ENTERPRISE ZONES

HC Deb 04 June 1980 vol 985 cc1429-525 3.45 pm

Mr. Frank Hooley (Sheffield, Heeley)

I beg to move amendment No. 23, in page 47, line 41, leave out subsection (b).

The Chairman

With this it will be convenient to take the following amendments: No. 19, in page 47, line 43, leave out ' or of a commercial building or structure '. No. 28, in page 48, line 1, after ' structure ', insert ' or '.

No. 24, in page 48, line 1, leave out ' the qualifying hotel or the commercial building or structure '. No. 29, in page 48, line 1, leave out from ' hotel ' to ' is ' in line 2.

No. 25, in page 48, line 12, leave out subsections (3) and (4).

No. 30, in page 48, line 17, leave out subsection (4).

No. 20, in page 48, line 20, leave out ' or, whether or not for such a purpose as an office or offices.'.

Mr. Hooley

Amendments Nos. 24 and 25 are simply consequential on the main amendment, and therefore the same arguments will apply. In this matter the House is faced with something of a procedural nightmare. We are asked to debate in this clause tax allowances for a scheme that has never been debated by the House as a whole and a provision for allowances to be given to a body that has no legal existence. That body will never have legal existence unless legislation going through the House is eventually approved.

The substance of the scheme that is the basis of the provisions in this clause—the 100 per cent. capital allowances—was contained in a new schedule tacked on to the Local Government, Planning and Land (No. 2) Bill. The matter was brought up in Committee and the House has not had the opportunity to debate it in detail. The provisions are extensive and complicated, and I suspect that they are unknown to the vast majority of right hon. and hon. Members.

I believe that the schedule is now classified as schedule 25 to the Local Government Bill, as amended. In Committee the schedule ran to 15 pages, five parts and 34 paragraphs, and was virtually a Bill in itself. Yet the House is now required to debate taxation provisions on the basis of a scheme that we have never had the opportunity to examine in detail. The principle of the scheme was, I think, referred to only vaguely, if at all, during the Second Reading debate on the original Bill. Moreover, among the bodies that purport to take advantage of the capital allowances referred to in clause 68, the urban development corporations have no legal existence and, as I have said, may never legally exist unless the House eventually passes the local government Bill, as amended.

We are dealing with a procedural arrangement that is grotesque in itself. Had some of my hon. Friends who are experts in " Erskine May " delved into the procedures and rules of the House they might have disqualified this procedure. It is thoroughly unsatisfactory, and puts hon. Members at a severe disadvantage when trying to discuss the true implications and merits of the provisions in the clause and the proposed amendments.

The taxation implications of schedule 25 to the Local Government Bill are extremely formidable. If the enterprise zones are established, entrepreneurs, landlords, property speculators and others will be able, through the Treasury, to transfer to the general taxpayer their liability for paying rates. They will not pay any rates if they are in the enterprise zones. The Treasury will pay the rates to the appropriate authority, and the only way in which it can do that will be through general taxation. Therefore, the ordinary taxpayer, the old-age pensioner and the low-paid will be paying local taxation on behalf of those entrepreneurs and landowners who are shrewd enough to get in on the act in the enter prise zones.

Not only will there be that transfer of taxation liability; there will be an exemption from development land tax, with all its consequences on the price of land and speculation in land in the enterprise zones. It is a massive invitation to speculations and to uncovenanted capital gains. In addition, there will be exemption from the industrial training levy and no requirement for industrial development certificates.

In Committee the Minister used a curious phrase when discussing the enterprise zones. He said: Customs relaxations will be covered by administrative action."—[Official Report, Standing Committee D, 15 May 1980, c. 1166–7.] It is not clear how the enterprise zones will attract relaxation of customs duty, unless helicopters with dutiable goods land in the middle of Attercliffe. At some stage the Government should give the House an explanation of that rather strange phrase used by the Minister. What customs regulations would be relaxed, why, and how? Will customs posts be established on the borders of the enterprise zones in the middle of Sheffield to judge what is exempt? It is a mysterious phrase. I shall be interested to know its implications for the excise duties that should accrue to the Revenue, and perhaps, to the Common Market also.

The clause sets out explicitly the provision for 100 per cent. capital allowance. The scheme, which has never been debated by the House, has widespread and formidable implications for both local and national taxation and excise. I hope that we shall carefully probe into that aspect this afternoon, to see how the system is intended to work. We must fully understand its implications for taxation, planning, development, industry and jobs.

I am slightly relieved to know that the scheme does not abrogate, right across the board, the health, safety and building regulations. That is some concession by the Government to decency and civilisation. I would like an assurance from the Minister that at some later stage of the game there will not be the abrogation of health, safety and building regulations also, like the wholesale demolition of taxation liabilities that are provided for under the scheme.

It says something for the growing desperation of workers and trades unionists in Sheffield at the disastrous impact on industry and jobs being caused by the Government's policies that many of my worthy Socialist and trade union friends, whom I have known for the past 25 years, are grasping at this straw to help them in the increasing plight into which British industry is drifting. I think that they are mistaken to do so. There are many implications from such a scheme that they may not understand. I do not blame them for that. Most hon. Members have not had the opportunity to read the scheme, let alone trade unionists and shop stewards in Sheffield, but they feel that in terms of jobs the position is now so bad—and is becoming worse—that even this wretched proposition should be crabbed at, in the hope that it will produce 20, 30 or 100 jobs. No doubt other hon. Members will explore that proposition during the debate.

No one on the Opposition Benches objects to the principle of special help to regional areas, or areas of cities. It is a long-established process, and one that the Labour Party has developed over the years—much more effectively and vigorously than the Conservative Party. There is already an urban programme, and I am puzzled to know why its provisions have not been used to deal specifically with the areas that will fall into the so-called enterprise zones. They will be mainly in the centres of our industrial cities. The urban programme is already established, and more money should be put into it, more vigorously and more energetically, to revive the economy of those areas where that is necessary, without the weird nonsense of establishing enterprise zones.

In the past, we have had the regional employment premium, the temporary employment subsidy—which was de stroyed by a Common Market regulation —and the regional grants. It is rather extraordinary that the Government, who set out to dismantle a great deal of the apparatus of regional development and assistance, should produce this peculiar scheme, presumably with the ideological notion that somehow it will work miracles where more carefully controlled——

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

Much of the discontent felt on some Benches about enterprise zones could have been avoided if they had been called urban or inner city industrial development areas. That would have been far more acceptable, while the same powers were retained. It is the use of the term that some hon. Members find objectionable.

4 pm

Mr. Hooley

It is not only a question of nomenclature. My hon. Friend has hit on the substance of my amendment. As the clause stands, they are not industrial development zones at all. We could have any kind of cranky, potty, barmy scheme. Provided that it is in this zone, it attracts the tax relief and all the other exemptions set out in the schedule. Had they been properly considered and carefully organised schemes for industrial development, there might have been some case for them, and certainly there would have been no case for my amendment. But the amendment is necessary. What my hon. Friend rightly suggested as being a reasonable idea—one would have to spell it out carefully—might have been acceptable without the amendment, but that is not what is in the clause. My amendment is designed to remedy, at least in part, some of the deficiencies of the clause, as I shall spell out later.

What we have in this scheme is not a carefully controlled public expenditure exercise, with defined aims and proper control by the Treasury and appropriate Government Departments regarding who gets what and under what conditions—which was the aim of regional expenditure under the Labour Government—but a proposition for totally uncontrolled tax handouts for all sorts of vaguely specified or, indeed, totally unspecified objectives, with no real economic benefit at all.

Mr. Nick Budgen (Wolverhampton, South-West)

Is it the hon. Gentleman's intention to try to limit the benefits of an enterprise zone to manufacturing industry, and to exclude other forms of what he would describe as less worthy activity?

Mr. Hooley

Yes. I shall spell out that argument as I go along.

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

Does my hon. Friend realise that if that is his intention he will rule out those working men's clubs as well as pubs along Attercliffe Common, in the city of Sheffield, that have been abandoned both by de-industrialisation and by urban removal, and whose last hope of survival now is that they will benefit from rate relief under the enterprise zone proposals?

Mr. Hooley

I have already expressed the profound difficulty of hon. Members in understanding and comprehending the small print of this scheme. I have spent a little time studying the text of the schedule and the eloquent remarks of my hon. Friend the Member for Newham, South (Mr. Spearing) in Committee upstairs. I have not had time to analyse the scheme thoroughly, but in the course of a casual reading of it I got the impression that public houses would not benefit from it. Indeed, I am dubious whether working men's clubs would benefit from it. Obviously, I take advice on that from the Financial Secretary. My hon. Friend ilustrates my point very well. As these zones are drawn, any kind of wide-ranging activity—[Interruption.] Yes, betting shops, for example, pubs and working men's clubs, which make no real contribution to the economy and create very little, if anything, by way of new jobs, will benefit.

Mr. Duffy

They are indispensable to the social life of Attercliffe.

Mr. Hooley

Working men's clubs exist in my constituency as well. I am happy that they should flourish. If people want working men's clubs or pubs, that is splendid. There are working men's clubs and pubs all over the place. But to get pubs and working men's clubs we do not need to create enterprise zones. That is the last thing in the world that we need.

Mr. Duffy

When my hon. Friend looks at the text of his speech later he will see that on this point he was discussing my constituency, not his.

Mr. Hooley

All that I am saying is that there is no necessity for a complicated schedule of 34 paragraphs to have pubs or working men's clubs in Attercliffe. I am sure that there are large numbers there already. There will no doubt be more in future if they flourish, and good will to them. However, we do not need rate relief, depriving the city of direct control over its finances, and we do not need handouts from the Treasury or a whole complicated list of tax exemptions to develop working men's clubs and pubs in enterprise zones. My hon. Friend is pursuing a red herring on that point.

I come back to the main theme of my amendment. This scheme provides an indiscriminate, uncontrolled system of tax incentives within limited zones, however they are drawn, for people to do pretty well what they like.

Perhaps I may give another example from Sheffield. The Sheffield city council is very properly concerned with the redevelopment of an important site in the city centre as part of a business and shopping complex. The site is well known to my hon. Friend. It is generally referred to as the H. L. Brown site. It is an important site in the middle of the city and it has caused considerable controversy. The development will undoubtedly be expensive and important in terms of shopping and office facilities. We do not yet know how it will work out.

Let us suppose that the scheme is approved, that demolition takes place and new building commences, and that down the road we then get an enterprise zone. What will happen to the shops and offices if some bright speculator says "Why should I build on the H. L. Brown site? Why should I go to the expense of paying a lot of rates and claiming only perhaps 25 per cent. capital allowance "—I think that is the existing capital allowance—" when I can go down the road and build a whopping great supermarket or a thumping great office block without paying any rates for one year, two years, or heaven knows how long——"

Mr. Nigel Spearing (Newham, South)

Ten years.

Mr. Hooley

"—without having to pay rates for 10 years," as my hon. Friend said, " with a 100 per cent. capital allowance and without having to bother about industrial training levies, and so on." This will make planning in Sheffield a nightmare. How can the city, as the planning authority, deal with a problem such as the H. L. Brown site—an important centre for the development of shops and offices that could have a valuable effect on the redevelopment of the centre of the city—when it may be undercut completely by the declaration of an enterprise zone down the road?

If I read the schedule aright, the council would lose planning control. If someone said that he wanted to build a supermarket, a block of shops, another Centre Point, or something, as I understand the schedule, the council would be virtually unable to prevent his doing so. Instead of having a properly planned development in the city centre, providing valuable income to the city in the form of rates and valuable income to the Treasury in the form of taxation, we could have a fly-by-night scheme built somewhere else in the city, drawing trade away from the city centre and drawing away value from the properly planned layout of which Sheffield is rightly proud.

Mr. Stan Crowther (Rotherham)

Does my hon. Friend agree that a developer might ask whether he should build factories or offices in the Government's newly created development area in Rotherham and Mexborough that are perhaps even nearer than the centre of Sheffield?

Mr. Hooley

I shall come to that point later, but it is a fair point to make.

Mr. Duffy

I hope that my hon. Friend will make sure that he answers it.

Mr. Hooley

I am happy to answer it. My hon. Friend should not get too peevish. We have time for a civilised exchange of views, as always, at least on this side of the Committee.

Mr. Duffy

I assure my hon. Friend that there is no question of peevishness, but rather of trying to fix the responsibility of my hon. Friend in the city that he represents and in all the organs of the Labour movement in Sheffield that have discussed this proposal in recent weeks. Discussions may have taken place both outside and inside the House, but the proposal has not been fully discussed in Sheffield. I am anxious to know where my hon. Friend stands on this matter and how far he is prepared to reflect the wishes of the people that he represents.

Mr. Hooley

Having known me for 20 years, my hon. Friend should be aware that measuring my judgment against the judgment of other people and other bodies has never seriously worried me. I may be wrong——

Mr. Dennis Skinner (Bolsover)

Does my hon. Friend recall that there have been many occasions when my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) has been in conflict with the general views and trends within the Sheffield Labour movement? Perhaps we can instance a few in recent times, namely, the Common Market, through all the machinations——

The Chairman

Order. I think that perhaps we should not pursue that line.

Mr. Hooley

I apologise, Mr. Weatherill, for being drawn into this excessively parochial debate. I am merely telling my hon. Friend that this is not the first time that my judgment does not square 100 per cent. with the judgment of the city council, and I do not think that it will be the last time. I must answer to my constituents and to the House for the views that I hold, and I am happy to do that.

There was a famous occasion on which I criticised high-rise blocks. The local council thought that they were the greatest thing since sliced bread. Very few people think so these days. There may be differences of opinion, but hon. Members are here to express differences of opinion. I make no bones about the difference in opinion between myself, my colleagues in the trade union movement, and the local council. I suspect that in five or 10 years my judgment is more likely to be vindicated than theirs. I could be wrong, but that is my judgment of the scheme. I have probably spent a little more time studying the fine print of this schedule than those people who are anxious to rush along with the cranky notion that merely by giving tax concessions the disasters of the economic policy of this Government can be reversed.

Mr. Spearing

Does my hon. Friend understand that it was made clear in Committee that local authorities and other bodies throughout the country have so far understood enterprise zones, what they are supposed to do, and how they are to operate purely through the information and circulars given to them by the Government. After nine hours of discussion on the small print of the schedule in Committee the enterprise zones appear in a different light. That should be taken into account by local authorities and other bodies when looking at this proposition, which may appear to be attractive on the surface but will pose many problems.

Mr. Duffy rose——

Mr. Hooley

I am sorry, but my hon. Friend cannot intervene in an intervention. I must reply to my hon. Friend the Member for Newham, South first.

My hon. Friend the Member for New-ham, South is absolutely right. He spent many hours in Committee studying this schedule in considerable detail. I would prefer to listen to his opinion than off-the-cuff opinions from people who, with great respect, I suspect have not looked at the fine print of the schedule. I now give way to my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy).

Mr. Duffy

What my hon. Friend said may be true of other authorities that are interested in an enterprise zone, but it is certainly not true of Sheffield. Sheffield's understanding of an enterprise zone and all that it may imply has been reinforced by a deputation on behalf of Sheffield to the Minister.

Mr. Hooley

In that case, I hope that the Minister gave the deputation clearer and better information than he gave to the Committee. My impression from reading the Committee proceedings was that on a considerable number of points the Minister was vague about what the Government were doing.

4.15 pm

I return to the main theme of my argument. I have pointed out that the creation of these zones would have a damaging effect on development in other parts of a city. They could undermine planning procedures and sensible planned development, and they could cause serious difficulties, not only for the city council but for developers who are already committed to development in another part of or adjacent to the city.

There is also the question of the kind of enterprise that will be set up in these areas. Will there be scrap dumps, dumps for used cars, and so on? Will they be a haven for that sort of business? How far will planning controls be relaxed for the purpose of these tax concessions? That is the central point of our argument today.

In Committee, the Minister said repeatedly that this was an experiment. He said that the Government were not sure how it would work. Therefore, he could not answer many of the detailed questions from my hon. Friend the Member for Newham, South and others. The main purpose of my amendment is to limit this experiment with regard to capital allowances. I am aiming to confine the experiment—if it is to take place at all—to a more specific and precise area of development, so that if damage is done—I think that damage will be done—at least it will not be too far-reaching and drastic.

I now wish to put to the Financial Secretary and the Committee one or two points about the way in which the scheme will work with regard to capital allowances. There is an astonishing provision in paragraph 22 of the new schedule to the Local Government Bill which was discussed in Committee. It states: The scheme does not authorise the carrying out of operations after the termination date, even if they started to be carried out before that date in accordance with the scheme. Of course, it is difficult to understand the gobbledegook in which we write our legislation, but if I understand that paragraph correctly, it would mean that a person could start building a factory or an office and complete half the building, and then, if the Minister, for good reason or ill, decided to terminate the enterprise zone or change the boundaries of it, any capital allowances would disappear. What would happen to the wretched entrepreneur in those circumstances? If that phrase does not mean what it says, per-Paragraph 22(2) of the new schedule states: even if they started to be carried out before that date in accordance with the scheme. So the entrepreneur will have to stop what he is doing, or, at best, carry on what he is doing but not receive all the tax refunds and tax rebates that he thought he would receive. I should be interested to know what construction the Government put on that paragraph.

When do the capital allowances start? Do they start on the date on which the enterprise zone is designated? Do they apply to all work that is carried out after the date of designation?

Let us take another situation. Let us suppose that a zone is designated that is mostly empty or derelict but has within it one factory or building—that is, the foundations are there and some of the first floor is built—and then the zone is designated. From the point of designation, does that building attract rate relief, capital allowances, and so on? Does the owner get that not for the first floor, but for the second, third and top floors? How exactly will these allowances be calculated?

If the zone is designated and there is within it an existing factory, office block, or whatever, will they attract the allowances immediately the zone is designated? This is very important, because one will then have some jolly mavericking and political jiggery-pokery if the boundary of the zone runs fairly close to an existing factory or a factory being built just outside it. Some very heavy persuasion will be brought to bear on the Minister or the local authority, or others, by people saying " If you could just run the line up Howard Street, round the back and down Blake Street, my factory will come in, I shall not have to pay any rates and I shall get all the capital allowances." Perhaps the Minister will kindly explain how the designation of this scheme will apply to existing buildings, offices, and so on, once the zone is designated.

When do the allowances finish? Let us suppose that the zone is terminated, or that the boundaries are changed. The schedule provides explicitly that the boundaries can be changed. If the zone is suddenly chopped in half, or whatever, do the rate relief and capital allowances abruptly stop on the date on which the zone is finished?

What about a project that attracts allowances and is then abandoned uncompleted? Is there a provision that a project for offices or a factory must be carried right through to completion and actually put into use? This point is not as academic as all that, because we remember the scandalous case of Centre Point, which was not put to use for many years.

If someone builds a factory or an office block simply as a speculation, purely in order to get the rate relief and the capital allowances—and the land, because there is exemption from development land tax—but then makes no attempt to put it into use, merely leaving it standing, taking a gamble—as the Centre Point chap took a gamble—that at a future date he may be able to sell it off at a very handsome capital profit, what safeguard is there against that sort of technique? In other words, how shall we guard against pure speculation for capital gain which has very little economic end to it in these zones?

One of the golden opportunities of this scheme is the scrapping of development land tax. What will happen to the price of land within the enterprise zones with the knowledge that there is no DLT to pay? Will not this be opening the door to a splendid bout of new speculation in land values? What will be the eventual consequences of that for the sensible planning and the sensible development of our city centres if that occurs?

Mr. Spearing

Is my hon. Friend aware that since the planning description for the whole zone will be a very general one, any land within the zone will be potentially available for any description of development that falls within that definition? Therefore, the potential or real value of the land in the zone, in speculation terms, is likely to be much increased, on the assumption that all sorts of buildings may be built anywhere on it. The value of the land is likely to be very much enhanced, and that may well detract from some of the objectives that the Government have in mind.

