same way as it assists other areas. Because we are not regarded as an area in need of assistance, we are constrained in other ways.

Mr. Budgen rose—

Mr. Park

I had hoped that the hon. Member for Wolverhampton, South-West (Mr. Budgen) would devote more of his time to the West Midlands instead of becoming involved in paternal aspects. I shall not give way to him.

The hon. Member for Rochdale (Mr. Smith) drew attention to the fact that if an area is not designated as an assisted area, it cannot be eligible for EEC grants. It is ruled out on all counts. An area is either in or out. The West Midlands is definitely out and has been for some time.

Regional policy is essential, but, as I said earlier, I should like it to be more selective and monitored more closely. Money should be invested in a way which will yield the best return in jobs. In that way, we shall get away from the scourge of unemployment that has hit throughout the length and breadth of the land.

Mr. Hardy

I shall be brief. I am extremely sorry to have to speak on this subject. The issues to which I wish to refer should have been resolved months ago. If they had been resolved, my speech would be quite unnecessary. There should be a flexible attitude to regional aid. No particular system should be sacrosanct. However, there should be far greater flexibility than that shown by the Government.

I wish to speak on two matters. I touched on one of them in an earlier intervention, namely, derelict land. In South Yorkshire there are first-class people with a splendid record in reclaiming derelict land. Unfortunately, there is appalling uncertainty about the matter. The Government have had time to deal with it because I pointed out the need to take action when the Secretary of State made his announcement last summer. Sufficient time has elapsed for those areas with derelict land and colliery spoil heaps to have received an assurance of a firm policy.

I took a deputation to see the Under-Secretary of State in August We were courteously received, but no firm response has been forthcoming. Local authorities, industries such as the National Coal Board and Members of Parliament for relevant areas are entitled to a rather more expeditious and positive response than that which has so far been received. I hope that the Minister will comment on the matter when he replies. The County council and the NCB in my area are entitled to know exactly what they are to do.

I shall speak briefly on the other issue that If wish to raise. There are 150,000 men, women and children in my constituency, and I doubt whether one of them would defend the Government's arrangements on assisted area status. In that one constituency there are now three different sorts of assisted areas. Part of my constituency lies in the Rotterdam area, which the Government in their generosity have raised to development area status. Rotherham has about a 7 per cent. unemployment rate. It was decided that the Maltby area would remain an intermediate development area. That area's unemployment rate is about 9 per cent. The employment rate is rising so fast in South Yorkshire that I am hesitant about putting a figure forward.

In the southern half of my constituency, all assistance is to be taken away. Yet it contains, in the south-east, the Dinnington employment exchange area, where the unemployment rate is about 12 per cent. Greater help is to be given to the part of my constituency that has the lowest level of unemployment and all help is to be taken away from the areas where unemployment is at the highest level. That is quite absurd.

The Government acknowledged that there was a need for improved capacity in Rotherham, and they conferred a greater degree of attraction upon Rotherham. It is ridiculous that the surrounding areas should have had their capacity and attraction reduced, not least because Rotherham lacks sites for industrial development.

If unemployment is to be cured, industrial estates such as North Anston, Wales wood and Hellaby must be developed. Yet they are all—one by only 50 yards—outside the area where the extension of advantage has been arranged.

The Government's position is one of idiocy. I do not use the word lightly. Not one person in the whole of my constituency, young or old, Left or Right, Trotskyist or Fascist, will have any respect at all for the arrangements that have been made.

I have put the case by letter—from councils, industrialists and trade unions—and by representations from the whole community. I have put the case courteously by letter and by deputation. Yet we have not seen the slightest evidence that the Government would be prepared to consider the mattersensibly. We have received a courteous response from the Under-Secretary of State. That appears to be the main purpose of Under-Secretaries. However, South Yorkshire men are not impressed by courteous response. They expect logical conduct, and we have not had that.

That is why I felt that it was essential to intervene in the debate. I hope that we shall see greater evidence of good sense and flexibility from the Department of Industry today than it has shown since last July.

8 pm

Mr. Alexander Fletcher

Thehon. Member for Rother Valley (Mr. Hardy) has put his case courteously, reasonably and correctly. He will not be surprised to learn that I cannot respond immediately, especially as he has told the House that he spent some time putting his case to my righthon. and hon. Friends. I am not trying to dismiss his argument lightly. I shall speak to my right hon. and hon. Friends to see whether we can satisfy him any further, at least as to the logic and thinking behind what he considers to be a most illogical solution.

This has been an important debate. It has come at the right time for regional policy, as the measures that were announced in July 1979 have been in force for some months. We have been able to see not only the advantages of the measures but some of the difficulties and problems. A change of policy of this sort was bound to happen.

The hon. Member for Whitehaven (Dr. Cunningham) set the tone for the debate. Even though one or two of my hon. Friends may disagree, I agree with the hon. Gentleman's reference to a common thread between the two main parties on the broad area of regional policy.

The hon. Gentleman acknowledged also that the first requirement of a suc- cessful regional policy, or any other policy, must be a strong economy. We readily agree with that. He referred also to the need for stability on economic policy. I welcome that acknowledgment of common ground between the parties, because I believe that one of the greatest problems which the United Kingdom faces, and which is often referred to as the British disease, is that there is so much disagreement on critical, important issues.

Apparently, with regard to the management of the economy, there is a gigantic gap between the two parties. That is what distinguishes the United Kingdom from almost all, if not all, of our major competitors in Europe and elsewhere. It is the passion in which we indulge in bringing about an economic revolution immediately following each general election. No other country that I can think of—Germany, France, United States or Japan—indulges in that exercise. That is probably the major reason why our economic performance generally and our international competitiveness are at such a low ebb.

Therefore, let me take advantage of the degree of common ground which apparently exists—and which I am happy to believe does exist—on regional policy. Although my right hon. Friend the Secretary of State for Industry altered the boundaries of the assisted areas in July last year and adjusted the rates of grant, the broad arrangements for regional policy remain as they have been for a number of years. The importance of my right hon. Friend's changes was the change of emphasis, which was clearly aimed at highlighting and distinguishing the most economically depressed parts of the United Kingdom and at concentrating aid in those areas.

The Government took over the economy when it was in a serious condition, but in accepting the resources available to us to help even the worst parts of the United Kingdom we also had to accept that those resources would be severely limited. A regional policy means giving aid where it is most needed, and that is the whole direction of the changes in regional policy that were introduced.

My right hon. Friend did not behave as Labour Ministers did. As I have said, it is not my purpose to be contentious. However, I must point out that previous Labour Ministers from time to time enlarged assisted areas but never reduced them. Therefore, their enlargement nullified the overall effect of regional policy.

Mr. Gregor MacKenzie

That is not true.

Mr. Fletcher

The right hon. Gentleman says "That is not true", but I cannot imagine any significant reduction in the number of development areas during the period of the previous Government.

Mr. MacKenzie

Perhaps the hon. Gentleman will consult his hon. Friends who represent constituencies in Aberdeenshire, because in conjunction with my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) we reduced it to intermediate status. There were many complaints from hon. Members representing that part of the world. We judged that to be right because of the prosperity that had come to Aberdeenshire as a result of the North Sea oil. Therefore, we made what we regarded as an important change, and the hon. Gentleman had better talk to his hon. Friends from Aberdeenshire about it.

Mr. Fletcher

With respect, that was hardly a courageous decision. Of course, it is one that we have followed through by removing intermediate status from Aberdeen, thus recognising the right hon. Gentleman's point that this is now a prosperous part of the United Kingdom, although within that prosperity there are difficulties and problems for indigenous industries due to the domination of the oil industry.

I stick to my point that previous Labour industry Ministers found it easier to enlarge than to accept the difficult decisions of reducing areas and concentrating resources where they were most needed. It is easy to enlarge an area or to leave it alone, but, as the hon. Member for Leigh (Mr. Cunliffe) illustrated in his passionate speech—indeed, the hon. Member for Workington (Mr. Campbell-Savours) spoke on similar lines—it is extremely difficult for a Secretary of State to tell an area "You are special. You will be given development area status." That is a hard decision to make.

