GRANTS TO REGIONAL DEVELOPMENT ORGANISATIONS

HC Deb 12 April 1983 vol 40 cc705-21

Mr. Cook

I beg to move amendment No. 4, in page 3, line 3, at end insert— `(dd) the West Midlands enterprise board'. We move from amendments that I was confident were not defective to an amendment that I frankly admit is gloriously—indeed, heroically—defective. It would include among the named development bodies the West Midlands enterprise board.

I concede at the outset that, despite the excellent work carried out by the West Midlands enterprise board, it is not an appropriate vehicle as a development organisation to receive grants on a par with the other four organisations that are named in the clause. The other four bodies are concerned primarily with promoting inward investment into their areas, whereas the West Midlands enterprise board is concerned primarily with rescuing existing indusries, of which too many are in difficulties in the west midlands, and matching their capital requirements with the capital that the West Midlands county council can raise either from its own internal resources or from financial institutions in the area. I hesitate to say which is the more important task. The West Midlands enterprise board may be doing a more essential and rewarding task in considering what can be done in its own area by using the resources of its own area than other development organisations which have concentrated on seeking external resources to come into their areas.

There is a tale, at once comic and sad, that reinforces what the hon. Member for Honiton (Sir P. Emery) said about the complexity and unnecessary repetition of the attempts made to attract external foreign investment. A local authority in Sheffield sent a delegation to Japan seeking inward investment for Sheffield. While it was in Tokyo, it met another delegation of south Yorkshire councillors and officials who turned out to be there on behalf of another south Yorkshire local authority pension fund seeking opportunities for outward investment in Japan by that pension fund. The unfortunate coincidence by which they both found themselves in Japan, one looking for investment from and the other looking for investment in that country, shows the enormous capacity that exists within local authorities and local communities to use the capital resources that are available to meet the problems of those areas.

I congratulate the West Midlands enterprise board on the sterling work that it has done in the past three or four years in trying to provide a sound base for local indigenous industries. We do not wish to impose a radical change on that board against its wish—and certainly we do not intend to press the amendment to a vote—but the purpose of the amendment is to enable the House to explore a strange aspect of the Bill that has surfaced on a number of occasions both on Second Reading and in Committee. One of the anomalies of the clause is that it names four specific development organisations which are now to be entitled to receive grant from the Department of Industry, with the gracious permission of the Treasury, and those four organisations rightly represent four regions with serious problems of economic development. However, none of those four organisations represents any part of the region that has been hit most spectacularly by the Government's policies of the past four years—the west midlands.

What has happened in the west midlands since 1979 has been truly dramatic. It is a traditionally prosperous region. At one time, it was one of two regions that were held up to the other regions of Britain as examples of prosperity and the acme of success. It has now been translated into a depressed region where unemployment is exceeded by only one other region in mainland Britain—the northern region.

It is within my recollection in my time in public life that Scotland used to regard the west midlands as the region to be emulated. In speeches and in questions asked at public meetings, it was held up as an example of the level of prosperity, wages and employment which we ought to be seeking to attain in Scotland. It is a remarkable change in the fortunes of that region that it now has a level of unemployment which is higher—albeit only marginally, but nevertheless higher—than that in Scotland, which continues to be a disgrace and a scandal.

The forum of county councils within the west midlands has carried out a study of what has happened there in the last three years. Its conclusion is that in those three years the west midlands has suffered the greatest increase in unemployment and the greatest drop in jobs of any region in mainland Britain. It has lost more than 1,000 jobs for every week the Government have been in office. The increase in the long-term unemployed has been particularly dramatic. In April 1979 only 35,000 men and women in the west midlands had been unemployed for more than one year; in October 1982 there were 156,000—an almost fivefold increase in the long-term unemployed.

The reason why the west midlands in particular has suffered from the monetarist shock is easy to discover. The prosperity of the region was based mainly on engineering and metal industries. Those industries have suffered most grievously under the monetarist policies of the past three or four years and were hit most severely by the penetration of our market by foreign products.

I reflect on the intense and exciting debates we had in the House in the mid-1970s when the then Labour Government were rescuing British Leyland. The Conservative Opposition opposed our rescue package. I recall a member of that Conservative Opposition, who is now Minister of State, Department of Education and Science, leading a Back-Bench revolt, because his Front Bench hesitated to go quite that far with the degree of irresponsibility, against the money resolution.

In the course of his speech in the debate on the money resolution he said that, hon. Members had been told that if British Leyland went, the car industry went, and then the west midlands industries would collapse. He posed the rhetorical question whether the House really believed that the entrepreneurs of the west midlands and the black country would be so lacking in imagination and drive that they would be unable to find other outlets for their products and other ways of employing their staff if the motor car industry were to go to the wall. Today, the Government have come close to testing the irresponsible question asked by the right hon. Member who now plays a distinguished part within the Government. What we have discovered as a result of the experiment is that it is impossible for entrepreneurs, be they large or small, to cope with a major collapse in their own domestic market.