Mr. Hooley

I am sure that my hon. Friend is right. I hope that the Financial Secretary will deal with that argument.

Can the capital allowances that will accrue in respect of developments in the enterprise zones be offset against tax liabilities in other directions? I must admit that I am not sufficiently conversant with our tax system to know how these things operate, but I know that if one builds up, as it were, a tax credit in one direction—and there are substantial credits accruing from some of these schemes—one can, if necessary, apply it to one's liabilities somewhere else. It seems to me that there may well be a temptation for the owner of a business that has fairly substantial tax liabilities for some reason to look around for an enterprise zone, to start up a project there, and then to try to offset his liabilities in one direction against the allowances that can accrue in the enterprise zone.

My hon. Friend the Member for Rotherham (Mr. Crowther), who is not present at the moment, asked about the effect on neighbouring areas of these enterprise zones. That is a very serious matter. There is no doubt that in certain circumstances these zones could attract some forms of development away from neighbouring areas with very high unemployment levels and into areas in which the unemployment levels were low, or by present-day standards, comparatively low. That would distort the whole planning system. My hon. Friend the Member for Rotherham made a very fair point. It would apply particularly in South Yorkshire, and it is a matter on which the Financial Secretary ought to be fairly explicit.

Mr. Duffy

Although my hon. Friend is normally very well informed about South Yorkshire, and especially his own city of Sheffield, he does not seem to have a very clear picture of the relative rates of unemployment between his city and the adjacent areas, as I hope to show later. They are much closer than he and my hon. Friend the Member for Rotherham (Mr. Crowther) presume. What my hon. Friend also needs to bear in mind is that only a year ago, when we lost our assisted area status, we envied other areas, but wished them luck. We hope that they will adopt the same gracious attitude towards us now that there has been a reversal of the position.

Mr. Hooley

My hon. Friend can spell that out in his own speech. He is well aware that for many years unemployment in the Dearne Valley area has been far higher than the unemployment rate in Sheffield, and still is.

Mr. Duffy indicated dissent.

Mr. Hooley

It still is. However, I do not want to make a major point. I am merely saying that my hon. Friend the Member for Rotherham was quite right to point out the damaging effect that this scheme could have on neighbouring areas if the enterprise zones were not dealt with very carefully.

I believe that the whole scheme is a charter for the tax lawyers, the tax accountants, the tax evasion industry, and the land and property speculators. It could be argued—the Government may argue—that there is a very strong need to try to influence small firms, perhaps, and certainly some more industries, to come into certain central city areas, and that the scheme is designed to do that. If the Government are arguing along those lines they must support my amendment, because it makes it quite clear that although the clause as thus amended would disqualify commercial and hotel building, and non-industrial activity of one sort or another, it would not disqualify industrial development.

I am prepared to give the Government a little bit of licence. If they push on with this scheme anyway—I am not enamoured of it—at least it should be carefully confined to promoting, if it can promote, some development of manufacturing industry. My hon. Friend the Member for Workington (Mr. Campbell-Savours) very fairly and properly pointed out earlier that if it were possible to promote a limited amount of industrial develepment by this scheme, creating new jobs, perhaps there would, as a limited, carefully controlled experiment, be a little to be said for it. The Labour Party instrument of the National Enterprise Board was an infinitely more sensible instrument.

4.30 pm

Mr. Martin J. O'Neill (Clackmannan and East Stirlingshire)

The example of the development agencies of Scotland and Wales is perhaps even more pertinent. The agencies' small business assistance departments can go in and clear out areas of industrial despoliation and supply equity capital to set up partnership projects that can fulfil all the functions of free enterprise.

Mr. Hooley

My hon. Friend is right. I should have included the Scottish and Welsh Development Agencies along with the NEB. These are infinitely more valuable and important instruments of industrial development than the cranky enterprise zone system.

My amendment would make it possible for the scheme to go ahead and to attract 100 per cent. capital allowances for industrial purposes. It would rule out office blocks, hotels and that type of development.

Mr. J. Grimond (Orkney and Shetland)

Will the hon. Gentleman explain what " commercial " covers? I understand what is meant by office blocks and hotels, but what does " commercial " mean?

Mr. Hooley

I am not a drafting lawyer and I am in difficulty in replying to the question of the right hon. Member for Orkney and Shetland (Mr. Grimond). I have assumed that there are, broadly, three categories of development. There is industrial development, which is basically manufacturing or processing. There is domestic development, which is property in which people reside. I assume—I admit that it is a rather vague assumption—that " commercial " development means, for example, finance, banking, property and land agents.

Mr. John Townend (Bridlington)

Does the hon. Gentleman agree that included in " commercial " would be warehousing and other service industries?

Mr. Hooley

Warehousing might be regarded as commercial. That depends on what is to be put in the warehouse, and the nature of the operation. I must admit to the right hon. Member for Orkney and Shetland that I am not sufficiently conversant with parliamentary jargon to be able to define " commercial " while on my feet. He must put the question to the Financial Secretary.

I have no doubt that the Financial Secretary will explain that if the amendment is carried, which I hope it is, there will be certain consequences—namely, the exclusion of certain activities and the inclusion of others. The amendment is designed to ensure that if the scheme goes ahead it will be intended to promote or encourage the creation of real wealth through manufacturing industry and not a spivery of profiteering or speculation.

There is the element of a confidence trick in the scheme. We are told by the Minister that the rates forgone by the local authorities will be paid by the Treasury. In other words, if Sheffield can prove that it has lost £4 million in rates because of its enterprise zone, it can ask the Treasury for the £4 million. As I understand it, under the scheme the Treasury is bound to pay back the loss. Is it credible that the Treasury, with all its characteristic attitudes, will pay out, year after year, £4 million to Sheffield, £5 million to Bradford, £6 million to Glasgow and £7 million to Manchester? I think that that is unlikely.

I suspect that the Treasury will rapidly say " Enough is enough. The scheme has cost us £10 million this year. It will cost £20 million next year and £50 million the year after. We will not have an open-ended account of this sort. It must be stopped."

One way of stopping it would be to knock it off the rate support grant. A promise has been given that that will not be done, but one never knows. The other way of stopping it would be to call a halt or to modify the scheme. That reinforces my argument for going slow with the scheme, for accepting my amendment, and for limiting the effect of it to a more precise and specific type of development, namely, the development of industry, especially manufacturing industry.

Finally, in a spirit of good humour more than anything else, I refer to the wise words of my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant). In Committee my hon. Friend said: If he thinks that the Government with this little bit of the Bill with these few enterprise zones, will be able to challenge the massive social inertia of institutions, particularly local authorities, and create a situation in which we have some sort of Hong Kong on our doorstep, he does not know the institutions. If the Minister were to say that Stoke-on-Trent was to have such a zone, all the defensive mechanisms of the institutions would move into action. All the vested interests would take up position. What he imagines will take place is too far fetched."—[Official Report, Standing Committee D., 21 May 1980, c. 1344.] There is much substance in that view. I am worried that the Government are in the process of creating the sort of dog's breakfast that the previous Conservative Government created with local government reorganisation and the reorganisation of the Health Service. There was a ghastly bungle and muddle when those reorganisations took place. I fear that that will be recreated, and that jobs will be lost.

My honest Socialist friends in Sheffield believe that there will be jobs for skilled engineers and skilled workers in the steel and engineering industries, but I fear that there will not. However, there will be jobs for property sharks, real estate men, lawyers, accountants and tax fiddlers. This scheme is a charter for tax evasion, and it should be considered in that light.

The Chairman

It may be for the convenience of the Committee if I allow a general debate on the principle of clause 68 with this group of amendments. I propose to do that.

Mr Fred Silvester (Manchester, Withington)

For those of us who missed the Derby, I think that the Sheffield chase has provided an entertaining afternoon. In a way Sheffield has been divided by those who should speak with one voice.

It appears from the speech of the hon. Member for Sheffield, Heeley (Mr. Hooley) that a great difficulty is arising for Labour Members. Those of us who are associated with areas of deep unemployment and substantial industrial problems will look favourably at any scheme which is likely to help to alleviate those difficulties and problems. On the other hand, the fact that we are talking about enterprise, with all the implications of the effect that free enterprise will have on the production of jobs, seems to bring out the worst in some Members. Apparently, it is all right to call them inner city industrial development areas but it is not all right to associate them with free enterprise. The hon. Gentleman's view is absurd. Enterprise zones stand or fall in their own right.

Those to whom I have spoken about private enterprise zones wish them well. That does not mean that they foolishly believe that there will not be any trouble or difficulty around the periphery. There may even be—as the hon. Gentleman mentioned—some examples of spivery. Many difficulties may arise. However, those people also believe that to do nothing would be a greater danger.

The hon. Gentleman's speech was remarkable because it was completely negative. He quoted an example of people being driven to set up enterprises in order to benefit from some of the dreadful tax advantages that he envisages. Those enterprises may benefit the area. Perhaps enterprise zones are not completely virtuous. However, some of us believe that virtuous poverty has been endured for too long. We should therefore look to the engines that work in free enterprise if we wish the system to succeed.

Mr. Hooley

It was unfair of the hon. Gentleman to say that my speech was negative. I pointed out that the urban programme, the Scottish Development Agency, the Welsh Development Agency and the NEB were in existence. I said that those were available without any need for further legislation. There is nothing negative about that.

Mr. Silvester

Nevertheless, problems have not gone away despite the existence of those agencies. For many years we have struggled and have tried different devices. We now wish to experiment and to try a different tack. We wish to create private rejuvenation where public rejuvenation has failed. The hon. Member for Heeley has over-egged the pudding as regards the difficulties. I should like to quote from a document that was sent to local authorities. It states that the plan for the enterprise zone would be prepared and approved by the Secretary of State. It continues: The plan would show which classes of development were permitted in each part of the Enterprise Zone; it would set out any conditions governing development eg those needed for health or safety or for the control of pollution; and it would specify any ' reserved matters '. It is not true that enterprise zones will become scrap yards. It is possible for the local authority or Secretary of State to impose some restrictions on planning applications for enterprise zones. I hope that they will not make too many restrictions.

There is a danger in the way in which we are going about the proposal. I hope that the Financial Secretary will give some estimates of the costs involved. We have promised one enterprise zone to Scotland, one to Wales and one to Northern Ireland. Six areas in England have been listed. Only three or four will be allowed. I should like to be satisfied that the cost of going ahead with six enterprise zones is prohibitive. The publication of the paper has stimulated great interest and effort. There has been great excitement, and a willingness to succeed.

Mr. Tam Dalyell (West Lothian)

It has raised expectations.

Mr. Silvester

I can see no reason why we should not instil a competitive spirit between the areas in order to see how keen they are. However, the keenness of the six English regions has been demonstrated. If the Government say that they are sorry but that there will be only three enterprise zones, the three areas that do not receive zones will be worse off than if we had not made the proposal in the first place.

I realise that I am pressing a regional issue. It does not take great wit to see that two of the suggested zones are in the North-West. People in the Northwest feel that if the pruning knife has to come out it might be thought more sensible to allow one enterprise zone in the North-West. A choice would then have to be made between Liverpool and Manchester. That would be an ill-advised choice. I advise the Financial Secretary against it.

Mr. Bill Homewood (Kettering)

There is no unanimity of opinion on this issue among Members of the Opposition or, as the hon. Gentleman has shown, among Conservative Members. However, if enterprise zones are a good idea, why should they be restricted or reduced? We have been told that they are a good idea. Let us expand the programme. Let us have 10, 15 or 20 enterprise zones.

4.45 pm

Mr. Silvester

The hon. Gentleman is deliberately trying to send up the argument. We may learn from enterprise zones things that have universal application. Those who believe in a free enterprise economy believe that enterprise zones will demonstrate certain qualities that will lead the Government to undertake policies of more general application. But I am not concerned about extending the list. The list has been published. Those who live in the areas affected have been involved. There has been a lot of discussion and activity. Many hopes have been raised in those areas. That is different from wishing to increase the number of enterprise zones beyond six. I do not wish to do that. It would be foolish to do so.

Turning to the amendment, it would be a great mistake to limit the area of operation within enterprise zones. Not only can jobs be created by the type of commercial development that the hon. Member for Heeley dislikes; the types of jobs created would be of particular value in those areas. We should do ourselves a great disservice if we did not allow enterprise zones to develop naturally under their own steam. They should cover activities that include manufacturing, commerce and the hotel trade. I hope that the Financial Secretary will say that the scheme will go ahead in its full glory.

Mr. Denzil Davies (Llanelli)

You have indicated, Mr. Weatherill, that several amendments can be debated with amendment No. 23. The two main Opposition amendments are amendments Nos. 19 and 20. They do not differ in substance from the amendment moved by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley), or from the points that he raised concerning the split between industrial and commercial developments. Amendment No. 19 seeks to leave out commercial buildings. We should like to know what " commercial building " means. Perhaps the Financial Secretary will tell us what type of development he has in mind. Does " commercial " include warehousing and other activities? We need some explanation.

Amendment No. 20 concerns offices. There is a curious provision in the clause. It states that an office—even if a " trade, profession or vocation " is not carried on in it—can still get capital allowances. I hope that the Financial Secretary will explain that. I cannot envisage an office that does not carry on a " trade, profession or vocation." I should have thought that the activities of that office would have been taxed under case 1 or case 2 of schedule D.

We need clarification. That is one reason why we tabled our amendments. There will be further opportunities to debate the matter and a chance in Committee upstairs to discuss the development land tax aspect. When we have brought all the strands together, we can come back to the subject on Report. It is a new venture and we need to understand fully what the Government are about.

You have indicated, Mr. Weatherill, that you are happy that there should be a general debate on this subject and the discussion has proceeded along those lines. It is clear that, despite a few disputes within the city of Sheffield, the Opposition remain deeply sceptical about the venture, which seems to be a pathetic attempt to remedy some of the damage that the Government's other economic policies are doing to this country.

We are sceptical for a number of reasons. First, the venture is being introduced against a background of depression, no growth for the next few years, high inflation, high unemployment and the virtual destruction of manufacturing industry in many parts of the country. We read today that 3,000 jobs are to be lost in the Lucas works in the West Midlands. I do not know whether there is to be an enterprise zone in that area, but how can paltry enterprise zones make up for even a small fraction of the loss of jobs that has taken place over the past year and the loss that will, on the Government's own admission, take place over the next two or three years?

We are being offered a few miserable acres to help to arrest the continuing decline and the rising tide of unemployment. Many parts of industrial Britain are being starved to death by the Government's policies. It seems that all that the Government can do is to throw it a few stale crumbs and crusts, as they are trying to do with the enterprise zones.

Mr. Budgen

They are fresh.

Mr. Davies

They are not all that fresh, as I shall show shortly.

We are sceptical because of the Chancellor of the Exchequer's attitude and the reasons that he gave in a speech to the Bow Group at a public house on the Isle of Dogs in June 1978. We are sceptical of the reasons for introducing the zones. The philosophy behind them is rather disturbing. The Chancellor told the Bow Group: Almost ten years ago I was walking with a Labour councillor, whom I knew well, down a road in Poplar, only a short distance away from here. As we passed beside a terrace of decaying houses, two up and two down and about a hundred years old, he observed ' Are those not a dreadful monument to private landlordism? ' ' Absolutely not ' I replied. ' The fact that they are here in such numbers is remarkable tribute to the speed with which nineteenth century private enterprise housed the newly urbanised working people of our country, to standards much higher than they had previously enjoyed '. We reject the philosophy behind the enterprise zones and the idea that private enterprise can produce makeshift schemes to provide a few miserable jobs in areas where standards will be less than adequate in many cases.

Take the case of South Wales, Mr. Wealherill. We are being offered a miserable 200 acres on the edge of an area which is to lose 6,000 jobs in one steelworks and 6,000 in another, with all the consequences of that action. How can those miserable 200 acres do anything to alleviate the misery and suffering that will be caused?

In South Wales, and no doubt other areas, there are already factories on enterprise zone sites. I understand that they will receive the new capital allowances. We are not talking about new businesses coming in. In many cases, existing institutions will get support, even though they are already in those areas. I hope that the Financial Secretary to the Treasury will confirm that existing operations will receive those benefits.

We are also sceptical because the Government have taken away development area status from many parts of the country. Many parts of Wales, Scotland, and the North have lost that status as the result of a positive decision by the Secretary of State for Industry to deny help to the regions, because he and the Government believe that that is not the way to develop the economy. Having taken away development area status, the Government are proposing to restore these miserable provisions in small parts of many of the regions that have ceased to be development areas.

The clause is concerned with capital allowances, which are all very well if a firm is making a profit, because they can be set against taxable profits, but in many cases firms in the enterprise zones will not make profits. We have seen the prognostication of the effect of Government policies on the profit potential of British industry over the next few years. There will be a substantial decline. We shall find that tax allowances cannot be taken up.

Firms starting up, especially small firms, do not need capital allowances, because they cannot use them until they are generating profits. If the Government wanted to help such firms, they should have provided specific grants, because they would enable organisations to get started. Capital allowances come years afterwards when firms generate profits, if they are able to do so in the present economic climate. If the Government were concerned about helping those firms to build factories, they should have gone back to the old investment grant system, which specifically helped small firms to put up factories. The Government scheme is clearly ill thought out.

Another problem is that areas will be competing against each other. We do not have economic growth. There are no more jobs being created and there is no more investment coming. Areas will be competing for the same investment and the same lack of growth. Areas that get the assistance will take jobs from other areas.

The economic cake is getting smaller. There will be no growth next year or in the following year. We have a shrinking pool of investment, labour and job opportunities. Areas will be bidding against each other. If we had growth, there might be something to be said for the venture, but we have no growth and one It is an ill-thought-out scheme, which the area will be fighting against another. Chancellor has introduced as a result of an idea that he had while walking down a road in Poplar. It is another example of the Tory Party's wishful thinking about the economy. It is a nineteenth century attitude towards the problems of a modern, complex, industrial society. The idea is that if we cut taxes and give people a few reliefs there will, as in the nineteenth century, be great growth. But the world and the British economy have changed, and that is no way to regenerate the economy.

The last Budget was supposed to produce a crop of entrepreneurs as a result of the tax cuts. Nothing has happened. There will be nil growth next year or the following year, and little growth throughout the Government's tenure of office. The proposed system is based on a wrong-headed attitude to the problems of industry and the economy in the middle of the twentieth century. It is the laissez-faire attitude of the nineteenth century put into operation at a time when circumstances are completely different.

Mr. Hooley

There is also a basic dishonesty in the concept. The Government say that they will cut public expenditure by not giving grants, but they are prepared to forgo income through tax relief. The end result is the same.

Mr. Davies

I do not know whether the Financial Secretary can tell us how much this clause will cost, but perhaps he can indicate the total cost of the Chancellor's idea.

5 pm

Mr. Spearing

In Committee the Minister of State, Department of the Environment mentioned the figure of £50 million a year. That is additional expenditure by the Exchequer, possibly including forgone income. That is a scandal. Those in need and those not in need, the just and unjust, will all be affected within these zones.

Mr. Davies

The Minister may be able to give us the figure, which is possibly more than £50 million. That money will have to come from somewhere. I do not know how much the Government will save by changing development area status.

Returning to that famous speech by the Chancellor, it was headed in the handout from Conservative Party Central Office " Enterprise zones for all systems go ". I understand that that is a space metaphor. In terms of the problems of urban blight and decay and unemployment, the scheme can be compared with using a Tiger Moth to try to reach the moon. That is basically why we remain deeply sceptical of such schemes. We shall go into detail in Committee upstairs. I hope that on Report we shall have further information on which to form a final judgment.

Mr. Esmond Bulmer (Kidderminster)

I hope that the Committee will resist attempts to restrict operation of the scheme. My right hon. and learned Friend the Chancellor emphasised that it was an experiment designed to help those areas that most needed help.

