HC Deb 18 June 1980 vol 986 cc1678-700

Lords amendment : No. 3 in page 11, line 5, at end insert— ' (3A) Where, apart from this subsection, the amount of a grant under Part I of the Industry Act 1972 towards expenditure falling within subsection (3B) below would be less than 20 per cent, of the expenditure, the amount shall instead be 20 per cent, of the expenditure. (3B) The expenditure falling within this subsection is expenditure incurred—

  1. (a) in providing an asset as part of, or on or for use in, qualifying premises in a relevant special development area in such circumstances that, by reason of Article 5(1) and (4)(d) or Article 5A(2) and (5)(b) of the Assisted Areas Order 1979, any grant under Part I of the Industry Act 1972 towards the expenditure is to be made at the rate appropriate to a development area which is not a special development area, or
  2. (b) in providing a building or works at any time as part of or on qualifying premises in a relevant development area in such circumstances that, by reason of Article 5(2) and (4)(d) of that order, no grant may be made under Part I of that Act towards any expenditure incurred in providing machinery or plant at that time for use in those premises.
(3C) In subsection (3B) above—
  1. (a) "relevant special development area" means an area which became a special development area on the coming into operation of the Assisted Areas Order 1977, the Assisted Areas Order 1979 or the Assisted Areas (Amendment) Order 1979, and
  2. (b) "relevant development area" means an area which became a development area on the coming into operation of the Assisted Areas Order 1977, the Assisted Areas (No. 2) Order 1977 or the Assisted Areas Order 1979.'

Mr. David Mitchell

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

This is a technical amendment to reverse an unforeseen effect of the transitional provisions in the Assisted Areas Order 1979 and the Assisted Areas (Amendment) Order 1979 which, combined with the effects of the Regional Development Grants (Variation of Prescribed Percentages) Order 1979 would result in some companies in upgraded areas suffering an unintended shortfall of regional development grant.

The companies affected are those that accepted offers of selective assistance in excess of £20,000 before the orders came in to operation. The transitional provisions allow such companies the option of retaining the selective assistance and receiving RDG during the period of the assisted project as if the areas had not been upgraded or of repaying the selective assistance, forgoing future assistance received under the offer and receiving the new and higher rate of regional development grant.

The intenion was that companies that retained their selective assistance should continue to receive grants at the 20 per cent, rate during the period of their assisted project. They cannot receive the full benefits of RDG that their expenditure would otherwise have attracted in the upgraded areas. The Regional Development Grants Variation of Prescribed Percentages) Order reduces the rate to 15 per cent, on assets provided on or after 1 August 1980. The outcome is that some applicants in assisted areas that have been upgraded because of special problems will not only not receive any benefit from the upgrading but will be disadvantaged.

About 52 projects in the new special development and development areas are affected by the transitional provisions, with an unexpected loss of RDG estimated at about £480,000. The amendment reverses that effect and provides that applicants in the new special development and development areas which opt to retain their selective assistance shall continue to receive the 20 per cent, rate of grant during the period of their assisted project. I commend the amendment to the House.

Mr. John Evans

The amendment is a piece of exceptionally obscure parliamentary gobbledegook. We are dealing with areas that used to be assisted areas or intermediate areas and which have been upgraded to special development areas. Which particular area has been upgraded from intermediate area to special development area? Some areas have been upgraded from intermediate to development area and from development area special development area. I cannot recall an area which has been upgraded from intermediate area through to special development area.

Mr. Mitchell

That question does not arise under the amendment. There will be further cross-examination from the Opposition Front Bench and I shall do my best to explain the detail.

Dr. John Cunningham

The Minister is waiting for information from his civil servants rather than for my questions.

Mr. Mitchell

That is not true. The intervention was irrelevent to the amendment. No areas have made a double jump.

Dr. Cunningham

Perhaps that is the answer, but perhaps the Minister is unsure, as we are unsure.

It is not surprising that there is confusion. Perhaps I was over-hasty a few moments ago. If anyone in a factory or office in my constituency that had just lost special area development status were presented with this amendment, even if local advisers or solicitors or the Minister's civil servants from the regional office were called in there would be difficulty in deciding what it all means.

I am tempted to read everything into the record to make the point, but I fear that even attempting that would be too difficult, because the issue is so complicated in its wording and cross-references. It is a classic piece of Civil Service gobbledegook and legal jargon. Industrialists, their staff and advisers will have grave difficulty in understanding what is proposed. I therefore hope that the Minister will do two or three things in order to overcome those difficulties.

