HC Deb 26 March 1981 vol 1 cc1161-79

10.1 pm

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

I beg to move, That the draft Enterprise Zones (Northern Ireland) Order 1981, which was laid before this House on 3 March, be approved. The order provides the framework for the introduction of enterprise zones to Northern Ireland and shadows similar provisions enacted in schedule 32 to the Local Government, Planning and Land (No. 2) Act 1980 which apply to the remainder of the United Kingdom. The proposed order covers the non-fiscal aspects of the enterprise zone experiment and more generally deals with the designation procedure for making modifications, the new planning powers which will be available in enterprise zones, and exemption from rates on industrial and commercial properties within designated areas. The fiscal provisions applying to enterprise zones have already been enacted in the Finance (No. 2) Act 1980 and will apply to Northern Ireland. The provisions in this order therefore tie up the loose ends.

It may be helpful if I go through some of the provisions in more detail. The order follows closely the provisions already in operation in the rest of the United Kingdom. There are inevitably some differences arising through the different structures of central and local government in Northern Ireland. The main difference, as hon. Members will know, is that the Department of the Environment for Northern Ireland as planning authority for the Province is designated the enterprise zone authority, unlike in Great Britain, where district authorities, among others, can be invited to prepare schemes. To ensure that a district council has some statutory say in any enterprise zone which might be proposed for its area, the Department is required to consult that council before preparing a scheme. I am glad to say that Belfast City council, within whose area Northern Ireland's first zone is located, fully supports the enterprise zone proposals for Belfast and has been closely involved from the outset. In addition, I intend to invite the city council to nominate two representatives to serve on the advisory committee which I am setting up shortly.

I shall deal now with some of the more detailed provisions of the order. Part II provides for the preparation of an enterprise zone scheme and for the subsequent designation of the zone. It also provides powers for an enterprise zone scheme to be modified. An opportunity is given to the public to object to any developments which would be permitted by the scheme if it were brought into effect. Objections must be given full consideration, and the Department may modify the scheme to take account of representations made. Opportunity is provided to challenge in the High Court the validity of an adopted scheme. Provided that no challenge has been sustained, the Department may designate the area as an enterprise zone by order subject to the negative resolution procedure.

Following designation, the fiscal and rating concessions will take effect and the proposals set out in the enterprise zone scheme will take on the force of a planning permission. These measures will last for a specified period—usually 10 years—as the intention is to give an effective boost to the redevelopment and improvement prospects of rundown areas rather than a permanently favourable tax regime. So that investors can be assured of the continuance of an enterprise zone for the full 10-year period, it will not be possible to revoke the designation order.

Part III of the proposed order provides for the effect of the scheme in granting planning permission. Permission may be subject to any conditions or limitations specified in the scheme and the approval of the Department where this is specifically required by the scheme. In practice, conditions or limitation will be used to enforce the necessary controls over polluting or hazardous developments. These provisions pave the way for private initiative to carry out development with the minimum of control and interference in the form of planning restriction but without encroaching on any existing rights under general planning legislation.

Part IV of the proposed order provides for industrial and commercial premises in an enterprise zone to be exempt from rates. The Department of the Environment is required to compensate fully district councils for lost revenue.

The draft order seeks generally to bring Northern Ireland into line with Great Britain. Much of it, particularly what lies behind it, has already been fully discussed at two meetings of the Northern Ireland Committee. Accordingly, I commend the order to the House.

10.7 pm

Mr. Tom Pendry (Stalybridge and Hyde)

The order and the proposals before the House are the product of almost a year's discussion and, I might add, dispute. As the Minister said, two meetings of the Northern Ireland Committee were devoted to the proposals. The Under-Secretary and, in particular, his predecessor have been most amenable to the suggestions that were put forward at those meetings. Indeed, the policies have been adapted accordingly, particularly in relation to the size of the enterprise zone. It should be placed on record that many of the views that were expressed at those meetings were accepted.

The Opposition have always expressed reservations about the way in which this idea might work in practice. We have had almost 12 months in which to consider this laissez-faire experiment, and I am bound to say that I find little to convince me that the Northern Ireland enterprise zone will make a noticeable impact on the state of the economy either in the Province or in Belfast, where the zone is to be designated.

While the Opposition welcome any Government interest or help for the Northern Ireland economy, we do not regard this measure as anything like adequate, given the serious economic problems that are facing the Province. Last week I was in Belfast and Coleraine, and I met trade unionists and representatives of the CBI. I was moved by the general mood of gloom and despondency that was felt about the state of industry throughout the Province. Factories are closing, jobs are going for good and the level of unemployment is now the highest in living memory. The figures published last week reveal that the output of all Northern Ireland industry slumped by a massive 16. 3 per cent. in the year to January 1981.

These arguments have been heard many times before, but they must be repeated. The unemployment rate in Northern Ireland is about 120,000, if one takes the unregistered work force, and 6,149 of last year's school leavers still do not have a job. In view of the grave problems, the Government's proposals to establish the enterprise zone in Belfast is no more than window dressing.

Of course, the Opposition do not oppose the Government's help for industry and small businesses. We welcome any initiative on that score. Nor do we object to the tax and rating concessions to promote jobs and encourage industrial regeneration. We do not oppose the order on those grounds.

We wish to make it clear that an enterprise zone in Belfast is no answer to the problems of urban decay and unemployment. The scheme is no substitute for comprehensive public sector investment in housing and improved infrastructure. The scheme in relation to Northern Ireland and the rest of the United Kingdom is a distraction from the real job of tackling deep-seated causes of inner city and urban decay. It is a diversion from the task of reducing the intolerable levels of unemployment. I am glad to see that the hon. Member for Liverpool, Wavertree (Mr. Steen) agrees.