However, if one is to apply the principle of regional policy and if one is to apply aid where it is most needed, those decisions must be made. I know that the Labour Party has refused to face up to such decisions, not only in regard to regional policy. Had it made the right decisions about the steel industry and about the closures that have been obvious for years, the problem would not be so great today as it clearly is. The same argument applies to shipbuilding and other parts of the public sector.

The real criticism of the Labour Party's regional policy is one that applies to almost everything that it did when in office, namely, that it never considered the cost. The Labour Government never worked out the effect on the economy generally of their sometimes lavish distribution of regional aid. Yet, on any kind of cost-effective exercise, it is obvious today that the economy in the regions of the United Kingdom has not particularly benefited from that lavishness. What also distinguishes the policy of the previous Government is the fact that they made no effort to distinguish between projects that would go ahead anyway and ones that genuinely required Government assistance. That is a matter to which my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) referred.

The hon. Member for Whitehaven eventually referred to amendment No. 22 concerning the time allowed for the transitional arrangements. The fact is that these are the best arrangements which either party in office has yet devised. As such, I commend them to the House. This is a difficult problem which we have had to face on a number of occasions, as have Labour Members. But the arrangements that have been introduced by my right hon. Friend have taken into account the difficulties that have been experienced previously, and we have tried to be as fair as possible to the many interests involved.

The hon. Member for Newton (Mr. Evans) repeated the argument about the transitional arrangements that he made in Committee and also spoke about the effect of the steel strike on the changes in regional policy. The reason why we made these arrangements was to accommodate the unhappy events of that time. One cannot envisage what will happen in regional policy 12 months from now, and my right hon. Friend made allowance, by giving the notice of 12 months, for the sort of difficulties that face us now.

Mr. John Evans rose—

Mr. Fletcher

I should like to continue, because I have more to say to the hon. Gentleman and it may be of some interest to him. The arrangements had to try to account for circumstances which could not be envisaged at the time. That is why the notive was given. As to the steel strike, there is no general evidence of a shortage of steel, and no reason to believe at the moment that a significant number of cases may be affected by the strike.

The hon. Members for Newton and for Rochdale (Mr. Smith) and my hon. Friends the Members for Southampton, Test (Mr. Hill) and for Renfrewshire, East (Mr. Stewart) mentioned the problem for some companies which will arise from their not being able to complete projects which started before the changes were announced—that is, before the cutoff date of 1 August 1980. The Government have always recognised that the transitional arrangements cannot meet all difficulties and that inevitably there will be some hardships. In any kind of transition, that is bound to be the case. However, if, as a result of the changes in regional development grant, a long-term project which has been started before the changes loses some of the expected RDG, and if the project can readily be recognised as a project under section 7 of the Industry Act 1972, consideration will be given to providing selective financial assistance, subject, of course, to the normal criteria if the project is genuinely in jeopardy. We have done this in a number of cases, but the criteria are strict and the project must really be in jeopardy.

Mr. John Evans

Naturally, we are grateful for the small crumb which the Minister has let fall from the Government's table. Does he not accept that what he has just read out is a recipe for strife and dispute which could conceivably continue for many years? Does he not accept that our amendment is quite clear and specific and that it would solve most of the problems? Does he not accept also that what he has just said will cause the same problems as were created the last time we had a cutoff under a Labour Government?

Mr. Fletcher

We spent some time discussing this point in Committee. I did my best then to explain to the hon. Gentleman the inadequacies of the amendment and the suggestions that he made. I can only repeat that the Government believe that the proposition we have made in the transitional arrangements and what I have now said are the best that can be done in what we accept can be difficult circumstances in some individual cases.

My hon. Friend the Member for Horsham and Crawley made an important point about industrial relations and motivation generally in our more difficult and older industries. He said that there were greater problems in these declining industries than in the newer industries. I suggest that this has more to do with the industry than its location. I may have misunderstood my hon. Friend, but I had the impression that he suggested there were greater problems in motivating and managing the work force in the North of England and Scotland, due to the number of declining industries, than may exist in the South of England. It is a distinction of industry rather than location within the United Kingdom.

In the North of England, in Wales and in Scotland, electronics industries and others are operating as well as anywhere in the world. Work forces co-operate wholeheartedly with management, and managements themselves are doing a good job. We can compete in the making of wrist watches. Dundee can compete with Taiwan, South Korea or anywhere else in production times and quality, making computers and other electronic equipment. It is a problem essentially of the type of industry. Greenock has the newest electronics industries alongside old declining shipbuilding and engineering industries. The performance of the newest industries is as good as any in the world.

My hon. Friend made some important comparisons between the United Kingdom and Ireland as places in which to invest and stressed that companies, not only from overseas but also from the United Kingdom have been attracted to Ireland by the promise of 10 years' tax relief on corporation tax. I agree that this is a simple and easy incentive to understand. That in itself, perhaps, is clearly to the benefit of the Irish. I am not sure that it is altogether to the benefit of the companies that go there. It is not, however, for me to judge.

As my hon. Friend said, few British companies pay the full rate of corporation tax. Companies that are investing and expanding enjoy the benefits of a differential rate. It is possible that we do not say enough about that. The tax may be too complicated to understand. It may therefore appear that we are at a disadvantage in ralation to Ireland and some other countries when international mobile projects are deciding where to invest.

Mr. Hordern

As my hon. Friend knows probably better than I do, corporation tax is being reviewed. It is about time. It is a real jungle of a tax. There are so many exceptions to it—depreciation divisions, stock depreciation allowances and so on. One of the foremost revisions and improvements that needs to be made is the revision of corporation tax. A simple, straightforward corporation tax with a low rate would do much to clarify the situation and make industry's position much easier throughout the country. I still hold to the view, however, that it would be better still to have a differential rate between the regions and the other parts of the country.

Mr. Fletcher

I think that the differential should be in accordance with the investment effort of the company. Apart from that slight qualification, I believe that the points my hon. Friend makes about corporation tax will be studied with interest not only by myself but, more importantly, by my right hon. and learned Friend the Chancellor of the Exchequer.

I agree that we must try to simplify our package of incentives for investment both at home and abroad. One can go through various pages listing the varieties of incentives and a variety of offices handling those incentives. We are trying to put that right in Scotland through the offices of the Scottish Development Agency and the Scottish Office itself.

My hon. Friend the Member for Oxford (Mr. Patten) was right to remind the House that there is more to regional policy than regional development grants and selective financial assistance. The attraction of industry to the regions and to Scotland and Wales depends on more than cash handouts. That has been my experience over the years. It is my experience now that I am in Government and through talking to companies here and elsewhere. Almost the first requirement in deciding where to locate industry is political stability. That is why I hope that several terms of office of this Government will help to attract overseas investors.

8.15 pm

Other factors are the availability of skilled labour, the education system—schools and colleges—housing, communications, roads and transport. All these items are high on the list when most people are looking for a place to invest in the United Kingdom. This is a matter to which my hon. Friend the Member for Southampton, Test referred. I am sure that my hon. Friend will agree wholeheartedly that the first requirement is to achieve economic growth and economic prosperity to enable us to afford the overall environmental improvements to attract industry to the United Kingdom.

I should like to turn to the amendment spoken to by my hon. Friend the Member for Knutsford (Mr. Bruce Gardyne). He surprised me a little. He favoured the former regional employment premium on the basis that this would maintain employment in labour-intensive industries. He acknowledged that this was indiscriminate but did not appear worried about that.

Mr. Bruce-Gardyne

I am in favour of it.

Mr. Fletcher

My hon. Friend says he is in favour of it but he wished to restrict regional development grants to capital-intensive industries. That is the purpose of the amendment. I take his point about the sum. It is the principle we are talking about, whether it is £10,000 or £25,000. I am sure that my hon. Friend accepts that the last thing Britain needs is a subsidy that not only discourages technological change and change in work practices but actually encourages over manning. That was the handicap of the regional employment premium.

I am sure my hon. Friend would also agree that wage rates, as distinct from wage costs, are not a problem that contributes to our adverse international competitiveness. It is because of our inefficient use of labour that we talk about trying to subsidies wage costs. I was not able to follow my hon. Friend's argument. He may care to explain it in the Sunday Telegraph. I could not appreciate the point he made in this debate about regional employment premium.