Will he, first, in words, if not of one then at least of two syllables, explain in more detail what the effect of these amendments will be in terms of regional policy? It would be helpful if he did that. Secondly, will he give us an assurance that every project and every company that has been affected by this technicality which he says was not intentional—we accept that—will be advised of the circumstances and given the opportunity to take advantage of whatever is the best option for them? I am not too clear whether an option exists for them or not.

Thirdly, will the hon. Gentleman undertake either to write to my hon. Friend the Member for Newton (Mr. Evans) about the point that he raised, or to myself or to both of us, when he is able to give a satisfactory answer? That would assure us that a project or company in a development area will not lose as a result of this legal labyrinth into which the Government have staggered as a result of their desire to change regional incentives. I hesitate to pass judgment on this because I have had grave difficulty in reading the measure and understanding its intention.

It is clear, as my hon. Friend the Member for Newton said and as many of us know, that though the Government are being helpful in this respect they are being unhelpful in relation to a number of the other changes that they have made in regional policy incentives. I speak of the downgrading of areas and the subsequent loss of grant. Those things are having a serious effect in the regions. Perhaps this debate on these Lords amendments is not the appropriate time to discuss that matter, but I can assure the hon. Gentleman that though we shall not oppose this amendment he should be clear—as he seemed not to be clear in his remarks a few moments ago—that we regard these amendments as being not only eminently avoidable but not in the best industrial interests of the regions that they affect.

Mr. J. W. Rooker (Birmingham, Perry Barr)

I intervene briefly in this debate to say that the amendment is, as my hon. Friends have said, extremely complicated. I tried this afternoon to marry up some of the orders, because I wish to raise a point in the context of the purchases of equipment in development areas. Not enough of the equipment purchased for factories in development areas is manufactured in the West Midlands.

I thought that I would be able to make my points during the debate on the two new clauses, but I took advice from the Clerks and was told that this would be the most suitable juncture at which to make my plea on behalf of a company. One of the advantages of that procedure is that the amendment that we are discussing is so complex, because of the references to orders that were read out by the Minister, that I do not intend to take more than four or five minutes to make my point. However, I wish to raise with the Minister the matter of grants payable as well as some of the projects that he has mentioned. The sum of £500,000 has been mentioned.

9 pm

During the course of recent visits that I have made to machine tool manufacturers in the West Midlands I have come across allegations of gross irregularities amounting to corruption in the purchase of machine tools for installation in factories in development areas. The purchase of the machine tools was by Rolls-Royce. At the request of the management and representatives of the employees of the company which feels aggrieved, because its machine tools were involved in the first place, I am making the points that they wish to have made.

There is another advantage in raising this matter. The money resolution affects this point. However, I do not intend to go into that aspect, because it would be out of order to do so. The company concerned, Rolls-Royce, is to ge into the direct ownership of the Department of Industry as a result of the measures in the Bill. The shares will be transferred from the National Enterprise Board to the Department. The Government will be on the receiving end because they will own a company with factories in development areas. I hope that at least the Minister will look into the points that I wish to make.

I can explain this matter very simply. At the Glasgow plant of Rolls-Royce there is a facility for producing a component known as a high pressure disc, using machine tools manufactured by Webster and Bennett in Coventry. The machines—known technically as vertical turning machines or boring mills—were specially built to do the job and perform to specification.

By pure accident, it came to the attention of the management of Webster and Bennett in December 1978—some time ago, when these grants were available—that a duplicate set of machines to produce exactly—I repeat, exactly—the same component as was produced in Glasgow had been ordered for Rolls-Royce's Sunderland plant. They had not been ordered from Webster and Bennett, nor was the company requested to quote for them. These machines would have attracted grants. The machines—nine in all—were ordered from Morando, an Italian company, a subsidiary of an organisation called Comay which is itself owned by Fiat.

Witnesses have seen in the Turin factory of Morando during the manufacture of these machines the Webster and Bennett operation sheets which were used when the Glasgow machines were manufactured—sheets subsequently handed over to Rolls-Royce. Morando did not obtain those operation sheets from Webster and Bennett. They could have been obtained only from someone within Rolls-Royce for the Sunderland factory, which is in a development area, for machines purchased abroad to attract the grants referred to in the amendment.