It is important to put the enterprise zone in perspective. The Government have, predictably, built up the advantages which, they say, stem from the scheme so that they are seen to be active in the industrial sphere. We are not impressed by the whitewash. The Opposition have stressed on a number of occasions that Northern Ireland is a special case which deserves special treatment. Nothing less than a co-ordinated regional policy is sufficient to tackle the dire problems faced by workers, non-workers and industry in Northern Ireland.

We have fundamental objections to the manner in which the Government are treating the Northern Ireland economy. We question the relevance of an enterprise zone in a small area of a single city to the real task of combating the problems.

Mr. Anthony Steen (Liverpool, Wavertree)

I hope that the House does not think it inappropriate for a Liverpool Member to take part in such a debate. I was interested in what the hon. Gentleman said. Does he agree that the test of the success of the enterprise zone is whether it generates private investment and whether the banks, insurance companies and small firms go back into the area? Public money must be used as leverage for private money. Without that, it is unlikely that the zone will succeed.

Mr. Pendry

I agree. I shall come to that, and I am sure that the hon. Gentleman will continue to agree with me.

We question the relevance of the scheme to a small area within an area with large-scale problems on the industrial front. We do not oppose the order, because we believe that help, however minuscule, is not to be spurned. We do not oppose it, but we do not believe that it is the answer.

I wish to raise several matters in connection with the working of the zone which require an answer from the Minister tonight. He gave a brief introduction. I am sure that he will be more forthcoming later. He should answer certain questions if the scheme is not to be a white elephant.

In the past, the economic and physical fabric of the zonal area in Belfast has not proved attractive to investors. For sound and perhaps strategic reasons, industry has not gone in to such areas in any force. Will it go there now?

I have doubts about whether planning restrictions and taxations are the main operative factors in deterring investors from this area of Belfast. I argue instead that the economic infrastructure has not been amenable to manufacturing industries.

I raised the matter at the last meeting of the Northern Ireland Committee, and the Under-Secretary of State replied to my comments on 12 March. He said that he considered that the present infrastructure was under-untilised rather than poor. That is a matter of opinion. I am still not convinced that the medium-to-large job-creating ventures will be attracted to the zone, because the services required will not be available in the quantity demanded.

Mr. David Mitchell

Can the hon. Gentleman clarify what he means when he speaks of the services that are not available?

Mr. Pendry

I take up the intervention of the hon. Member for Wavertree, who asked about back-up services such as banking and other facilities that go with an industrial scheme of this nature.

The Minister said that a monitoring team would be set up to oversee the progress of the enterprise zone experiment in Belfast and that the team would address itself to the problems that might arise from the weakness of the economic infrastructure. This debate provides a good opportunity for the hon. Gentleman to tell the House exactly how the team will be composed. Will it, for example, prepare annual reports? What powers will it have to ensure that any suggested improvements are undertaken?

When we have discussed Northern Ireland affairs in Committee, I have asked about the type of company that is likely to take up the enterprise zone package and locate new firms and buildings within the designated area. I understand that up to 12 March there were 50 inquiries about the zone. That information came to me in the Minister's letter. Apparently, the inquiries were made by a cross-section of retailing, warehousing and industrial undertakings. I shall be grateful if the Minister will detail the exact proportions of the inquiries that have been received under those broad headings. Have there been more inquiries from storage companies and warehouses than from manufacturing firms? It is only when we know of the type of firm that is expressing interest that we shall be able to know how many new jobs are likely to accrue from the introduction of the experiment.

Secondly, the House will be interested to know whether there have been any firm decisions on the part of companies to take up sites in the enterprise zone. From my own experience, I know that there is a world of difference between an inquiry by letter or telephone and a positive decision to site a building or factory. Considerable elucidation is essential.

A criticism frequently levelled at enterprise zones is that they are likely to distort economic patterns in surrounding areas and endanger the future of existing industries or firms in those areas. What representations has the Minister had from the firms that are sited in the area adjacent to the zone? I know from my talks with industrialists in Belfast that they are worried about competitive firms moving into the area of the zone.

The main reason why the Opposition have been and will remain sceptical about the experiment is that the proposals accompanying the enterprise zone emphasise property development and will appeal to large office and warehousing activity. If that is so, the proposals will not be enticing to additional economic activity. They will merely encourage the relocation of businesses already sited in Belfast. Will the Minister tell the House exactly how many of the inquiries have come from groups wishing to relocate to take advantage of tax and rating concessions and how many have come from potential new investors intending to start new enterprises?

It is primarily because we consider that the zone will become a haven of relocated office blocks and warehouses that we withhold our full support for this measure. The emphasis should have been on job creation and not on the easing of planning arrangements, which will appeal to those who wish to make quick profits. If the enterprise zone succeeds in attracting new investment, it will make little impact on urban dereliction and unemployment. When referring to the enterprise zone in its area, the Scottish TUC was of the opinion that the Government were attempting to paint a silver lining on a black cloud. That is pertinent to the Northern Ireland enterprise zone as well. The people of Northern Ireland deserve better treatment than that.

Unemployment in the Province is reaching unmanageable proportions. There may be serious social consequences if it stays at its present level or rises even further. The Government have a duty to tackle these problems and to face the consequences of their own economic failure.

The scheme before the House is experimental. The Northern Ireland economy needs much more than untried and unproved theories if the current rate of economic decline is to be arrested. I repeat that the scheme is a window-dressing exercise which, even if it proves successful, will bring few jobs and little comfort to the people of Northern Ireland.

10.20 pm
Mr. Robert J. Bradford (Belfast, South)

As the hon. Member for Stalybridge and Hyde (Mr. Pendry), the spokesman for the official Opposition, said, we have had two goes at the enterprise zone debate in Committee. Almost every point which it is possible to make has been made. In the two introductory speeches, many of the old fears and the old recipes in response to those fears have been ventilated. I do not wish to detain the House unduly, except to return to one or two points which have been made previously which have not been answered as fully as some of the others which the Minister has dealt with on previous occasions.