I felt that my hon. Friend skated lightly over the benefit to the balance of payments of capital-intensive projects and the competition from other countries in other locations for internationally mobile projects. My hon. Friend is right in saying that not all the projects in the United Kingdom could, or would, locate in other countries. I accept that point. I hope, however, that my hon. Friend will accept that it is difficult for the Government to distinguish one from the other and to know which one would locate in the United Kingdom, and only in the United Kingdom, and those which would go abroad. That is the first difficulty that the Government would face.

If my hon. Friend is not persuaded on that point, I am sure that he will agree, knowing his willingness to consider economic problems in the broadest terms and not just in a particular piece of legislation, that the cost of constructing a petrochemical or similar complex in the United Kingdom is considerably more and the time taken far longer than in any other Western country. There are chemical companies, oil companies and others which at this very moment are contemplating the construction of refineries or petrochemical complexes in the United Kingdom, taking advantage of the natural resource from the North Sea. When they look at the cost and the time it takes to get a new complex into production, I am sure that they would much rather take a pipeline—if they were allowed to do so, which they are not—from the North Sea to some other part of Europe. They would then get their complex built in about half the time.

If for no other reason, in the state of the construction industry in Britain at the moment there is a case for giving RDGs as some kind of compensation for the time it takes to construct buildings of this sort.

Mr. Bruce-Gardyne

I confess that I am, frankly, appalled by my hon. Friend's argument. Perhaps I might raise a query with him concerning the first part of his argument. He says that it is very difficult for the Government to identify which projects are foot-loose and which are not. That is the beauty of the amendment. If the Government are satisfield that a project is foot-loose, their case can be argued in the House. By accepting the amendment, the Government would not be precluded from doing that. I agree with my hon. Friend in what he says about the worrying record of British handling of major construction projects, but does he really believe that we shall get improved performance on major construction sites by giving grants on this sort of scale, running into tens of millions of pounds? Surely, the opposite is the case.

Mr. Fletcher

Not at all. If we are to persuade companies to build these complexes in the United Kingdom, they have to take into account the cost of building here compared with the cost of building in other countries. We may well lose the foot-loose ones anyway—apart from those which might change their minds about building in the United Kingdom when they look at the total cost and find that they are getting no benefit whatever from the Government's regional policy.

As for distinguishing between what is foot-less and what is not, that is not a matter to be decided by coming to the House of Commons. It is a matter of deciding, in negotiation with the company, whether it will make its investment in the first place. [Interruption.] Is my hon. Friend suggesting that House of Commons permission should be sought on a case-by-case basis in regard to giving RDGs to certain types of capital-intensive industry?

Mr. Bruce-Gardyne

Yes.

Mr. Fletcher

I cannot agree with my hon. Friend on that point.

Mr. Bruce-Gardyne

I do not know whether my hon. Friend appreciates that all that is being suggested is exactly the procedure that operates under 8(8) of the Industry Act 1972—except when the Government are, shall we say, going behind the back of Parliament.

Mr. Fletcher

I am aware of that point. My hon. Friend has tabled an amendment that is to be debated later this evening. The two arguments might run together then. Meanwhile, I feel that I should move on and reply—

Mr. Budgen

Is my hon. Friend's general objective to try to ensure that the Executive have the widest discretion possible and as little interference as possible from the impudent House of Commons?

Mr. Fletcher

My general objective is to encourage companies in the chemical and other industries to invest in the United Kingdom and not to be persuaded to go abroad, where they can build their chemical complexes much more cheaply and quickly than they can in Britain at the moment.

I agreed with the admonition that the hon. Member for Rochdale gave to my hon. Friend the Member for Knutsford for suggesting that regional policy had failed. I am glad to hear the hon. Gentleman say that in Lancashire—as in Scotland—there are many examples of the success of regional policy. It has been with us a long time and there are examples all over the United Kingdom of the success of regional policy. But it is wrong to suggest that the changes that have been made in regional policy are in any way immoral or that the way in which transitional arrangements have been handled is in any way immoral. They comply properly with the legislation in the 1972 Act.

A regional development grant is payable on individual assets in accordance with the rules, and these rules are laid down in the Act. There is no prior agreement between the Department and a company on the availability of grant. As with any statutory instrument, the law is always liable to change. This is something that any company should understand, or that its agents should understand, in dealing with a Government Department in regard to the 1972 Act or any aspects of that Act.

Mr. Cyril Smith

My point about the changes being immoral was that a company could, before the Government announced their change of policy, decide to build a factory on the assumption that, if the factory cost £600,000, it would get £150,000. There is a case of this sort in my constituency. Such a company would have made its decision because of the policy and the law at the time. Then, having placed a contract in the belief that it was entitled to a grant, it suddenly finds that there is a policy change and that it is not entitled to a grant. That is immoral because it is retrospective legislation. I still believe it to be immoral.

Mr. Fletcher

Suppose that someone has returned to live in the United Kingdom, having left it because of the high rates of taxation, because of the benefits introduced by my right hon. and learned Friend the Chancellor of the Exchequer in the June Budget last year. He cannot be surprised if, in a few years' time, under a Labour Government, penal rates of taxation are reintroduced. That cannot be called immoral. It happens to be the way in which tax changes of this kind take place.

The hon. Member for Rochdale also mentioned the regional development fund of the EEC. The regulations of the fund will be reviewed before 1981, and we shall consider changes in regional policy when possible amendments are being discussed at that time.

Mr. Cyril Smith

I am grateful for the information that it is to be considered, but may we have an assurance not merely that the Government will consider changes in regional policy but that they will press for a change in the EEC policy, which at the moment would exclude areas which do not have development maximum possible benefit from the EEC, grants? I was pressing the Government, within the Council of Ministers or the appropriate committee, to seek a change in EEC policy. I realise that they may not be able to pull it off, but may we have an assurance that they will try to get the change made?

Mr. Fletcher

I do not know whether the hon. Gentleman heard the Prime Minister say today how hard she and her right hon. Friends argue in the Government and in Europe for the sorts of policies that we believe in. The Prime Minister has made clear that she is anxious that Britain should derive the maximum possible benefit from the EEC, and that clearly includes the regional fund.

My hon. Friend the Member for Renfrewshire, East made a very important point about branch factories. There is a criticism that they are often the first to go if there is any problem affecting the company concerned. I am sure he would agree with me that branch companies—multinationals—operating in the United Kingdom are at least as fair and responsible as indigenous companies. There is a myth, often floated by Labour Members, that the multinationals are inconsiderate in dealing with national Governments. We need to encourage them to invest in the United Kingdom. We also need more indigenous investment. It is not a question of either/or. We need both types of investment and we should work to encourage them.

The Government require three elements for successful regional policy. The first is to concentrate most aid where the need is greatest. That does not mean that we must ignore the fact that self-help in the regions is the best guarantee for their economic revival. Secondly—and the Opposition need to be constantly reminded of this—regional policy costs money and the resources that we inherited are scarce. That means careful distribution of regional funds. Thirdly, there is no substitute for a strong British economy. Everything else, even regional policy, must take second place to that.

On that basis, I ask my right hon. and hon. Friends to reject the amendment.

8.30 pm

Mr. George Robertson (Hamilton)

During the debate it has become evident that alongside the Government's major proposals on regional policy there is a notable absence of the cloth-cap image that once figured so strongly in the Conservative Party's image-making, when it was developing or even inventing policies for the regions. However, it might be said that by putting in the Under-Secretary of State for Scotland the party believes that he is the 1980s version of Lord Hail-sham's cloth cap.

On the other hand, perhaps for the first and only time, I stand shoulder to shoulder with the Under-Secretary in his response to the remarkable commentary by the hon. Member for Rochdale (Mr. Smith). The hon. Member for Rochdale was speaking as the representative of the federalist party in this Parliament—the Liberal Party—and he objected to the Under-Secretary of State for Scotland answering a debate on United Kingdom regional policy.

Since I see from "Voucher's Parliamentary Companion" that the hon. Member for Rochdale is the Liberal Party spokesman on industry and employment in the United Kingdom, it really does come rich from him to complain that an hon. Member representing a Scottish constituency is responding to the debate.