Well over a year ago the NEB was informed of Webster and Bennett's unease about the matter, but it shrugged it off with claims about the component being different and about price and delivery. Webster and Bennett was never approached about the order. Its price of £165,000 per machine was cheaper than the £182,000 of Morando, and the component was exactly the same, as confirmed on 18 January 1979 when executives of Webster and Bennett visited the Rolls-Royce plant in Glasgow.

This is not a claim on behalf of a bucket shop operation. Webster and Bennett, which was started in 1885, supplies 78 per cent, of the United Kingdom market in boring mills and has a good export record, rightly feels aggrieved about this matter.

After Webster and Bennett heard what was happening about the machines ordered for Sunderland, its chief executive got himself inside the Morando plant in Turin. He was accompanied by the British Government's trade official, Mr. G. E. Gostauda. He saw his company's operation sheets lying around. Morando was asked how it got the Rolls-Royce order for Sunderland attracting the grant. We are talking of over £1½ million in orders. The trade official is a witness to the fact that the answer was that someone was bribed and that Morando could get any order that it wanted from Rolls-Royce.

It is alleged that the person responsible inside Rolls-Royce for obtaining orders for Morando in this way is a Mr. Frank Turner, currently plant applications manager, Rolls-Royce production centre, Derby.

Mr. Dennis Skinner (Bolsover)

Is he a Tory?

Mr. Rooker

Inside Rolls-Royce, Mr. Turner has been the leading advocate that the company should drop Webster and Bennett in favour of Morando. He certainly made that clear at the Sunderland plant on 18 April 1978. That was eight months before Webster and Bennett heard about the Sunderland facility, and nine months before 18 January 1979 when, during a visit to Rolls-Royce in Glasgow, Webster and Bennett executives were officially told of the Morando order for the Sunderland factory owned by Rolls-Royce.

Other inquiries have revealed that Webster and Bennett was ruled out as a "policy decision" within Rolls-Royce. Some Rolls-Royce executives have privately apologised to Webster and Bennett for Mr. Turner's conduct but say that they can do nothing. That action is being repeated in the United States, where Rolls-Royce is planning one to three plants for the RB211 engine programme, again using Morando machines. The British company has not been given the chance to quote. That is the end of my story.

I wish to conclude by asking five questions about the points that I have raised and in the context of the amendment that we are discussing. First, how did the foreign manufacturer obtain the British manufacturer's operation sheets? Rolls-Royce is owned by the public, it purchased machines with public funds, and it received extra grants because the machines were going into a development area factory.

Secondly, why did Rolls-Royce executives—almost civil servants—apologise to Webster and Bennett for the conduct of Mr. Turner but not take the matter further? Thirdly, how did Morando know that it could obtain any order from Rolls-Royce and feel secure enough to say so in front of witnesses? Fourthly, why did the NEB not look fully into the matter, having been informed of part of the story a long time ago? Fifthly, will the Department look into the matter now?

I am quite prepared to admit that I have made a substantial allegation against a company in the public sector, and also against an individual. Having considered the information given to me by the company that felt aggrieved, I made that allegation at the request of both the management and the representatives of the work force. I do not usually take lightly the use of the protection of parliamentary privilege. The charges are substantial. They affect the lifeblood of the part of the country that I represent. They affect the machine tool industry, which is dying on its feet. They affect one of our premier companies—Rolls-Royce—a leading exporter world renowned for the excellence of its engineering. Given the fact that the NEB was told part, if not the whole, of the story, it is a tragedy that I have been requested to make these allegations. I have used Lords amendment No. 3 as a vehicle to do so.

I hope that Government grants have been paid to Rolls-Royce. I make no suggestion that the money should be withdrawn. I am not sure whether the plant is one of the 52 to which the Minister referred. I am grateful for the fact that he did not interrupt me to make the point that it was not one of those plants. That might have given you, Mr. Deputy Speaker, the opportunity to rule me out of order. However, it is a development area site. That practice that I have alleged tonight will happen in other factories unless we alter the conduct both of the executives and of the company.

Mr. John Evans

My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) made an extremely grave charge. Obviously, I do not intend to follow him down that road, because I have no knowledge of the issue that he raised. I am sure that the Minister, and the House, will agree that my hon. Friend has a long and proud record of bringing matters of that nature to public attention. I am sure that the Minister will not take my hon. Friend's charge lightly. It is important to recognise that some hon. Members have long felt that there was a danger of a measure of sharp dealing, if not outright corruption, in the development grants for machinery in assisted areas.