The Treasury team will doubtless monitor the success of the zones and apply some of the lessons learnt more generally. When my hon. Friend does so, I hope that he will bear in mind the problems of the one-industry town. Kidderminster has for many years depended on the carpet industry. In the past 10 years that industry has employed, directly or indirectly, at least one-third of the people in the town. Since 1974 the number of people directly employed has fallen from 11,500 to about 7,000. The indications are that the number will further reduce.

The reasons for the reduction are not difficult to diagnose. The industry expanded during 1973–74. It was then hit by the huge increase in oil prices, as was our whole economy, and found that it had a great deal of surplus capacity. It began to sell at the margin, and had less money to invest. It faced higher wages and costs, particularly fuel costs. It found itself in a vicious spiral.

A number of us in management, unions and local government met together at regular intervals over the past five years to see what might be done to attract new industry, and the proposals in the enterprise zone scheme are extremely attractive. We first tried to see where sites might be provided for new industry. The largest potential site was unavailable because of the complexities of development land tax. Some of the smaller sites involved county and district planning, which caused problems. I pay tribute to the district planning officer for the way in which, over a long time, he has looked at each site to see what could be done to bring it forward. However, when it comes to looking for sites, particularly for carpet factories that have gone out of business, and seeing how such sites can be relet, difficult planning problems can arise. Any measures that the Government may introduce to simplify such procedures can only be helpful.

The sum of the past five years is that we have lost jobs in thousands and have reinstated jobs only in hundreds. Large companies will not employ more people. New jobs must come from new and smaller companies.

Three factors are overwhelmingly important in seeking to encourage industry. First, those who take investment decisions must have confidence that the basis on which they are taken will not be torpedoed. Over the past five years my company has lost hundreds of jobs through a single tax change introduced by the previous Government. Secondly, industrial relations are crucial. My company is fortunate in having a background of good industrial relations. Thirdly, interest rates are at present the great dampener. For people to see that interest rates are coming down is as important as, and some would say more important than, the absolute level.

Mr. Campbell-Savours

When?

Mr. Bulmer

The Prime Minister gave an indication yesterday that it would not be too long before the0y came down. It is essential that those in industry should be confident that when interest rates start to come down they will continue to decrease and not rise again.

The right hon. Member for Llanelli (Mr. Davies) poured scorn on the enterprise zone offer for his constituency. If 200 acres in my consituency were available under the scheme, we would grab it. It would be poetic justice if the old Ministry of Defence site at Hartlebury, which employed over 2,000 people and which was closed by the previous Government, were offered. It would be a good site for new industry. The Property Services Agency is offering it next month. If it had the attractions that go with enterprise zones added to it, it would rapidly generate new jobs.

I hope that the scheme will be successful, that my hon. Friend will learn lessons from it and that some of the measures will have wider application. When my hon. Friend seeks to extend the measures, will he consider particularly those towns that have been over-dependent on one industry?

Mr. Grimond

I hope that the Financial Secretary will discharge the duty imposed on him by the hon. Member for Sheffield, Heeley (Mr. Hooley) to define the word " commercial ". The hon. Gentleman prudently refused to define it, but it is of importance.

I have some sympathy with the amendment. I believe that primarily the provisions in the clause should be for manufacturing industry. There is a danger that there will be land speculation in those areas that people believe may be designated under the Bill. I hear, however, that " commercial " includes such concerns as repair shops, apart from warehousing and other activities that one could not rule out as being illegitimate activities for these zones. I hope that the hon. Member will clear up that matter.

I agree with the hon. Member for Heeley about the curious way in which the matter has been handled. As the hon. Gentleman said, what amounted to a Second Reading debate took place in a Committee of the House on an enormous new schedule to the Local Government, Planning and Land (No. 2) Bill. So far, that is the main fount of information upon which we have to go, and whether it is to continue as a matter for the planning authorities or for the Treasury appears somewhat doubtful. I hope that at some stage, somewhere, the two will brought together.

Many interesting features arose in that debate. I found myself, not unexpectedly since unity is the hall-mark of the Liberal Party, largely in agreement with my hon. Friend the Member for Isle of Wight (Mr. Ross). We approve of this move with considerable reservations and questions.

When the Chancellor of the Exchequer first made this suggestion, I welcomed it for two reasons. First, any sign of new thought in a Chancellor of the Exchequer is to be welcomed, otherwise we plough on with 50 per cent. on whisky, 10 per cent. on cigarettes and the argument that the duty on this or that commodity has not been increased in 10 years and it is time that it was. This is supposed to save the country. But it has not saved it over the past 30 years, and it will not save it in the next 30 years. Something must be done to improve the state of industry and to increase production. Therefore, any new thought on the part of a Chancellor of the Exchequer is in principle to be welcomed.

Secondly, it shows that for once a Government are not content to erect obstacles to common sense, production and so forth, and then erect machinery for getting over them. This is our normal way of proceeding. As I understand it, here we have an attempt to remove the obstacles, and I welcome that. It seems economical and sensible and the kind of move that one seldom hears proposed in the House of Commons.

Having read the Government's explanations of this, one is bound to ask what is the object of it all. Frankly, I found it much easier to commend before I heard Ministers speak about it. With the short, throwaway remarks of the Chancellor of the Exchequer I find considerable agreement, but the more I read the speeches in Committee, the more confused I become.

I thought that the Chancellor of the Exchequer was putting forward this proposal as a method of helping the derelict inner city areas.

The Financial Secretary to the Treasury (Mr. Nigel Lawson) indicated assent.

Mr. Grimond

If that is so, why has every planning authority been asked whether it wants to participate?

The new towns are mentioned specifically in the schedule as possible beneficiaries. Whatever else one may think of the new towns, it must be agreed that they are totally different from the derelict inner city areas, So who is it meant to help? Every local authority which has any planning powers is being told that it may take part in this experiment, if it is lucky. It is a great national lottery in which someone will draw a prize. We do not know who. But it is open to everyone.

Although the Financial Secretary indicates his agreement when I suggest that this proposal is designed to help the inner city areas, that is contradicted by the schedules to the Local Government, Planning and Land (No. 2) Bill.

It may be said that, anyway, it is meant to help small businesses. But there is no reason to believe that that will happen. As the hon. Member for Heeley and others have pointed out, it is all too likely that very large and speculative businesses may be in a better position to cash in on this than are small ones. At any rate, I should like to know from the Treasury whether helping small businesses is part of the object. I hope very much that it is, because they have a part to play in this. But, if it is, they will need some protection against being outbid by big businesses for premises and so on in these zones, and they may need other help if they are to take part.

The third possible reason for this is that it is an experiment. Indeed, this was said by a Minister in Committee. However, before reading what he said, perhaps I might digress for a moment, because I notice that his comments were made in the course of the forty-first sitting of the Committee. This is the state that we have reached under a Conservative Government. I used to complain about the number of hours spent in this place under a Labour Government. But those seem happy far gone days. Now we have a second, perhaps a third, planning Bill running to innumerable pages and 41 days in Committee. However, that is by the way. I return to my main theme.

5.15 pm

During the forty-first sitting, the Minister said: As the Member for Greenwich pointed out, it is extremely expensive"—— that refers to this proposal—— even in the limited fashion in which we propose to conduct it. It cannot be widely extended; it is an experiment."—[Official Report, Standing Committee D, 20 May 1980, c. 1256.] But what is the point of an experiment which cannot be extended? It could be argued that if it is relevant to certain places, that is all right, but that is not an experiment. If it is an experiment, why cannot it be extended?

I refer now to the matters dealt with in the Government's handout. There is no reason why some of them should not be extended, and extended now if the Government thought it appropriate. For example, reference is made to the simplification of planning procedures. I can tell the Government, without having all this palaver, that this would be welcomed everywhere in the country, from Shetland down to Land's End. The Government do not need to bring in this Bill to establish that. They could do it now, and it would be welcomed unanimously.

There is a reference to exemption from the requirements of industrial training boards. It has been pointed out by me that in my constituency industrial training boards are of no use. My constituency is separated from the boards by the sea, and small businesses do not find these boards of any great use. So in many parts of the country the exemption has been established already.

Mr. John Townend indicated assent.

Mr. Grimond

I am glad to see agreement coming from an hon. Member who runs a small business. In respect of many parts of the country, industrial training boards can be written off now, though I do not suggest that that is true of all parts of the country.

There is also reference to a reduction to the bare minimum of Government requests for statistical information. Surely we do not need an experiment to establish that. I cannot believe that a Conservative Government need an experiment to do so. I have often heard the Financial Secretary inveighing against the practice, although I notice that he has that pained expression worn by Ministers when they are reminded of what they have said in the past. However, I cannot help it. It has been one of the themes of the hon. Gentleman's writing and talking. He does not need this experiment before deciding to reduce the Government's requests for statistical information.

It may be true, of course, that the tax exemptions will be shown not to be worth while. Presumably that is what the Government have in mind by experiment. If we read the speeches of the Minister in the Committee which considered the Local Government, Planning and Land (No. 2) Bill, we see that these tax exemptions represent a considerable sum.

What evidence have the Government that derating in Scotland, which already exists, has been effective? We have this experiment already. Scottish industry is derated. Has this led to the expected result of drawing industry into Scotland?

In my constituency it has had a curious and anomalous result, in that the largest oil terminal in Europe, which has come to Shetland not because of derating, not because of the splendour of Shetland, and not because of a love of the Shetlanders but because it happens to be nearest to the North Sea oil fields, may be derated. The one in the Orkneys has been derated already. But it was not derating which drew it there. That is a wholly unforeseen result.

As the Government are experimenting, and as they are keen to monitor the effect of the experiment, have they been monitoring the effect of derating in Scotland? If so, what conclusions have they drawn?

There is a great deal of evidence both here and in the United States that it is extremely difficult to get industry to go back into the inner cities. It was mistakes of planning and ludicrous Government policies which drove industry out of the inner cities. Now we have other Government policies to drive it back again. This may go on indefinitely, and, if it returns to too great an extent, we shall have set up a new bureau of office dislocation. The Location of Offices Bureau was set up to drive offices out of London. Suddenly, London's Underground was covered with notices saying that the bureau was now driving people back into London.

Have the Government any real evidence that all this will end up in a satisfactory balance in the inner cities? I do not complain about discrimination; it is dog-in-the-manger to complain that someone else's constituency is getting what one does not get in one's own constituency, anyway. What is more, I do not complain about a few spivs, so long as they are kept within reasonable bounds. I do not think that we can draft legislation to exclude spivs completely in any country, especially in this. Nevertheless, discrimination inevitably brings more discrimination, and I hope that the results of this are being noted.

If we are to have an experiment, and if this is an experiment, it should not be carried out solely in one type of community. There is a lot of evidence to suppose that in smaller towns such as Gloucester small industry has better prospects than it does in the derelict inner city areas. If there are to be four or five experiments in England, they should not be set up in the same type of place. Some should be located in inner cities, some in medium-sized towns and some in towns with a particular problem, such as Corby.

There have been references in the debate to one-industry towns. I have no constituency interest in Corby. My interest arises as chairman of an organisation that is trying to persuade people in Corby to put their money into co-operatives. Corby would seem to be a suitable place for an experiment. If it were freed of taxation and new industry were located there, some of the people being laid off by the steel industry, in painful circumstances—they are taking it extremely well—might be willing to engage in new forms of enterprise, such as a co-operative.

What is the relationship with the urban programme? This is skated over. Will areas already covered by the urban programme be considered? Some information should be given. How is the scheme to be administered? I understand that the free enterprise zone will be administered by the relevant local authority. I hope that that is correct. Parts of the schedule give the impression that the zone might be administered by new town corporations. Is it conceivable that a new quango will be set up to administer them?

Mr. Hooley

Part of the answer appears in the schedule. The Government's new quangos, called urban development corporations, will have the power to run those zones. That is set out specifically in the schedule.

Mr. Grimond

This is what alarms me. I hope that the Government will throw some more light on their intentions.

Another question that has rightly been raised concerns the Government's intentions about infrastructure. Part of the trouble of the derelict areas of inner cities is that the infrastructure has disintegrated. Transport and all sorts of amenities have vanished. The middle of Liverpool is becoming a desert. It is no good simply proclaiming that people in the area will get tax exemption. More is needed. Do the Government intend drastically to alter the planning procedures? What are their plans for these areas that have been virtually abandoned not only by industry but by the population?

One of the great mistakes of the planning Acts was zoning. It was a mistake entirely to separate industry from living conditions. It will be extremely difficult to repopulate inner parts of cities. If it is to be achieved, one needs a mixture of people living there and working there, together with small businesses, trading, and all sorts of retail activity. That will mean a drastic alteration of the planning law. Zoning still continues. It is disastrous.

I hope that the Government will not only answer the main point of the amendment, which has much validity, in trying to tie this experiment mainly to manufacturing, but will inform the Committee in far more detail how their proposals will work and whether they are prepared to take the measures outside the Finance Bill that will be necessary if the scheme is to be successful.

Mr. Graham Bright (Luton, East)

The Government's plan to create enterprise zones in inner city areas suffering from economic decay and social decline is one of the most imaginative proposals in the Bill. The severe problems that communities dependent on one major industry have to face when that industry enters a long-term decline have been recognised by hon. Members on both sides. A whole range of measures has been tried in the past to deal with this problem—regional subsidies and allowances, physical control, adjustments and the rate support grant. Unfortunately, efforts to revive areas such as the docklands of inner London or the shipbuilding areas of Tyne and Wear have not been as successful as was hoped.

Part of the reason is that artificial respiration is no substitute for natural breathing. Our aim must be to create jobs with a secure future based on self-sustaining economic activity. That is a task for private enterprise, especially small businesses. Such businesses offer the best opportunities for generating new products and new services. They offer opportunities for skilled workers and executives to set up and innovate on their own.

The enterprise zones will provide the right conditions in which the process of economic revival can begin. I welcome and support the Government's proposals strongly. It is vital to get the right balance between industrial and commercial development in the zones.

I am surprised that Opposition Members should have put down amendments to clause 68 to exclude commercial buildings and offices from the proposed capital allowances. This would prevent a wide range of commercial and service undertakings from setting up in the enterprise zones. It is a mistake to assume that industrial development alone creates a large number of new jobs. In the United States and West Germany small businesses create the bulk of new jobs, mostly in the commercial and services sector. In that sector I include banks, computer services, warehousing, packaging, and repair and maintenance services.

Mr. Hooley

The hon. Gentleman is right in saying that commercial operations create jobs. But he has overlooked the fact that the massive loss of jobs, the haemorrhage of jobs, at the moment is occurring in manufacturing industry. It is no use offering jobs as computer operators to skilled engineers who have been displaced from the engineering and steel industries.

Mr. Bright

I appreciate that. We must examine what is happening, as living standards increase, in other parts of the world. I have mentioned West Germany and the United States, where a more significant part is played in the economy by service industries.

Mr. O'Neill

Supporters of the amendment are trying to make the point that they would like to see a Silicon Valley in many of these areas. We do not want a Las Vegas.

Mr. Bright

I have already stated that the right approach is to try to achieve a balance. The capital allowances for industrial and commercial development are the key to balanced growth in enterprise zones. This would not be possible if development land tax was applied. Exemption from its provisions is a positive step forward. It is right that the Government should be seeking the agreement of local authorities in whose areas the enterprise zones may be sited on the planning criteria to be employed. Speeding up the planning procedures is an essential step in encouraging businesses to come in.

As a small business man, I know from personal experience how time-consuming these procedures can be. I appreciate the burden of rates not only on the domestic ratepayers but on commercial premises. They take no account of the profitability of the business, the number of people employed or the nature of the work done. My right hon. and learned Friend the Chancellor of the Exchequer has decided rightly that premises in enterprise zones shall be exempt from general rates. If the experiment is successful, I hope that my right hon. and learned Friend will see the advantages of extending his proposal to the rest of the country. There is no harm in hoping.

The measures accompanying the provision of capital allowances, exemption from the requirements of the industrial training boards—I also hope that these can be severely cut back elsewhere—the abolition of the remaining industrial development certificates, the reduction of the amount of statistical information demanded and the speeding up of Customs procedures are all welcome. They will certainly make the enterprise zones more attractive, but they do not necessarily complete the range of measures that we should be considering.

My hon. Friends who are members of the small business committee are keen on the idea of exempting employers in the enterprise zones from paying national insurance surcharge for their full-time employees. I am sure that Ministers know how much that would do to encourage small employers in these zones to take on more workers, and I hope that they will respond positively.

5.30 pm

The limited experiment that we are now beginning is of great importance to the depressed areas. I am convinced that the creation of positive incentives and relaxation of the suffocating web of fiscal and planning controls is the right way to solve their problems. But we should not be afraid to expand the number of enterprise zones and to apply the principles upon which they are to operate to other areas where industries are declining and unemployment is high and rising.

Small businesses will certainly seize the opportunity that the creation of enterprise zones and the provision of the industrial buildings allowance will give them. When there is a loan guarantee system for small businesses, our range of measures will be nearer completion. I urge my right hon. and hon. Friends on the Front Bench to go forward with this scheme and to follow it up by widening its scope and application in the years to come.

Mr. Spearing

The speech of the hon. Member for Luton, East (Mr. Bright) illustrates our great difficulty. He was in favour of the principle of enterprise zones, but at the moment we are debating an amendment to restrict capital allowances to industrial activities in enterprise zones, should they be introduced. The hon. Gentleman is a first-rate example of those who have taken the Government's proposal for these zones hook, line and sinker. That is illustrated by his hope that such experiments will be applied generally over the whole nation——

The Chairman

Order. I do not think that the hon. Member for Luton, East (Mr. Bright) needs my protection, but if the hon. Member for Newham, South (Mr. Spearing) had been here earlier he would have heard me say that I was prepared to allow a general debate on clause 68 with these amendments. The hon. Member for Luton, East was therefore in order.

Mr. Spearing

I was not suggesting that the hon. Gentleman was out of order, Mr. Weatherill. I noted what you said and that is why I hope that what I am now saying is equally in order. But the hon. Gentleman has accepted the Government's propaganda hook, line and sinker. I was criticising only the content and logic of the hon. Gentleman's speech. He hopes that the scheme will be extended, but, as the right hon. Member for Orkney and Shetland (Mr. Grimond) pointed out, this is not that sort of experiment. Indeed, can it be an experiment if it is not applicable in the wider conditions—as it is not, as the Minister of State told us in Committee? He said that the Government are to spend £50 million on rate relief and other reliefs and that they could not possibly do more because it would cost too much. I think that my hon. Friend the Member for Greenwich (Mr. Barnett) worked out that rate relief would amount to about £10,000 an acre in the designated enterprise zones if they were to cover about 500 acres each.

Mr. Bright

Does not the hon. Member agree that if the experiment is a complete success and it generates new businesses and provides an impetus for growth in the economy the Government obviously would have to consider extending it?

Mr. Spearing

The hon. Gentleman assumes that the new jobs and enterprises that are thereby generated will be a net gain to the country and will not be drawn into one part of the country from another. That is a big assumption. Secondly, in advocating wholesale largesse from the Treasury to particular areas, irrespective of who is already in those areas and what is happening there, organisations which do not need assistance will benefit from central Government funds just as much as those who do need it. For a party which publicly proclaims that centralised interference with local activities and centralised support of free enterprise is anathema to propose such indiscriminate largesse represents a surprising philosophical move.

Mr. Homewood

If it is surprising should it therefore not be welcome?

Mr. Spearing

It may not be quite as welcome as it looks. There is an old saying that when Greeks bear gifts one has to beware. If the Government turn almost the whole of their philosophy back to front, as they are doing in respect of enterprise zones—I see the Financial Secretary shaking his head, but the proposal is for centralised and indiscriminate intervention in local and industrial affairs. It is intervention in normal, local planning democracy. It is a taking away of local democracy and local choice of the sort that is advocated throughout the Local Government, Planning and Land (No. 2) Bill. All this is done in a manner which gives the Secretary of State for the Environment enormous powers, which will sometimes bypass this House. That, again, is contrary to almost everything that was said by Conservative candidates at the general election. The nature of this centralised power can be gauged from the new schedule 25 of the Bill. I therefore say to my hon. Friend the Member for Kettering (Mr. Home-wood) that although this may appear to certain councillors all over the country to be a welcome move, they should beware of it. This apparently good bargain contains long-term disadvantages, not just for their areas but for the nation as a whole.