I agree with the Under-Secretary that, until this year, we have seen a consistent, and in some cases a strong, thread of regional policy promoted by all Governments since the war. That thread has continued and has had some success, though I dare say that there are those of us who would admit that sometimes that success has not been as great as we might have wished. However, that does not in any way mean that we must give up trying.

That consistently strong policy for the regions came to an end last year on 17 July when the Secretary of State for Industry announced cuts in the budget for regional grants. I noticed in the debate that the hon. Member for Knutsford (Mr. Bruce-Gardyne), the former Member for South Angus, was keen to get on record the fact that he was not part of the consensus that led, in the 1970 Conservative Government, to the Industry Act 1972 and its interventionist powers.

It is not wonder that the hon. Gentleman makes that point, because shortly after that he became a columnist for the Financial Times prior to coming down to the plush lands of Southern England to take up another safe seat.

The hon. Member for Wolverhampton, South-West (Mr. Budgen), who is the companion in ideology of the hon. Member for Knutsford, perversely described himself as a Manchester liberal. That probably means that if we take geographical descriptions and relate them to ideology, the Under-Secretary of State for Scotland represents, perhaps, the Edinburgh bourgeoisie. What do such criteria make the hon. Member for Knutsford? Going back to his previous constituency, the best description for him might be an Arbroath smokey. There was a a time when many of us in Scotland watched the hon. Member for Knutsford and described him as a "funny money" man. Unfortunatel the joke has gone wrong, because the funny money men now dominate the Cabinet and the British Government's economic policy. The redemption of the funny money men has now come about.

The broken thread of regional policy that resulted fro mthe announcement of last July was brought about not just by change in emphasis in regional policy but by an absolute change—an absolute cut in the amount available for the regions. There was an overall cut in the regional policy budget of £233 million. That was not a change in emphasis. That is the key to this debate.

The Under-Secretary of State for Scotland and his Front Bench colleagues can go on to their heart's content about a change in emphasis and concentrating the aid where the aid is needed. That does not get over the fact that the total budget available for the encouragement of jobs in the regions of this country was cut by £233 million out of a total budget of £600 million.

There is another consistency that should run through this Parliament—the fact that regional policy is not charity. Regional policy is not, as some Conservative Members seem to believe, some sort of welfare payment to the regions that can, if the public sector borrowing requirement so demands, be cut willy nilly. Regional policy, regional aid and the development of a strategy for the regions is part and parcel of building up the country's economy, of giving growth and assistance and making sure that the industrial base is secure for the future.

In making his points about the commendable parts of this package, the Minister should recognise that regional policy is essential if growth is to be obtained. At last year's CBI conference Sir Campbell Fraser, who is the chairman of Dunlop Holdings and a senior member of the council of the CBI, went on record as saying specifically that he believed in regional policy. The Government should accept that some parts of the country need help in order to help themselves and will do so for some time to come. Regional aid should be available for a sufficient length of time to permit reasonable forward planning in areas dominated by major declining industries which most require assistance. Sir Campbell also made the point that Conservative Members calmly and consistently ignore—namely, that while we are pulling back from a strong regional policy, other countries are actually increasing the amount of selective aid to their industries. Again, at the same conference, Sir Campbell Fraser said that the Government's attitude was to treat everyone as an adult. The German, Japanese and United State Government did so, too, but that did not prevent them from providing assistance to their industries. He pointed out that they provided aid of a sophisticated, sensible and subtle kind, in a way that reflected the needs of the latter part of the twentieth century.

Industry recognises that our international competitors are giving aid and that their industries are benefiting from strong regional policies. When will this Government realise it also?

When we talk about structural imbalances in the country and the need for regional policy, we are talking about jobs. When we talk about jobs, we talk about people. When we talk about unemployment, we talk about people who are out of work and the consequences of that for their families and the areas in which they live. The real commentary on the Government's policy since July last year and on the so-called success of the policy that the Minister elaborated is the unemployment statistics and the fact that last month there were 1,470,620 people unemployed in this country. That was an increase of 115,000 in only one month. That is the commentary on eight months' Conservative Government. That is the condemnation of this Government and their total lack of regional policy.

I should like to refer briefly to the speech made by the Under-Secretary of State for Scotland in Committee. Speaking from the Dispatch Box this evening, he was more reticent in defending regional policy than he was in Committee. He said that if the Government felt that they could solve our industrial problems in the Midlands, Clydeside and in Wales simply through the vehicle of regional development grants, they would table such provisions tomorrow, because the return on their investment would be tremendous in economic and social terms. That was the testimony of the Minister. When he was going to do that? There are over 200,000 people unemployed in Scotland. When will he start increasing grants instead of reducing them? Will the level reach 250,000, 400,000 or half a million before the Under-Secretary starts to believe in the one policy that will help to create jobs?

The Minister was not only negative in Committee. He said that he believed that there was one aspect of regional policy that had worked. He said that the one item of regional policy that had drawn the greatest benefit—something that did not cost the Exchequer a penny—was the industrial development certificate. He said said that at a time when the imbalance was so clear between, say, the Midlands and the North-East, IDCs were used effectively by both parties. What are the Government doing with IDCs? They have increased the limit from 15,000 square feet to 50,000 square feet and they have made it impossible for practically anyone to avoid IDCs.

Mr. Alexander Fletcher

That is very interesting. But the hon. Gentleman, in his enthusiasm, must bear in mind that the result of five years' Labour Government is that there are no more prosperous areas left on which to inflict IDCs and that it is difficult to draw industry from

those areas to the rest of the United Kingdom.

Mr. Robertson

The hon. Gentleman's intervention is incredible. It follows a 26-minute speech by him in which he said that there was a need to concentrate available aid into the areas that are most in need. If he is now saying that all areas have an equality of depression and that the consequence must be that we reduce aid to all regions, let him say so. People in the regions recognise that the Government are abandoning them in the futile belief that free market forces will produce results.

Many Conservative Members would like to believe that they are participating in an exercise that will strengthen the regions, the economy. They are living in cloud-cuckoo-land if they believe that. The Government areinvolved in this and in so many other exercises which will lead to the destruction of employment and the destruction of hope while they wait expectantly for inflation to drop, for investment to increase and for jobs simply to proliferate. At the same time, they are destroying the industrial base that is necessary for a real future. I commend the amendment to the House.

Question put, That the amendment be made: —

The House divided: Ayes 239, Noes 289.

