§ The Minister of State, Northern Ireland Office (Mr. Adam Butler)
I beg to move,That the draft Industrial Investment (Amendment) (Northern Ireland) Order 1981, which was laid before this House on 23 June, be approved.
The order is short and relatively simple. It widens the powers to pay grant towards capital expenditure incurred on the provision of premises to be used for carrying on a qualifying industrial process.
The parent legislation provides that grant is payable only when a manufacturer provides industrial premises for his own use. The order will enable grant to be paid to any person who builds a factory and subsequently leases it to a manufacturing tenant. This amendment will have the effect of bringing the law in Northern Ireland broadly into line with that in Great Britain.
In Northern Ireland, advance factory building has tended to be the monopoly of the public sector, and there have been few attractions to the private sector to participate. The extension of grant in the way that the order provides will help to promote a climate in which the private investor will be persuaded to consider the industrial property market. The House will allow that in the current economic situation any measure which seeks to increase the resources available for industrial development should be enacted as quickly as possible.
There is a second reason for moving quickly. The special fiscal measure included in the Finance Act 1980 applies only to expenditure incurred before 27 March 1983. The Act provides for an initial 100 per cent. capital allowance on expenditure incurred on the construction of an industrial building with a gross internal floor space not exceeding 2,500 sq. ft. This incentive, married with the availability of regional development grant, has greatly encouraged the private sector to provide small factory units in Great Britain. I hope that there will be the same effect in Northern Ireland.
I commend the draft order to the House.
§ Mr. James Molyneaux (Antrim, South)
As the Minister has said, the order is another step in bringing Northern Ireland into line with Great Britain. As such, we give it a very warm welcome. My right hon. and hon. Friends offer no objection to the Minister's decision to employ the shortened form of normal procedure, not to be confused with the various "Prayer Book" versions, nor do we object to the aims of the order. We must confess, however, that we are a little puzzled by the urgency of it all.
1512 First, spare factory space is unfortunately not a scarce commodity in Northern Ireland. Secondly, as the grant will not be paid on what one might call a private advance factory until the premises are in use for a qualifying industrial process, is there really likely to be any rush of private investors at a time when it has proved impossible to retain many existing undertakings in Northern Ireland? As this would not appear on the face of it to be an attractive proposition for an investor, can the Minister give us some idea of the take-up rate under the existing broadly parallel positions of part I of the Industry Act 1972 in force; in Great Britain?
We should also like some clarification of the phrase "qualifying industrial process" which is used in some of the accompanying notes. May we assume that that definition will exclude any form of service industry, or, perhaps more important, any kind of repair facilities?
The portion of article 3 which provides for grants for alterations or extensions to a building or even part of a building is probably the most useful part of the order. Hitherto, manufacturers have had the great problem of trying to assess requirements, first in the short term and then in the long term. They have had to decide whether to opt for a modest beginning, with perhaps no scope for expansion, or to take the risk and go for a much larger factory than might sometimes seem to be prudent.
In the foreseeable future, it is to existing concerns and undertakings in Northern Ireland that we have to look. It is likely to be much more profitable, from the point of view of reducing unemployment, to graft on to what one might call a growing stock. It is more likely to flourish in the present economic climate than some exotic plant which may wither in the first chill breeze.
I should like to be clear about sites, and to know what is to happen in one of the so-called new towns where the entire town has been vested. One is never very clear by whom it was vested. There was the former Ministry of Development, and there were the new towns commissions of various shapes and sizes. Then, at a still later stage, we have what is now called the Department of the Environment, under the control of the Secretary of State. In that case, everything within the boundary of the town is vested.
If I may be forgiven for mentioning a constituency point, Antrim is perhaps the clearest example. Where is the private investor likely to find a site? If all potential sites are the property of the Government, will the Government release the land and not impose the unacceptable requirement that the developer will be given a comparatively short lease? This poses all kinds of problems, particularly if some of the investment is being derived from a very much larger undertaking on this side of the water.
May we assume that potential investors will not be unduly hampered by location problems? It is reasonable to expect that they will have to pay due regard to planning policies, but one hopes that those planning policies will be interpreted with flexibility. Far more important, they must be relieved of pressures designed to force them to go to areas which are not commercially attractive. The investors simply cannot be expected to commit capital in locations which are hampered by, for example, transport considerations, and where potential tenants would be very hard to come by. Neither should they be expected to settle for a location where their factory would stand a fair chance of being razed to the ground in the first year.
