HC Deb 18 June 1980 vol 986 cc1671-8

Lords amendment : No. 1, after clause 12, in page 9, line 31, at end insert—

  1. (1) The English Industrial Estates Corporation may, in accordance with directions under section 10(3) of this Act given with the approval of the Treasury, borrow in any currency from the Commission of the European Communities or from the European In vestment Bank, but subject to subsection (2) below.
  2. (2) The aggregate amount outstanding in respect of the principal of sums borrowed under this section shall not exceed £30 million or such greater sum not exceeding £50 million as the Secretary of State may with the approval of the Treasury by order specify.
  3. (3) The power to make orders under this section shall be exercisable by statutory instrument, and no such order shall be made unless a draft of it has been laid before and approved by resolution of the House of Commons.
  4. (4) In section 11(8) of the Local Employment Act 1972 (receipts of Corporation, with certain exceptions, to be paid over to Secretary of State) after paragraph (a) there shall be inserted—
(aa) receipts consisting of sums borrowed under section (Power for the Corporation to borrow) of the Industry Act 1980; and". Read a Second time.

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

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker

With this we may take Lords amendment No. 2—in page 9, line 31, at end insert new Clause B (Treasury Guarantees):—

  1. (1) The Treasury may guarantee, in such manner and on such conditions as they think fit, the repayment of the principal of, and the payment of interest on, any sums borrowed under section (Power for the Corporation to borrow) of this Act.
    2. 1672
  2. (2) Immediately after a guarantee is given under this section, the Treasury shall lay a statement of the guarantee before each House of Parliament; and where any sum is issued for fulfilling a guarantee so given the Treasury shall, as soon as possible after the end of each financial year (beginning with that in which the sum is issued and ending with that in which all liability in respect of the principal of the sum and in respect of interest thereon is finally discharged) lay before each House of Parliament a statement relating to that sum.

Mr. Mitchell

This is a technical amendment, which need not take up too much of our time. At present the English Industrial Estates Corporation has no borrowing powers, nor has it ever had such powers, nor have they ever been needed. As an instrument of the Government's regional policy, the corporation has been financed from the Vote of the Department of Industry and it will continue to be so financed, except in so far as the private sector may provide funds for its activities. However, it is not beyond the bounds of possibility that the Government might want the corporation to borrow from the European Investment Bank or from the European Coal and Steel Community. I do not say at this stage that this is probable, or even likely. Much obviously depends on the individual circumstances of each loan or project, and in particular on the desirability of borrowing in foreign currencies and so substituting the disadvantage of a long-term exchange risk for the disadvantage of temporarily higher domestic interest rates. This is a technical fiscal judgment, as hon. Members will recognise.

The purpose of the new clauses is simply to allow the kind of borrowing that I have described, should it be thought to be a good thing at any time. This is identical in substance, if not in words, with the comparable provisions relating to the European Investment Bank or EEC borrowing in the Welsh Development Agency Act and the Scottish Development Agency Act of 1975.

Dr. John Cunningham (Whitehaven)

We shall not oppose amendments Nos. 1 and 2. The English Industrial Estates Corporation has a good record, and anything that is done to facilitate its more effective operation is welcome to us. Certainly we subscribe to the view that the EIEC should be helped in whatever way possible to do the very great and increasing job that the Government are placing upon it.

8.30 pm

The corporation has a difficult task in helping industrial growth and regeneration and providing advance factories in its headquarter area in the Northern region and other areas in England. One has only to look at the latest Government figures for bankruptcies and liquidations to see that any help given to the corporation, however small and technical, is welcome. We urge the Government to consider providing wider powers to the corporation. The Labour Party is committed to the creation of a northern development agency, as the Minister knows, which would have implications for the work of the corporation and for the northern arm of the National Enterprise Board.

I hope that the corporation will continue vigorously to tackle problems in the regions. In a debate earlier today the Government demonstrated the scant regard that is being paid to job safety in the North-West and Scotland, which, admittedly, does not come under the corporation. I hope that the Minister will take account of the serious concern that I and my hon. Friend the Member for Workington (Mr. Campbell-Savours) share about the Northern region, and West Cumbria in particular. Had it not been for the public expenditure devoted to the operations of the corporation, among other public expenditure, the situation would be worse.