I am sure that the Minister will agree that those hon. Members who have lived most of their lives in assisted areas have complained bitterly about firms that open within our areas for a brief period, buy expensive machinery with Government assistance, and, after a short period, close down and leave for other parts of the country taking the machinery with them. That is a nice operation for them to pull off. I hope that the Minister will appreciate that my hon. Friend has made no political charges. He has not attacked the Government. He made the major point that he was referring to events in 1978, when the previous Labour Administration were in office.

On clause 14 we are discussing grants. I hope that the Minister will recognise that it is important that my hon. Friend's charge is examined in some detail. Consequent upon the Industry Bill, Rolls-Royce has passed from the orbit of the NEB into the direct control of the Department of Industry. I hope, therefore, that the Minister will as a matter of urgency look into the grave charges that my hon. Friend has made.

I return to the Lords amendment. I understand the reluctance of my hon. Friend the Member for Whitehaven (Dr. Cunningham) to read out the whole of clause 14, but I think that he had a public duty to do so. If he had read it the general public would have seen the incredible gobbledegook to which the parliamentary draftsmen have to resort—I suspect because of the activities of the legal profesion. This is an extremely difficult area to understand.

The Minister will recall assuring me that no areas had made a double jump from assisted area status to that of special development area. I suspect that the Minister is right, but equally I suspect that this provision has nothing to do with that. I suspect that we are concerned here with areas which were assisted areas, which have been promoted to development areas, but which have suffered a cut in the level of grant from 20 to 15 per cent, in accordance with the Bill. Clause 14 amends the table in section 1 of the Industry Act 1972.

Clause 14 states that for the purpose of regional development grants expenditure incurred in Providing a building as part of, or providing works on, qualifying premises in a development area

will attract a prescribed percentage as follows : If the qualifying premises are in a special development area : 22 per cent. If not : 15 percent.

So special development areas will receive a 22 per cent, grant whereas development areas and intermediate areas will receive a 15 per cent, grant. The clause then goes on to make a similar statement in relation to machinery and plant. Section 1 of the 1972 Act, which this Bill amends, states that expenditure incurred in Providing a building as part of. or providing works on, qualifying premises in— (a) a development area. attracts a prescribed percentage as follows If the qualifying premises are in a special development area : 22 per cent. If not : 20 per cent.

It then goes on to say that in an intermediate area the prescribed level is 20 per cent.

There is no change in the special development areas. We are therefore concerned with intermediate areas. The provision applies to much of the area of the Wigan metropolitan district council which for some time after the publication of the Bill in 1979 was congratulating itself on being promoted at long last from intermediate area to development area status. The members of the council were somewhat deflated when I pointed out that as a result the area would get less grant.

I suggest that the Government have now recognised the odd circumstances that they are creating for an admittedly small number of companies and have accordingly tabled the amendment to protect those areas from promotion to development area status. I hope that the Minister will confirm the accuracy of what I have said.

I find that obnoxious since in Committee we spent a great deal of time arguing on clause 14 on behalf of the substantial number of firms which will stand to lose grant if the expense incurred in providing the asset is incurred before 1 August 1980 or defrayed before July 1979.

9.15 pm

We spent a long time discussing the matter. We pointed out that there was an engineering strike last year, and that we were in the throes of a steel strike. Firms signed contracts with the Department in good faith and because of circumstances outside their control they risk losing substantial sums of money because they cannot complete construction before 1 August this year. I know that many companies are desperately trying to get the work finished, but with not very much hope of doing so.

It is curious that the Government should produce this gobbledegook of an amendment which no one will be able to understand. One would have to be a barrister-at-law and chief engineer rolled into one to be able to understand it. Serious problems are being created for many firms because of the Government's actions—and for no reason. They are not saving a substantial amount of money. They are merely creating bad faith with firms which, at the behest of the Government and local authorities, moved to assisted areas to provide employment. They have been cut off, and the Government have done nothing to assist them.