1513 I am not advocating discrimination against particular areas on the ground of political or religious conviction, but it is common sense to say—and for the Government to say—that behavioural patterns of the natives in that area are bound to be a major factor when decisions are being taken by potential investors.
§ Rev. Ian Paisley (Antrim, North)
I should like to underscore one point that was emphasised by the hon. Member for Antrim, South (Mr. Molyneaux) concerning the location that has been appointed in certain areas for the development of factories, and to give one illustration.
In the village of Portglenone there was on the map for development a location that was allocated for the private development of businesses. No business has ever been built in that area, for the simple reason that it is the worst area for terrorist activity in that village.
When the right hon. Member for Mansfield (Mr. Concannon), who is on the Opposition Front Bench this morning, was in office in Northern Ireland, a certain potential investor wanted to build a factory in Portglenone. The planning authority said "You must build the factory in the area that has been appointed for it." The investor said "No. If I were to build there, I would be unable to get any work people to go to it. It is a very bad area. There have been many assassinations there."
The matter went to appeal, and the vice-chairman of the planning appeals commission recommended that the location should be changed, but the commission overruled the decision of its vice-chairman. I am glad to say that when the matter came to the right hon. Member for Mansfield, because there were 40 jobs at stake, he said "Jobs are more important than this argument". He let the matter go ahead, and there is a prosperous business there today.
Therefore, I underscore what was said by the hon. Member for Antrim, South, and I trust that we shall have an assurance from the Government today that in the matter of location, where there is a danger of a new factory being razed to the ground, or work people attacked, there will be some latitude, and that jobs will take first priority. That is essential at the present time in Northern Ireland.
§ Mr. J. Enoch Powell (Down, South)
I concur with my hon. Friend the Member for Antrim, South (Mr. Molyneaux) in welcoming the order and the fact that it has been introduced under the abbreviated procedure.
The Minister of State was good enough to supply hon. Members with a personal letter commenting upon the nature and purposes of the order, under the date of 5 June, although an explanatory document had previously been issued as usual. There are one or two points of explanation on those two papers that I should like in a moment to raise with the Minister of State.
As the representative of a rural constituency in Northern Ireland—and part of the beginning of wisdom in regard to Northern Ireland is to realise that there is Belfast and there is the rest of Northern Ireland—my attention was particularly caught by the words in article 3(including structural alteration, extension or improvement)".That, I take it, would bring within the ambit of these grants the alteration, extension or improvement of existing buildings such as mill buildings.
1514 The mill buildings across the face of Northern Ireland strike the eye of any observer, but they are of potential interest not only to the industrial archaeologist. Although they were not originally constructed for modern productive processes, many of those buildings, in the locations in which they stand are suitable, after necessary adaptation, for occupation and use by new industries; in fact, already many new industries have found a workable home in such buildings.
It is, therefore, particularly welcome that grants should now be extended to those entrepreneurs whose use of such buildings would be made possible by the work of third parties, financed by third parties, and carried out by third parties. There is particular importance in this possibility, because employment in Northern Ireland can be localised to a degree which it is perhaps hard in the rest of the kingdom, or in most of the rest of the kingdom, to envisage.
I imagine that those who promoted the parent Act had in mind primarily such enterprises as those whose collapse is now causing havoc and distress in Northern Ireland. Whether or not this was so in the past, I am convinced that in the future much of the resumption of industrial activity will take place on the part of relatively small firms and new enterprises that will not necessarily be located in the obvious industrial centres but will take opportunities of building and labour where they find them. For that purpose, and for stimulating that process, I believe that the grants available under the order could be helpful.
I have in my mind's eye as I speak the village, or perhaps it should be called the little town, of Annsborough, near Castlewellan, which, as one drives through it, appears to be comprised almost entirely of derelict mills, the vestiges of a nobleman's investment in the last century. I am not sure whether it was the Minister of State or his predecessor and I who were concerned for a long time over the possibility of one of these buildings being made available and adapted for a local entrepreneur with the prospect of employing local labour. The entrepreneur believed—I think he was right—that one of these buildings could have been made suitable for his purpose. I remember the difficulty experienced at that time in adapting his requirements to the then existing grant legislation. I hope, therefore, that enterprises of that sort will be helped by the extension of the grant powers which this order will make.
