HC Deb 13 December 1983 vol 50 cc839-52 3.41 pm
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Norman Tebbit)


Mr. Harry Cowans (Tyne Bridge)

On a point of order, Mr. Speaker. I seek your guidance on an important matter. Would you accept a motion that the House should adjourn for five minutes so that hon. Members can be as well equipped as the press to deal with the statement about to be made by the Secretary of State?

Mr. Speaker

Before we become too excited about the matter, I remind the House that we have already heard what the Secretary of State has to say. It appears to be a long-standing practice, and I think that we should now proceed.

Mr. Tebbit

With permission, Mr. Speaker, I should like to make a statement on the Government's review of regional economic policy. I have today laid before the House a White Paper entitled "Regional Industrial Development", and my Department will publish shortly a factual background paper on the effectiveness of regional policy and other regional issues. The Government remain firmly committed to an effective regional policy. Although the economic case for regional industrial policy today is not clear cut——

Mr. Eric S. Heffer (Liverpool, Walton)


Mr. Tebbit

If the hon. Gentleman will listen, he may find out what I mean, if he is able to absorb it. —[Interruption.].

Mr. Speaker

Order. The Secretary of State has barely started.

Mr. Tebbit

Although the economic case for regional industrial policy today is not clear cut, and the economic costs of such policies must be set against the benefits, there remains a social case for regional industrial policy to reduce regional imbalances in employment opportunities.

Mr. Heffer

You can say that again.

Mr. Tebbit

I will say it again, if the hon. Gentleman tempts me.

The Government believe that there is scope to increase the effectiveness of regional policy and to achieve better value for money in the regions, with less adverse effects on the economy as a whole.

The White Paper sets out a new structure for regional industrial incentives, involving major changes to the regional development grants scheme. At present, RDGs overconcentrate on capital intensive projects and manufacturing industries. In future, we propose that they should be aimed more precisely at job creation. The new RDG scheme will be widened in scope to cover parts of the service sector, in addition to manufacturing. However, RDG will be payable only towards projects that provide, or modernise, capacity. Simple replacement investment will not qualify for RDG.

Grant will be payable as a proportion of capital expenditure, or as an amount for each new job created by a project, whichever is more advantageous to the investor. However, where grant is paid in respect of capital expenditure, it will be limited by a cost-per-job ceiling. For the sake of simplicity, small firms will be exempt from that limit.

These changes shift the payment of automatic grant assistance to projects that create jobs. In addition, the importance of selective assistance relative to RDGs will be increased. Relocation projects that offer no net increase in jobs will not normally be eligible for regional selective assistance.

Industry attaches great importance to the automatic and predictable nature of the RDG scheme. Therefore, grant will continue to be paid at standard rates, and by reference to published criteria. To avoid disruption or uncertainty arising from these changes, there will be a 12-month transition period from the introduction of the scheme before they take full effect. For projects that have already been offered selective assistance, RDG will continue to be paid under the old rules, not the new. The old rules, not the new, will apply for projects for which application has already been made, or is made before 31 January 1984, provided that an offer is made before changes to the legislation are brought into effect.

The regional investment role of the British Technology Group—which does not relate to its primary task of encouraging the transfer of technology — will be discontinued.

The White Paper invites views on number of issues: in respect of grant, which activities should qualify for RDG, what the rates of grant should be, and what the balance should be between automatic and selective assistance. On the assisted area map, views are invited on both the criteria for designation and on map coverage. The Government also welcome views on whether special measures should be taken in the assisted areas to encourage innovation and new firm formation. I would welcome written submissions before the end of May 1984 in order that they may be considered before decisions are reached.

Consultation has its price. A number of important decisions about regional policy will remain to be taken until after the consultation period. In particular, it is not possible now to announce the future geographical coverage of regional assistance or the amount of future regional expenditure. So far as coverage is concerned, the new map, when it is published, will be based upon more up-to-date data concerning travel-to-work areas now becoming available from the 1981 census returns.

The Government will introduce legislation as soon as possible to provide for the new scheme of RDGs outlined in the White Paper. Once the consultation process is complete, and the remaining decisions taken, the Government propose to lay the necessary orders, implementing all the changes simultaneously in autumn 1984.

In short, the new policy will ease the present unjustified bias against service industries, it will end the unjustified payment of expensive aid to projects that create few jobs in the assisted areas, it will minimise mere job shifting at taxpayers' expense and it will concentrate on better value for money in job creation in the areas of greatest need.

I am confident that the new framework will provide a firm basis for a more cost-effective regional industrial policy, benefiting the assisted areas more effectively with less adverse effects elsewhere.

Mr. Peter Shore (Bethnal Green and Stepney)

The Secretary of State will be aware that it is nearly four and a half years since his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), when he was Secretary of State for Industry, made a major statement on Government regional policy. Will the right hon. Gentleman confirm that there is not one region or sub-region in the whole of Britain where unemployment problems have not either trebled or doubled since his right hon. Friend made that statement? Is he aware that in July 1979, when his right hon. Friend last spoke, the worst unemployment in Britain, in the northern region, was about 8 per cent., but now in the region where there is least unemployment, the south-east, the figure is well over 9 per cent?