I hope that the Minister will say why, even at this late hour, the Government are not prepared to throw a lifeline to those firms which could lose a substantial amount of money unless they conclude their building work—presumably to the satisfaction of the Department—by 1 August. Will he agree that I have spelt out correctly that the reason for amendment No. 3 is that the promoted areas that at one time congratulated themselves on being uplifted to the giddy heights of development areas have lost grants in the process. If I am wrong, the Minister should give a more convincing explanation in his reply than he gave in his introduction. With respect, I could not make head or tail of his opening remarks, or of Lords Amendment No. 3.

Mr. John Butcher (Coventry, South-West)

It had not been my intention to participate in the debate on this clause, but after the remarks of the hon. Member for Birmingham, Perry Barr (Mr. Rooker) I hope that I will be forgiven for placing a few sentences on the record.

I am curious as to why this complaint came through the hon. Member for Perry Barr, and why he had to use the privilege of the Floor of the House in order to make strong allegations. Neither Webster and Bennett nor Rolls-Royce is in my constituency, but, as the only Coventry Member present, I should like to ask my hon. Friend the Under-Secretary to conduct whatever necessary investigations are required with all speed, because very serious allegations have been made. Either vindication or exoneration must be established as soon as possible. Will my hon. Friend also ensure that the four hon. Members representing Coventry constituencies receive, if not an advance copy of the conclusions, a copy as soon as it is made available to the House generally?

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

I commence by congratulating you, Mr. Deputy Speaker, on being so liberal. I felt that you were tolerant in allowing to be brought before the House, an issue of national concern and significance. I am sure that my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) will wish to join me in thanking you for your tolerance. It is good that on occasions the precedents of the House can be modified to allow hon. Members to accomplish their objectives, which is essentially that there be justice in our society.

It seems that the clause that is being amended consolidates the provisions of the regional development grant orders that were placed before the House in July 1979 by the Secretary of State for Industry.

I should have been much more satisfied if those in another place, in their so-called wisdom, had removed the whole of clause 14. If that had been done, much of the difficulty embodied in the Bill as presented to the House would have been removed. That would have led to some form of continuity in industrial development.

I find remarkable the unintelligible nature of the amendment that has been drafted by another place. I cannot imagine what sort of mind is able to contrive such a remarkable amendment. When I first saw it I found it incomprehensible. I turned to my hon. Friend the Member for Whitehaven (Dr. Cunningham), to whom I regularly turn for guidance, and he told me to refer to the discussion in another place. I did so and it was only then that I was able to gain a marginal interpretation of the objective.

As the objective unfolded, I realised that embodied in the amendment was a gross inconsistency. The amendment deals with the problems of companies that are about to lose grant. I think that the sum is £460,000 in areas to be upgraded. However, it fails to deal with the problems of companies in areas that are to be down-graded.

In view of the sums involved and the considerable hardship that will be caused to many companies in development areas that have lost regional support directly as a result of the introduction of the Bill, those in another place would have been far wiser to turn their attention to a much more important issue. Mistakes have been made by the Government because they have failed to understand the increasing nature of unemployment and the increasing misery that it brings. At the same time they have been willing to introduce measures to down-grade certain areas.

A company in my constituency is involved in the down-grading process. As millions of pounds are involved, I think that I should bring the issue before the House. A measure was brought before the House when the previous Labour Government were in office, and the then hon. Member representing Workington, who now represents another constituency, referred during the debate that then took place to Thames Board Mills and the allocation of selective financial assistance and other forms of financial assistance to that company to help it with the investment that it was making in its plant in Workington.

In negotiations with the Department of Industry the company was led to believe that a certain sum would be made available. Since 1978 it has made various investments in pieces of machinery to ensure that within a reasonable period from the original application, its investment having been laid, it will be able to begin production of the product that it intended to manufacture.

The guillotine fell in July 1979. The Secretary of State for Industry made a statement to the effect that if within 12 months a programme had not been carried out financial assistance would be removed. At that time, the Thames Board Mills project—which was sponsored by the Department of Industry—had only used 50 per cent, of investment moneys for machinery orders. Only 50 per cent. of the buildings had been created. The new measures reduce the amount of grant given to that company. I do not wish to discuss the merits of whether that level of assistance should be paid to companies in development areas. I simply wish to refer to the principle of making an agreement with a company that will affect its cash flow, and on which it will determine its future investment.

Mr. David Mitchell

I wish to clarify that point. The hon. Gentleman referred to making an agreement with the company. Was he referring to selective assistance, or to a regional development grant?