In introducing the order and in writing to hon. Members about it, the Minister of State laid stress upon the competition for capital between the Province and the rest of the United Kingdom. No doubt it was right of him, and something of which we would approve, to make sure that there was no inequality which, so far as such competition existed, would place Northern Ireland at a disadvantage. I think, however, that hon. Members representing Northern Ireland will agree that, in the coming period, it is to local enterprise, local investment and local saving that we shall find ourselves looking for the revival of industrial activity in Northern Ireland. That will be nothing strange, historically or socially, to the Province.
I put it to the Minister of State that this should be seen as an opportunity for banks and similar institutions, which would hereby have the full necessary collateral for advances, to come in on the act and, if the entrepreneur himself has only enough capital to start the business, to inject the additional capital that would provide suitable buildings in a suitable place. It is wrong if those who have 1515 investment capital in Northern Ireland, particularly the banks and institutions, do not look first to their own Province for opportunities of investment. I believe that if they look, particularly with this order in mind, they will find such opportunities to a surprising degree and perhaps in surprising locations.
That brings me to a technical point that I want to raise with the Minister of State arising out of the terms of the order and the principal Act of 1966 and his interpretation of it. The hon. Gentleman said in his letter that the premises that will attract grant—I believe technically called "the qualifying premises"—include premiseswhich are subsequently leased to another person carrying on a qualifying activity".
I take it that the use of crystal balls and such equipment will not be necessary in administering these grants. I therefore want to know how a decision is reached to give a grant for expenditure on premises that are subsequently to be leased to a person carrying on a qualifying activity. Will the entrepreneur and the investor, or possibly the entrepreneur the investor and the developer, have to be brought together and already be in contractual relations, and firm contractual relations, before these grants can be made? That, I must confess, was the interpretation to which I was inclined after the minute textual study to which I had subjected the Minister's letter of 5 June.
But then I was caught up short when I applied the same attentive study to the explanatory document which has a whole spiel in the first three or four paragraphs on the question of advance factories, what a splendid thing advance factories had been in the rest of the United Kingdom, and the moves made to tempt—I do not know with what success, although my hon. Friend the Member for Antrim, South put out a tentative inquiry about the matter—private capital into providing advance factories. Paragraph 3 of the explanatory memorandum, describing the order, said that it wasin response to the Government's policy of attracting private sector finance into advance factory provision.Which is it? Is it into the speculative provision in the hope of getting a lessee some time in the future? Is it to that that the intended grants are to be directed? Or is it to cases where the parties concerned, including the potential entrepreneur, have been brought together?
If the Minister of State, in resolving that dilemma, embraces the second alternative, I personally would not feel disposed to criticise him. My belief is that we shall begin most fruitfully in these cases from a gleam in the eye of an entrepreneur and that the process will extend backwards from the entrepreneur to the choice of the site, to the finding of the building, builder or developer and, I hope, with the assistance of the Department of Commerce, to the location of an institution that is willing to provide the finance—not necessarily the working finance but the capital finance—for the premises.
On the face of it, there is a contradiction between what appeared to be the background and scope of the order, as stated in the explanatory document, and the explanation afforded by the Minister of State. As the hon. Gentleman said, we are here filling a gap that has always existed between the legislation on the mainland and that in Ulster.
That takes us back to the Industry Act 1972. Not all of us who were then sitting on the Government Benches look back on that Act with uninhibited enthusiasm for all parts of it. As it happens, they are not the parts with which we are concerned today. Although parts II and III of it applied 1516 to Northern Ireland, part I did not. The now defunct Northern Ireland Parliament was provided with dispensation from the limitations imposed by the Government of Ireland Act 1920 and was enabled to enact its own legislation on that subject. It was assumed, I imagine, that the Northern Ireland Parliament would amend its 1966 Act in whatever way was necessary to mirror the provisions of part I of the Industry Act 1972.