The Local Government, Planning and Land (No. 2) Bill appeared in reprinted form yesterday. It contains over 13 pages of the schedule on enterprise zones. The price which local authorities are being asked to pay has hardly yet been mentioned. They will be asked by the Secretary of State for the Environment, both in informal conversations which have already begun and in the terms of the schedule, to give up detailed planning control. The right hon. Member for Orkney and Shetland may think that that is a good thing, but exchanges involving the Labour Benches so far have shown that planning control has become a firm element in post-war government. In many places those who invest—this includes pension funds representing large sections of the population—require the protection that planning control gives. It is a question not of bureaucracy but of wise decisions about what sort of development should go where and how much of it there should be. We all know such centres. Some of them are not far from this House, particularly town centres such as Croydon, where office developing has taken place specifically as planned in a structure plan.

The surprising thing about the Bill is that it says that, where there is an enterprise zone, the structure plan should be changed willy-nilly. If that is not retrospective legislation it is getting very near to it. It is important that the principle of generalised structure plans as to where retail development, office development and new road building should take place is, in broad terms, not questioned across party lines. I do not think that even the right hon. Member for Orkney and Shetland would question the broad structure of planning. He does not face the problems in Orkney and Shetland that we encounter here, but I do not believe that he would question strategic planning.

This scheme says that we shall do away with planning applications within enterprise zones provided that the use falls within the generalised definition of the zone as a whole or within its compartments. That is the new feature in enterprise zones, other than the financial largesse which the Treasury is, uncharacteristically, pouring into the zones. I suggest to Conservative Members that that is a dangerous precedent, because what the Government will say to local authorities is that there will be no general process of planning applications for any activity within the zones as long as that activity conforms to the generalised perimeter definition.

It may be that some activity will not affect the rights of people already there but it might well do so, and there will be no question of a planning appeal. There will be no question of going along to one's local councillor to say that the local planning committee should throw out a particular planning application. If such an application is within the generalised criteria which have been agreed with the Secretary of State for the Environment before the area was designated the complainant will be told that the authority is sorry, but all has been agreed and the application comes within the generalised definition. The authority will say that matters have been agreed with the Secretary of State and that nothing can be done about it.

The aggrieved householder or local ratepayer—it might even be a business man—might then go to his Member of Parliament and say: " Look, I have no powers here. What are you going to do about it? " The Member of Parliament will go to the Secretary of State for the Environment to ask why he is allowing a certain thing to happen. The Secretary of State will say " It is not me. The local authority produced the scheme. I have designated the area and that is that."

One of the greatest dangers of this scheme is that we shall give away some of the protective mechanisms covering individuals or bodies who are either inside an enterprise zone or adjacent to it for the payment of money which does not go to them but which goes in rate relief and capital allowance taxation for the enterprises within the zone. That mechanism is open to considerable criticism.

The second point touched upon in the debate is that the scheme will engender great speculation. There are to be only six zones at the start. There will probably not be more than six, for reasons that we understand. Yet great interest has been shown. We know that the Secretary of State for the Environment has sent his officials to talk to people in many areas. Much speculation will take place about where the zones might be established. In those areas where zones are established land values will obviously go up because land which is rate-free, and free from other financial encumbrances, must increase in value. There is no getting away from that.

As I pointed out in an earlier intervention, if the generalised planning permission is for offices up to four or five storeys, for example, the value of the land will leap immediately. Therefore, the money which the Treasury will pay out under these provisions—particularly in rate relief, which will constitute the largest amount—will, I suggest, go either straight into the hands of the people who own the land already, who are the fortunate recipients of the windfall where areas are designated, or into the pockets of speculators who may be speculating on where the zones may be.

Hence, the technical press is full of stories about Wandsworth hoping for a zone, Tower Hamlets putting in for a zone and Manchester asking for one as well. Liverpool may ask " What about us? " Those stories are appearing and the greater the speculation the greater the degree of speculation investment. In the end it is the firms who go there who will pay because unless they own the freehold rights already they will have to pay higher rents for the value of the land.

5.45 pm

What of the activities that will take place in the enterprise zones? I address my remarks in particular to my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) because these are some of the factors that must be borne in mind. Where will the activities come from in any industrial area to comprise the enterprise zone? I suggest that the first people to move in will be those already running foot-loose industries within a reasonably short distance of the area. Such businesses can move into the zone with their employees.

In other words, many of the people who will move in fairly soon are already operating not far away, and there will not be much net gain. I suggest also that those who move in will be people who do not have a great deal of heavy capital plant or equipment. Once capital plant and equipment for manufacture has been set down it is very expensive to move it again. The kind of people who will move into the enterprise zones quickly are those who have equipment which is easily moved. Those businesses will, perhaps, be particularly associated with transport, the container trade, packaging, transport depots, vehicle repairs and so on.

What will be the position of those businesses when an enterprise zone is finished? The Government say that the zones will exist for 10 years but, presumably, a subsequent Government could review the position. After a time the rate relief will be a diminishing return because at any time it could disappear. I cannot see the Treasury advocating the proliferation or continuation of the zones for that length of time.

I suggest that in the matter of long-term income the business men who go to the enterprise zones will have little security over five or six years. What kind of people will go to the zones in the face of that relatively short-term benefit?

My own borough is interested in this issue and I say to my hon. Friends that there are some disadvantages to the scheme. Those disadvantages will appear as time goes on. They are particularly noticeable from a perusal of schedule 25 to the Local Government, Planning and Land (No. 2) Bill. In the end it will be the Secretary of State who invites local authorities to put up a scheme. All the consulation that is going on is entirely unofficial. The legislation has not yet gone through the House and it is quite clear that the Secretary of State for the Environment is seeing how much de-planning local authorities can achieve. Those authorities which provide the Secretary of State with a de-planning package suitable to his requirements are probably the ones that will be designated in the end.

If there is to be an experiment it could be that, in a very specious way, the Secretary of State for the Environment—particularly the present one—will say " Look how this industry is flourishing now that we have removed planning controls ". The real reason, of course, why industry might flourish would be because of massive handouts of millions of pounds by the Treasury. It will be as a result of money received from the Treasury, not because of de-planning, because such de-planning will be to the disadvantage of somebody else.

That point brings me to the amendment in the names of my hon. Friend for Sheffield, Heeley (Mr. Hooley) and myself, in which we seek to delete subsection 1 (b) of clause 68. That provision allows hotel and commercial buildings or structures to be given capital allowance relief under this scheme. The amendment represents a relatively small cut in the financial largesse which is to be showered. The rate relief will provide the lion's share of the finance. Capital allowance might be significant for certain forms of activity.

I deplore de-planning. It is a cosmetic to the process of regeneration of British industry. I do not believe that it will do what the Government wish it to do. If there is to be such a form of de-planning, we should not shower money on commercial and hotel developments in this way. That is why I support the amendment. I hope that my hon. Friends will heed the arguments.

Mr. Budgen

I wish to take up the general spirit of what the hon. Member for Newham, South (Mr. Spearing), said. It is plain and understandable that he and many of his hon. Friends deeply dislike the whole idea of enterprise zones. We understand why. The enterprise zone springs from the Tory Party's belief in profit and the desire of people to improve their lot and the lot of their families. The idea is wholly opposed to the bureaucratic ideal of planning and regulated commercial and industrial activity.

It is plain from even a cursory perusal of schedule 25 of the Local Government, Planning and Land (No. 2) Bill that the co-operation of a local authority is a condition for the designation of an enterprise zone. The Labour Party wishes to pour scorn on the enterprise zone concept but has neither the muscle nor the courage to vote against it au fond. It wishes to nit-pick and to make it plain that it does not like the idea. However, some local authorities are more self-confident in their Socialism. They will say " We prefer planning to the profit motive. We prefer the wisdom of the bureaucrat and the concept of regulation and heavy taxation to anything that the Tories may propose for an enterprise zone."

If a local authority does not wish to co-operate in an application for an enterprise zone, I hope that the Minister who has to decide whether to designate a zone will make clear publicly that he has not designated a particular area because the local authority does not wish it to be so designated. That is an important point and it could apply to my local authority. Some of the Socialist councillors in Wolverhampton have indicated that they do not wish the local authority to make such an application.

If the suitable 500-acre site at Bilston, which could transform a large part of the Midlands, is not designated, because of opposition by the ruling Socialist group in Wolverhampton, that should be made known, and the voters in Wolverhampton should be able to express a view at the next election.

My second point demonstrates my distrust not only of local authorities, but of central Government. I asked my hon. Friend the Member for Bristol, West (Mr. Waldegrave) how the six areas were to be designated. He told me with jovial but not entirely serious cynicism that they will be designated according to the pork barrel. I hope that that is not so.

I have often listened to the Financial Secretary with interest and admiration. I am sure that he will agree that one of the most disagreeable features of the last decade has been the extension of the pork-barrel principle in our politics. I believe that reliefs or benefits should be general and that there should be no showering of benefits on particular areas or individuals as a consequence of the pork-barrel lack of principle in politics.

The two great parties have been guilty of pork-barrel politics in the last decade. It was used after the discretionary powers were conferred on Governments under the Industry Act 1972. The power was used to help the motor cycle manufacturers at Meriden, which is in a marginal constituency. Until 1974, that area was represented by the Tory Party. It was used again in the most disgraceful way in respect of the vast discretionary investment in South Wales as a result of the last Prime Minister's desire to try to buy employment near to his constituency.

I want no more of pork-barrel politics. A value judgment must be made by the Government in the designation of enterprise zones.

Mr. Spearing

The Minister of State became vague when he was pressed in Committee to give the criteria on which he would judge the zones that he would be most likely to designate. Is the hon. Gentleman aware that the Opposition moved an amendment to allow any local authority to make statutory application to the Secretary of State rather than leave the Secretary of State to give a statutory invitation and that the Minister resisted it?

Mr. Budgen

I am grateful to the hon. Gentleman.

I hope that the Government will publish the criteria on which they will choose the six areas. That is the best way to avoid the charge of pork-barrel politics. If the enterprise zones are to be useful, considerable benefits will be conferred upon people who own land in an enterprise zone and on the local authorities in designated areas. It follows that the local authorities which apply and are turned down will be disappointed. That is an inevitable consequence of any selective discretionary arrangement.

I am prepared to go along with the idea of a discretionary enterprise zone because it is an experiment which will be useful and which will have general application, particularly to the planning system. I understand why the Labour Party, pledged as it is to support centralised planning systems, dislikes the enterprise zone concept.

The Financial Secretary must make it plain that clear and specific criteria will be used and published so that there can be no allegation about pork-barrel politics. I shall be deeply ashamed if a particular area is made an enterprise zone in order to influence a Tory marginal seat. I shall be equally disgusted if Wolverhampton, which has a relatively stable parliamentary pattern, is denied an enterprise zone simply because it is more convenient to benefit other constituencies. I hope that my hon. Friend, when he reflects on some of his past speeches about the rule of law and the dangers of discretionary powers given to Governments, and all the comments that be no allegation about pork-barrel polisition, will give a clear undertaking that such criteria will be published.

6 pm

I hope that there will be no playing around with the amendment that has been proposed by the hon. Member for Sheffield, Heeley (Mr. Hooley). It is quite plain that the concept of the enterprise zone represents a return to free market liberalism, which is a strand within the present Conservative Party. I understand that the Labour Party, with its great links with the trade union movement, has an instinctive tendancy to prefer manufacturing activity to all other forms of activity. Let us have none of that.

Let us have none of the rather aristocratic paternalism which came so strangely from the mouth of the right hon. Member for Orkney and Shetland (Mr. Grimond) when he said, in a very grand way, that he did not mind a few spivs, as long as there were not too many. I must remind him that in the days when the Liberal banner was being carried by Cobden and Bright the great landowners regarded the manufacturers from Lancashire as the spivs of their day. The market not only created great prosperity for the new spivs who eventually became established families, such as the Peels and the Gladstones; it provided great wealth and prosperity for Britain. Let us have no strange Labour Party prejudices or new style paternalistic Liberal Party prejudices about the matter. Let the market decide who will prosper in the enterprise zones.

Mr. Duffy

In a curious speech my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) subjected the concept of an enterprise zone to prolonged ridicule and deprecation, yet he concluded by commending it to the Committee, if on a limited basis. He said that he preferred that we should move slowly on the matter. The hon. Member for Wolverhampton, South-West (Mr Budgen) pointed out that it is a condition of determination of enterprise zone location by the Minister that there be an acceptable degree of enthusiasm, and a willingness to work with the Minister, on the part of a local authority.

I say with the utmost sincerity that my hon. Friend the Member for Heeley has more virtues than most. No one could represent his constituency more conscientiously and effectively—as I, his neighbour, know well. If we appear to be taking issue on this occasion, no one should make too much of that, as did the hon. Member for Manchester, Withington (Mr. Silvester). No doubt the press, tomorrow, will do likewise. However, we have not disagreed before, and we disagree this afternoon only because I feel that the hon. Member did not make a case for our city that would commend it as an applicant for an enterprise zone. Whatever reservations we have—and I shall spell out mine—we need to show a great deal more enthusiasm than that mustered by my hon. Friend. Moreover, in presenting the case on behalf of Sheffield we must necessarily talk in a little more informed way about the nominated location, which happens to be in my constituency.

I intervened rather frequently in my hon. Friend's speech, and he gave way because he is a generous person. I now invite him, as I make my case for Sheffield, to feel free to reciprocate. If he thinks that I am not presenting the case properly, I hope that he will intervene. I shall prefer to give way to my hon. Friend rather than to other hon. Members who may wish to intervene.

Mr. Spearing rose——

Mr. Duffy

This is what I was afraid of. It was my hon. Friend the Member for Newham, South (Mr. Spearing) whom I had in mind when I made that cautionary remark.

Mr. Spearing

I am grateful to my hon. Friend. I understand that he is representing the interests of his constituency, as did my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley). In the course of my remarks I said that my area was also interested in the enterprise zones—but I did not make a case for Newham, which I could have done very easily. Does my hon. Friend agree that the debate is about the general issues of enterprise zones as applied to the national need, and especially about the amendment before us? Does he not think that it may be better to stick to those general points, rather than make a case which the local authority is, no doubt, making adequately elsewhere?

Mr. Duffy

I am sure that my hon. Friend is not serious in making those remarks. He heard the Chairman describe the debate as a general debate. There can be no question whether I am in order in speaking on behalf of my constituency. Indeed, I am expected to do so by interested bodies in Sheffield.

I take issue with my hon. Friend the Member for Heeley for another reason. Because of his acquaintance with Sheffield, his concern for the area, and the frequency with which he speaks in the House, no one was better placed than he to tell the House how industrial activity in Sheffield, especially in its east end, is in a state of crisis. No one was better placed than he, in opening the debate, to say that because of inflation, the soaring pound and record interest rates, local industry faces a collapse in profits. He knows that all the signs in our city point to a local industry in the grip of recession. He knows also that those developments point to something even more disturbing. Sheffield's east end, especially Attercliffe, symbolises Britain's industrial heartland as much as, if not more than, any other part of Britain. The threat facing Attercliffe is not only the decline of its staple industry—steel—but a threat that is compounded of persistent dereliction and desolation, which has lasted for 20 years, and of crumbling factories and industrial wastelands, from which there seems to be no relief. While Attercliffe, where successful industries once thrived, remains a blight and an eyesore on the industrial landscape, it is not only Sheffield but Britain as a whole which faces the relentless decline and fall of those manufacturing industries which were once our greatest strength.

I believe that the position is a good deal more urgent than my hon. Friend had in mind when he recommended the acceptance of the enterprise zones on a " go-slow " basis. Given the awareness of the acute problem of deindustrialisation in the east end of Sheffield, it is not surprising that the Sheffield city council demonstrated an immediate interest in the enterprise zone concept.

We lost assisted area status only a year ago, thanks to the changes in regional policy by the Financial Secretary's right hon. Friend the Secretary of State for Industry. Since then there has been a continued shake-out of jobs in steel alongside the failure, over many years, to redevelop Attercliffe. Therefore, it is not surprising that not only the city council, but nearly every other organised body in Sheffield, and not only on the Labour side, demonstrated interest in the enterprise zone proposal.

Discussion and consultation have taken place. If we have not entered into such discussions here—I read the Committee proceedings with the greatest interest— at least discussions have gone on for weeks in Sheffield between bodies at various levels. It is only right to put on record that they reflect all the doubts, scepticism and opposition that have been heard in this debate and will no doubt be heard again before it concludes. Nevertheless, the consensus is that Sheffield should make a bid for an enterprise zone.

No one is in any doubt about the possible snags or even the eventual possibility of downright frustration and disappointment. No one in Sheffield is dreaming of a Hong Kong on its doorstep or of a great programme of job creation. Sheffield's hopes as yet do not even run beyond job retention. The position in the east end of Sheffield is so desperate that we just want to hang on to what we have. That is why, for Sheffield's trade union leaders, an enterprise zone is a lifeline. For the working men's clubs and pubs, at which some of my hon. Friends, who are not now present, were prepared to scoff about an hour ago, an enterprise zone might yet mean a new lease of life. These valuable social institutions have been left high and dry as a result of deindustrialisation, which has removed plants and jobs as the city has followed the programme of housing clearance which has gone in every great city.

For the River Don steelworks, without which we could not have won two world wars, it could yet mean survival. For a firm such as Hadfield's, which was in the news recently—I mention it as one, but I could mention others—which is locked into a price structure not of its own making but through the BSC, and is now desperate for cash flow, rate relief could amount to more than £1 million. For a city which forfeited more than £15 million in spending power earlier in the year as a result of the disastrous steel strike, the notion of an enterprise zone is bound to have a compelling attraction. At the same time, it poses the same dilemma for the ruling group on the city council as it does for my right hon. and hon. Friends. It is only right to say that the city council faced that dilemma. I am not saying that no one else has done so or may yet do so, but Sheffield has done so with its eyes open.

My hon. Friend the Member for New-ham, South said that we ought to be aware of the possible consequences, and he mentioned me and my constituency. We are aware of those possible consequences.

I accompanied a deputation from the Sheffield city council a month ago to see the Secretary of State for the Environment to explore the implications of this concept. I am proud to say that Sheffield was the first such local authority to see the Secretary of State. Indeed, it may be the only local authority to have seen the right hon. Gentleman. Certainly we were at the head of the pack. We spent more than an hour with the right hon. Gentleman. Ministers in both this Administration and the previous Labour Administration are always busy, but it was the people from Sheffield who got up first to leave.

We had a helpful discussion. All the questions that were exercising our minds were raised. We did not get all the answers. Again, it is only right to say that we came away with the impression that the Government had not at that stage thought their way through this matter, and I can understand why. But the parties on both sides of the table were agreed that this was to be an experiment. The purpose of the zones will be to test, on a few sites, how far industrial regeneration can be achieved by a new mix of incentives and commercial stimuli. Nevertheless, the depuation felt obliged to express deep concern to the Secretary of State about the implications of all the measures which have so far been spelt out—for example, development land tax, industrial training boards and planning procedures, notably in respect of health, safety and pollution. Doubt was also expressed about how many and what types of jobs the enterprise zones will succeed in attracting and for how long and at what cost to their neighbours.

In deciding subsequently to apply for an enterprise zone, the Sheffield city council was prompted by certain considerations. The first was that the current increase in the loss of jobs in steel and associated industries requires special efforts to accelerate the regeneration of the Attercliffe area of the city.