Unfair competition is one of the great worries which we entertain about enterprise zones. It is difficult to be convinced that the companies which reside on the border of the newly created zone will not be unfairly hindered by the special treatment afforded to companies inside the zone. There has been no satisfactory reply to that fairly fundamental point in the debate.

How can the Minister safeguard the companies that are not inside the zone from being affected by the advantageous conditions which will be enjoyed by the companies inside the zone? There has been reference to tax relief. At the moment, with taxes going up, it is clear that that will be not an inconsequential part of any company's cash flow problem.

I should like to take up the point which was stressed by the spokesman for the official Opposition. He referred to the need for greater assistance. In a previous debate, my right hon. Friend the Member for Down, South (Mr. Powell) said that Northern Ireland was in need of a general application of Government assistance, not just for Belfast but for the whole Province. Why should we single out a small segment of Belfast and say that that is the area in which we shall concentrate and ignore many other areas of the Province which are equally in need?

We should consider what sort of more general assistance should be afforded. I have said—I know that the Minister does not accept it—that at the end of the day, apart from a small amount of tax relief afforded to companies in the enterprise zone, the Government are doing little more than providing a line on a map. It does not cost them a penny to put a line on a map. Apart from the tax relief and that line on the map, what other assistance are the Government giving?

If the Government are interested in rejuvenating industry in the Province, they must seriously consider energy charges. Some steps have been taken in that direction since we last discussed the enterprise zones. We must also consider transportation costs and ways of equalising them. We must consider making the more generous grants which are reserved for small segments of Northern Ireland applicable to the whole Province. If we tackle the problem more generally and not by isolating a small segment of the Province for special treatment, we shall create more jobs.

If a part of Belfast offers advantages to a company, why should it not choose to go there in the first place? The Minister may say that the rate relief is attractive, but rates are not a major item of expenditure.

We must consider security in Belfast. The area outlined on the map is singularly unattractive because it is prone to terrorism. After what happened in Dublin this week, we must be careful about the incentives that we offer to businesses. North or West Belfast would be the last place that I would choose to locate a business, although I am not consigning the area to the dustbin. The space could be used, for instance, for community projects, which would be far more beneficial than warehouses. The enterprise zone will not attract labour-intensive manufacturing industries, because there is no easy access to roads. One road leads to the north of the lough, but all the facilities, including the docks, are to the south. Heavy manufacturing needs to be more judiciously located. The area would attract only warehouses and service industries, which are not labour-intensive and will not help us.

If the Government wish to help the 99,828 unemployed in Northern Ireland, they will pay attention to fuel and transportation costs and to the need to give the Province a larger slice of the economic cake. I do not blame the present or the previous Administration, but Northern Ireland has bean allowed to put too many eggs in one basket. The enterprise zone is only a good-sized thimble and not a basket. W e need a sufficiently large basket to hold all our economic programmes. We must consider locating some of Great Britain's economic programmes, particularly in high technology, in the Province. A line on the map and a little rate relief are not what we need. Ulster needs a fair slice of the economic cake of heavy and high technological industry.

10.30 pm
Mr. James Kilfedder (Down, North)

I hope not to repeat what I said in the Northern Ireland Committee, although I may touch on some matters. I intend to be brief.

The Minister recommended the order on the basis of equality for Northern Ireland as enterprise zones had already been created in Great Britain. But the enterprise zones in Great Britain have not been greeted with great joy by the people there. They provide no dramatic solution to the problems of areas of industrial and social decay. They may somewhat reduce the hardships in those areas, but they will not resolve the problems or provide a long-term solution.

I am not one of those who believe that because we are in the midst of a depression one must therefore take a sad, dismal and defeatist attitude. I believe that this is the time for an imaginative and radical measures. But this is not a radical measure. As I said in the Northern Ireland Committee, it is a petty measure which will do little to stem the tide of unemployment or the rate of industrial decay in the Province.

Sadly, the Government have nothing to offer the people of Northern Ireland but measures such as this, creating an experimental zone in Belfast. They have nothing to offer but the old remedies of credit restriction and retrenchment. There is a new name for it now: it is called money control. In place of the exciting release of the enterprising entrepreneurial skills of a captive nation of aspiring, go-getting business men, the Government offer a few hundred acres in a dozen enterprise zones throughout the United Kingdom.

The so-called enterprise zones would be better called by a more realistic name. They are in fact twilight zones which the enterprising have largely abandoned for good, sound, significant commercial and social reasons. I do not believe that the Government seriously believe that they can revive the social and commercial life of the area of Belfast covered by the order through the methods proposed in it. It is certainly not the kind of thrusting, challenging measure that we were led to expect from a Conservative Government.

Whatever the order does for the 500-acre area in Belfast, it will do nothing for the rest of Northern Ireland, which is itself a depressed region within the United Kingdom. By introducing the order, the Minister is really saying that Government regulations and bureaucratic controls of every kind have created planning blight and that lack of investment has brought about the downfall of this part of Belfast and ruined the natural enterprise of the people in it. In the small area of the enterprise zone, the Government will ensure that the dead and palsied hands of the bureaucrats, planners and civil servants who have controlled, dominated and interfered in business life will for a short time be removed.

In my view, the order will not hasten the end of the economic blight, social deprivation and urban industrial decay in Northern Ireland. There is no grand design here, for which I have called so often in the past, no challenge and no imaginative assault on the problems of the hordes of unemployed, the industrial stagnation, and the poor housing which are a denial of the standards that British people are entitled to expect.

The order limits the enterprise zone to one small area of Belfast. The Government have described it as an experiment, but the Ulster people have had enough of experiments.