Mr. Campbell-Savours

I was referring to both forms of assistance. However, I shall refer specifically to regional development grant applications. The company's total investment in machinery amounted to £63 million. Last year, the Secretary of State for Industry decided to introduce a measure. That decision will cost the company £3 million this year in potential investment. The company will lose £1 million on its investment in buildings. That sum could have been greater. However, the company has informed me that negotiations have taken place with representatives from Department of Industry, and that agreements have been made.

The amendment deals with the trivial—although in one sense important—amount of about £500,000. However, it means £4 million to that company. Hundreds of companies are losing money as a direct result of the Secretary of State's decision to erect that limit. Representatives of the Department of Industry said "Hard luck" when Thames Board Mills asked whether the Secretary of State would pay the money in accordance with the agreement made by the previous Labour Administration.

I understand that such things can be modified under the 1975 Act. However, there is such a thing as the spirit of an agreement. In this case, the spirit was that moneys would be paid. Where such agreements have been made, those moneys should be paid. I ask hon. Members to maintain pressure on the Government to ensure that the problems of companies that have been dealt a savage blow by the Secretary of State's measures are adequately aired in the corridors of power, where decisions are taken.

Mr. Bob Cryer (Keighley)

The amendment would appear to have a long and chequered career if one examines the Department of Industry's policy of making variations in prescribed percentages orders. The Regional Development Grants (Variation of Prescribed Percentages) Order 1979, amended by the Lords amendment, had to be revoked at short notice because it was found to be defective. Clause 14 is in that tradition. It may not be technically deficient, but it is obscure.

I should like to enter a plea for clarity in legislation. Officials of the Department of Industry are necessarily involved in some interpretation of the law when they deal with applications for development grants, but the same applies to those who apply for such grants. The Government want people to use those development grants. Whenever a steelworks closes as a result of the Government's disastrous policies, they say that special development area status or development status will soften the blow.

The Government should try to devise legislation that is clear and that can be used by the people concerned. I share the view of my hon. Friend the Member for Workington (Mr. Campbell-Savours) that the Lords would have been better occupied in ensuring that intermediate areas such as Keighley were not denied all regional development grant, rather than remedying technical deficiencies in this way.

9.30 pm

Keighley will lose its regional development aid on 31 July—the end of next month. This is particularly important, bearing in mind the difficulties that the textile industry is experiencing in West Yorkshire where jobs are being lost at the rate of 500 a month.

When the Minister replies, no doubt he will argue that in the application of regional development grant, unemployment is not the only criterion to be taken into account. This is the sort of standard line that the civil servants feed to him when he is in difficulties because he is denying an area a certain status. In Keighley the level of unemployment during the five years of Labour Government was consistently below the level of national unemployment. It is now creeping up fast. In 13 months of Conservative Government we have achieved almost the national average of unemployment, principally because of losses in the textile industry. Therefore, it is extremely important that the Minister should consider retaining intermediate area status for the Keighley travel-to-work area, so that the difficulties that face the textile industry, resulting in job losses, can be met, in Keighley and in other areas of West Yorkshire, by retaining the attractions of intermediate area status.

Mr. Skinner

About 300 words ago my hon. Friend the Member for Keighley (Mr. Cryer) referred to the House of Lords and the way in which it has dragged up this obscure amendment. We are always told by those who aspire to the other place, having been here for too long, that the sensible and appropriate function of the House of Lords is to "polish things up" and to look at things dispassionately. The other place is supposed to smooth off the rough corners. It is supposed to be better at putting things logically and understandably than the House of Commons. Yet here we have typical gobbledegook, so that even that argument for the House of Lords falls flat in the light of these silly amendments.

Mr. Cryer

My hon. Friend is absolutely right.

Mr. John Evans

My hon. Friend the Member for Keighley (Mr. Cryer) referred to the theory that the House of Lords should concentrate on areas of significance instead of producing this sort of nonsense. He referred to the many problems of Keighley caused by the loss of intermediate area status. Is he aware that another difficulty will occur as a result of the loss of intermediate area status—that is, the loss of derelict land clearance area status. That will add to the problems of these areas. We have spent many hours trying to persuade the Government to see sense and ameliorate the worst effects of clause 14. Had the other place been doing the job that my hon. Friend the Member for Bolsover (Mr. Skinner) rightly suggests that it should, this is another area that it would have concentrated on.

