§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gummer.]
3.25 am§ Mr. David Myles (Banff)Abraham Lincoln said that one cannot strengthen the weak by weakening the strong. It may come as a surpise to the Minister to discover that I am not asking for assisted area status to be retained for Banffshire. That may come as a surprise to my local district council, too.
I shall ask the Government to rethink the concept of regional policy. They should consider sensible selective aid. I quote a letter from the district council, lest it should think that I am not representing it as it would wish:
What is required in this District—and I have no doubt in many other parts of the UK—is a selective system of industrial assistance which is primarily aimed at assisting those sectors of industry which are both essential to the economic well being of an area and in danger of collapse without such assistance".The Minister's predecessor, the hon. Member for Basinstoke, (Mr. Mitchell), when he was Under-Secretary of State for Industry, in a letter dated 27 May 1980 to the then convenor of the Grampian regional council, alleged that selective assistance would becompletely foreign to the nature of the Regional Development Grants scheme".We should emphasise that that and other parts of the country would benefit substantially from a selective system. The Government should look positively to the introduction of such a system as part of a further and more sophisticated review of economic assistance.My hon. Friend the Minister of State, Department of Industry, in the debate on regional industrial policy last Wednesday, said
It is a sobering thought that those areas which were assisted in the 1930s are the ones that are assisted today. What is our reaction to that to be? Is it simply to carry on with the same regional policies for ever?"—[Official Report, 14 July 1982, Vol. 27, c. 1115.]Banffshire lies sandwiched between the oil boom area of Aberdeen in the east and the much subsidised Highlands and Islands Development Board area in the west. Its economy is based mainly on three industries—agriculture, fishing and whisky distilling. However, it also has a high proportion of small businesses providing valuable employment. Despite the welcome encouragement that the Government have given to those small businesses so far, I still believe that much more remains to be done in removing unnecessary burdens.My other district council, the Moray district council, sent me a note to remind me that, according to the most recent statistics, the rate of loss of jobs in manufacturing industry is greater in Aberdeen than in any other Scottish city except Glasgow. In the Grampian region as a whole, the unemployment rate is fast approaching that of Glasgow and Strathclyde. Other areas of Scotland, such as Inverness, have a lower unemployment rate than the Grampian region, yet they retain assisted area status and also get IDB aids.
In Keith, a town in my constituency, employment greatly depends on two companies that run the woollen mills. I must not mention them by name as I should have to put one before the other, but those companies face severe competition both at home and abroad from others in the woollen textile trade. They do not mind competing on equal terms—in fact, they are quite able to do so—but 187 why should they be disadvantaged by having to compete with companies that choose to go to one of the assisted areas and which can therefore be unfairly subsidised?
A few years ago in Aberlour, a plastics firm set up business in an SDA factory, getting all the regional grants that were then available. What will the future role of the SDA be in areas such as Banffshire? That plastics firm has now departed the scene. Joseph Walker of Aberlour, the world famous shortbread bakers, took over the factory and is greatly helping employment in that area. Why should it have to compete with anyone who sets up business over the border in the Highlands and Islands Development Board area, where grants and loans can be obtained from all sources?
Thorn Lighting in Buckie is the largest employer of labour in that town—at least it was until recently. It is now finding conditions tough. I am thankful that the rail dispute has been solved, otherwise Thorn Lighting might have found conditions even tougher as it is a major supplier of light bulbs to British Rail. That is why I have a dichotomy of interest when I hear of vandals on the railways. Why should Thorn Lighting's parent company be encouraged to set up in Inverness rather than to continue in Buckie, when the unemployment rate in Inverness is 9 per cent. compared with Buckie's 16.1 per cent?
Why was it right to encourage the setting up of a fish processing plant at Breasecleate in the Western Isles, which almost every fisherman declared could not be viable, and when investment aid will now be denied to such enterprising and expanding fish processing firms as Moray Fish and Cox Fish, which conduct their businesses in Buckie and have an assured supply of the raw material from the Moray Firth ports?
Is it not ludicrous that grants can be available to a large manufacturing company setting up business in Banff under section 8 of the Industry Act? I hasten to add that I do not want such development. The lesson of Invergordon is not lost on me. At the same time, a company such as Grampian Country Chickens, which completely fits into the area's economy, will now qualify for no encouragement even from FEOGA funds. I sincerely hope that the European Court decision that we must again open our ports to poultry imports will not cause that firm insurmountable problems in the future.