I again repeat my demand for action. I demand it for the whole of Ulster, not just for one small area of Belfast. Such action should stop the steady erosion of Ulster's industrial base and reduce the vast army of unemployed. If the Minister goes round the Province, he will see that factories are closing in North Down and other areas which never expected closure. Firms are closing because of Government policy.

Therefore, strong, radical and imaginative Government action is required. This is a puny measure which I hope will not mislead the Ulster people into believing that it will solve their problems. Northern Ireland's plight should demand all the Government's energies as well as more Government finance. Indeed, with 100,000 unemployed, the Ulster people, both Protestant and Roman Catholic, should be united in fighting that sort of blight. They should unite in fighting the Government and force them to take steps to remove the scourge of bad housing and unemployment from a Province which is deserving of more help.

This order is like sewing a patch on a worn-out coat and saying that the renovation will transform the coat. Northern Ireland urgently needs a regional plan covering the whole of the Province. The Government have turned their back on the pleas that I have made in the past for such a regional policy. As a result of the implementation of their national plan in Northern Ireland, Ulster has suffered more heavily than other parts of the United Kingdom.

I fear that the Government still do not realise that their measures will fail to effect any dramatic change. I believe that the number of unemployed in Northern Ireland will continue to rise, as will the number of sub-standard houses. It is extraordinary that included among the unemployed are builders who could build new homes, yet they remain on the dole at a time when people need houses in which to live and bring up their families.

Even at this late hour, the Government should offer some real hope to the people of Northern Ireland. They should say that the Belfast enterprise zone is only the first step in transforming Northern Ireland into a Province-wide experimental zone. They should mobilise all their efforts into transforming the Province into a fit place in which the people may live.

10.38 pm
Rev. Ian Paisley (Antrim, North)

Great regret has been expressed on both sides of the House about the order. It is only right that we should look at the background to it.

Before I proceed, I should like to apoligise for the absence of my hon. Friend the Member for Belfast, North (Mr. McQuade), whose area is affected by the order. As hon. Members may know, my hon. Friend had a stroke while attending the House and has been ill. However, after Easter he hopes to take his place again in the Chamber.

The other hon. Member who is strangely absent, and who is good at pointing out—especially in the media—when Northern Ireland Members are absent from such debates, is the hon. Member for Belfast, West (Mr. Fitt). He seems to think that when he is in the House every other Northern Ireland Member should be here. Although the order affects his area, he is strangely absent. I put that on the record as he is very good at putting other hon. Members' absences on the record.

I want to look at the background of the Government's approach to this subject. The Government announced that they would set up these enterprise zones. I am not opposed to the setting up of the zones, but I feel that it is infinitesimal in terms of what is needed to deal with the problem. I assume that no Northern Ireland hon. Member will vote against the order, but that does not mean that we think that it will do anything to grapple with the serious problems of the Province. To me, however, the Government's attitude is static. They have said that these zones could be areas of 500 acres, but their first proposal is for 208 acres. If the Government had grasped the magnitude of the terrible unemployment scourge that we have, they would not have been tinkering with 208 acres but their first proposal would have been for the entire acreage.

After strong opposition emerged from both sides of the Northern Ireland Committee, the Government announced that they would take 500 acres. What confidence can hon. Members and the people of Northern Ireland have in the Government, who were prepared to give a draft outline of a plan to take in 208 acres?

How was that first acreage planned? If ever there was magnificent gerrymandering, that was the most magnificent of all, leaving aside Mackies' factory and other potential places that would help the unemployed. I am glad that that has been rectified and that the Government have seen sense and heeded the representations made to them.

However, there is one matter to which I draw the attention of the House—that is, the inclusion of 100 acres on the north foreshore of Belfast lough. I take issue with the hon. Member for Antrim, South (Mr. Molyneaux)—who is not with us tonight—when he said that that was very good news for the Carrickfergus area. As the hon. Member for Carrickfergus, I tell him that it is not good news because Carrickfergus does not need new factory buildings. We have a whole complex of factories sitting idle. There is the most complex of Courtaulds, miles of it, but it is now all empty. When I came to the House in 1970,3,000 people were employed. Now, 300 are employed and they are on notice. There is another vast complex at ICI, where at the end of the month 1,800 will be wiped off, unemployed.

How much better it would have been if the Minister had said that the Government would take 100 acres in Carrickfergus so that those coming into the area would have some advantage as regards dealing with unemployment problems.

In recent years, nowhere has felt the scourge of unemployment more than Carrickfergus. As the Minister knows, there has been a terrible recession in the textile industry. Courtaulds and ICI specialise in textiles. Instead of my suggestion being adopted, there has been a decision to take in reclaimed land. Has the Minister had any inquiries about the 30 acres that are available? The rest of the area is not available. There may be 100 acres, but only 30 acres is available and has access roads.

Mr. David Mitchell

Is the hon. Gentleman referring specifically to the North foreshore?

Rev. Ian Paisley

I refer to that area. Only 30 of the 100 acres are available. Only 30 acres provide means of access and would be able to supply services. According to the hon. Member for Stalybridge and Hyde (Mr. Pendry), 50 firms have made inquiries. How many have specifically applied for that area? I should welcome any business that came to Northern Ireland. I should welcome any alleviation of the scourge of unemployment.

I agreed with the hon. Member for Down, North (Mr. Kilfedder) when he said in Committee that the Government should have declared the whole Province an enterprise zone. We have gone so far down the road of unemployment that it can be arrested only by taking in the whole of the Province. An inquiry was set up to consider our difficuties. The Quigley report was a diagnosis of our ills. The Government have not brought forward a remedy for the ills diagnosed. What we need is not tampering here and there but an overall plan. We do not want petty or puny tampering. This puny little enterprise zone is almost insulting to the unemployed in that agonised Province.