Division No. 161]	AYES	[8.45 pm
Abse, Leo	Cohen, Stanley	Eadie, Alex
Adams, Allen	Coleman, Donald	Eastham, Ken
Allaun, Frank	Concannon, Rt Hon J. D.	Edwards, Robert (Wolv SE)
Anderson, Donald	Cook, Robin F.	Ellis, Raymond (NE Derbyshire)
Archer, Rt Hon Peter	Cowans, Harry	Ellis, Tom (Wrexham)
Armstrong, Rt Hon Ernest	Cox, Tom (Wandsworth, Tooting)	English, Michael
Ashley, Rt Hon Jack	Craigen, J. M. (Glasgow, Maryhill)	Evans, Ioan (Aberdare)
Barnett, Guy (Greenwich)	Crowther, J. S.	Evans, John (Newton)
Barnett, Rt Hon Joel (Heywood)	Cryer, Bob	Ewing, Harry
Beith, A. J.	Cunliffe, Lawrence	Field, Frank
Bennett, Andrew (Stockport N)	Cunningham, George (Islington S)	Fitch, Alan
Bidwell, Sydney	Cunningham, Dr John (Whitehaven)	Fitt, Gerard
Booth, Rt Hon Albert	Dalyell, Tam	Flannery, Martin
Boothroyd, Miss Betty	Davidson, Arthur	Fletcher, Ted (Darlington)
Bottomley, Rt Hon Arthur (M'brough)	Davies, Rt Hon Denzil (Llanelli)	Foot, Rt Hon Michael
Bradley, Tom	Davies, Ifor (Gower)	Ford, Ben
Bray, Dr Jeremy	Davis, Clinton (Hackney Central)	Forrester, John
Brown, Hugh D. (Provan)	Davis, Terry (B'rm'ham, Stechford)	Foster, Derek
Brown, Robert C. (Newcastle W)	Deakins, Eric	Foulkes, George
Brown, Ronald W. (Hackney S)	Dempsey, James	Fraser, John (Lambeth, Norwood)
Brown, Ron (Edinburgh, Leith)	Dewar, Donald	Freeson, Rt Hon Reginald
Buchan, Norman	Dixon, Donald	Freud, Clement
Callaghan, Rt Hon J. (Cardiff SE)	Dobson, Frank	Garrett, John (Norwich S)
Callaghan, Jim (Middleton & P)	Dormand, Jack	Garrett, W. E. (Wallsend)
Campbell, Ian	Douglas, Dick	Ginsburg, David
Campbell-Savours, Dale	Douglas-Mann, Bruce	Golding, John
Canavan, Dennis	Dubs, Alfred	Gourlay, Harry
Carmichael, Neil	Duffy, A. E. P.	Grant, George (Morpeth)
Carter-Jones, Lewis	Dunn, James A. (Liverpool, Kirkdale)	Grant, John (Islington C)
Clark, Dr David (South Shields)	Dunnett, Jack	Grimond, Rt Hon J.
Cocks, Rt Hon Michael (Bristol S)	Dunwoody, Mrs. Gwyneth	Hamilton, W. W. (Central Fife)
Hardy, Peter	McNally, Thomas	Sheerman, Barry
Harrison, Rt Hon Walter	McNamara, Kevin	Sheldon, Rt Hon Robert (A'ton-u-L)
Hart, Rt Hon Dame Judith	McWilliam, John	Shore, Rt Hon Peter (Step and Pop)
Hattersley, Rt Hon Roy	Magee, Bryan	Short, Mrs. Renée
Haynes, Frank	Marks, Kenneth	Silkin, Rt Hon John (Deptford)
Healey, Rt Hon Denis	Marshall, David (Gl'sgowm,Shettles'n)	Silkin, Rt Hon S. C. (Dulwich)
Heffer, Eric S.	Marshall, Dr Edmund (Goole)	Silverman, Julius
Hogg, Norman (E Dunbartonshire)	Marshall, Jim (Leicester South)	Smith, Cyril (Rochdale)
Holland, Stuart (L'beth, Vauxhall)	Martin, Michael (Gl'gow, Springb'rn)	Smith, Rt Hon J. (North Lanarkshire)
Home Robertson, John	Mason, Rt Hon Roy	Snape, Peter
Homewood, William	Maxton, John	Soley, Clive
Hooley, Frank	Maynard, Miss Joan	Spearing, Nigel
Horam, John	Mikardo, Ian	Spriggs, Leslie
Howell, Rt Hon Denis (B'ham, Sm H)	Millan, Rt Hon Bruce	Stallard, A. W.
Howells, Geraint	Morris, Rt Hon Alfred (Wythenshawe)	Steel, Rt Hon David
Huckfield, Les	Morris, Rt Hon Charles (Openshaw)	Stewart,Rt Hon Donald (W Isles)
Hudson Davies, Gwilym Ednyfed	Morris, Rt Hon John (Aberavon)	Stoddart, David
Hughes, Mark (Durham)	Moyle, Rt Hon Roland	Stott, Roger
Hughes, Robert (Aberdeen North)	Mulley, Rt Hon Frederick	Strang, Gavin
Hughes, Roy (Newport)	Newens, Stanley	Taylor, Mrs Ann (Bolton West)
Janner, Hon Greville	Oakes, Rt Hon Gordon	Thomas, Dafydd (Merioneth)
Jay, Rt Hon Douglas	Ogden, Eric	Thomas, Jeffrey (Abertillery)
John, Brynmor	O'Halloran, Michael	Thomas, Mike (Newcastle East)
Johnson, Walter (Derby South)	O'Neill, Martin	Thomas, Dr Roger (Carmarthen)
Johnston, Russell (Inverness)	Orme, Rt Hon Stanley	Thorne, Stan (Preston South)
Jones, Rt Hon Alec (Rhondda)	Owen, Rt Hon Dr David	Tinn, James
Jones, Barry (East Flint)	Paisley, Rev Ian	Torney, Tom
Jones, Dan (Burnley)	Palmer, Arthur	Varley, Rt Hon Eric G.
Kaufman, Rt Hon Gerald	Park, George	Wainwright, Edwin (Dearne Valley)
Kerr, Russell	Parker, John	Walker, Rt Hon Harold (Doncaster)
Kilfedder, James A.	Parry, Robert	Watkins, David
Kinnock, Neil	Penhaligon, David	Weetch, Ken
Lambie, David	Powell, Raymond (Ogmore)	Welsh, Michael
Lamborn, Harry	Prescott, John	White, Frank R. (Bury & Radcliffe)
Lamond, James	Price, Christopher (Lewisham West)	White, James (Glasgow, Pollock)
Leadbitter, Ted	Race, Reg	Whitlock, William
Leighton, Ronald	Rees, Rt Hon Merlyn (Leeds South)	Willey, Rt Hon Frederick
Lestor, Miss Joan (Eton & Slough)	Richardson, Jo	Williams, Rt Hon Alan (Swansea W)
Litherland, Robert	Roberts, Allan (Bootle)	Wilson, Gordon (Dundee East)
Lofthouse, Geoffrey	Roberts, Ernest (Hackney North)	Wilson, Rt Hon Sir Harold (Huyton)
Lyons, Edward (Bradford West)	Roberts, Gwilym (Cannock)	Wilson, William (Coventry SE)
McCartney, Hugh	Robertson, George	Winnick, David
McDonald, Dr Oonagh	Robinson, Peter (Belfast East)	Woodall, Alec
McElhone, Frank	Rooker, J. W.	Woolmer, Kenneth
McGuire, Michael (Ince)	Ross, Ernest (Dundee West)	Wrigglesworth, Ian
McKelvey, William	Ross, Stephen (Isle of Wight)	Wright, Sheila
MacKenzie, Rt Hon Gregor	Rowlands, Ted
Maclennan, Robert	Ryman, John	TELLERS FOR THE AYES:
McMahon, Andrew	Sandelson, Neville	Mr. James Hamilton and Mr. George Morton.
McMillan, Tom (Glasgow, Central)	Sever, John
NOES
Adley, Robert	Brotherton, Michael	Douglas-Hamilton, Lord James
Aitken, Jonathan	Brown, Michael (Brigg & Sc'thorpe)	Dover, Denshore
Alexander, Richard	Browne, John (Winchester)	du Cann, Rt Hon Edward
Ancram, Michael	Bruce-Gardyne, John	Dunn, Robert (Dartford)
Arnold, Tom	Bryan, Sir Paul	Durant, Tony
Aspinwall, Jack	Buchanan-Smith, Hon Alick	Eden, Rt Hon Sir John
Atkins, Rt Hon H. (Spelthorne)	Buck, Antony	Edwards, Rt Hon N. (Pembroke)
Atkins, Robert (Preston North)	Budgen, Nick	Eggar, Timothy
Atkinson, David (B'mouth, East)	Bulmer, Esmond	Elliott, Sir William
Baker, Kenneth (St. Marylebone)	Burden, F. A.	Emery, Peter
Baker, Nicholas (North Dorset)	Butcher, John	Eyre, Reginald
Beaumont-Dark, Anthony	Butler, Hon Adam	Fairbairn, Nicholas
Bell, Sir Ronald	Cadbury, Jocelyn	Fairgrieve, Russell
Bendall, Vivian	Carlisle, John (Luton West)	Faith, Mrs Sheila
Benyon, Thomas (Abingdon)	Carlisle, Kenneth (Lincoln)	Farr, John
Benyon, W. (Buckingham)	Chalker, Mrs. Lynda	Fell, Anthony
Best, Keith	Channon, Paul	Fenner, Mrs Peggy
Bevan, David Gilroy	Chapman, Sydney	Finsberg, Geoffrey
Biffen, Rt Hon John	Clark, Hon Alan (Plymouth, Sutton)	Fisher, Sir Nigel
Biggs-Davison, John	Clark, Sir William (Croydon South)	Fletcher, Alexander (Edinburgh N)
Blackburn, John	Clarke, Kenneth (Rushcliffe)	Fletcher-Cooke, Charles
Body, Richard	Cockeram, Eric	Fookes, Miss Janet
Bonsor, Sir Nicholas	Colvin, Michael	Forman, Nigel
Boscawen, Hon Robert	Cope, John	Fowler, Rt Hon Norman
Bottomley, Peter (Woolwich West)	Corrie, John	Fox, Marcus
Bowden, Andrew	Costain, A. P.	Fraser, Peter (South Angus)
Boyson, Dr Rhodes	Cranborne, Viscount	Fry, Peter
Braine, Sir Bernard	Critchley, Julian	Galbraith, Hon T. G. D.
Bright, Graham	Crouch, David	Gardiner George (Reigate)
Brinton, Tim	Dean, Paul (North Somerset)	Gardner, Edward (South Fylde)
Brittan, Leon	Dickens, Geoffrey	Garel-Jones, Tristan
Brocklebank-Fowler, Christopher	Dorrell, Stephen	Glyn, Dr Alan