Mr. Hooley

If I interpret my hon. Friend correctly, the drift of his argument hitherto is entirely in support of the amendment. Though I have grave reservations about the whole thing, I want it concentrated on manufacturing industries. That is the purpose of the amendment. That is the burden of my hon. Friend's speech. Therefore, I suggest that it would be sensible to support the amendment on those grounds.

Mr. Duffy

In my references to my hon. Friend's speech I thought that I entered two caveats. One was that he did not present the case for Sheffield with enough enthusiasm and that he did not present the case for Attercliffe—my constituency—with a clear enough appreciation of contemporary facts. I shall come to that aspect later, when I come to the different unemployment levels in the east end of Sheffield and other areas across the M1.

6.15 pm

The other caveat was that in view of what was happening in the east end of Sheffield—no one who has just heard me can doubt it—we need to proceed with greater urgency, not on a go-slow basis.

I was informing the Committee that the Sheffield city council was prompted to make an application for an enterprise zone, first, because the position in Attercliffe—a position that has persisted for over 20 years with little, if any, sign of relief of regeneration—now calls for special measures, and, secondly, because much of existing industry in Attercliffe needs to adjust to new market conditions, to restructure with a view to improved competitiveness, for example, or to rationalise and diversify. An enterprise zone may provide us with the mechanism to accelerate the process of change that will take place anyway. In other words, it may shorten the agony.

Thirdly, this regeneration of the Attercliffe area could be accelerated by a relaxation and streamlining of planning procedures and practices and still leave an obligation on the developer to ensure that intended development accorded in every way with an approved planning scheme for the zone and the council's long-term plans for the area.

Mr. Spearing

I appreciate the point being made by my hon. Friend, but the Secretary of State may not agree with that concept.

Mr. Duffy

Indeed, he may not. However, I understand that there is to be consultation between the Department and local authorities. It has already started with Sheffield, as I shall explain. Indeed, Sheffield has informed the Minister not merely of its reservations, but of its sticking points. My hon. Friend may be right, but at least the Minister knows, as the Committee has now been informed, where we stand in Sheffield. I hope that there will be a process of give and take. I do not see how an enterprise zone can work if there is no such process.

Sheffield council applied to be nominated as an enterprise zone on the basis of a belief that an enterprise zone need not portend a free-for-all. The council's objectives for securing a good standard of environment for the principal road corridor along the banks of the canal and river in my constituency should be retained, and there should be some limitation on shopping development.

It may be useful for the purposes of the debate if I give a case history—if that is an appropriate description—of Sheffield's proposal. We proposed a zone with a total of 518 acres, of which 309 are vacant at present or could become available for redevelopment in the next few years. Those 309 acres have been vacant for years, with no possibility of their being used. Three-fifths of the land in the area will, therefore, be available for early development, and, as such, the area offers tremendous potential over the next 10 years for new industry and commerce.

I am not saying that we believe that Sheffield should be nominated as an enterprise zone only on that basis. Neither am I saying that we believe that Sheffield will be rejuvenated on any other basis. I am saying that so far we have not been rejuvenated on any basis. The city council has already attracted central Government and EEC regional development fund aid for infrastructure works in the area, and the Yorkshire water authority is receiving similar aid and loans for the Don Valley intercepting sewer, which will serve the whole of the possible enterprise zone area.

The council also proposes to divide the zone to ensure that the land fronting the main route from the motorway is not an eyesore. Those hon. Members who have left the motorway at the Tinsley viaduct and have driven into Sheffield city centre—some hon. Members did so recently when the semi-final was played at Hillsborough—will have driven through my constituency. The city is anxious that that land fronting the route will not become an eyesore to people visiting Sheffield. I am sure that the Minister will recognise that concern by the Sheffield city council.

Outline planning permission would be automatic, for schemes in zone A, because it is recognised that the scheme is in accordance with the planning scheme for the area. Any development is required to meet the standards set by the statutory authorities on health and safety regulations, noise, smoke, dust emissions, effluent control, fire regulations, building and advertisement control regulations. I do not worry about scrap-yards, which my hon. Friend the Member for Heeley mentioned.

In zone B, developers would not have to apply for outline or detailed planning permission if their schemes accorded with the plan for the area, and I do not see how they could not do so. But they would have to meet the standards required by the statutory authorities that I have spelt out for zone A. The major reservation of the council about the enterprise zone concerns the threat of a hypermarket. We believe that this could pose a threat, to commerce in the centre of Sheffield, Barnsley, Doncaster, Rotherham and Chesterfield. I am sorry that my hon. Friend the Member for Bolsover (Mr. Skinner) is not present. I wanted to tell him that we are also concerned that a hypermarket in any economic zone near Attercliffe should not threaten the shops in his constituency.

There can be no question of Sheffield consciously lending itself to bad neighbour policies in the pursuit of enterprise zone status. On the contrary, I believe that Sheffield's neighbours stand to benefit, although I well understand a residual nervousness on their part about its impact on their local economies. My right hon. Friend the Member for Llanelli (Mr. Davies) did not take that view. He did not allow for the possibility that such an impact might be the reverse, and that it might be beneficial. I ask him to consider that hypothesis. I am sorry that my hon. Friend the Member for Rotherham (Mr. Crowther) is not present. I told him last night that I would be addressing several of my remarks to him, but he explained that although he would have liked to be present, he had another engagement.

I was present in the Chamber on 24 July 1979, when we debated changes in regional policy following the announcement by the Secretary of State for Industry that Sheffield was to lose its assisted area status and that our neighbours in Rotherham, Rother Valley and Dearne Valley were to receive improved assisted area status. My right hon. Friend the Member for Sheffield, Park (Mr. Mulley) spoke in the "same debate. Naturally, we expressed envy of our friends and neighbours, but at the same time we wished them luck. I wish they would show similar gracious-ness now that it appears that Sheffield is to receive some degree of restoration of the position that it enjoyed only a year ago.

I also appreciate any disappointment felt by Rotherham and Rother Valley about the preference of Sheffield as a posible location for an enterprise zone, in view of the relative disparities in unemployment levels. They may feel that they are more deserving. I should like to comment on the impact of such a zone on them, and on any possible belief on their part that they are more deserving.

The economic importance of Sheffield in relation to the rest of South Yorkshire, and in particular to the need to develop the Don Valley and exploit its full potential in terms of job creation, was well documented in terms of the structure plan. This area, with its continuous belt of manufacturing firms, spans the Sheffield and Rotherham travel-to-work areas. There is an economic linkage that runs right along the Don Valley. The Don Valley has given rise to continuous industry—and the same sort of industry. The announced removal of assisted area status from Sheffield last year fractured this unity and created a potential anomaly, notably in respect of the BSC complex, which spans these travel-to-work areas. Enterprise zone status for Attercliffe would restore this economic entity—this natural economic linkage—and, with the multiplier-effect secondary consequences, it would confer beneficial consequences on the county as a whole. I am simply saying that that is possible. I am all too aware of the disappointments that are likely to be our lot. I hope that my right hon. Friend the Member for Llanelli will agree that there is a good case for Sheffield being nominated as an enterprise zone, and I believe that there is more than a theoretical case.

Sheffield is a major industrial centre, serving a much wider area than that within its own boundary. In 1971 there was a net inflow of 26,000 persons coming to the city to work every day. Accordingly, the structure plan recognised Sheffield as the area of greatest potential for job growth, to the benefit of the whole county of South Yorkshire. At present, half of South Yorkshire's jobs are in Sheffield. So, incidentally, is half of the county's unemployment.

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That brings me to my second point. It is certain that unemployment will continue to increase locally. Despite great efforts to diversify its industrial base, Sheffield remains largely dependent upon one industry—steel. But, as we all know, job losses in metal manufacturing have been and are expected to be considerable. They have proceeded even faster in Attercliffe than the national average suggests. The structure plan in 1976 estimated a loss of 11,000 jobs between then and 1986, but the situation has deteriorated markedly since then. Osborne Hadfield's and Ashlow's are just two firms that have closed down in my constituency in recent weeks, and the number of redundancies is expected to reach 5,000 by the end of June. This figure exceeds that for the whole of last year.

That is why there is a feeling of desperation on the part of some of us about this deterioration at the east end of Sheffield, especially among the trade union leaders. That, also, is why the overall unemployment rate for the city of Sheffield is so misleading. It conceals a number of specific local problems. Sheffield's pockets of unemployment, such as those that exist in the east end, are averaged out of perspective if not out of existence; yet they were clearly brought out in the structure plan evidence and the inner city submission and were recognised in the granting of inner area programme status.

The latest figures available from the national dwelling and housing survey published in 1979 showed a 6.6 per cent. unemployment rate for the inner city, when Sheffield's overall rate was 4.6 per cent.—in other words, half as much again in the east end. It will certainly be higher now.

Six yards within the inner area, with a population roughly equivalent to that of Dearne Valley—about 100,000—showed a rate of 8.9 per cent., when Mex-borough's rate was 9.7 per cent. A wider area, covering 10 wards, showed 7.9 per cent. At the time the rate at Rotherham was about 7.8 per cent.

Therefore, contrary to what has been said in this debate, it is most likely that parts of Sheffield, from which assisted area status was removed last year, will have unemployment rates comparable to those of adjacent areas which were given full development area status last year. Indeed, about a quarter of the employed men in some of those adjacent areas which are assisted come to Sheffield daily to work, most of them coming into my constituency. Yet when those people commuting from those adjacent areas outside Sheffield's travel-to-work area lose their jobs in my constituency they are not included in Sheffield's unemployment figures, never mind in those for my constituency. That is another reason why the relative unemployment levels can be somewhat deceptive.

Much more revealing is the rate calculated for unfilled vacancies. This shows Sheffield's 0.27 per cent., similar to Barnsley's at 0.28 per cent. and less than Doncaster's 0.46 per cent. Undoubtedly, the unemployment position has deteriorated nationally. I am not saying that we have problems that other areas do not have. What I am saying is that the level of unfilled vacancies relative to the number of persons employed in Sheffield is now very low. It is lower than the national average. It is very worrying. It is the same as Barnsley's figure, which has intermediate status. It is approaching that of Rotherham, which is 0.23 per cent., and that of Dearne, at 0.22 per cent., both of which have full assisted area status.

As well as unemployment, there are other grounds on which I know the Minister will ponder when he considers Sheffield's application for consideration as an economic zone location. The derelict land problem in Sheffield has been recognised for a considerable time. The area was designated as a derelict land clearance area prior to being granted intermediate area status. Despite receiving aid approaching £500,000, there is still a considerable problem, much of which is in the Don Valley.

Therefore, what I am really arguing throughout is that Attercliffe is ripe for redevelopment. There is considerable infrastructure, social as well as economic. It has an unrivalled position, lying between the city centre and the motorway. It straddles the river Don and embodies the canal basin for the South Yorkshire navigation, which is in the process of being widened and modernised.

Sheffield is also well aware of the large element of risk for all concerned in such a concept as that before us. At the end of the day there may well be a greater preponderance of warehousing/commercial concerns as against manufacturing concerns, as my hon. Friend the Member for Newham, South warns. This may or may not generate more or fewer jobs. On the other hand, given modern technology, there is no guarantee that more jobs would be forthcoming if we continued with present policies within an economic zone.

Sheffield is taking a practical view. It is willing to go a long way to meet the Minister's wishes. I hope that the Minister will be equally practical and will recognise that it is similarly incumbent on him to go some way to meet the wishes and to allay the fears of the hard-pressed people of Sheffield. It is in the Minister's interests, after all, as well as those of Sheffield, that the undertakings should be harmonious and the outcome successful. But that is likely to be secured only on a basis of give and take. Sheffield hopes, therefore, that the Minister will be seized of the same outlook and a corresponding readiness to enter into partnership.

The economic zone concept cannot be realised on the basis of a lopsided philosophical or historically out-of-date approach, which seemed to permeate the remarks of the hon. Member for Wolverhampton, South-West.

Sheffield is painfully conscious that it would lose some control over the type of development in Attercliffe. For his part, the Minister must recognise that market forces can no longer be given their head in Britain. There is no possibility of the restoration of Victorian laissez-faire. The problem for the Government in trying to establish these economic zones is essentially one of trying to find a new equilibrium—a new and appropriate point of balance between the claims of the entrepreneur and the needs of the host community. It can be done with good will and co-operation on both sides.

As with the assisted area next door, industrial and commercial promotion in Attercliffe will be subject to incentives and stimuli. The range and the mix in economic zones will be different, and, of course, there will be a much less positive input. But where public incentives and public money are disbursed, public accountability is never very far behind, and always lurking in the background is the instrument of public intervention.

Mr. John Loveridge (Upminster)

I listened with amazed admiration to the loquacious tenacity of the hon. Member for Sheffield, Heeley (Mr. Hooley), and added to that a sense of admiration for his temerity in bringing forward an amendment the effect of which must surely be to damage the interests of his own city.

Mr. Hooley indicated dissent.

Mr. Loveridge

In bringing forward the amendment, the hon. Gentleman seems not to have noticed what was said by his hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) or the words in the article in The Times of 28 April, which said that in the Sheffield case prosperity … has been in decline since the mid-forties. The fortunes of the steel industry have plunged and the pressing need for improved living standards and environmental improvements have swept away factories and sub-standard housing so that Attercliffe is once again ripe for development It is a pity that the amendment of the hon. Member for Heeley should knock a Government measure that is designed to bring new vigour and life to just such an area, particularly if that area of Sheffield is selected as an enterprise zone in due course. The amendment would take away not only from hotels but from commercial buildings and commercial structures the benefits accorded to enterprise zones. If the amendment were to have the effect of taking such benefits from commercial structures, the hon. Member would be taking away what he would like to see—namely, greater industrial development. That is because most of such development takes place within a structure.

If we are to have enterprise zones—and I welcome the Government's initiative—surely we should allow the enterprises in them to do what they wish. That is the very function of the experiment. We do not need " carefully controlled " ideology. The experiment will not work on that basis. It will work only if we draw into these derelict areas new life and vigour from those who themselves have the initiative and the will to make them work.

Mr. Guy Barnett (Greenwich)

I do not think that any of my hon. Friends doubt the value of commercial premises and commercial operations in areas of the sort that we are debating. The question is whether, for example, 100 per cent. rate relief is needed by the undertakings that will operate in the enterprise zones.

Mr. Loveridge

The hon. Member knows that in Sheffield, Attercliffe there has been great depression for a long time. Some new inspiration and some new drawing of life into the neighbourhood is required. If we do not allow experiments to take place, we shall never see it and other neighbourhoods grow and develop.

People have moved out of inner London. Young people have moved out to live in the commuter belts. They have made their homes in those areas, but they have continued to commute into the city to work. They commute into the city, but not to the areas in which they used to live, and those areas now have a population imbalance that is dominated by the elderly. They do not have enough young people of working age. So we have been left with derelict areas. Surely it is better to provide an incentive and try to develop these areas and give hope for the future than to leave them alone.

To achieve that aim the Government have brought forward a number of proposals, including first-year capital allowances of 100 per cent. for all commercial and industrial building. I hope, incidentally, that the Government will allow the maximum flexibility to the firms concerned when they take up these allowances if they cannot take them all up in the first year.

Secondly, the Government have given complete relief from development land tax, that minefield of confusion and anomaly that has deterred so many entrepreneurs. They have given complete derating and provided for compensation for local authorities. They have ended industrial development certificates and have promised fast planning procedures. They are cutting out industrial training requirements, and they have made special provisions for warehouses. These measures, when taken together, form a substantial inducement to firms to move into the enterprise zones, and that is welcome. The scheme will especially help to bring small businesses into these zones.

6.45 pm

Does the scheme go far enough? I hope that the Government will consider the provisions that are included in the amendments and new clauses that have been tabled by my hon. Friends who are officers of the smaller businesses committee. The provisions should be accepted and introduced for the enterprise zones at least, even if not more generally.

The more that we can do to make the zones true magnets for endeavour, the better it will be. They are experimental, and we must try to make the experiment work from the first. No unnecessary limitation must be placed on the inducement. We must offer every attraction possible.

It will be beneficial if employers who are located in enterprise zones are not liable for the national insurance surcharge in respect of persons employed full-time within the zone. The surcharge is, in effect, a payroll tax. Relief from the surcharge would draw in firms that employ a high ratio of labour to capital and thus help to reduce unemployment.

That relief would apply to full-time workers, so as to prevent tax avoidance. The removal of that aspect of taxation would have a strong psychological effect. It is a tax that has caused much irritation in the small business sector. Payroll taxes have never been popular in Britain. Some hon. Members may remember that it was a payroll tax that led to Wat Tyler's rebellion in 1381. Exemption from the payroll tax for firms in enterprise zones would show the Government's clear purpose to make the zones work, in addition to providing the capital and other concessions that are welcome and encouraging.

There was a spectacular growth of the Irish economy following the tax concessions given to businesses. The zone at Shannon was especially successful. It was founded in 1959. As I understand it, profits and losses are disregarded there. That is an even greater inducement to bring trade to that zone than is offered within the enterprise zones that the Government plan. It is my belief, and the belief of my colleagues in the smaller businesses committee, that the zones, if they are to work well, should be given the fullest concessions, so that they can act as a magnet. If they prove themselves especially successful, there is no reason why similar provisions should not be applied to make the whole of Britain an enterprise zone and allow us all to enjoy the fruits of success and thus benefit in the future.

Mr. Donald Anderson (Swansea East)

And no taxes.

Mr. Loveridge

Taxes could be raised, but not necessarily in a way that depresses output. We want to get the country on its feet again. When we have done that, we can tax the product on output and sales. At present we have taxes that inhibit output and sales, and there is not a sufficient base to enable the Government to obtain the money to allow them comfortably to pay their way without having a large public borrowing requirement.

Another helpful measure would be to give firms in the enterprise zones greater flexibility in stock relief. That would also have a magnetic effect. An additional aspect that the Government may care to consider is setting up special banking arrangements so that enterprises and fast expanding businesses that have only slender capital resources and little security to offer banks can obtain bank loans with a form of Government-backed guarantee. The Government are doing that in an experiment in Wales, through the Welsh Development Agency. What is good enough for Wales should be good enough for the enterprise zones.

The real need of smaller businesses is the freedom to retain earnings for reinvestment. That is a real need, in addition to inducements to make them work harder to produce more and to sell more for the kingdom generally. The firms that will go to the enterprise zones will not wish to borrow any more than is necessary. The best inducement that the Government can give is to encourage the firms to reinvest their own earnings. The capital allowances provision will go a long way towards that within the enterprise zones. That is why I welcome the Government's initiative, and why I oppose the amendment.

Mr. Homewood

The hon. Member for Upminster (Mr. Loveridge) has opposed the amendment. I shall also oppose it, but for different reasons. I should be hypocritical if I were to support it. The day after the Budget speech I wrote to the Treasury and suggested that Corby should become an enterprise zone. I did not stipulate that assistance should be confined to manufacturing. However, it is with regret that I oppose the amendment.

I have as many reservations about enterprise zones as have other Opposition Members. I had thought that the hon. Member for Wolverhampton, South-West (Mr. Budgen) had left the Chamber, but I am pleased to see that he is here. I do not believe that he meant that he supported the results of the situation that existed many years ago. To some extent that situation can be paralleled to enterprise zones. I do not believe that the hon. Member is in favour of producing such environments again.

Some Opposition Members seem to believe that if we reject enterprise zones the Government will do what we wish and start to pour money into the NEB. They believe that the Government will intervene more actively in society and reinstate some of the things that they have removed from manufacturing industry. By putting forward amendments to the scheme they believe that we shall induce the Government to do that, but that is impossible.

The town of Corby is in my constituency. By the end of the year unemployment will probably not be below 25 or 27 per cent. About 5,500 people are being discharged from the iron and steel works, and that figure will be augmented by another 1,000 from the tube works in the town. Out of a population of 55.000, 23,000 work. Within three or four years there will be an unemployment rate of 25 or 27 per cent. I recognise the dangers inherent in enterprise zones. However, the people of Corby must be grateful, as my right hon. Friend the Member for Llanelli (Mr. Davies) said, for crumbs and scraps from tables. We need every crumb and scrap that we can get.