The Financial Times carried out a survey in the west midlands last autumn. Its report included a quotation by an executive of one company whose work force has been halved in the past three years. That executive—and I have no reason to believe that he is a card-carrying member of the Labour party—said: The Government have done a great job, not only in cutting out the fat, but in killing local industry. I cannot see any prospect of revival.

We meet in the week in which we have seen accounts of the debate within the National Economic Development Council on its report on future employment prospects within industry. As we know from the press, the NEDC has discovered in its survey of 40 sectors of British industry that there will be no increase in employment in the foreseeable future. We were not privileged to be present, but we understand from the press that the report is controversial within the Government and that Government representatives at the meeting exuded greater optimism than the director of the NEDC or the business or trade union representatives on the NEDC. Obviously, Mary Poppins still reigns at the Treasury.

I was intrigued to note that the Chancellor gave as one of the reasons for optimism the fact that the pound had declined in recent months. That I find a particularly interesting statement when I recall that throughout the past three years the Chancellor has claimed that one of the major reasons for the success of this policy was the rise in the value of the pound and how, when the pound started to go down in January, oddly enough it was said that the responsibility was not that of the Chancellor, but of the Labour Opposition.

6.15 pm

The Chancellor is bullish. The Minister of State, who has demonstrated frankness and integrity throughout our proceedings, would be the first to agree that, however bullish the Chancellor may be about future prospects for the economy, regions such as the west midlands, which are dependent primarily on industrial manufacturing, have on present policies no prospect of an increase in employment which would return them to anything like their position in April 1979.

Given the recent devastating past and the bleak future that exists for the west midlands, the House is entitled to look to the Government for a response. We had a response of a kind at the weekend, but it did not even rise to the level of a comic gesture. The Government have designated their most recent and most junior Minister at the Department of Industry as the Minister with special responsibility for west midlands industry. On Second Reading I reminded the House that we met in the week that marked the 20th anniversary of the visit by Lord Hailsham to the north-east of England after he had been appointed as Minister with special responsibility for solving the unemployment problems of the north-east. I drew a contrast between the commitment of the former Conservative Government in responding to the level of unemployment in the north-east, which was only 5 per cent. but which they admitted was unacceptable, and the failure of this Government to respond to levels of unemployment three and four times as high as the level that motivated that Conservative Government to appoint Lord Hailsham as Minister with special responsibility for the north-east.

In a way, I am happy about the development at the weekend, because it enables me to balance that contrast on Second Reading with a further contrast on Report. The more pertinent contrast is that that Government at least appointed a senior Minister, a head of Department, a member of the Cabinet and someone with high standing in the Conservative party as the Minister with responsibility for the north-east. This Government have eloquently displayed their lesser commitment to resolving the problems of industrial regeneration and unemployment by appointing the most junior and most inexperienced Minister whom they could find. I could not hope for a clearer contrast between the different types of Conservative Government which we face which spring from a different type of Conservative party.

At the end of the article in The Sunday Times, which reported the appointment, there was a statement that the Government were not unhappy at having taken this initiative in respect of the west midlands and were prepared to resist any similar approaches from other regions and that ministers are confident that they will be able to resist charges of discrimination. I am happy to assure the Minister that no member of the Labour Opposition will accuse the Government of discrimination in favour of the west midlands. It would be a task well beyond our skills of rhetoric, great though they may be. Plainly, the Government, if accused of discrimination in relation to the west midlands, have discriminated heavily against what was formerly the industrial heartland of the nation.

If the Government are serious about tackling the problems that they have created for the west midlands, they will require a body in the west midlands which can act as the local leg of the regeneration process. I am diffident about criticising the regional development bodies already in place in the west midlands, and I have already pointed to the enterprising and frontier pioneering work being carried out by the West Midlands enterprise board.

In that same Financial Times survey, the newspaper noted that the west midlands has probably one of the most ineffectual regional lobbies in the United Kingdom. I understand that there is now a move afoot among local authorities to try to weld together a development organisation, broadly comparable with those in the northwest and the north-east, which could seek to promote inland investment and take a broader view of the development opportunities in the west midlands than the enterprise board necessarily can.

The Department of Industry is not prohibited by the clause from making grants to any such body. The clause provides that the Secretary of State may make grants to any other bodies that he thinks fit. That enables the Department to make a grant to whatever body may emerge in the west midlands.

Before we pass from the clause, and as the west midlands is not specifically mentioned although four other regions are, we are entitled to ask the Government what response any such body in the west midlands is likely to receive when it seeks from the Department of Industry parity of treatment either with the North of England development council or the other development organisations that are mentioned. I hope that the Minister can tell us that, if such an approach is received from the west midlands in the near future, it will receive a sympathetic response and that, therefore, my amendment is unnecessary. I hope that the Minister will confirm that such a body will receive favourable, positive treatment under paragraph (e) and that the Department will be only too happy to make available as much grant as such a body can absorb, so that the Government may undo some small part of the immense damage that has been done to the west midlands during the past four years.