As I said in debate last week, we are prepared to carry the cross with the rest of the United Kingdom. We are not saying that Northern Ireland should not also bear the cross, but we have already carried more than our share of the load. In Northern Ireland the average wage is lower than that found in the rest of the United Kingdom. The cost of living is higher. The cost of energy is higher. Gas is three times more expensive and electricity is one-third more expensive. Transport costs are heavier. Our unemployment queues have always been longer. Why cannot the Government set their sights on an overall enterprise zone for Northern Ireland? Northern Ireland could then have a plan and a goal that could be achieved with Government help. What will this enterprise zone achieve?

I am worried about several issues, one of which has been touched on by the hon. Member for Belfast. South (Mr. Bradford). What will happen to businesses on the fringe of the zone? Will they suffer so much that they will be forced into bankruptcies? Those inside the zone will be able to compete more easily while small businesses go to the wall. The zone might affect not only businesses on the fringe but businesses in our constituencies. They will not have the advantages of the businesses in the zone. Has the Minister considered that?

I am not too happy about the planning considerations. Too much power already resides in the Department of the Environment. This would have been a good opportunity to give the district councils a power in planning. The councils could have used the power to bring business to a particular area. I am sure that the councils would have accepted the responsibility and seized the incentive to attract jobs to their areas. Instead, the little power that they possess is undermined by the Department of the Environment.

The tragedy of Northern Ireland's unemployed is the knowledge that every month the situation will be more appalling. When the ICI figures and the rest of the Courtaulds figures are added and when account is also taken of the companies—I shall not name them—that are tottering on the brink of closing down, it is clear that unemployment will have risen to 125,000 in a few months' time. The real unemployment figure is even greater. One can add a further 10,000 or 15,000.

Northern Ireland finds itself in a state of great difficulty. To the Minister with his little enterprise zone, I would say that the whole Province should be turned into an enterprise zone. I trust that the Government will put all they have got into the proposed enterprise zone in order to produce some small alleviation of the dilapidation and blight described by the hon. Member for Belfast, South in the districts at the lower end of the economy of Northern Ireland. I trust that some hope will be given to those districts.

The Government, however, have pursued a policy that is not helpful to the economy of Northern Ireland. Their policy is inflexible. If the Government pursue that approach, I can see only a state of abject hopelessness for the people of Northern Ireland. I make a plea to the Minister, who, I believe, wants to help, to look at the whole Province and not to be content with the proposal before the House.

10.52 pm
Mr. J. Enoch Powell (Down, South)

By a peculiarity of procedure, the matter of the Belfast free enterprise zone has twice been before the Northern Ireland Committee. What hon. Members have before them tonight is not specifically concerned with the Belfast zone, still less with its details or delineation. What we have tonight is simply the framework which we would not need to be enacting at all by order if provision for it had been included in the legislation for Great Britain.

The opportunity to consider the matter more widely before the order was published in the form of a proposal did at any rate result in the extension of the proposed zone from 200 to 500 acres approximately and in the inclusion of a very different type of area from that originally envisaged.

The Minister, referring to the procedure that has still to be followed, indicated that when the order under this order was eventually made—the order that will designate the 500 acres or whatever it is to be—it would be subject to the negative procedure. He will not mind my reminding him that that is incorrect—at any rate unless it is immediately qualified. That order will be subject to no procedure.

If hon. Members representing areas in Great Britain which are affected wish to do so, they will have the opportunity to debate the proposed orders. They will have the opportunity to pray against the orders and, if arrangements can be made, debate specific proposals which have gone through all the other procedures and are about to be finalised and become law.

That is not to be the case for Northern Ireland, despite the request which my hon. Friends and I made, that as this is a United Kingdom experiment, we should be treated in exactly the same way and have the same opportunities as are given to any other part of the United Kingdom.

Following the first of the two debates in the Northern Ireland Committee, the Under-Secretary of State's predecessor was good enough to write to me and other hon. Members on 19 September last. In that letter he said: Northern Ireland's enterprise zone is not being put forward as a major new extension of regional policy". In the popular phrase, "You can say that again".

We in Northern Ireland do not know, except by occasional rumour, what view is taken in other parts of the United Kingdom of the utility of the schemes for free enterprise zones which are under consideration in the mainland. The rumours that reach us do not indicate any great degree of exhilaration or popularity, but I do not think any hon. Member representing Northern Ireland, whatever be his background, when considering the proposition of a 500-acre zone under this scheme in Belfast, can seriously believe, to repeat the words used by the Minister this evening, that it can "provide an effective boost to redevelopment prospects in a rundown area". However glad we are that Northern Ireland has not been ignored in this experiment, we would not be doing our duty if we were to pretend for a moment either to the House or to the people of the Province that we imagined that that can be the outcome of the application of this measure to that 500 acres.

The hon. Member for Stalybridge and Hyde (Mr. Pendry) was right when he said that if we want Government action, either by remission or injection, to assist the Province as a whole and at least bring it nearer to the experience of the rest of the United Kingdom, it is to the infrastructure we must look, that which affects all enterprise, all industry in Northern Ireland alike, and which provides a fair means of comparison between one site and other, one place and another, in establishing an enterprise.

Since we last debated this subject in the Northern Ireland Committee, a statement has come from the most important source possible. The Prime Minister declared the Government's intention to bring the cost of electricity in Northern Ireland more closely into line with that in the rest of the kingdom. In a subsequent debate we learnt that the thinking was that that might be produced by "financial integration", if not physical integration, between that branch of the energy industry in the Province and the rest of the United Kingdom. But time goes by. It is four weeks since the Prime Minister paid us her visit and made that statement, and it becomes a matter of increasing urgency.