However, as it happened, the Northern Ireland Parliament and its various assorted successors were busy with other things in 1972 and 1973, notably with suicide and extinction. It is therefore perhaps not altogether surprising that they omitted to take the invitation afforded to them by section 18 of the 1972 Act. Now it is 1981. At last we, in this House, have got round, by means of an Order in Council, to doing what ought to have been clone straight away directly for that part of the kingdom as for any other.
I have no intention of annexing my normal lecture on legislation for the United Kingdom as a whole to the welcome I am offering to the order. I say simply that it is a solemn reflection that whatever benefits part I and this aspect of part I of the Act afforded in the rest of the Kingdom are now, only after a delay of nine years, to become available in the Province. Belated as that is, we welcome it. Particularly those of us who represent rural constituencies will have this order at the back of our minds when, as happily occurs from time to time, we are approached by those who, often with very little backing but often with a good deal of personal skill and experience, are contemplating setting up productive processes and employing their fellow citizens. We shall bear this order in mind, and we welcome its making.
§ 10.1 am
§ Mr. Adam Butler
By leave of the House, Mr. Deputy Speaker, I should like to reply to the debate. Obviously I am delighted that the order should have been received. The speeches which have been made point to its potential benefits.
I sympathise with the latter remarks of the right hon. Member for Down, South (Mr. Powell) in questioning why it has taken this time to bring forward the order. I think that I can only answer him by saying that it is because of the success of Government encouragement to the private sector to be involved in the provision of factory space in the last year or two. This answers the first point raised by the hon. Member for Antrim, South (Mr. Molyneaux). The amount of activity has been very considerable. It is because of that success that we have been encouraged to look at our own situation to see whether it is possible to move away from the prevailing situation of largely Government-only involvement. That Government involvement, with other things which go with it, has definitely inhibited the private developer.
Having seen this success in Great Britain, I felt that it was right—I welcome the fact that hon. Members have considered it right that we should use the shortened procedure—to bring the order to the House as quickly as possible.
I should like to reply briefly to the points of detail that have been raised. The qualifying industry is largely manufacturing. Service industry is not included. One reason for that is that in Northern Ireland there is already a market, albeit limited, in private building—for instance, for warehousing.
1517 It is correct to say that the word "construction" in the order covers improvements. It covers alterations of a capital nature to parts of buildings. Any person is covered by the legislation, so that, whether we are discussing a private developer or a local bank, all qualify under the legislation. But—and this relates to the next point raised by the right hon. Member for Down, South, about when the grant becomes payable—to the question whether it would be possible for a developer, working perhaps in conjunction with a financial institution, to draw grant if he is building purely speculatively, building in the hope of achieving a let to an industrial user, the answer is "No."
My Department will need to be satisfied that the provisions of the measure have been met. Generally, that will require a lease to have been signed, or documentation showing a firm contractual position, perhaps, between the developer and the eventual user of the premises. That will be essential. I believe that that is what the right hon. Member for Down, South would welcome.
Sometimes it is helpful to have speculative building. That is what public advance factory building is about. But, generally, I think that the right hon. Gentleman is right in suggesting that one needs what he described as a gleam in the eye of the entrepreneur—that is to say, a man with an idea, a product which he wishes to develop, who is looking for support in regard to the premises in which he might carry out an activity.
The hon. Member for Antrim, South, asked about new town sites. Where land is effectively publicly owned, we would encourage its sale or letting on long leaseholds to a private developer. We want to remove, where possible, any inhibition to private building. Where the public ownership of land is such as inhibition, we have to overcome it in the way that I have described.
This measure is neutral as to discrimination in the location of any private building. It would not be the Government's intention to seek discrimination of any sort. Indeed, it is significant that the grant about which we are talking in this instance is not the discretionary grant, which applies to plant, equipment and buildings, but the investment grant which is of a fixed percentage, and certainly of a percentage substantially higher than that anywhere else in the United Kingdom. It is the fixed 30 per cent. grant which would apply universally throughout the Province. Therefore, in that sense there is no discrimination between one part of the Province and another.
The Government see this order as a small way of bringing more resources to bear in our endeavours to improve the economic prospects of the Province through greater industrial development. Therefore I warmly commend it to the House.
§ Question put and agreed to.
That the draft Industrial Investment (Amendment) (Northern Ireland) Order 1981, which was laid before this House on 23 June, be approved.