Mr. Cryer

That is so. Intermediate area status also provides the opportunity for European Investment Bank loans. Intermediate area status ends for Keighley on 1 August 1982. It would also be useful to have discretionary grants from the Department of Industtry to assist development and safeguard jobs. Those are two important elements. The amendment and the clause may have a narrow application, but assisted areas are given grants and other financial assistance because they have particular difficulties. Those difficulties are being accentuated because of the Government's determined inertia over the textile industry.

The Under-Secretary replies to points raised in the usual clicé-ridden terms.

Mr. Deputy Speaker

Although the Lords amendment may be difficult to understand, the hon. Gentleman is straying wildly from it. Will he confine his remarks to the amendment?

Mr. Cryer

The clause relates to the assisted areas order 1979 and grants under part 1 of the Industry Act 1972, which are concerned with regional development and the assisted area programme. My remarks were to illustrate the importance of regional assistance to an area such as Keighley, which is facing recession in the textile and other industries. The Under-Secretary's platitudes are not good enough. Employers, including the chairman of the Wool Textile Federation, have written to the Prime Minister and the Department of Industry in strong terms, expressing deep regret at the Government's inaction.

As a member of the Select Committee on Statutory Instruments I often see the ambiguities and difficulties that legislation causes people. It is part of that Committee's task to try to draw the attention of the House to ambiguities and excessive use of power in Government Departments. I have to plough through that legislation, and I see no reason why primary legislation should not be subject to the same scrutiny. That is what we are doing in this Chamber. In English legislation we do not often achieve clarity of thought followed by clarity of expression. The House of Lords has not distinguished itself in this legislation. The Bill represents a cutback in expenditure. The Government have done it in a shoddy and ill-defined way, which is a fair summary of their general industrial policy.

Mr. David Mitchell

Before I come to the main substance of the speech of the hon. Member for Whitehaven (Dr. Cunningham) and other hon. Members who concentrated on the Lords amendment, may I say to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) that he has made a charge of industrial espionage and a charge that a major British company, a publicly owned industry, paid more for Italian equipment than the equivalent United Kingdom equipment. He has also made a charge against an individual who is not able to defend himself because it was made in the House. The hon. Gentleman will have to consider whether it is appropriate to repeat that charge outside, where he will have to stand on the strength of the certainty of what he is saying.

I shall examine the Official Report carefully to see what the hon. Gentleman said. I regret that he did not see fit to write to me or come to see me as the Minister with some responsibility in this area or to see my hon. Friend the Minister of State with responsibility for the public sector in the Department of Industry. Nevertheless, these are very serious matters that he has raised, and, as my hon. Friend the Member for Coventry, South-West (Mr. Butcher) said, they need to be examined swiftly. I undertake to ensure that the hon. Members for the Coventry constituencies will be written to as a result of the points which have been raised.

I now turn to another extraneous matter, raised by the hon. Member for Newton (Mr. Evans), who alleged that companies had been buying equipment with regional developing grant and then promptly closing and moving somewhere else, taking the machinery with them. I assure him that we carry out a regular inspection system, where regional development grant payments have been made, to ensure that over the specific term that equipment stays in the assisted areas. If he has any example of a company that he thinks may have failed to notify us, I hope that he will let me have the details, so that we can take the usual procedures to secure recovery of the grant.

Mr. John Evans

I am glad that the Minister has dealt with the point that I intended to convey. If I did not convey it correctly, I apologise to the House. I was not attempting to allege that companies were getting machinery via assisted area status and then transferring it out of one plant into another. It may well be that I did not make my point sufficiently clearly. It is that there are many instances on the record of companies moving into assisted areas, purchasing plant as part of the move and then, after a relatively short space of time, closing down completely in that area and returning to their home base, taking with them the machinery and plant which they had previously purchased with Government assistance. I suspect that in those circumstances—I may be wrong, and if so the Minister will no doubt correct me—there is no requirement on them to pay anything back to the Government.

Mr. Mitchell

I assure the hon. Gentleman that if the action of ceasing to operate the equipment in the assisted area and moving it to a non-assisted area takes place within a specified time, we reclaim the regional development grant that has been paid. If the firm notifies us, it is done on a pro rata basis. If it fails to notify us and we discover it in the course of our regular inspections, the amount is wholly reclaimed. I hasten to assure the hon. Gentleman that I had understood what he said earlier in the debate. If he knows of a case in which he believes it has happened, I shall be happy to look into it for him. But since we are scrupulously careful, in carrying out inspections, to ensure that the precise action that the hon. Gentleman described does not take place—I have frequently written letters to companies telling them that they must repay—I hope that I shall find that he is inaccurate in the charge that he makes.