There is no possibility of Corby becoming substantially depopulated. People will not move to other areas. Of the population in Corby, 72 per cent. live in public housing. It will not be easy for them to go to other areas to find work. I wish to make a special plea. I hope that the Financial Secretary will confirm that enterprise zones will be set up in those areas in which they are most needed. We shall have to withstand the resulting despoliation and unplanned environment if we wish to meet the problem of unemployment.

Mr. Dalyell

All hon. Members will understand the special problems facing my hon. Friend the Member for Kettering (Mr. Homewood), who has Corby—or Little Scotland—in his constituency. I listened to the speech of my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy). It is possible that a bad thought will have crossed one's mind. What would happen if a bad fairy from the Department of the Environment—we all know that there are bad fairies in that Department—decided against Sheffield and in favour of Hull, with its fishing problems, or Bradford, or Barnsley, and so on? A large number of areas have special needs. If there are to be only three enterprise zones, some areas will lose. Will Sheffield, Merseyside, or Manchester lose?

One must look at the scheme as a whole and not argue in favour of special cases. I do not wish to argue a special case. However, I have some experience of the matter as I represent half the new town of Livingston. Let us be candid. Several local authorities, including some major Labour-controlled authorities, are tumbling over their proverbial selves to get an enterprise zone. I have no doubt that the Sheffield Labour movement is committed to an enterprise zone. The position is such that any straw that can be grasped is more than welcome. That is understandable.

The burden of proof lies with the Chief Secretary and the Financial Secretary to prove that the scheme is more than a gimmick. Let us suppose that the scheme had been introduced under the Government of my right hon. Friend the Member for Huyton (Sir H. Wilson). What would the Chief Secretary have said? He would have written in The Economist about " another Wilson gimmick." Formidable and eloquent articles would have been written in the Spectator by its former editor to the effect that this was just another Wilson gimmick.

Mr. John Garrett (Norwich, South)

It would not have been well written.

Mr. Dalyell

Some of us believe that this gimmick was thought up in order to give a silver lining to a very black cloud when the Budget was presented. Enterprise zones had more to do with the Chancellor of the Exchequer's problems in presenting the Budget than with any economic rationality.

It is true that, as one trade union official in the West of Scotland put it to me, " Nobody quite knows what it is, but everybody wants an enterprise zone ". We have an obligation to try to find out precisely what is in the Government's mind, because the suspicion is that once again the Government have spoken first, come up with a superficially bright and attractive idea and later taken the time to think. I prefer Governments to think first and then to speak.

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My right hon. Friend the Member for Llanelli (Mr. Davies) asked a question that I hope will be answered. Where is the extra growth to come in this scheme? Will not those who are lucky enough to get enterprise zones be competing for any growth that may take place? Will we not be robbing Peter to pay Paul? Will the Financial Secretary deploy the argument that enterprise zones will create more growth than would otherwise have taken place? If so, I shall listen to him with great care.

Mr. Loveridge

The question of robbing Peter to pay Paul is important. It is possible that that will happen and that there will not be the desired growth. If so, the experiment will not have succeeded. However, is it not much more likely that as we get the magnet effect of growth in the zones, with new trade and new life there, all the other trades around the zone will have a demand made upon them from the area of growth so that they also benefit? I believe that that will be the case, though there may inevitably be a little robbing of Peter to pay Paul.

Mr. Dalyell

In the light of the nature of that intervention, I do not wish to respond by trying to be too clever by half or by giving a slick response to the hon. Gentleman, who has asked a fair question. However, to use his own analogy, is it not in the nature of magnets that they attract objects from other places rather than create objects?

Let me give the hon. Gentleman a less glib answer. I listened to his speech with care and interest. He used the analogy of Ireland. Some hon. Members will know that Livingston new town is in competition with Eire for a major Japanese-owned electronics project. It strikes some of us who have gone into the matter that the Irish economy will, as some Irishmen admit, soon reap a whirlwind by having been over-generous in terms of external investment.

At one level, I concede that if one has an enterprise zone that is a whole State it may or may not work, but small enterprise zones in part of a unitary State raise different problems, and I have yet to be convinced that the total sum of trade will be any greater as a result of this scheme.

What will happen if a company moves into an enterprise zone and produces goods that are already being produced by another company in the area? Let me give a precise example. Let us suppose that on Clydebank, where the enterprise zone is proposed to cover the Singer factory area, a company moves in and makes some of the same products as those being produced by the John Brown engineering firm, which will not be in the enterprise zone. I am not just bringing up ghosts. The scheme could involve serious consequences for industries that have survived.

My hon. Friends the Members for Greenwich (Mr. Barnett) and for New-ham, South (Mr. Spearing) know that an enterprise zone in the East End of London could make things much worse for firms outside the zone which are having great problems at present. Inside the zone, products would be heavily subsidised. The Financial Secretary must deal with that matter.

I understand why my hon. Friend the Member for Attercliffe says that local industry is in the grip of a decline. However, it is not apparent that the scheme, on the present basis, will not hasten the decline of local industry outside the enterprise zones. Uncertainty about the operation of the scheme must be a deterrent to investment in buildings. The delay and uncertainty involved will be a deterrent in a situation which is difficult enough at present. The Government must get down to the nuts and bolts of any proposals.

My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) asked about the Customs situation. I had envisaged that that would not arise, but there will be endless bureaucracy to determine who is working in an enterprise zone and who is not. The question of distinguishing, for tax and other purposes, which companies are operating inside a zone and which are operating outside must be a complex matter.

Since no area has yet been designated as an enterprise zone, the importance of what we are discussing is difficult to estimate, but the names of posssible sites have been outlined and uncertainty must be a deterrent to investment in buildings in those locations, since by deferring investment a higher rate of allowance may be obtained on industrial buildings, and non-industrial buildings may qualify for relief. Is it suggested that the Government will consider extending the relief to any expenditure incurred after 26 March 1980 in areas subsequently designated as enterprise zones, so that investors are not penalised for acting now?

Another problem is the question of travel to work. As we know from our constituency experiences, there is no doubt that the costs of travelling to work are increasing out of all proportion, even to inflation. Is it desirable that in Clydebank, for example, one should concentrate a travel-to-work area in an enterprise zone when we know that it may mean longer and more expensive travel for many of those whom we are trying to help?

There is a related question: what is the estimated loss to the Exchequer involved in enterprise zones? How much will all this cost? What will be the cost in revenue that would have been collected but for the proposals before us?

The right hon. Member for Orkney and Shetland (Mr. Grimond) referred to obstacles for developers. What are the obstacles that will be removed? My hon. Friend the Member for Greenwich knows more about the matter than I do. He was the efficient and helpful Minister in charge of such matters during the Labour Government. I suspect that the talk of removing obstacles disguises measures to undermine planning procedures. We may from time to time find planning procedures irksome, but almost every planning procedure has a reason behind it. If we do not have planning procedures, how can we hope to maintain a meaningful and rational urban programme?

Not every arm of the Labour movement is enamoured of the proposal. I agree with the Scottish TUC that the policy is based on the false assumption that planning regulations are a major factor in inhibiting industrial development. The major factors inhibiting development are the lack of demand in the market, superimposed on decades of unsatisfactory investment, which has left whole sectors of industry hopelessly uncompetitive. The other provisions in the Budget make those problems much worse. The enterprise zones are offered as a palliative. They were spatchcocked in at the end of the Budget.

I listened carefully to what the Chancellor said in putting forward the proposal, and I have checked in Hansard what I heard. He talked of a drastically simplified planning scheme ". Will the right hon. and learned Gentleman let us into the secret of how drastically to simplify planning schemes? Every hon. Member would like to see drastically simplified planning schemes for his constituency. However, a drastically simplified procedure often means riding rough-shod over such measures as the Health and Safety at Work etc. Act. I suspect that it means cutting corners in relation to such organisations as river purification boards. I go to Clydebank from time to time. I was recently at a Labour Party meeting there when several views were expressed. It is madness to ride rough-shod over such organisations as purification boards. The Government should spell out the whys and wherefores.

The right hon. and learned Gentleman also talked of accelerated handling of applications for warehousing free of Customs duty ". What does that mean in terms of extra personnel for Customs and Excise? There are problems if the Customs and Excise operates in one part of the United Kingdom and not in another. I do not wish to take the Committee through the devolution debates. The Financial Secretary shakes his head. Perhaps he will explain. What checks will there be against abuse? What are the police duties?

7.15 pm

The Chancellor referred to: Minimal requests … for statistical information ". What statistical information can we do without? I presume that the Chancellor knew what he was referring to. I should like to know what statistical information is unnecessary and gratuitous. In, say, six enterprise zones, the attempt at economic management will be far more difficult if one washes one's hands of the need for statistical information.

The right hon. and learned Gentleman went on to say that red tape all too often stands between a young school leaver and the prospect of a job."—[Official Report, 26 March 1980; Vol. 981, c. 1488–9.] That is emotional talk. It is all too easy to work up steam against red tape. We are all against red tape, as we are all against sin. What is the red tape that stands between a school leaver and the prospect of a job? The remark appears to suggest the need to override regulations that the House in the past has thought necessary.

Mr. Tom Benyon (Abingdon)

I have just played a modest part in attempting to gain planning permission for a substantial company moving to my constituency. I assure the House that there are considerable problems and delays, which can be speeded up with good will, which we managed to achieve. Having been once round the circuit, I assure the hon. Gentleman that the process can be simplified in many areas without cutting corners. Gaining permission from the district, the county, the Department of the Environment and the Department of Trade can be run in parallel instead of series. Perhaps the hon. Gentleman will put forward positive proposals for developing areas of total neglect.

Mr. Dalyell

That is a temptation to speak for an hour and a half, and my colleagues will be grateful that I do not succumb.

The hon. Gentleman is right, but what can be done by laws and what can be done by good will? In my experience there is comparatively little difficulty and delay when there is good will. However, all the laws in the world will not overcome messing around, ill will and bloody mindedness. The human factor is important.

I have ideas about urban development, but I am not an inner city Member. I do not believe that the Committee would thank me for discoursing on the subject at present.

What is the good of experiments if, by their nature, those experiments cannot be extended? It is not sour grapes. Although I am an East of Scotland Member, if I thought that the scheme would benefit West Scotland I should admit that West Scotland had priority. However, singling out Clydebank is less than satisfactory.

Mr. Budgen

An experiment may bring out lessons that can be generally applied.

Mr. Dalyell

We have been over this road before. I can look into the glass.

I represent half of a new town. There is no doubt that the advantages of a new town are very fine for the new town area, but they create endless problems for industry in the area round the new town. If that is on a small scale, it could be extended to the rather larger scale which the hon. Member for Wolverhampton, South-West (Mr. Budgen) has in mind.

In all this talk of free and cheaper markets, again one sees it from one's own constituency experience. Many of my constituents go off on Sunday mornings to buy a great many goods at the Ingliston market, which in a sense is a free market just outside Edinburgh. That is all very well, and no doubt it is to their short-term advantage. But whether it is to the long-term advantage of the area is a different proposition when one sees once prosperous businesses becoming less prosperous and employing fewer people than they used to do.

Having experience of free markets and of new towns, I am very sceptical about the proposal.

I come to one or two technical points. Schedule 13 provides that a company may by notice in writing given to the inspector not later than two years after the end of the chargeable period for which the allowance falls to be made disclaim the initial allowance or require it to be reduced to a specified amount. Cannot a great deal happen in two years? I think that it can. It seems to me that we are getting into an enormously complicated area of bureaucracy, especially with this kind of time lag.

The schedule also provides: In section 2(3) of the said Act of 1968 for the reference in one twentyfifth of the expenditure there shall be substituted references to one quarter of the expenditure. With all the talk of reducing manpower in the Civil Service, what will be the manpower costs of operating an enterprise zone system?

All these questions are perfectly legitimate in Committee, and I feel that seriatim they deserve an answer. If people put forward schemes such as this which look attractive, it is part of the purpose of the House of Commons to examine what may be a gimmick. It is able to be examined in no other form. We had better look before we leap.

Mr. Guy Barnett

My hon. Friend the Member for West Lothian (Mr. Dalyell) raised a number of issues which it had been my intention to raise. However, I do not wish to delay the Committee more than I can help, and therefore I shall not cover ground which my hon. Friend covered very ably. He showed that there were many unanswered questions, and we hope that the Financial Secretary will deal with the matters that have been put to him.

Sometimes when Governments come forward with proposals which they describe as experiments, I am afraid that they are putting forward propositions which they simply have not thought out. Unless we receive satisfactory answers from the Financial Secretary to some of our questions, we shall be driven to the conclusion that all that we have is a proposal which the Chancellor of the Exchequer thought up at a drinking party on the Isle of Dogs and which he discussed with a Labour councillor in the streets of Poplar. Any experiment which this House is proposing to approve ought to have a little more background work done on it than that.

The experiment which the Labour Administration put forward to deal with the problem of our inner cities was very well thought out. It was based on a good deal of practical experience through the urban programme and other programmes that had been carried through. But here we have an experiment which appears to be based on very little experience and hardly any research.

It is even odder to describe this as an experiment when, at the same time as they propose to set up enterprise zones as an experiment, the Government say that as part of the experiment they will reduce to a bare minimum their requests for statistical information. I thought that the purpose of an experiment was to learn from it. Apparently that is not the Government's purpose since, at the very moment that they set up the experiment, it is clear that they do not intend to monitor it. Earlier today a Government supporter made a justified plea for a proper monitoring of the experiment to see how it worked. Apparently, we are not to get that.

My hon. Friend the Member for West Lothian pointed out that in addition to being an ill-thought-out experiment it was a very expensive one. In Committee we managed to glean from the Minister for Local Government and Environmental Services certain vague answers. He coud not give a clear estimate. We should like a clear estimate from the Financial Secretary of how much the House is voting, because he is responsible for doling out the money.

On 15 May the Minister for Local Government and Environmental Services said: The nearest estimate of the cost that I can give at the moment is £5 million to £10 million. He went on: We do not know to how much it will ultimately give rise, because that depends on how successful the enterprise zone concept is. If it attracts a lot of industrial and commercial development, the cost may increase significantly, possibly up to £50 million a year."—[Official Report, Standing Committee D, 15 May 1980, c. 1171.] The Committee should take note of what we are doing in the Bill. We are allowing the Government to enter into an open-ended commitment to spend a sum, the total of which they do not know.

What about the matter that we are immediately debating, that of capital allowances? We were told by the Minister that the cost in a full year might be between £10 million and £20 million. He could give no estimate of the cost on the Exchequer as a result of the exclusion from development land tax. We have no estimate of the cost of exclusion from the industrial training levy.

Mr. Lawson

I apologise for intervening at this stage, but it may expedite the proceedings on this series of amendments if I do so now.

Is the hon. Member suggesting, for example, that because we do not know the amount of sickness in any given year there should be no such thing as sickness benefit?

Mr. Barnett

I am making no such sugestion. I am drawing attention to the fact that we are allowing the Treasury to enter into a wide and open-ended commitment, and we want clearer explanations from the Financial Secretary than we have had so far from the Minister for Local Government and Environmental Services.

Several hon. Members have pointed out very properly that it is no use setting up an enterprise zone unless the proper infrastructure is provided. That infrastructure will not involve merely the 500 or so acres that we are discussing. It may involve industrial feeder roads. If the zone is to be a success, it may even involve the development of other transport facilities. My hon. Friend the Member for West Lothian spoke about people travelling great distances to work. That may place a burden on rail and road services in the area. There is also the problem, which pertains in docklands especially, of land that requires proper drainage and a proper water supply before it is possible for industry to operate successfully there.

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In Committee it seemed right for us to pursue the issue with the Minister, and the right hon. Gentleman gave extremely vague replies about the cost. It was clear to me that the Government had not thought out the issue. The right hon. Gentleman said: The answer is that the matter of resources for enterprise zones, particularly in regard to infrastructure, is one that we shall consider, but of course we cannot consider it until we know which will be the enterprise zones and whether they will or will not have infrastructure implications. But we shall be anxious to consider that and see whether help is needed."—[Official Report, Standing Committee D. 20 May 1980, c. 1265.] That is a pretty open commitment. When the Labour Government put forward their proposals for inner cities, some limit was at least set on the sums of money that we proposed to devote to dealing with the problems of the inner cities. The proposal under discussion seems to involve a variety of open-ended commitments to which the attention of hon. Members should be drawn.

A good deal of attention has been paid to the competing claims of local authorities. That does not surprise me. If I lived in Sheffield I should be keen to have an enterprise zone there, because of the heavy subsidy that an enterprise zone involves from Government to local authorities.

The Minister for Local Government and Environmenal Services has described the scheme as expensive. Since it involves the Government acting as ratepayer, to the extent of 100 per cent., for all commercial and industrial property within a zone, in addition to all the other reliefs that are provided, it is an immediate and considerable benefit to any local authority that succeeds in obtaining a zone. Hon. Members listened with sympathy and respect to my hon. Friend the Member for Kettering (Mr. Home-wood) talking about the problems of Corby. I know them well, and I can understand why my hon. Friend and his constituents would be only too keen to receive a subsidy of the kind implied in an enterprise zone.

I wish to underline the point made by the hon. Member for Wolverhampton, South-West (Mr. Budgen), who pointed to the need for proper criteria to be established. If six enterprise zones are to be set up throughout the British Isles, and if considerable benefits are to be unloaded on little pockets of 500 acres in various parts of the country, there must be published criteria that will be used to decide why one area rather than another qualifies for the benefits that the Government propose to dispense. I recognise the difficulties. It will be difficult to pick out six zones of 500 acres and declare that their need is pre-eminent. I can inform the Minister of the difficulties experienced by the previous Government in designating 47 areas as well as programme authorities. It was a real problem to meet the competing claims of different local authorities.

I ask the Minister to try to give a clearer indication of the criteria that the Government will apply. A clearer identification of the criteria than that given by the Minister for Local Government and Environmental Services is needed.

I have discussed with a number of small business men whether the proposals for the enterprise zone that I explained to them were relevant to their needs. Their answer was most definitely " No ". The small business men to whom I spoke are looking for decent estate management more than anything else. They want one authority to which they can go for answers to specific questions. They do not want a diminution of controls. Many recognise the need for control over pollution, safety, health at work and such issues. What really upsets and annoys small business men is that there are so many authorities to which they must go—one for health, another for pollution and still more for safety at work, planning permission and building control. A small business man with a small administrative staff finds it difficult to secure perhaps one small change, because so many different authorities have to be consulted. The enterprise zone is no solution. According to the Government, many of the controls will remain.

The solution is proper estate management, where the estate manager takes responsibility for a large number of the issues that are involved in developments that take place on a particular estate. The experience of new towns indicates that where there is good estate management by a development corporation, rather than a situation in which they are flogged off to pension funds or anyone else who cares to buy them, the business man can get on with his job. If he has a question to ask or wishes to seek permission for a particular development, he can get an answer quickly and efficiently from someone whose job is to find out what regulations apply and those who need to be approached for an answer. That is the problem, and I do not think that it will be answered by the enterprise zone idea. I understand that there will be no estate management in the proper sense of the word. The Government have admitted that most of the controls that exist, with the exception of a degree of diminution of planning control, will continue.

For those reasons, I find the whole proposal highly suspect. The Committee will want some explanations from the Minister to many of the questions that have been raised, especially those that I have tried to put and also the points that were ably put by my hon. Friend the Member for West Lothian.

Mr. Anderson

I share the scepticism of those of my hon. Friends who have participated in the debate. I participate for two reasons. The first is that the lower Swansea Valley, in my constituency, is the site favoured by the Welsh Office for the enterprise zone to be located in Wales. There has, presumably, to be a statutory Welsh zone in this context. The second reason is my experience as a councillor in a deprived inner city part of London for five years.