It is not on the basis of how many acres and which streets they will cover that people contemplate the industrial future of Northern Ireland. What they want to know is what will be the energy costs and how they will be brought into line with the rest of the Kingdom, and kept in line, which was perhaps the more important part of the phrase used by the right hon. Lady.

My hon. Friend the Member for Belfast, South (Mr. Bradford) mentioned transportation. I suppose that energy and transportation are the two legs of the infrastructure. So we join the hon. Member for Stalybridge and Hyde (Mr. Pendry) in saying to the Government "Do not imagine that you can give an effective boost to the economy of Northern Ireland unless you are prepared to say precisely what you intend to do—not to equalise, but at any rate to bring closer together, the basic conditions and the basic costs in Northern Ireland and those on the mainland."

It is even possible, though one wishes not to crab even something as small as this, that to some extent the establishment of a zone may be counter-productive, in that the unfavourable comparisons thus established between sites in the zone and other sites where marginal enterprises are perhaps being conducted will produce no net result. As for sites outside Belfast, they will look from a distance, if they look at all, at the opportunities, if they are opportunities, which are being created in Belfast.

Perhaps the most substantial financial element which is represented is the remission of rates—the fact that the equivalent of the rates which would be paid on the property in the enterprise zone will be carried by the Treasury, will be transferred to the United Kingdom. The Minister, in the last debate in Committee, indicated that on the existing properties at the, I presume, then existing poundages, that would represent a cost of £¾ million, and that would increase if additional properties were occupied in the zone.

The Minister said that that represented an injection into the economy of Northern Ireland. It represents an injection into the economy of Northern Ireland only if we can be sure that that £¾ million, or however much more it is, is a net addition and is clearly seen to be a net addition on a separate account from all the rest. If all this means is that, whatever is to be the allocation this year, next year and the year after for Northern Ireland in the general Budget, £¾ million is to come out of that for the replacement of the rates which would have been paid on properties in that area, I am afraid the answer is nil.

The hon. Member for Stalybridge and Hyde applied a number of descriptions to the proposal of which the framework is before the House this evening. I do not think I got a complete list, but I noted "white elephant", "laissez-faire experiment", "minuscule", "window dressing"; and then there was a word which strikes a chord in all Northern Ireland hearts, "whitewash". It is an adjective for which we lack the accompanying noun nowadays, we do not regret that lack, but that is why the word "whitewash" is less frequently heard in Northern Ireland than it used to be.

I think the general opinion on both sides of the water on this notion in last year's Budget—how far away last year's Budget now seems—the general judgment which prevails on both sides of the water, is summed up in the simple word "gimmick". That just about describes it. It was a gimmick of the Chancellor of the Exchequer which he popped into last year's Budget, and so there has to be something in appearance done about it. But its relevance to the economy, its relevance to the problems of the United Kingdom as a whole and of Northern Ireland in particular, is, alas, remote.

11.4 pm

Mr. Anthony Steen (Liverpool, Wavertree)

I feel that the right hon. Member for Down, South (Mr. Powell) was perhaps unfair and unjust in thinking that the enterprise zone—although the order applies only to Northern Ireland the policy extends to the rest of the United Kingdom—will not have some effect. If it does something rather than nothing, it should be encouraged.

When I rise to speak, I do so always at the wrong time, just before the Minister wants to reply, so I shall make my remarks as short as I possibly can.

Enterprise zones apply to the whole of the United Kingdom. As I represent an area that is to enjoy an enterprise zone, some comments might be of use. The hon. Member for Antrim, North (Rev. Ian Paisley) understandably took a total view of the Province and more or less dismissed the enterprise zones as of no consequence, as other hon. Members did. These enterprise zones are areas where competition, private enterprise and capital have failed. The private sector has moved out. On the whole, the Government are trying to find a device to bring private enterprise back. They are using public funds to encourage private firms to return to areas which they have abandoned.

The interesting part of this idea is the flip side of the coin, the urban development corporation. In Liverpool and London, the urban development corporation is giving public money for infrastructure which will, it is hoped, provide an incentive for private enterprise to return to abandoned areas. The enterprise zone provides no infrastructure, so far as one can gather, but will encourage private enterprise to return to an area by lifting existing controls.

Rev. Ian Paisley

I do not know about the hon. Gentleman's area, but in regard to the area covered by the order I do not think that what he is saying is correct. There is one part about which it is not correct; the 100 acres never had anything on it. It has been reclaimed. II is actually the dumping ground of Belfast City council. The only enterprise that was ever on it was the dumping of refuse from the city. The hon. Gentleman may therefore have a different view of the area. The other part involves the Peter Pan bakery, but that was only included in the recent addition to the area.

Mr. Steen

Obviously, I am not as well informed as the hon. Gentleman about the area, but I understood that what he was referring to was only part of the area and that the other part had buildings and firms but that the firms have left. As I say, I am not in a position to go into the details. All I am talking about is the general pattern of enterprise zones. There will be differences in each area. The area in South Wales may well be similar to that in Belfast.

What I was trying to contemplate is the concept of what the enterprise zone is intended to do. In this case, it may be trying to bring private enterprise to an area which is not particularly attractive and which private enterprise would probably steer clear of. In other areas—the area in Liverpool is a good example—the businesses have actually left and there are empty buildings. The Leyland factory and the Dunlop factory are good examples of abandoned buildings which private enterpise has left.

The interesting thing is that private enterprise came in because the Government gave regional aid for large companies to come to an area to which they would not normally come. So the enterprise zone is another side of the same coin, because the Government gave regional aid to get businesses to an area to which they would not normally go, and they left. What one hopes will happen with the enterprise zones is that business will return, not because the Government are giving money but because they are lifting controls which they believe are preventing firms operating in the area. It is rather doubtful whether the incentives offered by the enterprise zone will be a sufficient inducement to bring business to an area which either it decided initially not to go to or which it abandoned. The concept may be a difficult one to grasp.