Mr. Stuart Holland (Vauxhall)

I apologise to the House for the fact that, because of a constituency engagement I shall not be able to remain to savour and enjoy the erudite and illuminating contributions to the debate on the Bill.

I was especially anxious to intervene on this issue and on these proposals. I welcome the amendment put forward by my hon. Friend the Member for Edinburgh, Central (Mr. Cook) not only because it proposes to include the West Midlands enterprise board, but because it provides the opportunity to recommend the Minister—I trust that he can reply to this—the inclusion of the Greater London enterprise board. The clause refers to bodies that stem from the conventional wisdom of the orthodox approach to regional development agencies over the main part of the post-war period, rather than to the newer, more dynamic, and, indeed, more interventionist approach of the enterprise board concept.

The difference is essentially that agencies such as the North of England development council, the North West industrial development association and others aim to attract and pull into an area that which is not already there, whereas the enterprise board approach is far more to reinforce and promote success among what is already there and, where possible, to stem and offset the decline among small and medium-size firms that have been especially critically hit by the current economic crisis.

In that respect, I should be glad if the Minister could give an assurance to the House that the grants to which reference is made will not prejudice any shareholdings that enterprise boards or agencies may wish to take in local firms. I stress that point, because one of the critical problems of the small and medium-size firms in a recession is that even if it has the technology to enable it to undertake a rationalisation of its production it may well not be able, from current cash flow, to mobilise that degree of self-financing that permits it to embody the new technology in innovative investment. Enterprises in areas, for example, covered by the Greater London enterprise board and, I suspect, the West Midlands enterprise board have approached the boards with the request that there be some means of getting a capital injection to enable them to survive the recession and to come abreast of new technology, for example, by the enterprise board purchasing the property or the premises of the enterprise itself.

Under normal circumstances that might well be quite useful. It could clearly amount to an injection of capital of £500,000 to £2.5 million or more in the enterprise itself. It is a recycling of funds which, if it is to go into productive investment, could be very valuable. I trust that the Minister is not excluding any means by which we can ensure that savings and finance are translated into enterprising investment in the companies that are faced with such difficulties.

I hope that the Minister can give the House an assurance that grant will, under no circumstances, be withheld—indeed, if he is feeling especially adventurous, perhaps he will assure us that they will be encouraged—from firms unable to go abroad to seek investment, of which several criticisms have already been made by more than one hon. Member. We should enable the enterprise boards or development agencies themselves to set up export representation facilities in foreign markets. I stress that point.

When a firm employs 16, or even 60, individuals, it is rarely in a position to develop markets abroad. Even al the level of 60 employees it is only beginning to border on the kind of entrepreneurial structure—the multi-divisional management structure is not yet within its reach—through which it could have permanent export representation in foreign markets. In other words, whether the enterprise is Wandsworth Widgets or West Midlands Carburettors, Components, Input Pins Ltd., the fact is that it needs the joint muscle of export representation in foreign markets of a kind that at present is difficult to find or escapes it.

I wish to give an illustration that could be relevant to the West Midlands enterprise board. It is certainly relevant to the Greater London enterprise board. The provision of even a quite modest export sales staff, perhaps starting with half a dozen permanent export representatives, could mean that there is at least one export representative whose specialist responsibility is Scandinavia and northern Europe and who will represent a range of firms in the west midlands or the Greater London area. One representative's specialisation may be eastern and southern Europe, with another in western Europe and another in the United States—wherever the key markets are.

It is only by that principle of the division of labour—something of which the Government are a great advocate, as they support Adam Smith, who told us that the way to make pins is not simply to stick all the heads on oneself—that small and medium firms will be able to achieve the export muscle to reverse the syndrome that we have heard criticised by hon. Members, including the hon. Member for Honiton (Sir P. Emery), whereby one had to take a begging bowl to Japan to get inward investment into regions where we have the skills, the enterprise and the entrepreneurship, but what we do not have is, in many cases, the critical minimum of finance and the guarantee of markets to survive.

I hope that the Minister will be able to reply on the matter of public purchasing. If individual small and medium firms are to be assisted, if there is to be a link between the supply and demand side of the economy at the regional level where it can be significant—whereas at the local level it may not be—it should be possible for firms in the enterprise board framework to meet public purchasing contracts pursued by the enterprise agencies themselves.

In this respect I hope—especially as the Labour party, in its wisdom, has now retitled the concept of a planning agreement an agreed development plan—that the planning agreement approach pursued by the West Midlands enterprise board will be welcomed by the Minister—as indeed it is welcomed by many small firms—as a positive means of ensuring that the enterprise boards fulfil their responsibilities in relation to a degree of security of market for the firms concerned.