There are some efficient construction and building firms in Banffshire, such as Leslie Anderson in Aberchirder and John Walker in Banff, which are both substantial employers in the area. But we never hear them howling for hand-outs. Hamilton Brothers of Buckie, whose name is on many new farm buildings and nearly all of the new whisky warehouses in the north of Scotland and, Simmers the blacksmiths in Keith, who have pioneered a new shed for inwintering sheep, do not continually call for grants, loans and subsidies, but they must compete with those who have businesses in the areas where such grants abound. They do much business in the HIDB area, but with travel problems there must be a great attraction to move their centres of operation into that area.
The same applies to boatyards, such as Macduff Engineering, Jones of Buckie, Herd and Mackenzie and Thompsons' Boatyard, although the latter has had to pay off its work force because of lack of orders. They, too, receive benefits from FEOGA aids, but they are so uncertain that they cannot be relied upon. It is not unheard 188 of for a fishing skipper to move his home to an HIDB location in order to get a grant to build a fishing vessel and then to move back after some time to his former home. Is it not rather bizarre that all of those solid, home-based, thriving businesses must pay taxes to provide the money that is used to bribe international companies such as Nissan to set up in an unemployment black spot?
Grampian regional council is making improvements to the harbour at Buckie. Is it sensible that if the work is finished by 31 July it will qualify for a European grant, but that if it is not finished by that date—I do not see how it can be—it will not?
Regional policy has demonstrably failed. If not, why are we still assisting the same areas as in the 1930s? If an enterprise zone can be a success in an area of failure, how much greater a success could it be in an area of proven success? Why should every encouragement be given to set up in business in Dumbarton, where the cost per head of providing services by the Labour-controlled council is £132.23, when no encouragement is to be given to set up in Banff, where the cost of similar services by the careful economic management of Banff and Buchan district council is only £68.10 per head? In the part of Banffshire covered by Moray district council, the figure is £66.11.
Furthermore, the rates levied by those two district councils are among the lowest in Britain. Coupled with the Grampian regional rate, which is the lowest in Scotland, it is a most attractive area for rate burdens. I urge the Government to take note. That is not the way to treat areas where the local authorities co-operate.
I turn to how the decision was reached. In December 1979, the Scottish Economic Planning Department commissioned Mr. Stuart McDowall and Dr. Hugh Begg to study the effect of the rapid growth in oil-related employment in the north-east of Scotland on indigenous industries. Was their report ever considered, because there is no evidence that it has been? If one examines the map delineating the areas and considers the retention of assisted area status by Nairn and Forres, one is forced to conclude that someone in an office decided that the map must be tidied up by drawing a straight line. I find those lines invidious.
I urge the Minister to respond to the invitations that were sent to him by the Moray district and Banff and Buchan district councils. Backed up by Grampian regional council and the visit to area to see for himself the potential that the area has to offer but which is being stifled.
The Government should obey their natural instincts, allow market forces a little more say in where industries are situated and cease perpetuating Socialist mistakes by continuing to pursue failed regional policy. It seems to have been devised by outdated theorists on doubtful statistics.
§ The Under-Secretary of State for Industry (Mr. John MacGregor)I congratulate my hon. Friend the Member for Banff (Mr. Myles) on three counts: first, as is customary, on his getting an Adjournment debate, especially so soon after my right hon. Friend's statement on the review of assisted areas. It is the first such Scottish Adjournment debate. I congratulate him, secondly, on initiating a refreshingly different debate on assisted areas and travel-to-work areas, so much so that I have had to tear up my speaking notes and move away from my carefully prepared brief, not for the first time, to reply to my hon. 189 Friend. I congratulate him, thirdly, on raising some fundamental and undoubtedly acute problems on regional policy. As I expect of my hon. Friend, he has shown the robust independence and rugged enterprise that serve his area well and make him a fitting champion of it.
My hon. Friend asked for a fundamental rethinking of regional policy. I believe that he is not questioning, as no one questioned in the debate last week, the necessity for some form of regional policy. Many areas have suffered from long-term structural decline. I shall not go into a long economic analysis now. Suffice it to say that all parties have regarded some form of regional aid as justified for economic and social reasons. My hon. Friend's area has benefited from regional aid and regional development grants. An area that no longer needs aid as a crutch should be regarded as showing signs of strength and progress.