Goodhart, Philip	Major, John	Shaw, Giles (Pudsey)
Gorst, John	Marland, Paul	Shaw, Michael (Scarborough)
Gow, Ian	Marlow, Antony	Shelton, William (Streatham)
Gower, Sir Raymond	Marshall, Michael (Arundel)	Shepherd, Colin (Hereford)
Greenway, Harry	Marten, Neil (Banbury)	Shepherd, Richard(Aldridge-Br'hills)
Grieve, Percy	Mather, Carol	Shersby, Michael
Griffiths, Eldon (Bury St Edmunds)	Maude, Rt Hon Angus	Silvester, Fred
Griffiths, Peter (Portsmouth N)	Mawby, Ray	Sims, Roger
Grist, Ian	Mawhinney, Dr Brian	Skeet, T. H. H.
Grylls, Michael	Maxwell-Hyslop, Robin	Speller, Tony
Gummer, John Selwyn	Mayhew, Patrick	Spence, John
Hamilton, Hon Archie (Eps'm&Ew'll)	Mellor, David	Spicer, Jim (West Dorset)
Hamilton, Michael (Salisbury)	Meyer, Sir Anthony	Spicer, Michael (S Worcestershire)
Hampson, Dr Keith	Miller, Hal (Bromsgrove & Redditch)	Sproat, Iain
Hannam, John	Mills, Iain (Meriden)	Squire, Robin
Haselhurst, Alan	Mills, Peter (West Devon)	Stainton, Keith
Hastings, Stephen	Miscampbell, Norman	Stanbrook, Ivor
Havers, Rt Hon Sir Michael	Mitchell, David (Basingstoke)	Stanley, John
Hawksley, Warren	Moate, Roger	Steen, Anthony
Heddle, John	Molyneaux, James	Stevens, Martin
Henderson, Barry	Monro, Hector	Stewart, John (East Renfrewshire)
Heseltine, Rt Hon Michael	Montgomery, Fergus	Stokes, John
Hicks, Robert	Moore, John	Stradling Thomas, J.
Higgins, Rt Hon Terence L.	Morgan, Geraint	Tapsell, Peter
Hill, James	Morris, Michael (Northampton, Sth)	Taylor, Robert (Croydon NW)
Hogg, Hon Douglas (Grantham)	Morrison, Hon Charles (Devizes)	Tebbit, Norman
Holland, Philip (Carlton)	Morrison, Hon Peter (City of Chester)	Temple-Morris, Peter
Hooson, Tom	Mudd, David	Thatcher, Rt Hon Mrs Margaret
Hordern, Peter	Murphy, Christopher	Thomas, Rt Hon Peter (Hendon S)
Howell, Rt Hon David (Guildford)	Myles, David	Thompson, Donald
Howell, Ralph (North Norfolk)	Neale, Gerrard	Thornton, George
Hunt, David (Wirral)	Needham, Richard	Townend, John (Bridlington)
Hunt, John (Ravensbourne)	Nelson, Anthony	Townsend, Cyril D. (Bexleyheath)
Hurd, Hon Douglas	Neubert, Michael	Trippier, David
Irving, Charles (Cheltenham)	Newton, Tony	Trotter, Neville
Jenkin, Rt Hon Patrick	Normanton, Tom	Vaughan, Dr Gerard
Jessel, Toby	Osborn, John	Viggers, Peter
Johnson Smith, Geoffrey	Page, John (Harrow, West)	Waddington, David
Jopling, Rt Hon Michael	Page, Rt Hon Sir R. Graham	Wakeham, John
Joseph, Rt Hon Sir Keith	Page, Richard (SW Hertfordshire)	Waldegrave, Hon William
Kaberry, Sir Donald	Parris, Matthew	Walker, Rt Hon Peter (Worcester)
Kellett-Bowman, Mrs Elaine	Patten, Christopher (Bath)	Walker, Bill (Perth & E Perthshire)
Kershaw, Anthony	Patten, John (Oxford)	Walker-Smith, Rt Hon Sir Derek
Kimball, Marcus	Pawsey, James	Wall, Patrick
King, Rt Hon Tom	Percival, Sir Ian	Waller, Gary
Knight, Mrs Jill	Peyton, Rt Hon John	Walters, Dennis
Knox, David	Pink, R. Bonner	Ward, John
Lang, Ian	Pollock, Alexander	Warren, Kenneth
Latham, Michael	Porter, George	Watson, John
Lawson, Nigel	Prentice, Rt Hon Reg	Wells, John (Maidstone)
Lee, John	Price, David (Eastleigh)	Wells, Bowen (Hert'rd & Stev'nage)
Lennox-Boyd, Hon Mark	Proctor, K. Harvey	Wheeler, John
Lester, Jim (Beeston)	Pym, Rt Hon Francis	Whitelaw, Rt Hon William
Lewis, Kenneth (Rutland)	Raison, Timothy	Whitney, Raymond
Lloyd, Ian (Havant & Waterloo)	Rathbone, Tim	Wickenden, Keith
Lloyd, Peter (Fareham)	Rees, Peter (Dover and Deal)	Wiggin, Jerry
Loveridge, John	Rees-Davies, W. R.	Williams, Delwyn (Montgomery)
Luce, Richard	Renton, Tim	Winterton, Nicholas
Lyell, Nicholas	Rhodes James, Robert	Wolfson, Mark
Macfarlane, Neil	Ridley, Hon Nicholas	Young, Sir George (Acton)
MacGregor, John	Rifkind, Malcolm	Younger, Rt Hon George
MacKay, John (Argyll)	Roberts, Wyn (Conway)
McNair-Wilson, Michael (Newbury)	Rost, Peter	TELLERS FOR THE NOES:
McNair-Wilson, Patrick (New Forest)	Royle, Sir Anthony	Mr. Anthony Berry and Mr. Spencer Le Marchant.
McQuarrie, Albert	Sainsbury, Hon Timothy
Madel, David	Scott, Nicholas

Question accordingly negatived.

Amendment proposed: No. 22, in page 7, leave out line 41, and insert—

'(i) Work on the asset is commenced before the passing of this Act and completed before 1 August 1981.'—[Mr. John Silkin.]

Question put, That the amendment be made: —

The House divided: Ayes 237, Noes 293.