In general, I welcome the clause, and I noted that the Minister, in replying to the debate on the previous clause, drew attention to the fact that, as I stressed at the beginning, this provision is very much in line with the conventional wisdom and the orthodox thinking—although those were not his words—of industrial development policy over a considerable period of time. Indeed, he referred to the fact that other Governments had done this kind of thing, as is seen from the Scottish Development Agency Act and the Welsh Development Agency Act in 1975, the Development of Rural Wales Act in 1976, the Housing Act and the Local Government, Planning and Land Act in 1980.

I am struck—as my hon. Friend the Member for Edinburgh, Central has been—by the parallel with debates on industrial intervention that have taken place in the House before—modest though it is; indeed, slipping in like a mouse in these financial provisions—and the broad range of powers that will be given, with, of course, Treasury consultation and supervision, to the Secretary of State to make a grant to any agency at any time to provide for any function whatsoever. I wholeheartedly welcome this. It strongly echoes, and is reminiscent of, a certain Industry Act in 1972, which represented a retreat from Selsdon man and the notorious so-called U-turn in Government policy.

I cannot say how deeply we are into the U-turn of Government policy here. I think that it is questionable whether the Government have yet made a U-turn. Some people might say that they are into an S-bend. Others might say that they hope that they will disappear from such a bend in the very near future since probably the best that could be done for the less developed regions of the United Kingdom would be a change of Government to one who actually believed in this kind of intervention instead of the rather cosmetic devices that are being employed at the moment.

The other question to the Minister, to which I am sure he will reply, is whether—unlike the citizens advice bureau issue which was debated earlier and in which, as my hon. Friend the Member for Norwood (Mr. Fraser) said, the sticky fingers of the Prime Minister are evident all over the measure—in this case the Prime Minister approves of this provision in the Bill. I might even ask whether, in this case, with such an interventionist measure, the right hand of the Government knows what the left hand is doing—or do we have a Government with two right hands? Is this a serious provision or not?

I am sure that the Minister, who has already been congratulated by my hon. Friend the Member for Edinburgh, Central on his integrity, will be able to assure the House—I am quite serious about this—that this measure is not only within the miscellaneous financial provisions but will actually be used and that some weight will be given to it. If that is to be the case, we need to take account of the degree to which the measure contradicts the main thrust of the Budget and contradicts the collapse in demand in the economy as a whole, which, rather than enabling the Government to get into a U-turn, means that the small and medium sector is in a free-fall situation. Certainly if the Government follow through the significance and meaning of this provision they will be beginning seriously to change their policy and to undertake the kind of recovery of public expenditure without which the future of small and medium firms within the economy is hardly secure.

Mr. Dixon

I, too, welcome the addition to clause 2, which includes the West Midlands enterprise board. I was interested in what my hon. Friend the Member for Edinburgh, Central (Mr. Cook) said about the least that could be aimed at by the west midlands being what was in this Bill, referring to Devon and Cornwall, the North of England development council, the North-West industrial development association and the Yorkshire and Humberside development association. I thought that he set his sights a bit low and that he would suggest that they should be brought up to what is enjoyed by the Scottish Development Agency and the Welsh Development Agency. It is powers of that sort that we in the regions require.

The hon. Member for Honiton (Sir P. Emery) said that many people were going abroad to try to attract industry to this country, and he mentioned Nissan. It is ironic that the first delegation that went from this country to Japan at the time when Nissan was allegedly going to make its decision was led by the Secretary of State for Wales. There was a good deal of criticism from the Opposition. We said that if Wales was to be one of the areas suggested, it would have an unfair advantage and we suggested that someone from the Department of Industry should have led the delegation, rather than the Secretary of State for Wales. We have considered for a long time that we are the poor relations of Wales and Scotland when it comes to development agencies and certainly when it comes to Ministers and voices within the Cabinet.

My hon. Friend the Member for Edinburgh, Central referred to Lord Hailsham, as he now is, being made Minister for the north. He came up to north-east at the time when unemployment was 5 per cent., donned a cloth cap and said that he was going to solve all our problems. I must admit, in all fairness, that he did a fair amount for the north of England at that time. We have since then had a Minister for the northern region—my right hon. Friend the Member for Houghton-le-Spring (Mr. Urwin). That is the sort of thing that we should be aiming for.

If we set our sights in clause 2 on a West Midlands enterprise board we would be suggesting that there should be development agencies of some sort, with top say within the Cabinet, for all regions—some sort of umbrella arrangement for deciding the priorities, instead of one region vying with another. At the moment, we have not got that, although there are two regions of the country which, although I am not suggesting that they have an unfair advantage, are certainly in a more advantageous position than we are in the northern region.

I fully endorse the point made by my hon. Friend the Member for Edinburgh, Central about the number of unemployed in recent months in the west midlands, but we in the northern region have been suffering this for many years. We are at the top of the unemployment league in this country and have been for many years. With the exception of Northern Ireland, the northern region has the highest unemployment percentage in the country. That cannot be tolerated any longer by our area.