Many hon. Members and local authorities overestimate the importance of regional aid. On the one hand, there are national schemes, to which I shall refer later. On the other is the fact that an area has many other merits that will encourage industries to move there. Concentration purely on assisted area status neglects that aspect and the prevalence of small businesses, which are obviously an important part of my hon. Friend's constituency, and the need for responsible and realistic local authorities.
My hon. Friend referred to high rates. It is right to point out to many local authorities that many businesses are being frightened out of high rating local authority areas. Correspondingly, realistically controlled local authorities will attract businesses. When one examines the merits of an area, one looks for self-reliance, enterprise and good work forces. Those elements do as much as any regional grants to attract industries.
In the changes to regional policy that we announced in 1979, the Government went a long way to concentrate assisted area status on the areas of greatest need. As my hon. Friend knows, they have been reduced in the latest review from 44 per cent. of the country to 27 per cent. That is a substantial move in the direction for which my hon. Friend asks. It reduces the element of what he called unfair competition for areas that are no longer assisted. I hope that he will welcome that reduction.
It is notoriously difficult to analyse the effects of regional policy over the decades. Research demonstrates, in so far as it shows anything, that when assistance is concentrated on the areas of greatest need, it is likely to be most effective.
Finally, I hope that my hon. Friend will accept the importance to industry of a certain amount of stability in regional policy—hence our commitment when we undertook the review in 1979 that there would be no more major changes in regional policy in the lifetime of this Parliament, and hence, too, the fact that the latest review, the results of which were announced this month, is limited in effect. Nevertheless, I have noted what my hon. Friend has said about regional policy as a whole and I shall bring his remarks to the attention of my right hon. and hon. Friends at the Scottish Office.
Turning away from the basic theme, my hon. Friend also asked how the decisions relating to the North of Scotland were taken in the latest review. He suggested that the Government did not consider the McDowall-Begg report on the oil-affected areas in Scotland in relation to those decisions. I assure him that we did. My right hon. Friend the Secretary of State for Scotland promised this when he welcomed the report in September 1981 for the 190 contribution that it made to the Government's knowledge of the economic background and prospects of the area studied.
My hon. Friend will notice that all four of the Scottish areas to retain assisted area status as a result of the special review that we have just undertaken were included in the study area of the McDowall-Begg report. That report will continue to be of value when matters such as infrastructure needs in the Grampian region and other oil-affected areas are considered.
In his comments about where we drew the line, I think that my hon. Friend took the point that in relation to the Nairn and Forres changes we simply drew a line across the map. I assure him that the process was far more sophisticated than that, although I am the first to admit that the selection of assisted areas is not an exact science. I shall explain to him how this was done.
As my hon. Friend will know, unemployment is not the only criterion in designating an assisted area, but it is an important one. In this context, we examine unemployment figures over a period and we look at trends. In 1981, unemployment in the Forres area averaged 19.3 per cent. and in Nairn 16 per cent., while in the three travel-to-work areas affecting my hon. Friend's constituency the figures were 14.4 per cent. in Buckie, 10.7 per cent. in Elgin and 8.9 per cent. in Banff. Those figures show that the first two areas were more seriously affected.
§ Mr. MylesDoes my hon. Friend accept that the unemployment figure for Forres is somewhat distorted by the number of Service wives there who are registered as unemployed?
§ Mr. MacGregorAs I have said, it is not an exact science, but one tries as far as possible to consider all the factors.
It is important to consider overall unemployment levels in a travel-to-work area as a totality. That is the measure that we use across the United Kingdom as a whole. I quoted the 1981 figures to show one reason why those two travel-to-work areas were selected for change compared with the 1979 proposals. My hon. Friend may well draw attention to the latest figures for one month, in June this year. As I have said, one must consider trends, so it is not really fair or correct in terms of the way in which this process is carried out to consider the figures for just one month. My hon. Friend quoted a figure of 16.1 per cent. for Buckie in June, but in May the figure was 14 per cent. as compared with 15 per cent. in Nairn and 21.4 per cent. in Forries. Again, that shows the relative way in which these travel-to-work areas were considered.