The Under-Secretary said that the second amendment was technical. No one would disagree. The Minister of State in another place had difficulty in explaining what the amendment meant.

Mr. John Evans (Newton)

When we debated the clauses relating to the English Industrial Estates Corporation in Committee we indicated that we would give them a fair wind. I welcome the proposed changes in the corporation. In Committee I said that it could be the embryo of an English Development Agency.

Funds which, we hope, are available from European institutions can benefit the corporation, although I am surprised that legislation is required to enable it to borrow those funds. Perhaps the Under-Secretary can explain that. I assumed that the corporation already had such powers. The European Investment Bank takes a fairly leisurely look at loan applications and will recognise that the corporation is, in effect, a Government body.

In view of what the Minister said, I should like clarification about the corporation's ability to borrow from the ECSC. Over the past few years I have had dealings with the ECSC. Basically, its role is to make funds available for projects that will create employment in areas where there is a rundown in either the steel or the coal mining industry. I am rather surprised that that has been brought into the measure. It is not stated in as many words in the clause. I should have thought that any project that offered employment in rundown areas, where there are redundancies among steel or coal workers, would qualify for aid from the ECSC.

Those are only general points, and I am concerned with a more important matter. I feel very strongly that, in the context of the Industry Bill, which we debated at length in Committee and on the Floor of the House, the Government have seriously disadvantaged substantial areas of the country, particularly in the North-West, by removing assisted area status from many parts of the country, and especially from my constituency.

I am sure that the Minister will appreciate that I did not spend a great deal of time in Committee raising matters concerning my own constituency, but I feel entitled on this occasion to raise this question, because the net effect of the clause—which will strengthen the English Industrial Estates Corporation, and to that extent I welcome it—will be further to disadvantage areas such as my own which have lost their assisted area status.

I am sure that the Minister will be prepared to concede that when he and his hon. Friends—particularly the Secretary of State—referred in the past to concentrating aid on areas that have the greatest need they were open to the charge of hypocrisy, because they have not added a penny to the special development areas, where the need is greatest. They have simply lopped off the funds that were available to the assisted areas.

There are potentially substantial sums of money that will be available on loan from European institutions and will obviously go only to the development areas and special development areas. They will not go to areas such as my constituency, because under the terms of the Industry Bill the English Industrial Estates Corporation will be precluded from acting in any area other than an assisted area. I am sure that the Minister will concede that I am right there.

I am sure that areas in which the English Industrial Estates Corporation is now acting will have to sell off their assets because they are no longer assisted. As I have indicated, I feel strongly that areas such as my own will be further disadvantaged. We have just had a debate on Ferranti, in the course of which some of my hon. Friends outlined the appalling job loss that has taken place in the North-West over the past 12 months, particularly in the Greater Manchester area. The fact that we have now no assistance leads to great difficulty in relation to the special development areas.

Special development areas, such as my own constituency, the Greater Manchester area, parts of Northern Lancashire and parts of Cheshire, are in competition not only with the special development area of Merseyside, but with development areas and special development area types of organisation throughout the European Community, and this is a great problem.

Other countries in Europe are pouring millions of pounds into large areas of their countries and increasing the total amount of national aid that they give them in order to protect industries and jobs. But this Government, to the amazement of the rest of the world, are cutting back on the gross total being made available for desperately needed assistance in industry in Great Britain.

I feel that I have a duty tonight to put forward the claims of areas, such as my own, which have lost their assisted area status and are now losing jobs at an appalling rate. The Minister will recall that on two or three occasions in Committee I said that the only growth industry that there would be in this country for the next couple of years would be the bankruptcy industry. He must concede that the figures that have been produced prove that there were more bank- ruptcies in the first quarter of this year than has been the case almost since records have been kept. We all know that that is only the fringe. A tremendous number of bankruptcies have still to come. Some of the greatest names in British industry will be going to the wall in the not-too-distant future.