The hon. Member for Keighley (Mr. Cryer) seems to regard assisted area status as some sort of virility symbol. I doubt whether I would be within the rules of order if I sought to deal with the question of whether Keighley should be an assisted area.

I now turn to the substance of the points made by the hon. Member for Workington (Mr. Campbell-Savours). He said that the amendment deals with an inconsistency that helps companies in areas which have been downgraded. No, it is companies in areas which have been upgraded to which this applies. If I misunderstood the hon. Gentleman, I apologise; but that is what I understood him to say.

The hon. Gentleman is erroneous in thinking that it applies to the generality of companies affected by upgrading or downgrading. It refers to some 45 to 52 companies in a very special situation, which I shall proceed to describe in a moment. in response to the points made by the hon. Member for Whitehaven.

9.45 pm

The hon. Member for Workington specifically raised the point of Thames Board Mills. Like every other company that is affected by a development which is not completed before 31 July this year, it loses out on the regional development grant concerned. However, if it is clear to us that a project is in jeopardy, we are able to consider whether an application for selective assistance under section 7 of the Industry Act may be appropriate. In the case of Thames Board Mills, I have discussed the matter with senior staff from the parent company. But I have equally to say—I am sure that the hon. Gentleman will appreciate this—that details are commercially confidential in relation to any particular company. But certainly we have sought to do what we could to help.

I turn to the main point made by the hon. Member for Whitehaven and made, in part, by the hon. Members for Workington and for Newton. That was that we are dealing here with a complex technicality. I was asked to express it more simply than I did when I introduced the amendment. I deliberately did something in the House then which I dislike doing. That was to read very carefully the detailed brief which I had for introducing the amendment, because I wanted to be sure that I put on the record, for those outside who will turn to the record, exactly and precisely in technical terms what the purpose of the amendment was. But now I should like to do what I much prefer to do, which is to try to explain, in simple layman's language, what we are about.

What we are about here is the peculiar unforeseen effects which have arisen in relation to a very small number of companies in areas which have been upgraded. What has happened is that a number of companies were made selective assistance offers under section 7 of the Industry Act. Those section 7 assistance calculations were made on the assumption of regional development grant being available at the levels ruling at the time the offers of selective assistance were made. Once those offers have been made, they are firm. We are in the position, therefore, that the basis of the calculation, that they required so much selective assistance on top of so much regional development grant in order to make the project viable, has been altered because the regional development grant to which they were entitled has been altered by reason of the order which was passed in the House last year.

These companies have been given a simple choice. They have been told that they can either retain their selective assistance and not have the higher level of regional development grant which applies in their areas, or return the section 7 selective assistance and take the higher amount of regional development grant.

The difficulty is that the small number who chose the first option are worse off because of the order passed last summer. The orginal offer was based on the old higher rate of regional development grant. The lower rate would have applied as a result of the Regional Development Grants (Variation of Prescribed Percentages) Order passed in the House last summer, which would be unfair to these companies. In order to put them back into the precise position in which they understood themselves to be, and the precise position upon which the selective assistance grant was calculated at the time the offer was made, this amendment is before the House. I hope hat the hon. Member for Newton has followed what I have said. I have tried to explain the matter in words that, while not as technical as those I used in my introduction, make clear to the House what we are doing. We are righting what would otherwise be an injustice to a small number of firms.

Mr. John Evans

I accept that I am a little thick in these matters and that they have to be spelt out. Is the Minister saying that areas that were previously assisted areas were promoted to development areas and at the same time the level of grant was dropped from 20 per cent, to 15 per cent., that this is how the injustice has come about and that the amendment is therefore needed to remove that injustice?

Mr. Mitchell

The position is that the House passed last year the Regional Development Grants (Variation of Prescribed Percentages) Order which had the effect of preventing firms that would otherwise have made an unintended gain from doing so. That upset the basis of the arrangements made for the 53 firms that were offered selective assistance on the basis of the then known level of regional development grant.

I was asked by the hon. Member for Whitehaven (Dr. Cunningham) whether I will ensure that every company affected by the change is notified. I readily agree to do that.

Question put and agreed to. [Special Entry.]

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