The Chancellor of the Exchequer, in his Budget speech, introduced the concept of the enterprise zone in a curious way. He began by saying: Finally, I come to an idea."—[Official Report, 26 March 1980; Vol. 980 c. 1487.] It was an utterance on the lines of a Conservative Prince Monolulu saying " I have a horse ". It was an idea which, clearly, came to the Chancellor on the Isle of Dogs and became refined as it was processed through Treasury channels and emerged, still an idea, on Budget day.

One can understand why the Chancellor, seeing the Isle of Dogs and the problems of inner city areas, concluded, like so many others, that something different had to be attempted. All the traditional means had failed. Manufacturing industry has fled from much of our inner cities. It is almost impossible to find apprenticeships for young people. Small workshops and other small enterprises that could form the basis of a local economy are not attracted by current methods. One decides, perhaps in desperation, to try a new idea.

Mr. Dalyell

Will my hon. Friend accept that both he and I, representing the areas that we do, will be faced by employers complaining bitterly about the poaching of skilled people whom they had trained, who would be taken away by firms under no such obligation? I know that he has this matter in mind, from questions on the subject that he has put in the House and elsewhere.

Mr. Anderson

That is one of the areas that form the basis of my scepticism. Where skilled workers are needed in the enterprise zones, they can be provided only by firms outside the zones which have trained them. There is bound to be poaching. That element may be inherent in the concept, but it is a negative aspect of it. The aim of bringing life back to these inner city areas is admirable. Perhaps the concept is more apposite to inner city areas than to declining industrial areas such as one finds in Wales, Scotland and the older industrial parts of England.

The concept is based, first, on a distaste for planning. It is clearly a direct attack on the benefits of planning, and we can think, in passing, what many of our areas would be like these days were it not for the development of our planning system, not to mention the local democratic input referred to by my hon. Friend the Member for Newham, South (Mr. Spearing). If planning procedures can be simplified in these enterprise zones, why cannot they be simplified elsewhere in the country? Far more relevant to the inner city areas than lifting the burden of planning restrictions is greater public investment. That, however, will clearly not come from this Government. Like my hon. Friends, I am philosophically reluctant to accept the concept of removing controls to see what enterprise may flourish. One may find all sorts of unwelcome enterprises developing.

The Government's basic distaste for planning is coupled with the belief that there are people who are likely and ready to respond to the new incentives that are to be provided. That statement in the Budget speech is contradicted by the whole series of other policies in the Budget—the general deflationary policies, with the current high level of interest rates—and one wonders where the growth that will form the basis of these new zones is to come from if it is to be additional to enterprises that would exist anyway. Where will the new orders come from, particularly since so many of the smaller enterprises which the Government have in mind are likely to be dependent on the public sector for their orders? As the public sector is in a period of retrenchment as a result of other Government decisions, clearly that stimulus to smaller businesses will be missing.

All the areas that are currently being considered are desperate for jobs, and naturally all local authorities which have been mentioned will be falling over themselves in seeking to convince the Government that their areas are the appropriate ones for the new zones. The Welsh favoured area in the lower Swansea Valley is suffering grievously from the current recession, even before the impact of the Port Talbot steel closure is felt. It is hardly surprising that, in common with other areas, the local authority is desperately keen to attract this new concept. However, there are dangers within the enterprise zones because, as the local authorities compete with one another in a Dutch auction to win the favour of the Government, they may well seek more and more to do without controls, to make the area look more attractive by having less stringent controls than those imposed by a competing authority.

7.45 pm

If the Government seek to establish a system of sub-zoning by which one part of the zone is for warehouse development, another for manufacturing units and another for other servicing units, the more controls there are the more the whole concept will be undermined and the more the whole raison d'etre of the enterprise zones will be put in question. There is therefore a real danger, with such a Dutch auction, of doing away with controls which most of us think are necessary for the establishment of such zones. For example, if the only bidders for enterprise zones were scrap yards—and we all, presumably, have in our areas the problem of where scrap yards are to be situated—would there be any control to stop them from coming in if the quota for them in a zone was already full? If there is to be no attempt to link the establishment of enterprise in a zone with the number of jobs that that enterprise will bring, are we not in danger of establishing a series of warehouses—what some of us regard as jobs on wheels? Clearly, the number of jobs generated by warehousing may be minimal, and therefore the job creation element, the real reason for this proposal, may be minimal, too.

There is the problem of hedge-hopping. Because the Government are proposing to create a zone of privilege, what will happen to the non-privileged areas outside it? [Interruption.] I believe that my right hon. Friend the Member for Llanelli (Mr. Davies) is suggesting that his constituency, which adjoins mine, is such an area. What will happen where a small enterprise from Llanelli decides to leave that area to come to mine?

Mr. Denzil Davies

Never.

Mr. Anderson

That may be so. However, if it decided to hop over the hedge into my constituency there would be no net increase in employment in the overall travel-to-work area, and therefore no benefit. Even so, a firm would have an enormous incentive to do just that. Have the Government any proposals to combat the real danger of hedge-hopping?

There is the real danger, therefore, of a lack of control over the type of enterprise that will be attracted to these zones and of the effects that they will have on areas adjacent to them. They are defined by the Government as being of no more than 500 acres. That suggested for my constituency would be about 200 acres—a relatively small area. The relevant area in employment terms—the travel-to-work area—is much larger, and it is in that much larger area that the adverse effects could be felt.

We were told from the Conservative Back Bench that if the concept of enterprise zones were a success it could be extended. That begs many questions, but there must be some way of measuring any success. Because of the vested interests that will develop during the 10 years, it is unlikely that any of the sites that are chosen will lose that status. Is the measure of success to be the number of jobs created within the area of privilege, or the effect on the total relevant area? They could be very different. The Government could find, on the principle of robbing Peter to pay Paul, that the total effect in the travel-to-work area was adverse.

Mr. Spearing

On the important question of time, is my hon. Friend aware that in the schedule the designation order gives the period for which the order shall be effective? All that we have heard is that the Government have mentioned 10 years. There is no obligation on the House to renew that period. It would be a matter for the House after 10 years if the Government wished to renew it.

Mr. Anderson

What the House has made it can unmake, and anybody who goes into an enterprise zone must be well aware of that, but the assumption would be that if these areas were successful according to the narrow definition of creating jobs within their own area, such vested interests would be created that no Government—of whatever complexion—would dare to destroy or take away privileges once they had been granted.

There are a number of question marks over the provisions. There is, for example, the question of what is meant by being free from Customs and Excise dudes, and also what statutory information will no longer be required. It is certain that in any of the currently favoured sites, whatever our overall scepticism, we shall each fight to ensure that the enterprise zones come to our own area.

We are aware of the danger that the Government will use the creation of enterprise zones as a substitute for a real regional policy or an inner cities policy in those areas which desperately need such policies. What is needed in my area and that of my right hon. Friend the Member for Llanelli is not an enterprise zone—though that might make a contribution to our desperate jobs situation—but a regrading of our regional development status. Whatever is done on enterprise zones should not be a diversion from looking at regional policies.

Mr. Lawson

The debate on this series of amendments, and on the clause, has been going on now for over four hours. It is perhaps appropriate, therefore, if I intervene at this point. It is quite possible that in your wisdom, Mr. Craw-shaw, you will decide that the debate should continue for a further four hours. Nevertheless, I believe that it is appropriate that I should reply at this stage to the great number of points that have been made.

I do not think that it is possible—nor do I think that the Committee would think it reasonable—for me to reply to all the points, partly because there have been so many and partly because—though your predecessor in the Chair, Mr. Crawshaw, suggested that the debate could be on the whole clause—the debate has gone wider than that. A great deal of the debate has, effectively, been on new schedule 25 of the Local Government, Planning and Land (No. 2) Bill.

I am sure that the Committee will understand if I do not deal with all the points in that 13½-page schedule. I shall confine myself largely, though not entirely, to those points which relate to the Bill we are now debating.

Mr. Bob Cryer (Keighley)

The clause that we are discussing says in subsection (2) that ' enterprise zone ' means an area designated as such by an order made by the Secretary of State under powers in that behalf conferred by any Act ". The Act that will confer those powers is the Local Government, Planning and Land (No. 2) Bill. The Government, not hon. Members, have framed the legislation in this way. The Financial Secretary has a duty to answer the points that have been raised on this clause, dealing with subsection (2), on the other powers that will designate the zones.

Mr. Lawson

The hon. Member for Keighley (Mr. Cryer) has just come into the Chamber. I shall make my own speech and, as I have said, I shall answer a great number of the points that have been made and many of the questions that have been asked during the course of this lengthy debate.

The clause and the whole concept of enterprise zones have been largely welcomed by those of my hon. Friends who have contributed to this discussion. I see that my hon. Friend the Member for Manchester, Withington (Mr. Silvester) is in his place. He asked whether we might have six enterprise zones in England rather than the three that have been suggested. At this stage the scheme is an experiment and it will be difficult to meet my hon. Friend on the matter of six zones, though his remarks will, of course, be given full consideration. It is possible that four zones will be created. I think that my hon. Friend's request for six at this stage is a little difficult to meet, but I am grateful to him for the support that he gave to the concept.

Support was also given by my hon. Friends the Members for Kidderminster (Mr. Bulmer), for Luton, East (Mr. Bright) and for Upminster (Mr. Loveridge). The last two of my hon. Friends wanted the proposal to be extended considerably. That really cannot be acceded to, although I understand what they are asking for.

The enterprise zone concept goes a long way. Let us see how it works out in practice. My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) also intervened, characteristically, in the debate. He wanted two things in particular. I am glad to see that he was wholly and robustly opposed, as I am, to the amendments before us. My hon. Friend wanted the Government to make it quite clear that a particular area had not been designated as an enterprise zone because the local authority did not wish it to be so. My right hon. Friend the Secretary of State for the Environment will, at the end of the day, decide on the particular areas and his decisions will be made known to the House before it rises for the Summer Recess. I think it likely that it will become apparent where local authorities have said that they do not want enterprise zones within their areas.

Let me make it clear from the start that no area will be made an enterprise zone against the will of the democratically elected local authority that is responsible for that area. There is no question of foisting an enterprise zone upon an area where it is rejected by the local authority concerned. I think that that answers the question about local democracy raised by the hon. Member for Newham, South (Mr. Spearing).

Mr. Spearing

The hon. Gentleman misunderstood the point that I was making. I was not referring to the response to the invitation. I was concerned that planning control—and one man's bureaucracy could be another man's protection—should be taken out of the hands of locally elected councillors in respect of planning applications. If the scheme goes through, the Minister will know that there is no planning application in the normal way in an enterprise zone.

Mr. Lawson

The planning regime—and there will be a planning regime even though it is different from the one which applies to the rest of the country—will have to be agreed with the local authority concerned in discussions that will take place, in broad terms before the designation and in detail after the designation.

Mr. J. Enoch Powell (Down, South)

As the Financial Secretary is a United Kingdom Minister will he confirm that what he said about the local authority having the veto will apply to the Belfast area equally with the others?

Mr. Lawson

The position, obviously, is different in Northern Ireland, for reasons that the right hon. Member for Down, South (Mr. Powell) knows full well. I am sure that if he asks the Northern Ireland Ministers about this they will be able to enlighten him, though I do not make light of the issue.

Mr. Hooley

If the Government are genuinely concerned about democratic accountability why do they give power to the urban development corporations to operate the zones? The corporations are not democratically elected. They can be imposed upon an area by the Secretary of State.

Mr. Lawson

That is so. I was not aware that the Labour Party was opposed to the urban development corporations.

My hon. Friend the Member for Wolverhampton, South-West wanted an assurance that there would be no pork-barrel politics. He thought that that could be avoided only by clear and specific criteria being announced in advance. That is unrealistic. Any Government must decide, for example, which road schemes should go ahead. A Minister cannot publish clear and specific criteria in advance so that people know which road schemes will be authorised and which will not. An element of judgment is involved.

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Broad criteria are being used. We have sought a reasonable geographical spread between the regions. Within each area we have examined economic problems, decay and physical dereliction. We have looked for sites which have a need and potential for development. We have tried to pick sites which have a variety of different problems in order to test the enterprise zone concept in different circumstances. I think that that answers the right hon. Member for Orkney and Shetland (Mr. Grimond).

The enthusiastic co-operation of the local authority is a pre-condition. The anxiety of my hon. Friend the Member for Wolverhampton, South-West about pork-barrel politics will be assuaged after the event. After the sites are chosen my hon. Friend, with his perspicuity, will be able to judge whether there is any evidence of pork-barrel politics. Most of the authorities that have been approached so far are solidly Labour-controlled. There is no evidence that we are looking to Conservative-controlled areas and overlooking Labour-controlled areas. I think that my hon. Friend was afraid of that. The press would be quick to investigate and we should be happy to submit ourselves to that test.

Mr. Anderson

Local authorities will be compensated by the Government for the loss of rate revenue. Will they also be compensated for any additional expenditure on infrastructure necessitated by the creation of enterprise zones?

Mr. Lawson

That is a matter for my right hon. Friend the Secretary of State for the Environment.

The debate was opened by the hon. Member for Sheffield, Heeley (Mr. Hooley). There was an instructive division of view between the hon. Member for Heeley, who was much opposed to the concept but who backed down later, and the hon. Member for Sheffield, Attercliffe (Mr. Duffy"), who was anxious that Sheffield should have an enterprise zone. The hon. Member for Attercliffe had the courtesy to explain why he is not in his place now. He has a naval dinner to attend. [Interruption.] I am horrified that the hon. Member for Keighley should laugh in derision because the hon. Member for Attercliffe, who is a former Navy Minister, has to attend a naval dinner. That is an honourable reason for not being present to hear the reply to the debate.

The hon. Member for Heeley spoke for 50 minutes. I shall try not to beat that record. His argument was echoed by the right hon. Member for Llanelli (Mr. Davies). They drew back from attacking the concept of enterprise zones. They wanted to ensure that the 100 per cent. allowances went only to manufacturing industry. The amendment is not drawn as narrowly as that but it comes to the same thing. But I do not wish to make anything of that point. I shall explain why I reject their approach.

The hon. Member for Heeley asked a number of specific questions. I shall try to answer some of them. He and other hon. Members were worried that taxpayers should shell out to pay for the concessions in the enterprise zones. Many Opposition Members talked in terms of robbing Peter to pay Paul. Of course there is an element of that. There must be. I ask Opposition Members to agree that those areas which receive favourable treatment, whether through increased Government expenditure or through tax and rate remissions, must be paid for by the generality of ratepayers and taxpayers. Hon. Members must either accept that or say that there should be no special aid for any region. They cannot have it both ways. They cannot say that they are in favour of regional policies and policies to help the inner cities and at the same time be against taxpayers being asked to pay.

Mr. Guy Barnett

We have asked that where there is discrimination of the kind provided by an enterprise zone clearly stated criteria must be published. We must be clear why one area is treated more favourably than others.

Mr. Lawson

I shall have to disappoint the hon. Gentleman. I do not have all the time in the world and I cannot devote more time to the question of criteria. There will be ample time to discuss it further. I had hoped that the Committee would be satisfied with what I had already said.

The hon. Member for West Lothian (Mr. Dalyell) mentioned Customs regulations. That was based on a misreading of what my right hon. and learned Friend the Chancellor of the Exchequer said in his Budget Statement. He said that there will be: accelerated handling of applications of warehousing free of Customs duty ".—[Official Report, 26 March 1980; Vol. 980, c. 1488.] He was saying not that there should be freedom from Customs duty in those areas but that in cases where handling free of Customs duty applied under the law of the land the procedure would be accelerated in the enterprise zones. Customs facilities throughout the country are available to firms to deal with goods that can be processed free of Customs duty. It is an administrative assistance—a cutting of red tape. The procedures will be expedited in the enterprise zones. The criteria applied to decisions on Customs warehousing in enterprise zones will be more relaxed than the criteria elsewhere in Britain. There will be no remission of Customs duty in those areas. I hope that that point is clear.

Mr. Dalyell

Why can the procedure be expedited in the enterprise zones? Why cannot it be expedited in all other areas?

Mr. Lawson

I hope that that will be possible at some stage. The hon. Gentleman and a number of his hon. Friends seem to be in favour of a curiously un-empirical approach. The approach that is embodied in the clause is that of " suck it and see ". It is not, as such, a doctrine of the Government. It is what lies behind the concept of an experiment, and the enterprise zones are an experimental concept. It make more sense to see how practice and changes in practice work in tiie light of real-life experience than to apply them by some abstract principle or dogma.

The hon. Member for Heeley was concerned about projects that had already started in areas subsequently designated as enterprise zones. It is clear from the Bill that relief applies only to expenditure incurred after an enterprise zone is designated. If a building is erected wholly and completely before the designation of the zone, there will be no 100 per cent. capital allowance relief. However, there will be rate relief after the zone has been designated. The clause makes it perfectly clear that a contract entered into during the 10-year period enables relief to be claimed under the 100 per cent. capital allowance.

The hon. Gentleman entered into some altercation with his hon. Friend the Member for Attercliffe about whether pubs would qualify for capital allowances. He said that it was a matter on which I should arbitrate, and I do so gladly. Pubs in enterprise zones will be eligible for the 100 per cent. capital allowances.

The hon. Gentleman was concerned with reviving manufacturing industry. These proposals are concerned with reviving the areas where there has been—as the hon. Member for Attercliffe said—dereliction and decay for 20 years. How are those areas to be revived? The idea that if a job disappears in a certain industry it must be recreated by Government action is the most arrant nonsense, and a clear road to disaster. The amendment sneers at the non-manufacturing sector because we are giving it 100 per cent. capital allowances too. That is where the majority of working people in Britain are employed.

8.15 pm

The right hon. Member for Llanelli said that he was unfamiliar with the idea of extending relief to commercial buildings. He asked the meaning of the word " commercial ". He said that he was puzzled. I am surprised that he was puzzled. Not only do the commercial and other non-industrial employers employ more than half of the working population—there is nothing here of the fringe nature suggested by the hon. Member for Heeley—but the right hon. Member has himself spoken about commercial buildings on many occasions in the past. Far from attacking the fact that in the enterprise zones we wish to give the same allowances to commercial buildings as to other buildings, he has conceded the point in the past. In Committee on the Finance Bill in 1977, only three years ago, he said: There is no case in equity for treating commercial buildings differently from industrial buildings."—[Official Report, Standing Committee D, 22 June 1977; c. 1135.] I see that the right hon. Gentleman is nodding in agreement. Yet he has the gall to say to the Committee that it is absolutely monstrous to give commercial buildings the same allowance as industrial buildings.

Mr. Denzil Davies

I did not say that. I simply asked what was meant by the word " commercial ". Secondly, I was dealing with capital allowances in general and not with the position in enterprise zones.

Mr. Lawson

That is a riddle. The right hon. Gentleman knows perfectly well that the reason why he made that statement in 1977, and did not accede to the demands of the CBI and many others, was that he could not afford it. Because enterprise zones are very limited, the cost is much cheaper and, therefore, they can be afforded. If he does not know the meaning of the word " commercial ", how could he make that statement in 1977? Commercial buildings are those such as retail or wholesale warehouses, shops, offices, garages, cinemas, banks, launderettes, and a whole range that do not qualify as industrial buildings. For the benefit of the right hon. Member for Orkney and Shetland, let me say that industrial buildings are confined, broadly speaking, to the manufacturing and processing industries. Everything that is neither manufacturing nor residential comes, in general terms, under the heading of commercial, including the office buildings that are given relief under the clause.

The right hon. Member for Llanelli also asked about cost.

Mr. Denzil Davies

I asked what is an office? What sort of office would exist where there was no trade or professional vocation being carried out?

Mr. Lawson

I will give an example. If the Labour Party wished to set up its office in an enterprise zone, we would, out of the goodness of our hearts, grant it the 100 per cent. allowance, despite the fact that it is not a trade, profession or vocation, although Labour Members may feel in their hearts that it is a trade, profession or vocation. The right hon. Gentleman asked for an example. That is the example that I give him. [Interruption.] I think that, as my right hon. Friend said, it is an industry now, but that concept is not yet known to the statute book.

