Small Engineering Firms (Hansard, 14 June 1982)

§ 9. Lord James Douglas-Hamilton
asked the Secretary of State for Industry how many small firms will benefit from the small engineering firms investment scheme.

§ 13. Mr. Iain Mills
asked the Secretary of State for Industry if he will make a statement on the level of the take-up under the small engineering scheme in the West Midlands.

§ Mr. MacGregor
By the time of the scheme's closure on 28 May 1982, some 1,750 firms had applied for assistance, of which 337 are in the West Midlands. All eligible applicants will, I hope, receive an offer in due course. Because o f the overwhelming response, my right hon. Friend increased the allocation to the scheme by 50 per cent. from the original £20 million to £30 million in total, through a real location of funding priorities within the Department.

§ Lord James Douglas-Hamilton
In view of the considerable success of the scheme, will my hon. Friend consider reopening it as soon as is practicable?

§ Mr. MacGregor
I am grateful to my hon. Friend for his comment about the success of the scheme. It is not at the moment possible to allocate more than £30 million to the scheme—we have already increased the amount by 50 per cent. We need to analyse in greater depth than has so far been possible, because of the overwhelming response, what the scheme has achieved and whether it has properly met all of its objectives and used taxpayers' money cost-effectively. I am going to Birmingham to visit the West Midlands regional office tomorrow to have a long discussion of matters with those who are handling the scheme.

§ Mr. Mills
Is my hon. Friend aware that I welcome the fact that he is going to Birmingham tomorrow as the first stage in the re-evaluation of the future of the scheme? Does he accept that it has helped small engineering companies in the West Midlands considerably? Will he elaborate on the high technology aspects of the scheme? Is it a way in which he anticipates continuing badly needed help for non-robotic equipment for small engineering factories in areas such as the West Midlands, to regenerate industrial activity in such depressed regions?

§ Mr. MacGregor
The fact that the response to the scheme has been faster than ever before means that it has achieved its objective of accelerating investment by small engineering firms in the advanced equipment that my hon. Friend rightly stressed. The initial assessment shows that small firms have gone up-market in obtaining more advanced equipment. That is vital. Moreover, they have brought forward investment. That, too, is vital. In that respect, the scheme is already achieving its objective and the good effects will continue to work throughout the year.

§ Mr. John Garrett
Does the Minister agree that the Department cut off the scheme because the Treasury got wind of how much money was going to companies that would have invested irrespective of the scheme's existence?

§ Mr. MacGregor
That is complete nonsense. The scheme was stopped because we quickly used the money that was allocated to it. We have increased it by 50 per cent. Many people in the engineering industry did not expect the scheme to be so successful so quickly. The scheme closed because the money was used up.

§ Mr. Colvin
What percentage of investment under the scheme has been spent on British equipment?

§ Mr. MacGregor
I am delighted to say that the analysis so far shows that up to 60 per cent. of the equipment that will be purchased under the scheme is British. That is considerably more than has recently been the case. I was anxious that the scheme should not be a "Buy British" one, as that would conflict with our international obligations. Nevertheless, I was keen to market the scheme to British manufacturers as much as possible to encourage them to take it up. They have done so well.

§ Mr. Ioan Evans
How many small engineering firms have gone out of existence under this Government, thus contributing substantially to the total of 3 million unemployed? Does the Minister agree that a radical change in the Government's economic and industrial policy is needed if British industry is to be revived? Does he agree also that the scheme does not match the size of the problem?

§ Mr. MacGregor
The difficulty faced by many small engineering firms has been, first, the world recession and secondly, that many of their major customers, such as the motor industry, have become increasingly uncompetitive in recent years. A further difficulty was that a number of them had not invested sufficiently in modern, advanced equipment. I believe that the scheme deals with their real problems and will help them to become more competitive.