We also have the disadvantage of relying on basic industries, such as mining, shipbuilding and engineering. At the moment, in the Tyne and Wear area, 20,000 men rely on shipbuilding and ship repairing and, bearing in mind the state of the shipbuilding industry world wide, their jobs are in jeopardy. That is the situation in the northern region and I take this opportunity, while supporting the amendment, to highlight it. I fully appreciate that the gesture that the Government have made by putting a junior Minister in charge of the west midlands is just a cosmetic matter before a possible June general election to see whether the Prime Minister can retain some of the marginal seats in the west midlands.

I hope that the next Labour Government will establish development agencies with the object of achieving a coordinated promotional approach, especially in areas of high unemployment.

Clause 2(2)(e) states: any other body, whether corporate or unincorporate, whose principal object appears to the Secretary of State to be the promotion of industrial or commercial development in an area in England. Will that "body" be funded in addition to the grant that is being paid to the various development agencies? Over a number of years south Tyneside has had an industrial fair, which has been financed by the local authority. The fair has been a success. Some firms have started as a result, and many firms have received orders. Unfortunately, the local authority cannot finance the fair this year because of Government cuts. Would south Tyneside be successful if it made an application under subsection (1)(e) for an industrial fair this year as in previous years?

Mr. Wakeham

The hon. Member for Edinburgh, Central (Mr. Cook) clearly recognised that the promotion of industrial activity in a particular area and the seeking of inward investment into that area are two entirely different matters. I am not sure whether everyone has accepted that they are different. Some of the remarks of the hon. Member for Vauxhall (Mr. Holland)—the hon. Gentleman said that he had to leave the Chamber before the end of the debate—suggested that he had not recognised the same clear distinction.

The hon. Member for Edinburgh, Central recognised that, as a consequence of the distinction, the amendment was defective. The purpose of clause 2(2) is to provide a specific statutory authority for the grant paid to the four existing regional development organisations. In some instances the Department of Industry has been paying the grant for many years. The primary aim of the clause is to regularise the payment of the grant.

The West Midlands enterprise board is not in the same category as the other four bodies that are named. It supports individual enterprises that contribute to the west midlands economy but it does not at present aim to promote the region overseas as a location for investment.

That is the answer, too, to the contribution of the hon. Member for Vauxhall who is no longer in his place. He made a better speech today than when I first heard him speak in the Chamber when he was a new Member. On that occasion he spoke for a considerable time and. I think, quoted several chapters of his book. He was somewhat under pressure because the hon. Member for Workington (Mr. Campbell-Savours), whom we miss in this debate, referred to him on that occasion as the finest economist in the western world. That was a burden that the hon. Member for Vauxhall did not have to bear today. I thought that he made his points well.

There is no doubt that the same principle would apply to London as to other regions. The grants are paid for inward investment promotion. That is what clause 2 is all about. The Government support export promotion in other spheres of their activities and these are matters for my right hon. and noble Friend the Secretary of State for Trade.

Mr. John Horam (Gateshead, West)

I appreciate the distinction which apparently the hon. Member for Edinburgh, Central (Mr. Cook) recognised—I am sorry that I was not able to hear his speech—and to which the Minister is now addressing himself. It is the function of the four associations to tackle the problem of inward investment. That has traditionally been their function. However, clause 2(2)(e) is rather ambiguous. It refers to the promotion of industrial or commercial development in an area in England. That could mean either of the two approaches that have been recognised as clearly distinctive. I am still not clear whether the Government are entirely satisfied with paragraph (e) in the light of the Minister's objectives.

Mr. Wakeham

I am sure that the Government are satisfied with the wording of the paragraph. It will be used for any other body that comes within the main objectives of clause 2, which are grants to regional development organisations. The Government have no intention of agreeing to any additional bodies except those that are in the business of promoting inward investment.

There is no statutory reason why a body such as the one mentioned by the hon. Member for Jarrow (Mr. Dixon) should not receive Government assistance. However, I am bound to tell him that it is unlikely that it would receive such assistance and, secondly, that it is a matter for my right hon. Friend the Secretary of State for Industry. It is unlikely that such a body would receive Government assistance because the Government's view is that we shall best promote industrial development regionally. We do not believe that competing bodies for Government funds in one particular region will produce the most effective use of the funds. If my right hon. Friend accepts that special factors have arisen, the Bill when enacted will not prevent Government assistance. However, that is not the way in which we see the development of these measures.

If the West Midlands enterprise board were to change its activities so that it became eligible, paragraph (e) already gives the Secretary of State the power to provide grants to other bodies for the promotion, especially overseas, of other regions, and that could include the west midlands. I know that local authorities and other organisations in the west midlands are looking towards a regional body of that sort. My hon. Friend the Minister of State, Department of Industry met representatives of the West Midlands county council this afternoon and I am sure that that is one of the matters that they will have discussed. Obviously I do not know the outcome of the discussions.