The cost of the rate relief, as the hon. Member for Greenwich (Mr. Barnett) rightly quoted from my right hon. Friend the Minister for Local Government and Environmental Services, is estimated to be between £5 million and £10 million a year. The cost of the capital allowances we reckon to be about £20 million. It has to be a broad estimate. We cannot be precise. That means that the total cost of those two items comes out at between £25 million and £30 million.

The right hon. Member for Orkney and Shetland asked a number of questions, some of which I have tried to answer in my earlier remarks. He asked two particular questions. One was whether this was specifically designated for small businesses. The answer is that it is not. I hope that small businesses will be attracted to the enterprise zones, but there is nothing specifically geared to small businesses in the clause. There are many other matters in the Bill which will be of considerable benefit to small businesses. We have debated one of those matters and we shall be debating others later.

The right hon. Gentleman also asked about the relationship with the urban programme. I assure him that the two will continue side by side. I do not know what areas my right hon. Friend the Secretary of State will designate, but if an area is part of both schemes it will presumably get the benefits available under both.

The hon. Member for Newham, South was concerned about local democracy, on which I have already touched. He was also concerned about the increase in land values that might arise. I think that is unrealistic, and I see no signs of it. Many areas—most of them Labour-controlled—have applied to be enterprise zones. The knowledge that they have applied has not increased land values. Once an area has been designated an enterprise zone, it is likely that land values will rise. But that is not the end of the world. That is no terrible thing. It is an extraordinary suggestion that we should not rescue these areas from dereliction because land values might rise. It is almost inconceivable that they will not rise if these areas are to be rescued from dereliction.

Mr. Spearing

My horror was not for that reason. The point that I was making related to the £30 million of which the hon. Gentleman spoke. Does he not agree that, because land values will rise and rents will rise with them, the effective benefit will go to the holders of the land and not necessarily to the industry? Therefore, the money voted by the House for this scheme will benefit not necessarily the areas, but the people who, by chance, already hold the land or speculate on its value.

Mr. Lawson

I am astonished at the hon. Gentleman. Whenever planning permission is granted, the benefit goes to the owner of the land. If he thinks that is repugnant, the whole planning permission system should disappear.

Mr. Denzil Davies

If that happens under planning permission, development land tax is paid. Under the Bill there will be an exemption from development land tax. Indeed, there will be no tax at all on the increase value.

Mr. Lawson

That is one of the ways of encouraging development in these areas. This is the purpose of the clause.

With the exception of the speeches by the hon. Members for Attercliffe and Kettering (Mr. Homewood), we have had a mixture of nit-picking and ideology.

Mr. Dalyell

No.

Mr. Lawson

The hon. Member for West Lothian says " No " to ideaology That is right. There was no ideology in his speech. He was a nit-picker. The ideology which came from the right hon. Member for Llanelli and the hon. Member for Heeley was that civilisation was to be equated with Government regulation. Apparently the more Government regulation there was, the higher the gedree of civilisation. The suggestion was that to remove any regulations—to de-plan, as the hon. Member for Newham, South said—was to destroy civilisation. I use the word " civilisation " because it came from the lips of the hon. Member for Heeley when he introduced this concept, and his hon. Friends agreed with him.

Mr. Hooley

I used the word " civilisation " in the context of those important laws passed by the House over the years to control pollution, filth in water and air, which damages people's health, to control safety and to try generally to exercise some benificent effect on the environment. Is the hon. Gentleman repudiating all that legislation?

Mr. Lawson

No. If the hon. Gentleman was talking only about that aspect, his speech was wholly irrelevant to the clause. Nothing in the clause alters health and safety at work provisions or the pollution regulations. I do not know what the hon. Gentleman was worrying about. Indeed, I do not know why he made his contribution, if that was his concern, because there is nothing in the legislation which alters those matters.

The hon. Member for West Lothian asked, as he often does, a number of pertinent questions. He was concerned particularly about administrative difficulties over a wide area. One was the administrative problem of the tax relief when there is a wide travel-to-work area.

Mr. Dalyell

Rubbish.

Mr. Lawson

If the hon. Gentleman looks carefully at the legislation, which is partly in the Local Government, Planning and Land (No. 2) Bill and partly in the Finance (No. 2) Bill, he will see a consistent pattern. We have tied the tax relief to buildings—whether it be development land tax, capital allowances or rates—rather than to employees. That is for the reason that he suggested—namely, that it is easier administratively to identify where a building is located.

The hon. Gentleman asked whether there would be back-dating of the relief to the date of the Budget. There will not. That is not the intention. Therefore, to say that there would be a great amount of investment in those areas which will have been penalised because it had taken place prior to the designation is a little over-optimistic. One of the problems of those areas is that there is very little investment in them at present. But the relief will start from the date on which the designation takes place.

8.30 pm

The hon. Member for West Lothian also said—this point has been touched on by a number of hon. Members—that planning delays were not a problem for business and industry. He said that the problems of business and industry were caused by a lack of demand. I venture to disagree with him very strongly. If he talks to business men he will find that planning delays and red tape are also real impediments. A number of studies have been made of the time taken to get planning permission for commercial and business enterprises in this country as compared with other countries. A study that was made comparing this country with Canada shows that in a particularly striking way.

This illuminates a major difference between the two sides of the Committee. We do not believe that economic growth is a function of government, and that it is simply a matter of how much monetary demand the Government pump into the economy that will determine the rate of economic growth. We believe that individuals are responsible for economic growth. The main factors that hamper individuals are impediments of one sort or another on the planning side. Planning delays are one factor. Others include restrictive practices—some of which are enforced by trade unions and some by other bodies—and disincentive levels of taxation. Those are the factors which are responsible for the lack of economic growth. If the hon. Gentleman thinks that planning delays are not impediments he is very much mistaken.

The hon. Member for Swansea, East (Mr. Anderson) did not make any new points, although he made many of the points rather better than some of his hon. Friends. I am not being patronising, because he is an eloquent speaker. The phrase: What oft was thought, but ne'er so well expressed. might well apply to him.

I have tried as briefly as possible to cover a large number of the questions that were put to me. I hope that the Committee will be satisfied that this is one of the most imaginative concepts to have come from any Chancellor of the Exchequer within living memory. We put forward the concept of enterprise zones as an experiment. We shall learn from that experiment, both from the problems of the derelict areas and from the lessons which will be of general interest and general validity for the economy and for the country as a whole. Above all—it is long overdue—I believe that the Opposition will learn some lessons too.

Mr. Dalyell

The Financial Secretary said that I was a nit-picker. I propose to pick some substantial nits that have not been answered.

The first is on the question of red tape. The Chancellor of the Exchequer said that red tape all too often stands between young school leavers and the prospect of a job. I should like him to spell out precisely what this red tape is. Often there is a reason for the red tape. It is true that there are delays in planning procedure, but they often occur as a result of the lack of good will and human bloody-mindedness. Is there any undertaking that human bloody-mindedness and lack of good will will be absent or will be cut with regard to enterprise zones.

Another nit that was not answered was the question of exemption from the scope of industrial training boards, and the question whether poaching would be allowed. Poaching would certainly occur if this system came into operation.

The Chancellor referred to " drasticaly simplified planning schemes." If there is a possibility of drastically simplified planning schemes, why, in heaven's name, can they not be introduced in other places and at other times? I do not think that the world is quite as simple as that.

Again, the question of what would happen to industry in the neighbourhoods was not answered. That question was put by my hon. Friend the Member for Greenwich (Mr. Barnett), who had ministerial responsibility for these matters, and by my hon. Friends the Members for Sheffield, Heeley (Mr. Hooley) and for Newham, South (Mr. Spearing). The question was, what would happen to industry that had survived on the edges of one of these enterprise zones? [Interruption.] The Assistant Patronage Secretary, the hon. Member for Monmouth (Mr. Stradling Thomas), has not been here for this memorable debate. It will be remembered as the " suck it and see " debate. The hon. Gentleman missed it. When he writes his memoirs, he will regret that he was out of his place for the " suck it and see " debate.

Then we did not come to the fundamental nit of all—what extra growth will be provided? We come back to where we started. We are competing for such growth as exists. There was no indication in the Financial Secretary's speech that somehow or other, by some alchemy, extra growth would be presented by all this. So the original charge of robbing Peter to pay Paul stands.

Again—a very substantial nit indeed—what about the whole travel-to-work problem? If this is to be a centre of industry, what about the infrastructure? I suggest that an answer should have been given to my hon. Friend the Member for Greenwich, who had to deal with the local authorities. A question which has not been answered is what the local authorities will have to pay for all this in terms of infrastructure. Suppose that in East London—we shall leave Clydebank out of it—an enterprise zone is set up. What will the neighbouring local authorities have to pay out, particularly in relation to transport? It is no good saying to local authorities at the end of the day " Suck it and see ". They will certainly not thank the Treasury for that.

Again, the question of delay was not answered.

There is a purely factual question about minimal requests for statistical information. How does one set about any kind of economic management if one has major enterprise zones, for which one does not require the statistical information which is required for the rest of the country? When the Treasury statisticians ask for it, what will they be told?—" Suck it and see."

Once again, the whole thing has been exposed. The Assistant Patronage Secretary knows very well those many occasions when he was sitting where my hon. Friend the Member for Birmingham, Stechford (Mr. Davis) is sitting now when the House of Commons, doing its job, has exposed a nonsense. I fear that this is yet more ill-thought-out nonsense.

I do not know whether the Financial Secretary will reply again.

Mr. Lawson

All right; I shall intervene. I made the point—I am glad to have this opportunity of repeating it—that it was unworthy of the hon. Gentleman to suggest that this was a gimmick, because he knows that my right hon. and learned Friend the Chancellor of the Exchequer put this idea forward two years ago in a speech and has been working on it since then. As soon as we got into office, a great deal of work was done on the detail of this proposal, and it has, therefore, come to fruition and to a vote in the 1980 Budget. Therefore, this is no instant gimmick. It has been developed ever since that speech in 1978.

Mr. Dalyell

That makes it worse and not better. If the Government have been thinking about this for two years, we should go over the whole list of questions again. However, I do not want to annoy my colleagues. That is the only reason for not doing so. The questions about travel to work are unanswered.

If the Financial Secretary wants to bring this debate to a speedy end, will he answer a key question? It has been asked by a number of my hon. Friends, and for Greenwich. How much are the local authorities in the area to pay out for the enterprise zones contiguous to their areas? If the hon. Gentleman will answer that question, I shall make a bargain with him—I shall be quiet and we shall leave it. Will he answer that question? It was asked by my hon. Friend the Member for Greenwich, a former Under-Secretary of State for the Environment. No such luck: the hon. Gentleman is not prepared to do so. I suppose that the answer is " Suck it and see ".

Mr. Spearing

Is my hon. Friend aware that, in spite of two years of preparation, schedule 25, which has been referred to in the debate, was not part of the original Bill? It was inserted after the Bill began to be considered in Committee. Paragraphs 9 to 14 of the schedule—paragraph 13 gives the Minister power by direction wholly to replace the scheme—were inserted on 15 May, two days before the Committee debated it, without the local authorities being notified.

Mr. Dalyell

We have been down this road before. Does not the Assistant Patronage Secretary know what happened in the previous Parliament and what happens to Governments when they put in additional schedules at a late stage? Be warned. Take the Bill back to the Whips' Office and tell it what happens when ill-thought-out legislation is produced and an attempt is made to put it right. The result is that Governments spatchcock new ill-thought-out schedules. On these occasions one sinks deeper and deeper into the mire as one sucks. This will be known as the " suck, suck and suck again" debate.

Mr. Hooley

We now know what the Tory answer is to the dole queue. Those in the queue will be told " We are sorry, but we have no way of providing you with a job, but at least you can have a rate-free pub in which to spend your time." I was astonished to learn that capital allowances will be available to the brewing industry. If any industry does not need tax relief and tax allowances, it is the brewing industry.

Mr. Spearing

That applies to the banks, too.

Mr. Hooley

Indeed. The banks have enjoyed massive windfall profits in a very high-interest-rate regime. If anything is needed to confirm me in my view that my amendment is sound, that is it.

The Financial Secretary echoed what his Treasury colleague kept saying in the Standing Committee, namely, that it is an experiment. Admittedly, his colleague used somewhat more elegant language. The Financial Secretary repeated that it was an experiement and that the Government wanted to try it. We are supposed to be in an age of science and technology, notwithstanding some of the nineteenth century notions of Conservative Members. The essence of an experiment in this age that it is controlled.

My amendment is deliberately conceived and presented. It is not a vague notion. Many of us believe that the enterprise zone is a cranky idea. It will not work. It does not stand much chance of working. However, if the Government must have it, and if they insist on having it, let us have it in a properly defined area and in the area in which the country is facing the most serious difficulty, namely, run-down manufacturing industry.

Sheffield and other major cities require especially the replacement of manufacturing industry. The men who are being thrown out of work are engineers, steel workers and industrial workers. It is

the men who are losing their jobs. By and large, the position of women is being maintained. In so far as there is a change in the composition of the work force, the change is in favour of service and commercial activity and against manufacturing and industrial activity.

Treasury Ministers say that they want to embark on the experiment. If that is so, let us have a controlled experiment in a defined area. That is broadly the substance of the amendment. Despite all the doubts and severe criticisms that have been expressed by my hon. Friends, let us have a controlled, sensible and confined experiment. Let us look at its development. I do not think that it stands much chance. However, that is a matter of judgment.

8.45 pm

When over 2 million people are unemployed, and when interest rates have risen to 21 per cent., we may get a U-turn, or something like it. We have a gimmick. Let us confine it to something that is manageable and fairly precise. That is the substance of my amendment. I still think that it is perfectly rational, and I hope that the Government will see it in that light.

Question put, that the amendment be made:—

The Committee divided: Ayes 26, Noes 160.

Division No. 335]	AYES	8.45 p.m.
Allaun, Frank	Evans, John (Newton)	Stoddart, David
Atkinson, Norman (H'gey, Tott'ham)	Lewis, Ron (Carlisle)	Straw, Jack
Bennett, Andrew (Stockport N)	Litherland, Robert	Walker, Rt Hon Harold (Doncaster)
Buchan, Norman	Marshall, David (Gl'sgow, Shettles'n)	Weetch, Ken
Callaghan, Jim (Middleton & P)	Maxton, John	Winnick, David
Campbell-Savours, Dale	Maynard, Miss Joan	Young, David (Bolton East)
Canavan, Dennis	Roberts, Ernest (Hackney North)
Carter-Jones, Lewis	Skinner, Dennis	TELLERS FOR THE AYES
Crowther, J. S.	Spearing, Nigel	Mr. Frank Hooley and
Dalyell, Tarn	Springs, Leslie	Mr. Bob Cryer.
NOES
Alexander, Richard	Brinton, Tim	Cope, John
Ancram, Michael	Brittan, Leon	Corrie, John
Arnold, Tom	Brooke, Hon Peter	Cranborne, Viscount
Aspinwall, Jack	Brown, Michael (Brigg & Sc'thorpe)	Dickens, Geoffrey
Atkins, Rt Hon H. (Spelthorne)	Bruce-Gardyne, John	Dover, Denshore
Baker, Nicholas (North Dorset)	Budgen, Nick	Dunn, Robert (Dartford)
Beith, A. J.	Bulmer, Esmond	Durant, Tony
Benyon, Thomas (Abingdon)	Burden, F. A.	Eden, Rt Hon Sir John
Berry, Hon Anthony	Butcher, John	Elliott, Sir William
Best, Keith	Cadbury, Jocelyn	Eyre, Reginald
Bevan, David Gllroy	Carlisle, John (Luton West)	Fairgrieve, Russell
Bitten, Rt Hon John	Carlisle, Kenneth (Lincoln)	Faith, Mrs Sheila
Biggs-Davi8on, John	Carlisle, Rt Hon Mark (Runcorn)	Fenner, Mrs Peggy
Blackburn, John	Chapman, Sydney	Fisher, Sir Nigel
Bonsor, Sir Nicholas	Clark, Hon Alan (Plymouth, Sutton)	Fletcher-Cooke, Charles
Boscawen, Hon Robert	Clarke, Kenneth (Rushcllffe)	Garel-Jones, Tristan
Bright, Graham	Cockeram, Eric	Glyn, Dr Alan
Goodlad, Alastalr	Mather, Carol	Sainsbury, Hon Timothy
Gow, Ian	Maude, Rt Hon Angus	Scott, Nicholas
Griffiths, Eldon (Bury St Edmunds)	Mawhinney, Dr Brian	Shepherd, Colin (Hereford)
Griffiths, Peter (Portsmouth N)	Maxwell-Hyslop, Robin	Skeet, T. H. H
Grimond, Rf Hon J.	Mellor, David	Smith, Cyril (Rochdale)
Grist, Ian	Meyer, Sir Anthony	Speller, Tony
Gummer, John Selwyn	Mills, lain (Mariden)	Spence, John
Hamilton, Hon Archie (Eps'm&Ew'll)	Mills, Peter (West Devon)	Spicer, Michael (S Worcestershire)
Hamilton, Michael (Salisbury)	Miscampbell, Norman	Stanbrook, Ivor
Hannam, John	Mitchell, David (Basingstoke)	Stanley, John
Hawksley, Warren	Moate, Roger	Steel, Rt Hon David
Heddle, John	Molyneaux, James	Stevens, Martin
Henderson, Barry	Morgan, Geraint	Stradling, Thomas, J.
Hicks, Robert	Morris, Michael (Northampton, Sth)	Thatcher, Rt Hon Mrs Margaret
Hill, James	Morrison, Hon Charles (Devizes)	Thomas, Rt Hon Peter (Hendon S)
Hogg, Hon Douglas (Grantham)	Morrison, Hon Peter (City of Chester)	Thompson, Donald
Holland, Philip (Carlton)	Mudd, David	Thorne, Nell (Word South)
Howell, Ralph (North Norfolk)	Murphy, Christopher	Thornton, Malcolm
Howells, Geraint	Needham, Richard	Townend, John (Bridlington)
Hunt, John (Ravensbourne)	Nelson, Anthony	Townsend, Cyril D. (Bexleyheath)
Hurd, Hon Douglas	Normanton, Tom	Trlppler, David
Johnston, Russell (Inverness)	Page, Rt Hon Sir R. Graham	Vlggers, Peter
Jopling, Rt Hon Michael	Parkinson, Cecil	Waddington, David
Knox, David	Parris, Matthew	Wakeham, John
Lawrence, Ivan	Patten, John (Oxford)	Waldegrave, Hon William
Lawson, Nigel	Penhallgon, David	Walker, Bill (Perth & E Perthshire)
Lee, John	Pollock, Alexander	Waller, Gary
Le Marchant, Spencer	Powell, Rt Hon J. Enoch (S Down)	Watson, John
Lester, Jim (Beeston)	Price, David (Eastleigh)	Wells, John (Maidstone)
Lloyd, Peter (Fareham)	Proctor, K. Harvey	Wells, Bowen (Hert'rd & Stev'nage)
Loveridge, John	Rathbone, Tim	Wheeler, John
Lyell, Nicholas	Rees, Peter (Dover and Deal)	Whitney, Raymond
Macfarlane, Neil	Renton, Tim	Wilson, Gordon (Dundee East)
MacKay, John (Argyll)	Rippon, Rt Hon Geoffrey	Wolfson, Mark
McNair-Wilson, Michael (Newbury)	Ross, Stephen (Isle of Wight)
McOuarrie, Albert	Ross, Wm. (Londonderry)	TELLERS FOR THE NOES:
Marlow, Tony	Rossi, Hugh	Mr. John MacGregor and
Mates, Michael		Mr. Tony Newton.

Question accordingly negatived.

Clause 68 ordered to stand part of the Bill.