Mr. Bradford

I thank the hon. Gentleman for giving way. If the Government recognise that a diminution in bureaucracy will assist industries in a given area, surely it would be criminal not to diminish bureaucracy for the whole of industry. That is the logical extension of the hon. Member's argument. Therefore, a separate segment does not need to be created.

Mr. Steen

There is an argument which says that all controls should be lifted in a whole area to see whether the business enterprise will prosper. In fact, the argument could be extended to the lifting of controls throughout the country. However, I believe that the Government are right to select a number of areas. It is questionable whether they are the right areas, whether the areas are large enough and whether the lifting of controls is extensive enough. Similar free ports and enterprise zones in the United States, some of which are flourishing, are in a particular place for a particular reason—not because private enterprise has abandoned the areas or because they are abandoned areas. They are the areas where prosperity is expected to grow faster than elsewhere.

So the argument may be based on a false premise when it is suggested that by lifting a limited amount of controls one can persuade a private business to go back to an area to which it would not otherwise go. Once firms go to areas for the wrong reasons, they leave for the wrong reasons. As soon as there is an economic downturn, they go back to the area which, but for Government intervention, they would originally have chosen. In many ways, therefore, the regional aid programmes—and possibly, enterprise zones—will distort the market forces and persuade firms to act in a way in which they would not normally act.

However, enterprise zones should be given a whirl. In the past, Governments have tackled urban deprivation by pumping small sums of money into social or community experiments. I shall not list the numerous experiments that there have been during the past 15 years, including urban aid programmes, partnerships, comprehensive community aid programmes and so on. The idea should be given a whirl, even though there may be dangers.

I conclude by saying what I think the snags may be. First, if the enterprise zones do not have infrastructure grants, how will the businesses that return be able to refurbish the buildings or the land which are derelict and abandoned? In Liverpool, how will the old buildings that are already there be refurbished?

Then there is the problem of warehousing. In most large cities—I am sure that it is true of Belfast—there is an endless amount of empty buildings or buildings for warehousing. If warehousing is offered in enterprise zones rate-free, there will be discrimination against other warehouses which are paying rates. I do not imagine that there are in Belfast—as there are in Liverpool—so many buildings and so much warehousing business that empty buildings both outside and inside the enterprise zones could be occupied. One will have to go.

There is the further problem of rents. If a business does not have to pay rates, the landlords will charge higher rents. That could make the enterprise zone less attractive.

There is also the matter of retailing. If the enterprise zone allows superstores and hypermarkets, there will be an adverse effect on the inner areas, where small retailers will have to pay rates as well as rents. So, if the enterprise zone is too close to the inner area, it will have a devastating effect on the small firms and retailers in the inner area.

I think that the concept is worth a whirl, but the Government should bring in certain restrictions to prevent private enterprise in the area from being destroyed.

Mr. Ivan Lawrence (Burton)

Is my hon. Friend aware that he does less than justice to the disadvantages of the enterprise zone? Is he aware that there is a dynamic construction company in my constituency called St. Modwens Securities, which moved to a waste part of Manchester on the Trafford Park estate, set up a dynamic development of construction units, having invested a vast amount in the infrastructure, and began selling these to advancing enterprises at quite a rate, when suddenly an enterprise zone was set up on the other side of the road?

Investment groups with massive advantages which were denied to the local company were attracted to the enterprise zone. As a result, a substantial disadvantage was caused to the company based in my constituency. It is having difficulty in selling the remainder of its units. A great deal of anger is felt. I hope that my hon. Friend the Minister will take the issue on board. It might do more harm than good to set up an enterprise zone in such circumstances.

Mr. Steen

I am grateful to my hon. and learned Friend for giving that example, because it widens the debate to enterprise zones in general.

Perhaps I have spoken for too long in a debate which is primarily about Northern Ireland. I hope that my hon. Friend the Minister will realise that although the House is with him and supports the idea that the Government should lift controls to encourage private enterprise to return, there are severe doubts about whether the scheme will have a real effect on urban deprivation. Because of the shortage of jobs and business opportunities, it might result in the transfer of a prosperous business to another area. The test is whether there is real growth rather than a switch from one part of Belfast to another.

11.22 pm
Mr. David Mitchell

My hon. Friend the Member for Liverpool, Wavertree (Mr. Steen) took part in the debate with justification because we are debating an important part of the United Kingdom—Belfast. As a United Kingdom Member he is entitled to make his opinions known. He claimed that private enterprise has withdrawn from some of the areas and that the enterprise zone is designed to bring private enterprise back. He is right. That is a good description.

I was interested when the hon. Member for Belfast, South (Mr. Bradford) intervened to ask why we did not make the whole of the United Kingdom into an area where controls were lifted if lifting controls helped. We are experimenting. We are conducting a major trial in different parts of the country to see whether enterprise zones produce the results for which we hope. The Government have already embarked on a substantial programme to try to ease the burdens which are placed by Government on industry and commerce throughout the economy outside enterprise zones. Regimentation in terms of planning is being eased for small businesses. Employment legislation and company law are being eased. The multiplicity of questionnaires which trouble business men so much has been swept away since the Government came to office.

I turn to the questions that I was asked about the Belfast enterprise zone. The hon. Member for Belfast, South said that companies inside an enterprise zone have advantages and create unfair competition for firms outside. That theme was taken up by other hon. Members.

I am sure that the hon. Member for Down, North (Mr. Kilfedder) and other hon. Members will recognise that it is difficult to reconcile the complaint that the zone will give special privilege and advantages to the firms inside the zone with the complaint that is made at the same time that the scheme is a load of whitewash, it is not worth the paper on which it is written, it will have no consequence and that it is of no importance. At least we should have consistent arguments.