Does the right hon. Gentleman therefore agree that there can be no solution to the problem of regional unemployment and decline unless and until there is a major change in Government national economic policy? Within the framework of a changed national economic policy, the case today for a strong regional policy is greater than it has ever been. Will the right hon. Gentleman therefore assure us that, whatever changes emerge from the consideration and consultations on which he is about to embark, the level of regional assistance will not be reduced?

We shall consider carefully what the right hon. Gentleman said in his statement and the White Paper about changes in regional development grants. It is odd that the factual background paper that the right hon. Gentleman referred to at the beginning of his statement, which is about the effectiveness of regional policy and other regional issues, is not available now. I assume that it is precisely on the basis of that factual background paper that his proposals for making changes in regional development grant find whatever support there may be for them, which encouraged him to make his statement. There are many questions that we shall need to ask, but now I shall confine myself to four.

First, what value does the Secretary of State put on regional development agencies such as those which Scotland and Wales have most successfully used in the past few years? Does he intend to extend or have any proposals to extend them to regions in England where there is undoubtedly a great need, as unemployment is at a similar level?

Secondly, what part does the Secretary of State envisage local government playing in regional development, especially through local government enterprise boards? Thirdly, what thought has he given to the regional pattern of public expenditure? I refer to roads, railways, water supply and a range of other forms of public infrastructure, expenditure on which has a major impact on the prosperity of regions. Fourthly, does he intend to integrate major urban development and inner city policies with development aid policies? Does he intend to retain the existing structure of assisted areas, intermediate areas, development areas and special development areas?

The Secretary of State has come a little way since he expressed his philosophy about the regions in that famous phrase in which he advised people to "get on their bikes." The reality of his policy will be judged when we have studied carefully and debated, as I hope we shall have an early opportunity to do, the statement and the White Paper.

Mr. Tebbit

I shall try to respond to all of the right hon. Gentleman's points. First, of course I can confirm that, like other countries which experience a world-wide recession, we have had increased unemployment in the past four years. I imagine that the right hon. Gentleman knew the answer to that question.

The right hon. Gentleman was entirely right to imply that the best form of aid for regional economies is a healthy national economy. That is precisely why we intend that the new regional policy should be more effective than that which we have used until now and that it should operate at a lower cost to help the progress of the national economy.

The right hon. Gentleman asked about the background paper. I hope that it will be available shortly.

Mr. Heffer

How many jobs will that mean?

Mr. Tebbit

If the hon. Gentleman wants a job, I suggest that he goes and finds something constructive to do rather than just sit there yacking.

Mr. Heffer

How many jobs will that mean on Merseyside?

Mr. Tebbit

It would hardly have been sensible to publish all of the material that the Government have been considering recently.

The right hon. Gentleman asked whether we intend to introduce to England agencies on the Scottish or Welsh model. The answer is no.

The right hon. Gentleman asked what part local government would play. Its prime role is to keep down its expenditure and rate demands on businesses and to stop taxing businesses out of existence.

The right hon. Gentleman knows that the regional pattern of expenditure is not the subject of the White Paper. We hope that inner city policies will become more closely aligned with our other economic policies, but the most important thing to remember is that industrial regeneration is seldom started in the inner cities where urban aid is being used most. The prime purpose of urban policy is to restore the environment so that it is more attractive to business and residents.

We would welcome observations on the three tiers of aid structure from those who take part in the consultative process.

Sir William Clark (Croydon, South)

Does my right hon. Friend agree that most of our right hon. and hon. Friends would welcome a general debate on regional aid? Does he also agree that in many cases regional aid has not be as effective as it would have been had industrial aid been given throughout the country?

I am delighted as, I am sure, are most hon. Members that emphasis has been placed on the service industries as they are more labour-intensive than manufacturing industry. Will my right hon. Friend impress upon the Chancellor of the Exchequer the fact that, whereas we give 100 per cent. grants to manufacturing industry, the same amount of fiscal aid is not given to the service industries? Is it not high time our service industries enjoyed the same amount of capital assistance and tax allowances as manufacturing industry?

Mr. Tebbit

My hon. Friend is correct. We were wrong to have discriminated in our regional economic policies against the service industries. Of course, not all service industries will qualify for regional grants. [Interruption.] If the Leader of the Opposition thinks about it, there would be singularly little point, for example, in subsidising new greengrocers to come into an area in which there was already an adequate number of them. On the other hand, there would be good reason to assist, through regional policy, the setting up, for example, of software industry houses as a service industry in the assisted areas.

I am sure that my right hon. Friend the Chancellor of the Exchequer will listen carefully to all that my hon. Friend the Member for Croydon, South (Sir W. Clark) said about the tax structure relating to manufacturing and service industries.

