HC Deb 07 July 1980 vol 988 cc11-3
7. Mr. David Watkins

asked the Secretary of State for Industry if he will make a statement on the level of industrial investment in the Northern region.

12. Mr. Dormand

asked the Secretary of State for Industry if he is satisfied with the progress being made in attracting industry to the Northern region; and if he will make a statement.

Mr. David Mitchell

In 1978, the latest year for which figures are available, investment by manufacturing industry in the Northern region totalled £648.7 million—10.8 per cent. of the total for the United Kingdom. The Government's regional policies concentrate help where the need is greatest. Much of the Northern region is a development or special development area where high levels of regional assistance are available to industry.

Mr. Watkins

Are not the Government's policies pricing investment out of the Northern region? Is the Minister aware that I have received a letter from the chairman of York Trailers, which had 165 redundancies in my constituency during this year, in which he makes the point that what he refers to as the present "usurious interest rates" are his company's main bugbear, preventing expansion? Is he aware that this is in one of the special development areas to which the hon. Gentleman has just referred?

Mr. Mitchell

High interest rates are a necessary part of dealing with the muses of inflation. It ill behoves the Labour Party, having left us the Augean stables to clear up, to complain about the size of the shovel that we have to use.

Mr. Dormand

Does the Minister agree that the problems of the Northern region are unique and therefore require special solutions? Is he aware that the disastrous effect of his right hon. Friend's policies is the destruction of business confidence with its long-term effects? My experience is the same as that of my hon. Friend the Member for Consett (Mr. Watkins). Will the hon. Gentleman, as a matter of urgency, seek to persuade his right hon. Friend to accept the proposal put to him recently by hon. Members for the establishment of a Northern development agency? We do not think that it would work miracles, but it would be the first step in the rehabilitation of the Northern region.

Mr. Mitchell

The proposal for a Northern development agency has been around for a very long time, including the period when the Labour Government were in office. My right hon. Friend is considering the representations that have been made to him. Perhaps I could helpfully add that, to encourage investment in the North-East and in other development areas, interest on European Investment Bank loans has now gone down to 10 per cent. fixed for seven years. That may be helpful to a number of projects.

Mr. Adley

Is my hon. Friend satisfied with the activities of the financial institutions in the Northern region in providing risk capital for new industrial development?

Mr. Mitchell

I can assure my hon. Friend that we are doing our best to encourage the banks to extend the frontiers of their lending wherever they can see ways of doing so.

Mr. Urwin

Is the Minister aware that the Government's industrial policies are having a calamitous effect on the industrial base of the Northern region? We may now be running the danger of creating an industrial wasteland in the North as a result of these policies. Worse still, industry will find itself in an almost irrecoverable position as a result of these policies. Will the hon. Gentleman at least give us some idea of the more objective and conclusive approaches which may be expected from the Government as a result of successive ministerial visits, including his own two or three weeks ago to Sunderland, and all the difficult problems which were presented to him by trade unionists, local government members and Members of Parliament?

Mr. Mitchell

It is regrettable that the right hon. Gentleman should seek to destroy confidence in that way when those who have examined what we are seeking to do to attack the causes of inflation have great confidence in the success of our policies in the longer term.

Several Hon. Members

rose—

Mr. Speaker

Order. I appeal for short questions, if possible, and, of course, answers will be short to follow.

Mr. Thompson

Is my hon. Friend aware that the problems of the Northern region are not unique and that a more even-handed national policy would be welcomed?

Mr. Mitchell

Yes, Sir.

Mr. John Silkin

Will the Under-Secretary explain how Government policy of increasing the inflation rate from 9 per cent. on 3 May 1979 to 22 per cent. a year later by means of the highest interest rates that we have ever known, and increasing value added tax to 15 per cent. can actually bring down inflation?

Mr. Mitchell

The right hon. Gentleman is aware that there is a direct correlation between the time at which one increases the money supply and the time, about 18 months later, when inflation comes through. We are now—and the right hon. Gentleman knows it—on the flood tide of the inflation caused by his Government.

Mr. Silkin

I am not aware of that and neither is the Minister of Agriculture. Fisheries and Food.