I believe that there has been some misunderstanding of the announcement about my hon. Friend the Under-Secretary of State for Industry. He has not been appointed a Minister for the west midlands. His job is to oversee certain industrial initiatives which are the responsibility of his Department. My hon. Friend is a Member for a west midlands constituency and an experienced business man. I am sure that he will do a first-class job in encouraging a better understanding in the west midlands of a great many of the Government's initiatives which we believe are not being used fully—for example, the £100 million small engineering firms investment scheme and many other schemes which are being discussed with the chambers of commerce and local authorities which will come together in partnership to achieve a better use of the available facilities.

I do not doubt for a minute that the hon. Member for Jarrow is right when he says that the west midlands has suffered badly during the recession. The problems of the west midlands, as of the rest of Great Britain, are caused not by Government policies, but by years of falling competitiveness and high wage demands. Our policies are designed to reverse this downward trend and considerable progress has been made. There has been a substantial fall in the inflation rate; interest rates are down; wage demands are moderating and there is a marked potential for increased productivity.

The Government are giving considerable assistance to the west midlands under section 8 of the Industrial Development Act 1982, the microprocessor application project and the support for innovation programme. Areas of the west midlands suffering from dereliction which hinders industrial development are designated as derelict land clearance areas, which means 100 per cent. grants for approved clearance schemes. Birmingham, Wolverhampton, Sandwell, Knowsley and Coventry benefit under inner city policy. Dudley and Telford have enterprise zones. The best prospect for creating real long-term employment in the west midlands, as elsewhere, lies in the Government's policies designed to reduce inflation and to create the right environment for industry to regain its competitive position in world markets.

Mr. Cook

We have had an interesting debate on the amendment, albeit not a debate that touched much upon the west midlands.

My hon. Friend the Member for Vauxhall (Mr. Holland) represents an area whose state is every bit as grave, stressed, strained and suffering from industrial dereliction as any of the regions that we have hitherto debated during the proceedings on the Bill. It was right that he should remind us of that point. I hope that the time will come when there will be a regional development organisation for inner London at least on a comparable footing with some of the development organisations that are specifically named in the clause.

I am not sure that the Minister was entirely fair to my hon. Friend when paraphrasing what he said on this occasion. If the Minister was referring to the speech that I believe he was, it is fair to say that my hon. Friend was under some pressure from the usual channels to make the best use of his time at the most leisurely pace possible for reasons familiar to hon. Members. It may not be entirely fair to criticise my hon. Friend for the time that he took to make some excellent points. On this occasion I believe that my hon. Friend distinguished clearly between the different roles of promoting inward investment and rescuing and stimulating indigenous industrial development.

My hon. Friend made a relevant point that we had not previously considered—that much of the effort being poured into seeking inward investment, some of which is clearly and frankly competitive, could be better put into seeking outlets for the products of the industries that exist within the regions. My hon. Friend was right to make the point that the handling of the export drive of small and even medium-sized firms might best be done through some co-operative effort with some public agency assisting as midwife.

My hon. Friend put the point vigorously to the Minister that the provision in this clause is explicitly interventionist. The Minister will recollect that we teased him into making a lucid and vigorous statement on the interventionist creed. We have it on record. I am treasuring my copy of the report of that sitting of the Committee. On that occasion, the Minister made a clear and cogent statement of the case for intervening in market forces, and the appropriateness of the Government taking such action when market forces failed. On that occasion we were debating the rural areas. One of the regrets of those of us who represent urban areas is that the Government are more ready to intervene in market forces in agriculture than in manufacturing. Nevertheless, the principle of intervention was clearly conceded by the Minister, and we are treasuring that against a future occasion.

My hon. Friend the Member for Jarrow (Mr. Dixon) said that we should be seeking comparability for the west midlands not only with the four other regions named in the clause, but between the five of them and Scotland. As my hon. Friend knows, I must tread on eggs here because I am a Scottish Member. I put to my hon. Friend the point that we have discussed on the amendment about the distinction between the two types of industrial development—the promotion of inward investment and the stimulus of local, indigenous industrial development. Our great strength lies in the fact that the Scottish Development Agency now has wider powers and greater resources and experience to carry out what I regard as the important function of stimulating local, indigenous industrial development and has done so with great success. There have been mistakes and failures. We must recognise that, if we are to have a state agency assisting in industrial regeneration and development, inevitably the odd risk that is taken will not pay off.

Mr. Dixon

Does my hon. Friend accept that Scotland also has a Secretary of State who is prepared to resign if Ravenscraig closes? We have no such person if Redcar closes.

Mr. Cook

My hon. Friend is correct in his statement of the position. Some of us await with interest to see what will happen if that statement is ever put to the test. We are not necessarily persuaded that that alone will be sufficient to safeguard Ravenscraig, which, I assure my hon. Friend, remains under serious threat.

My hon. Friend and I labour under the same disadvantage. We represent two regions of these two great kingdoms which have the good sense to return a healthy Labour majority. If we could obtain similar Labour representation in other regions of Great Britain, our problems would be greatly minimised.