Mr. Kilfedder

What is consistent is the rising unemployment in Northern Ireland. Surely the Minister agrees that the zone will not resolve that problem. A few jobs may he created in the zone, but those who are employed immediately outside it or adjacent to it may lose their jobs. That is what we are complaining about.

Mr. Mitchell

I never sought to claim that the zone would resolve all the employment problems in the Province. That has not been claimed by other Ministers in respect of other enterprise zones in other parts of the United Kingdom.

I was asked why the Government selected the part of the city that will form the zone. As my hon. Friend the Member for Wavertree has said, it has been picked for the good reason that private enterprise has withdrawn. We have picked deliberately on two areas. I shall take up the remarks of the hon. Member for Antrim, North (Rev Ian Paisley) on this issue. It is an area of decay and it is rundown. It is in the heart of the city. If we can restore the economic life of the area, the restoration will extend in concentric circles in the same way as the decay that preceded it.

Mr. Bradford

Will the hon. Gentleman write to me listing the companies that have withdrawn from the 500 acres or more to which he refers? I understand that most of the acreage was covered by housing and not existing enterprises. To substantiate his argument, I ask him to list all the companies that have left the area.

Mr. Mitchell

The hon. Gentleman knows that we do not keep records of companies that are not in the area. As they are not there we cannot record their non-existence. There are company premises, mills and linen weaving sheds that are empty. Those premises are inside the zone. The hon. Gentleman is wrong to suggest that there are large chunks of housing within the zone. The zone has a somewhat curious wiggledy edge, because we have tried to keep housing out of the area and to include other areas that can genuinely benefit from the presence of commerce and industry.

Mr. Bradford

rose——

Mr. Mitchell

I do not want to give way again as there are other contributions to which I must respond.

The hon. Member for Belfast, South complained that service industry is likely to come into the zone. I beg him to recognise that the world has moved on from the day when jobs and prosperity were measured by the numbers of blue collar workers doing grimy jobs. Every major industrialised country is now seeing the largest area of job creation in the service industries. We should not turn our backs on the opportunities that they will provide.

The hon. Member for Down, North argued that the enterprise zone will not be a solution to the problems of the areas of decay. We do not claim that it is a total solution. It is an experiment that we believe will help considerably. The tenor of the attack that has been mounted on the zone, which is that it will help the wrong people and damage those who are outside it because those who are inside will have a special advantage, is an indicator that a significant economic impact is expected within the zone.

I give a practical example to meet the argument about artificial competition. Someone might say that he is in the car selling business and tht it is unfair that his business should be situated on the edge of an enterprise zone. He might suggest that the order should be so framed that his business is included in the zone. However, he will have on his doorstep a multitude of business opportunities for selling cars to business executives, which he would not have had if he had remained on the edge of a dying and decaying area.

The hon. Member for Antrim, North referred to one of his colleagues, the hon. Member for Belfast, North (Mr. McQuade), who is recovering from a serious stroke. I join him, as I am sure does the rest of the House, in wishing the hon. Gentleman a full recovery.

The hon. Member said that only 30 acres on the north foreshore have the basic services. On the north foreshore, there are only two owners—the Belfast city council and the Belfast harbour commissioners. Both will be responsible for putting in the infrastructure services which are required.

Rev. Ian Paisley

Is it not a fact that at the moment only 30 acres are available?

Mr. Mitchell

It will be some months before the order is through and there is action on the ground. Already the Belfast harbour commissioners and the Belfast city council are considering what they will do. We shall work with them.

The hon. Member regretted that the local authorities were not being involved, and complained that there was too much power for the Department of the Environment. We are proposing to have an advisory committee on which we shall ask two representatives of the Belfast city council to serve, together with representatives of the Northern Ireland CBI, the chamber of trade, the chamber of commerce, the trade unions, the local estate agents, the local enterprise development unit, and consultants. The banking fraternity will also be invited to serve.

Mr. Pendry

rose——

Mr. Mitchell

I am coming to the hon. Gentleman's remarks. I am leaving him to last. I wish there were more time to deal with his speech. He raised a number of technical points on which I shall write to him. The £¾ million will not be taken from the Northern Ireland Vote. The right hon. Member for Down, South (Mr. Powell) also asked about that. He feared that it was a gimmick.

The hon. Member for Stalybridge and Hyde claimed that the outlook for Northern Ireland was one of universal gloom. We do not claim that this experiment will resolve all Northern Ireland's problems. To talk in terms of universal gloom is unfair. There are grounds for hope in firms such as Dupont, which has announced a £45 million investment, and Michelin with £23 million for further re-equipment. Recently Tootal announced a major further investment. The hon. Gentleman claimed that the Belfast enterprise zone was nothing more than window dressing. Yet that window dressing provides exemption from development land tax. It provides for 100 per cent. capital allowances for commercial and industrial building. It provides for the 100 per cent abolition of rating, for the simplification of planning procedures, and for changes reducing the amount of intervention by Government in relation to statistical information. It provides for training boards and great opportunities in bonded warehousing and free port facilities, as mentioned by my hon. Friend the Member for Wavertree.

To say that the enterprise zone is a gimmick is unfair. It is a genuinely interesting and imaginative experiment, designed to see whether we can pull up an area of 500 acres by its bootstraps and make it an area whose growing prosperity will brush off on to neighbouring areas. That is in addition to offering the most generous grant system in the United Kingdom of capital assistance to firms coming in and creating new jobs. It is equivalent to a regional development grant of 30 per cent. My hon. Friend the Member for Wavertree would like the assistance to go to Liverpool. We should not write off the substantial amount that the Government are investing.

Question put and agreed to.

Resolved, That the draft Enterprise Zones (Northern Ireland) Order 1981, which was laid before this House on 3 March, be approved.