Division No. 162]	AYES	[8.59 pm
Abse, Leo	Barnett, Guy (Greenwich)	Bottomley, Rt Hon Arthur (M'brough)
Adams, Allen	Barnett, Rt Hon Joel (Heywood)	Bradley, Tom
Allaun, Frank	Beith, A. J.	Bray, Dr Jeremy
Anderson, Donald	Bennett, Andrew (Stockport N)	Brown, Hugh D. (Provan)
Archer, Rt Hon Peter	Bidwell, Sydney	Brown, Robert C. (Newcastle W)
Armstrong, Rt Hon Ernest	Booth, Rt Hon Albert	Brown, Ronald W. (Hackney S)
Ashley, Rt Hon Jack	Boothroyd, Miss Betty	Brown, Ron (Edinburgh, Leith)
Buchan, Norman	Harrison, Rt Hon Walter	Orme, Rt Hon Stanley
Callaghan, Rt Hon J. (Cardiff SE)	Hart, Rt Hon Dame Judith	Owen, Rt Hon Dr David
Callaghan, Jim (Middleton & P)	Hattersley, Rt Hon Roy	Palmer, Arthur
Campbell, Ian	Haynes, Frank	Park, George
Campbell-Savours, Dale	Healey, Rt Hon Denis	Parker,John
Canavan, Dennis	Heffer, Eric S.	Parry, Robert
Carmichael, Neil	Hogg, Norman (E Dunbartonshire)	Penhaligon, David
Carter-Jones, Lewis	Holland, Stuart (L'beth, Vauxhall)	Powell, Raymond (Ogmore)
Clark, Dr David (South Shields)	Home Robertson, John	Prescott, John
Cocks, Rt Hon Michael (Bristol S)	Homewood, William	Price, Christopher (Lewisham West)
Cohen, Stanley	Hooley, Frank	Race, Reg
Coleman, Donald	Horam, John	Rees, Rt Hon Merlyn (Leeds South)
Concannon, Rt Hon J. D.	Howell, Rt Hon Denis (B'ham, Sm H)	Richardson, Jo
Cook, Robin F.	Howells, Geraint	Roberts, Allan (Bootle)
Cowans, Harry	Huckfield, Les	Roberts, Ernest (Hackney North)
Cox, Tom (Wandsworth, Tooting)	Hudson Davies, Gwilym Ednyfed	Roberts, Gwilym (Cannock)
Craigen, J. M. (Glasgow, Maryhill)	Hughes, Mark (Durham)	Robertson, George
Crowther, J. S.	Hughes, Robert (Aberdeen North)	Rooker, J. W.
Cryer, Bob	Hughes, Roy (Newport)	Ross, Ernest (Dundee West)
Cunliffe, Lawrence	Janner, Hon Greville	Ross, Stephen (Isle of Wight)
Cunningham, George (Islington S)	Jay, Rt Hon Douglas	Rowlands, Ted
Cunningham, Dr John (Whitehaven)	John, Brynmor	Ryman, John
Dalyell, Tam	Johnson, Walter (Derby South)	Sandelson, Neville
Davidson, Arthur	Johnston, Russell (Inverness)	Sever, John
Davies, Rt Hon Denzil (Llanelli)	Jones, Rt Hon Alec (Rhondda)	Sheerman, Barry
Davies, Ifor (Gower)	Jones, Barry (East Flint)	Sheldon, Rt Hon Robert (A'ton-u-L)
Davis, Clinton (Hackney Central)	Jones, Dan (Burnley)	Shore, Rt Hon Peter (Step and Pop)
Davis, Terry (B'rm'ham, Stechtord)	Kaufman, Rt Hon Gerald	Short, Mrs. Renée
Deakins, Eric	Kerr, Russell	Silkin, Rt Hon John (Deptford)
Dempsey, James	Kilfedder, James A.	Silkin, Rt Hon S. C. (Dulwich)
Dewar, Donald	Kinnock, Neil	Sllverman, Julius
Dixon, Donald	Lambie, David	Smith, Cyril (Rochdale)
Dobson, Frank	Lamborn, Harry	Smith, Rt Hon J. (North Lanarkshire)
Dormand, Jack	Lamond, James	Snape, Peter
Douglas, Dick	Leadbitter, Ted	Soley, Clive
Douglas-Mann, Bruce	Letighton, Ronald	Spearing, Nigel
Dubs, Alfred	Lestor, Miss Joan(Eton & Slough)	Spriggs, Leslie
Duffy, A. E. P.	Litherland, Robert	Stallard, A. W.
Dunn, James A. (Liverpool, Kirkdale)	Lofthouse, Geoffrey	Steel, Rt Hon David
Dunnett, Jack	Lyons, Edward (Bradford West)	Stewart, Rt Hon Donald (W Isles)
Dunwoody, Mrs. Gwyneth	McCartney, Hugh	Stoddart, David
Eadie, Alex	McDonald, Dr Oonagh	Stott, Roger
Eastham, Ken	McElhone, Frank	Strang, Gavin
Edwards, Robert (Wolv SE)	McGuire, Michael (Ince)	Taylor, Mrs Ann (Bolton West)
Ellis, Raymond (NE Derbyshire)	McKelvey, William	Thomas, Dafydd (Merioneth)
Ellis, Tom (Wrexham)	MacKenzie, Rt Hon Gregor	Thomas, Jeffrey (Abertillery)
English, Michael	Maclennan, Robert	Thomas, Mike (Newcastle East)
Evans, Ioan (Aberdare)	McMahon, Andrew	Thomas, Dr Roger (Carmarthen)
Evans, John (Newton)	McMillan, Tom (Glasgow, Central)	Thome, Stan (Preston South)
Ewing, Harry	McNally, Thomas	Torney, Tom
Field, Frank	McNamara, Kevin	Varley, Rt Hon Eric G.
Fitch, Alan	McWilliam, John	Wainwright, Edwin (Dearne Valley)
Fitt, Gerard	Magee, Bryan	Walker, Rt Hon Harold (Doncaster)
Flannery, Martin	Marks, Kenneth	Watkins, David
Fletcher, Ted (Darlington)	Marshall, David (Gl'sgow, Shettles'n)	Weetch, Ken
Foot, Rt Hon Michael	Marshall, Dr Edmund (Goole)	Welsh, Michael
Ford, Ben	Marshall, Jim (Leicester South)	White, Frank R. (Bury & Radcliffe)
Forrester, John	Martin, Michael (Gl'gow, Springb'rn)	White, James (Glasgow, Pollock)
Foster, Derek	Mason, Rt Hon Roy	Whitlock, William
Foulkes, George	Maxton, John	Willey, Rt Hon Frederick
Fraser, John (Lambeth, Norwood)	Maynard, Miss Joan	Williams, Rt Hon Alan (Swansea W)
Freeson, Rt Hon Reginald	Mikardo, Ian	Wilson, Gordon (Dundee East)
Freud, Clement	Millan, Rt Hon Bruce	Wilson, Rt Hon Sir Harold (Huyton)
Garrett, John (Norwich S)	Morris, Rt Hon Alfred (Wythenshawe)	Wilson, William (Coventry SE)
Garrett, W. E. (Wallsend)	Morris, Rt Hon Charles (Openshaw)	Winnick, David
Ginsburg, David	Morris, Rt Hon John (Aberavon)	Woodall, Alec
Golding, John	Moyle, Rt Hon Roland	Woolmer, Kenneth
Gourlay, Harry	Mulley, Rt Hon Frederick	Wrigglesworth, Ian
Grant, George (Morpeth)	Newens, Stanley	Wright, Sheila
Grant, John (Islington C)	Oakes, Rt Hon Gordon
Grimond, Rt Hon J.	Ogden, Eric	TELLERS FOR THE AYES:
Hamilton, James (Bothwell)	O'Halloran, Michael	Mr. James Tinn and Mr. George Morton.
Hamilton, W. W. (Central Fife)	O'Neill, Martin
Hardy, Peter
NOES
Adley, Robert	Baker, Kenneth (St. Marylebone)	Biffen, Rt Hon John
Aitken, Jonathan	Baker, Nicholas (North Dorset)	Biggs-Davison, John
Alexander, Richard	Beaumont-Dark, Anthony	Blackburn, John
Ancram, Michael	Bell, Sir Ronald	Body, Richard
Arnold, Tom	Bendall, Vivian	Bonsor Sir Nicholas
Aspinwall, Jack	Benyon, Thomas (Abingdon)	Boscawen, Hon Robert
Atkins, Rt Hon H. (Spelthorne)	Benyon, W. (Buckingham)	Bottomley, Peter (Woolwich West)
Atkins, Robert (Preston North)	Best, Keith	Bowden, Andrew
Atkinson, David (B'mouth, East)	Bevan, David Gilroy	Boyson, Dr Rhodes