The Minister said yet again that the problems of the west midlands were the result of imprudent economic management over preceding decades. I notice that he left that subject to the end of his speech and skated over it swiftly. I believe, on the whole, that he was wise to do so. I find it profoundly unconvincing that we should be asked to accept that the 17 per cent. unemployment in the west midlands is the product of previous Administrations, be they Labour or Conservative, who managed to keep the level of unemployment in the west midlands to less than one third of that figure. Of course, other factors have contributed to the increase in unemployment. Of course, what has happened in the rest of the world is relevant. Of course, there may have been a failure to invest over the past decades. However, it would assist the nation to accept those alibis if the Government also admitted that a large part of that increase was the result of economic policies that they imposed on the region and that have hitherto failed to change, and show no sign of changing, by the appointment of a junior Minister with responsibility for the west midlands. The appointment, as I understand from the Minister's reply, is even more limited than we had understood at the weekend.

I regret that my amendment is so defective—it refers to a development body that is not four square with the others—that I cannot put it to a Division. The Minister's response on the nature of the problems in the west midlands and the lack of positive response in the Government's reaction to those problems richly deserve the opinion of the House to be expressed in the Division Lobbies. However, I recognise that the West Midlands enterprise board is not necessarily on the same footing as the others and may not be appropriate for insertion in the clause. Therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

7 pm

Mr. Cook

I beg to move amendment No. 6, in page 3, line 23, at end insert— '(d) a condition requiring the recipient to obtain specified grants from the relevant local authority'.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

With this it will be convenient to take amendment No. 7, in page 3, line 27, at end insert— '(6) The Secretary of State shall lay before each House of Parliament a statement concerning any condition imposed by him under subsection (4)(d) above'.

Mr. Cook

These amendments provide for the position, which was debated on Second Reading and in Committee, of the North-West industrial development association. The amendments follow the wording of subsection (4)(b), which provides for any accounts audited and presented by the organisation to be presented to Parliament. Therefore, I nurse a hope that these amendments will not turn out to be defective.

The amendments intend to provide a minimum of parliamentary scrutiny for any requirement that the Government may place upon the development organisations to match Government grant from local resources—in other words, from contributions from local authorities. It is precisely that requirement that has provided the greatest controversy in our debates on the Bill. The controversy springs from one of the earliest decisions of the Government to reduce the previous level of contribution by the Government to these development organisations. The level that the Government inherited from the Labour Government was based on a formula under which every £2 provided by the Government had to be matched by £1 from local authority resources. The Government altered that formula to the disadvantage of local authorities by obliging them to match each £1 of grant with £1 of local authority contribution. At the same time the Government carried out a brutal assault on the level of support to local authority expenditure, which has made it impossible for many local authorities to make their contribution to development organisation finances.

Here we come up against the point raised in an earlier debate by the hon. Member for Honiton (Sir P. Emery), who fairly and properly pointed to the absurd anomaly, which we witness time and again, of the Government urging local authorities to carry out specific functions, take particular actions and accept particular responsibilities, while cutting financial resources available to the local authorities and exhorting them to cut their manpower. The Government do not face the contradiction of exhorting local authorities to accept particular responsibilities and functions while imposing a straitjacket on them.

The consequence for the NWIDA in the past three years has been marked. It has been unable to take up the full grant offer from the Government because it has been unable to obtain from the local authorities in its area a matching contribution out of their diminished resources. Therefore, it would clearly be desirable if Parliament had the opportunity to scrutinise and, if necessary, debate whatever requirement was imposed upon development organisations by the Government in relation to contributions from local resources. That is the technical, and desirable, purpose of these amendments.

The main purpose of tabling these amendments is to give the House an opportunity to return to the NWIDA and the current state of play in its negotiations with the Government. Most hon. Members who are present today were present on Second Reading and in Committee and therefore it will not be necessary for me to provide a summary of the background for new readers. However, I can add something to what the Committee learnt when we debated this subject in early March.

I am delighted to say that since the Committee rose progress appears to have been made between the Government and the NWIDA. On 23 March the Government wrote to the NWIDA announcing that they had approved the programme for the current financial year. In passing, I point out that great difficulties are created for non-governmental organisations if their financial resources and programmes are secured only eight days before the start of the relevant financial year. This point was raised with the Minister several months before that financial year drew to a close.

More significantly, on 14 March the Minister of State, Department of Industry climbed down from his previous position. He has effectively offered to go to arbitration on the dispute between the NWIDA and the Government. He has told the NWIDA that he will accept a report by an independent firm of consultants, which has yet to be chosen, on how best £1 million could be spent in promoting industry in the north-western areas.

That is an encouraging sign. The sum of £1 million is substantially larger than the sum that was last on offer to the NWIDA. It is a figure that is broadly comparable to that offered to the North of England development council and it would appear to show that the Department of Industry is now prepared to concentrate on putting the NWIDA on the same footing as the NEDC, which is what it sought on its last application. This is a considerable advance on the position taken by the Government on Second Reading. I should like to think that one of the reasons why the Government have shifted their position so radically is the contributions to the debates in which we have ventilated this matter repeatedly.