My hon. Friend also commented on Inverness. It is true that the level of unemployment in Inverness is well below that of, say, Buckie. Inverness, however, was not downgraded in 1979 and the current review dealt with areas downgraded by more than one stage in 1979. We considered certain other areas in which trends or difficulties stood out and we made very limited changes through some upgrading, but we deliberately decided not to downgrade any more travel-to-work areas beyond those announced in 1979 because we had not announced that we would even be considering that, because we were anxious to achieve stability and because if we had downgraded those areas now we should have had to give some years' notice in order to achieve the stability, which would have meant a further stage in the whole process. We decided, 191 therefore, not to downgrade any areas that were not selected for downgrading in 1979. That explains the position of Inverness.
My hon. Friend made some comments about Buckie harbour. An application for European regional development fund assistance for the Buckie harbour project was recently submitted to the European Commission. So long as the bulk of expenditure will have been incurred by 31 July, the project can be approved for grant. I understand that this is, in fact, the case. I hope that there will be no difficulties. I shall, however, check and let my hon. Friend know.
My hon. Friend also asked about other national aids and drew attention to the fact that his local authorities—or at least one of them—were urging a more selective form of financial assistance. This is important. There are a number of ways in which his constituency will still benefit. There are the national departmental schemes from my Department concentrated on high technology, small businesses and on selective financial asistance.
There are a whole variety of schemes where I believe that the take-up is sometimes not strong enough in the assisted areas, partly through lack of awareness of them and partly through over-concentration in the past on regional development grants. I hope that my hon. Friend and his local authorities will do everything possible to draw these national schemes to the attention of firms in the constituency.
As the Minister with responsibility for small firms, I have noted my hon. Friend's remarks about unnecessary burdens on small firms. I am always keen to remove such burdens. If my hon. Friend has particular examples to which he wishes to draw my attention, I shall be delighted to hear from him.
I should like to refer next to the activities of the Scottish Development Agency. These are illustrated by its investment of £100,000 in Grampian Country Chickens in Banff. Contrary to what my hon. Friend has stated, I believe that Grampian Country Chickens received that investment and would receive it irrespective of assisted area status. The SDA's assistance to small businesses in the district has resulted in £96,000 being provided in financial aid. In the agency's land renewal programme for the area, the main scheme is currently the rehabilitation of the Aberchirder, or what, according to my hon. Friend, is called the Foggy Loan, Causeway End Quarry, which is now out for tender. The agency is also considering a list of derelict land sites, many having war-time remains, provided by the Banff and Buchan district council for future attention.
There are various European schemes of financial assistance not confined to assisted areas. The European 192 Social Fund will provide financial support for training and retraining schemes for special groups of workers such as redundant agricultural and textile workers, migrants, women, the handicapped and young people. The latter category is of particular importance as the whole of Scotland is a youth priority area which means that the prospects of any applications for assistance are enhanced.
My hon. Friend talked about FEOGA grants which may also be available for agricultural activities. I know that these are of particular relevance to my hon. Friend's constituency. My hon. Friend referred to boat-builders. The Fishing Boat Builders Association has frequently expressed concern over the situation in boatyards. The Government are well aware that new orders are scarce. However, there is no shortage of financial incentives to encourage fishermen to invest in new vessels of the type constructed in Scottish yards. The ready availability of grants and loans from the Sea Fish Industry Authority supplemented by the possibility of a grant from European Community sources amounts to more investment assistance than is available to many sectors of industry.
I hope that the further interim scheme of European Agricultural guidance and guarantee fund grants—the FEOGA grants—will shortly be approved by the Community and that this will encourage the placing of new orders. In the longer term, a satisfactory settlement of the common fisheries policy should dispel some of the uncertainty about the future which may be inhibiting increased investment.
I noted my hon. Friend's remarks about the Highlands and Islands Development Board. I hope to visit the north of Scotland in early September and to be seeing members of the board. I shall discuss my hon. Friend's comments with them. My hon. Friend invited me to come to his area. I know that the area of the north of Scotland that I shall be covering is huge. I shall be happy to consult my hon. Friend about what he may wish me to do in the area whether this concerns local authorities or small businesses to see whether some arrangements can be fitted into my visit. If this is possible, I hope to continue the dialogue that we are now carrying on here in the House of Commons on what has been a steamy late night in July in his own delightful countryside in the refreshing climate that prevails in September. I hope to be able to demonstrate that the loss of assisted area status is not crucial to the region, that its own tremendous benefits will enhance the prospects of attracting industry in the future and that there are many other ways in which firms in his area can be assisted.
§ Question put and agreed to.
§ Adjourned accordingly at five minutes to Four o'clock am.