Bradford, Rev. R.	Haselhurst, Alan	Normanton, Tom
Braine, Sir Bernard	Hastings, Stephen	Osborn, John
Bright, Graham	Havers, Rt Hon Sir Michael	Page, John (Harrow, West)
Brinton, Tim	Hawksley, Warren	Page, Rt Hon Sir R. Graham
Brittan, Leon	Heddle, John	Page, Richard (SW Hertfordshire)
Brocklebank-Fowler, Chriatopher	Henderson, Barry	Paisley, Rev Ian
Brotherton, Michael	Heseltine, Rt Hon Michael	Parris, Matthew
Brown, Michael (Brigg & Sc'thorpe)	Hicks, Robert	Patten, Christopher (Bath)
Browne, John (Winchester)	Higgins, Rt Hon Terence L.	Patten, John (Oxford)
Bruce-Gardyne, John	Hill, James	Pawsey, James
Bryan, Sir Paul	Hogg, Hon Douglas (Grantham)	Percival, Sir Ian
Buchanan-Smith, Hon Alick	Holland, Philip (Carlton)	Peyton, Rt Hon John
Buck, Antony	Hooson, Tom	Pink, R. Bonner
Budgen, Nick	Hordern, Peter	Pollock, Alexander
Bulmer, Esmond	Howell, Rt Hon David (Guildford)	Porter, George
Burden, F. A.	Howell, Ralph (North Norfolk)	Prentice, Rt Hon Reg
Butcher, John	Hunt, David (Wirral)	Price, David (Eastleigh)
Butler, Hon Adam	Hunt, John (Ravensbourne)	Proctor, K. Harvey
Cadbury, Jocelyn	Hurd, Hon Douglas	Pym, Rt Hon Francis
Carlisle, John (Luton West)	Irving, Charles (Cheltenham)	Raison, Timothy
Carlisle, Kenneth (Lincoln)	Jenkin, Rt Hon Patrick	Rathbone, Tim
Chalker, Mrs. Lynda	Jessel, Toby	Rees, Peter (Dover and Deal)
Channon, Paul	Johnson Smith, Geoffrey	Rees-Davies, W. R.
Chapman, Sydney	Jopling, Rt Hon Michael	Renton, Tim
Clark, Hon Alan (Plymouth, Sutton)	Joseph, Rt Hon Sir Keith	Rhodes James, Robert
Clark, Sir William (Croydon South)	Kaberry, Sir Donald	Ridley, Hon Nicholas
Clarke, Kenneth (Rushcliffle)	Kellett-Bowman, Mrs Elaine	Rifkind, Malcolm
Cockeram, Eric	Kershaw, Anthony	Roberts, Wyn (Conway)
Colvin, Michael	Kimball, Marcus	Robinson, Peter (Belfast East)
Cope,John	King, Rt Hon Tom	Rost, Peter
Cormack, Patrick	Knight, Mrs Jill	Royle, Sir Anthony
Corrie, John	Knox, David	Sainsbury, Hon Timothy
Costain, A. P.	Lang, Ian	Scott, Nicholas
Cranborne, Viscount	Latham, Michael	Shaw, Giles (Pudsey)
Critchley, Julian	Lawson, Nigel	Shaw, Michael (Scarborough)
Crouch, David	Lee, John	Shelton, William (Streatham)
Dean, Paul (North Somerset)	Lennox-Boyd, Hon Mark	Shepherd, Colin (Hereford)
Dickens, Geoffrey	Lester, Jim (Beeston)	Shepherd, Richard(Aldridge-Br'hills)
Dorrell, Stephen	Lewis, Kenneth (Rutland)	Shersby, Michael
Douglas-Hamilton, Lord James	Lloyd, Ian (Havant & Waterloo)	Silvester, Fred
Dover, Denshore	Lloyd, Peter (Fareham)	Sims, Roger
du Cann, Rt Hon Edward	Loveridge, John	Skeet, T. H. H.
Dunn, Robert (Dartford)	Luce, Richard	Speller, Tony
Durant, Tony	Lyell, Nicholas	Spence, John
Eden, Rt Hon Sir John	Macfarlane, Neil	Spicer, Jim (West Dorset)
Edwards, Rt Hon N. (Pembroke)	MacGregor, John	Spicer, Michael (S Worcestershire)
Eggar, Timothy	MacKay, John (Argyll)	Sproat, Iain
Elliott, Sir William	McNair-Wilson, Michael (Newbury)	Squire, Robin
Emery, Peter	McNair-Wilson, Patrick (New Forest)	Stainton, Keith
Eyre, Reginald	McQuarrie, Albert	Stanbrook, Ivor
Fairbairn, Nicholas	Madel, David	Stanley, John
Fairgrieve, Russell	Major, John	Steen, Anthony
Faith, Mrs Sheila	Marland, Paul	Stevens, Martin
Farr, John	Marlow, Antony	Stewart, Ian (Hitchin)
Fell, Anthony	Marshall, Michael (Arundel)	Stewart, John (East Renfrewshire)
Fenner, Mrs Peggy	Marten, Neil (Banbury)	Stokes, John
Finsberg, Geoffrey	Mather, Carol	Stradling Thomas, J.
Fisher, Sir Nigel	Maude, Rt Hon Angus	Taylor, Robert (Croydon NW)
Fletcher, Alexander (Edinburgh N)	Mawby, Ray	Tebbit, Norman
Fletcher-Cooke, Charles	Mawhinney, Dr Brian	Temple-Morris, Peter
Fookes, Miss Janet	Maxwell-Hyslop, Robin	Thatcher, Rt Hon Mrs Margaret
Forman, Nigel	Mayhew, Patrick	Thomas, Rt Hon Peter (Hendon S)
Fowler, Rt Hon Norman	Mellor, David	Thompson, Donald
Fox, Marcus	Meyer, Sir Anthony	Thornton, Malcolm
Fraser, Peter (South Angus)	Miller, Hal (Bromsgrove & Redditch)	Townsend, John (Bridlington)
Fry, Peter	Mills, Iain (Meriden)	Townsend, Cyril D. (Bexleyheath)
Galbraith, Hon T. G. D.	Mills, Peter (West Devon)	Trippier, David
Gardiner, George (Reigate)	Miscampbell, Norman	Trotter, Neville
Gardner, Edward (South Fylde)	Mitchell, David (Basingstoke)	Vaughan, Dr Gerard
Garel-Jones, Tristan	Moate, Roger	Viggers, Peter
Glyn, Dr Alan	Molyneaux, James	Waddington, David
Goodhart, Philip	Monro, Hector	Wakeham, John
Gorst, John	Montgomery, Fergus	Waldegrove, Hon William
Gow, Ian	Moore, John	Walker, Rt Hon Peter (Worcester)
Gower, Sir Raymond	Morgan, Geraint	Walker, Bill (Perth & E Perthshire)
Greenway, Harry	Morris, Michael (Northampton, Sth)	Walker-Smith, Rt Hon Sir Derek
Grieve, Percy	Morrison, Hon Charles (Devizes)	Wall, Patrick
Griffiths, Eldon (Bury St Edmunds)	Morrison, Hon Peter (City of Chester)	Waller, Gary
Griffiths, Peter (Portsmouth N)	Mudd, David	Walters, Dennis
Grist, Ian	Murphy, Christopher	Ward, John
Grylls, Michael	Myles, David	Warren, Kenneth
Gummer, John Selwyn	Neale, Gerrard	Watson, John
Hamilton, Hon Archie (Eps'm&Ew'll)	Needham, Richard	Wells, John (Maidstone)
Hamilton, Michael (Salisbury)	Nelson, Anthony	Wells, Bowen (Hert'rd & Stev'nage)
Hampson, Dr Keith	Neubert, Michael	Wheeler, John
Hannam, John	Newton, Tony	Whitelaw, Rt Hon William

Whitney, Raymond	Winterton, Nicholas	TELLERS FOR THE NOES:
Wickenden, Keith	Wolfson, Mark	Mr. Spencer Le Marchant and Mr. Anthony Berry.
Wiggin, Jerry	Young, Sir George (Acton)
Williams, Delwyn (Montgomery)	Younger, Rt Hon George

Question accordingly negatived.