In Committee the Minister proved himself fully briefed on the issue and I congratulate him on the effort to which he had plainly gone to obtain the brief from the Department of Industry on his position so that he could advise the Committee on the then state of play. In the light of what I have said, I think that he will acknowledge that there have been a fair number of developments and movements since we had that debate in Committee. I hope that he has had the same briefing from the Department of Industry as he obtained on that occasion.

These amendments should give the Minister the opportunity to bring the record up to date. I hope that he will be able to give us some insight into the shift in the Government's position and will be able to assure us that there is now a good prospect in the forthcoming financial year, if not the present one, that the NWIDA will attain the same status as that achieved by the NEDC.

Mr. Wakeham

I shall first deal with the two amendments and then do my best to bring the House up to date on the position of the NWIDA.

In the amendments, the hon. Member for Edinburgh, Central (Mr. Cook) seeks to do two things. Amendment No. 6 singles out as worthy for explicit mention the power of the Secretary of State to make the provision of funds by one or more local authorities a condition of grant-in-aid to a regional development organisation. Amendment No. 7 would require the Secretary of State to lay before Parliament a copy of any condition imposed upon him by amendment No. 6.

As the hon. Member for Edinburgh, Central said, there have been extensive discussions during the previous stages of the Bill on the present application of my right hon. Friend's power to impose a condition that a regional development organisation should draw matching funds from local authorities and the Government. It is clear that the Secretary of State has this power, but he does not always make this a condition if other arrangements are appropriate.

The spirit of the first amendment is to make explicit the power to impose that condition, but the amendment is not technically acceptable. It suggests, in effect, a precondition that must be agreed between the Department of Industry and the regional development organisation before the grant is handed over. The burden of subsection (4) and the three illustrative conditions that are spelt out there all relate to good practice in handling and accounting for the grants. The amendment is different in kind and not appropriate to subsection (4).

The burden of the argument on these two amendments was that any such conditions should be laid before the House. I assure the House that we intend to do this. We accept the desirability of letting hon. Members see copies of the conditions that are attached to these grants by the Secretary of State. For the current year, my hon. Friend proposed, in his written reply of 19 January announcing the grants, that copies of the conditions applying to the grants would be placed in the Library. This has now taken place. It has taken a little time because the Department of Industry had no wish to impose the conditions without consultation. Therefore, my hon. Friend wrote to the organisations, enclosing a copy of the conditions in draft, and gave them the opportunity to comment. Now that the texts are clear, they will be placed in the Library. This will demonstrate to the House that we shall be publishing the conditions. Hence, we believe that the amendment is not necessary.

The hon. Gentleman referred to the NWIDA. I can confirm in outline the bringing up to date of the story as he told it, but with a slight difference in emphasis which is important. I do not wish there to be any misunderstanding, particularly as I am a Treasury Minister and as this matter is being handled in detail by my hon. Friend at the Department of Industry. In view of our previous discussions, it is important that this matter should be made clear. My hon. Friend the Minister of State, Department of Industry has put to the chairman of the NWIDA a specific proposal for an independent study to establish how best the north-west might be promoted for industrial development. I hope that all concerned throughout the region will give the most careful consideration to this idea.

I understand that on 18 March the executive committee of the NWIDA immediately welcomed the proposal in principle. The NWIDA is currently seeking the views of local authorities and the new town development corporations. The proposal is for a study by an independent firm of consultants to consider how best the north-west could be promoted for industrial development on a budget of about £1 million per annum. It is not, as the hon. Gentleman suggested, arbitration as such. The consultants' fees are to be paid 75 per cent. by the Government and 25 per cent. by the NWIDA. There is no commitment on either side to accept the result of the study, but it has been proposed by my hon. Friend and accepted by the NWIDA as a constructive way forward. Everyone intends that the study should find a solution to what has proved to be a difficult problem in the past. I would very much welcome that solution, but it is right to put a Treasury caveat on it. It is not arbitration, as the hon. Gentleman suggested, but a study from which both sides hope a solution will be found.

Mr. Cook

I am grateful to the Minister for making that statement, with the approval, I presume, of the Department of Industry, if I may put it in those terms without causing offence to the great dignity of the Department of State that he represents. I am glad that a solution appears to be approaching in the NWIDA case. I recognise, in the light of what the hon. Gentleman said, that what is on offer is not perhaps binding arbitration, but it is not unfair to describe it as arbitration as both parties have agreed to involve independent advice. It does, as he said, offer a positive way out of the developing stalemate and I should like to think that our debates have contributed towards that. It is ironic that on this occasion the Minister has come further towards meeting the thrust of my amendments, which I tabled purely as a peg for a debate on the NWIDA, than on other amendments of a more substantive nature. I welcome his assurances that these conditions will necessarily be published and will be placed before the House. That is a positive and desirable step. In the light of the Minister's reply, I am perfectly satisfied to withdraw the amendment.

Amendment, by leave, withdrawn.