We recognise the help that the new clauses will bring to the English Industrial Estates Corporation and the work that it can do in certain areas of the country, provided that the Government let it get on with the job—which I doubt. Nevertheless, we must not lose sight of the fact that vast areas of the United Kingdom, particularly in the north-west of England, and especially in the Newton constituency, are going to the wall. They are being decimated. Jobs are disappearing. Redundancies are occurring. Closures and bankruptcies are occurring on a scale that is alarming even the Tory Party in the North-West.

We welcome the new clauses, but we hope that the Minister will not for one moment think that our acceptance of them means that we give a helping hand to the Bill. Like so much of the rest of the Government's legislation since the disaster that overtook Britain last May, it is an appalling Bill. All that the new clauses do is to add just one little bit to one beneficial part of the Bill. I hope that the Minister does not think that I have in any way lessened my hostility to his appalling Bill.

Mr. David Mitchell

The hon. Member for Whitehaven (Dr. Cunningham) rightly praised the work of the English Industrial Estates Corporation. I am grateful to him for doing so, and I thoroughly agree with his sentiments.

My answer to the slightly carping tone of the hon. Member for Newton (Mr. Evans), is that it would be untrue to suggest, as he did, that under the Government the work of factory provision by the corporation is being held back. The truth is that public sector expenditure by the corporation will be about £35 million this year, to which must be added £25 million which has already been raised in private sector money. Taking those two together, we are spending at least twice as much as has ever been spent by the corporation. I hope that the House will recognise the very substantial benefit that this will bring to the areas in which the building is taking place.

Dr. John Cunningham

We recognise that what the Minister says is true, but I hope that he is not attempting to convey the impression that, because of this provision, somehow aid to the regions is being increased by the Government through this Bill, because the reverse is the truth, as he well knows. There will be a real cut of one-third in total aid to the regions as a result of the Government's policies. We had better have that clear in our minds.

Mr. Mitchell

If I trespass on to debating the whole area of regional policy, Mr. Deputy Speaker, I fear that I shall find myself out of order. However, on this amendment, concerned as it is with the English Industrial Estates Corporation and its activities, I know that the hon. Gentleman will wish to praise the fact that the Government have ensured that the corporation's expenditure this year will be more than double what it has ever been.

8.45 pm

The hon. Gentleman referred to the need for a Northern Development Agency. He said that this would have implications for the English Industrial Estates Corporation. This is, perhaps, not the right place, but it is unsettling for such an organisation to be given a sense of uncertainty, which inevitably is implied in changes that would mean that its factory building activities were taken away from it in the Northern area. If that is not to happen, I hope that the hon. Gentleman will put the record straight.

Dr. Cunningham

As the Under-Secretary of State invites me to put the record straight, I do so with pleasure. He should be assured, as should the people of the Northern region, who do not, however, need reassuring, because a glance at the record of parliamentary election results in the Northern region will more than adequately support what I say. They are not in any doubt about which of the two politicial parties, when in government, brings more succour and benefit to the region.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. I hope that the Minister will not be tempted to go along that line too far. We are concerned with the English Industrial Estates Corporation.

Mr. Mitchell

It is a pity that the Opposition have not taken the opportunity of this brief exchange to give an assurance and remove the uncertainty that their earlier remarks created.

I point out to the hon. Member for Newton that amendment No. 1 enables the English Industrial Estates Corporation to borrow. It has never before had borrowing powers. It has always been financed direct from the Department of Industry Vote. It is now thought that there might be circumstances—the Treasury feels that it might be helpful—in which it should have the opportunity, if in the judgment of those dealing with financial transactions this would be favourable, to borrow from either the European Investment Bank or the ECSC.

Lords Amendment No. 2 enables the Treasury to guarantee the corporation's borrowing. It is hardly a genuine need to guarantee, since the corporation itself is a creature of the Government and will not undertake borrowings without Treasury approval. Nevertheless, within our constitution there is a requirement that when the Treasury takes on a potential liability—which is what a guarantee is, in Treasury eyes—it must have Parliament's approval to incur that notional risk.

I hope that I can reassure the hon. Gentleman that we are dealing with a technical and minor matter. Since there are other matters with which the House wishes to deal, I hope that I have been able to satisfy the hon. Gentleman.

Question put and agreed to. [Special Entry.]

Lords amendment No. 2 agreed to. [Special Entry.]

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