Mr. Gordon Wilson (Dundee, East)

Is the Secretary of State aware that from 1977, when the Labour Government conducted a review of regional policy, Scotland's share of regional aid has declined by 40 per cent. in real terms? Although the right hon. Gentleman has not come to any specific decisions, there must be considerable worry underneath that cloak that Scotland will lose out. Will the right hon. Gentleman give a categorical reply to assure the Scottish people that in no circumstances will Scotland's share of regional aid be further reduced?

Mr. Tebbit

I could not possibly give an undertaking that anybody's share of aid would not decline further. It depends on the economic circumstances of the region. The hon. Gentleman knows perfectly well that Scotland has benefited enormously from the oil industry in recent years, which has eased its problems relative to those in many other parts of the country.

Sir Hector Monro (Dumfries)

Has my right hon. Friend considered the relationship between European aid grants and regional policy? Is he aware that in my constituency, which is probably the most afforested in the United Kingdom, forestry infrastructure grants are not available because it is not an assisted area? Is that logical?

Mr. Tebbit

The logic of the policy is that European regional aid is available in areas designated as assisted areas in this country. Such a policy seems to have a certain logic to me, as I think it probably will when my hon. Friend reflects upon it.

Mr. Robert Sheldon (Ashton-under-Lyne)

Is the Secretary of State aware that his remarks will be tested against the results that will be produced by the White Paper? Is he further aware that he had better be careful about manufacturing industry because in Tameside, which I represent, one quarter of manufacturing jobs were lost and more than 20 per cent. of the firms closed in the first two years of the previous Conservative Administration? We are dealing with a serious matter, and I hope that the right hon. Gentleman will consider the problems of manufacturing industry when he makes his final decisions.

Mr. Tebbit

Yes, indeed. I am sure that the right hon. Gentleman will also accept that, in all probability, there is a long-term trend towards a reduction of jobs in manufacturing industries because of technical change.

Equally, it seems that employment in the service sector will expand. To have a regional policy which acts only to assist manufacturing industries and not service industries is perverse.

Mr. Anthony Steen (South Hams)

Does not my right hon. Friend agree that instead of continuing to put public money into declining areas that private enterprise has left, in an attempt to reverse market forces, we should put the money where there is growth potential? That would he better than losing it in the ailing urban inner city areas.

Mr. Tebbit

I am sure that my hon. Friend noticed that at the beginning of my statement I said that we should be well aware of the cost of regional policy, and that we should now see it primarily as a social policy that is designed to ease the problems of those areas with the highest unemployment and to do what we can to reverse the imbalances. All social policies have their costs, and this policy has, too.

Mr. Eddie Loyden (Liverpool, Garston)

Is the Secretary of State satisfied with the progress made by the enterprise zone on Merseyside in regenerating industry and creating jobs? Will he take it from me that small businesses will not resolve the problem of mass unemployment on Merseyside? About 100,000 jobs have been lost on Merseyside, and they will not be mopped up by small businesses, or by tinkering with the economy.

Mr. Tebbit

I must agree with the hon. Gentleman in that, while the local authority in Liverpool behaves as it does, hardly any regional policy will solve Liverpool's problems.

Mr. Jim Lester (Broxtowe)

May I assure my right hon. Friend that his statement is most welcome and timely? It represents a far more intelligent basis for Government involvement in regional policy, provided that the net funds available do not differ from the practice of perhaps the past six years? Hon. Members will be aware that the net funds will greatly help job-related schemes, and will reduce the budget of the Secretary of State for Social Services.

Mr. Tebbit

The more people that we can get into work the more the problems of the budget of the DHSS are eased. If we can eliminate the excessive costs, particularly of some of the very capital intensive projects that have generated very few jobs, it will help to control costs. If we sharpen all the instruments needed, we can achieve our objectives at a lower cost. If we can do that, and so borrow and tax less, there will be a bonus for everybody, and not least for the unemployed.

Mr. Paddy Ashdown (Yeovil)

I welcome many aspects of the right hon. Gentleman's statement, and particularly the element that relates to an increased emphasis on job creation, as well as the extension of the system into the service sector. Indeed, I also welcome the White Paper, which this time gives us sufficient time to consult properly. However, the Secretary of State declined to give a commitment about the size of regional aid in each region. Will he then give a commitment about the global budget, and confirm that the Government do not wish the global resources that have been put into the support system to be diminished?

In the last major review, many rural areas with high unemployment were taken out the system and were removed from access to EEC grants. Will the right hon. Gentleman assure the House that rural areas with high unemployment will be more sympathetically considered when the new map is drawn?

Mr. Tebbit

I am not sure in what way the hon. Gentleman seeks to draw a distinction between expenditure on regional economic policy and what he called "global" support. I should make it absolutely plain that I expect the total cost of our regional economic policy to be lower in future than it has been in the past. [HON. MEMBERS: "Ah!"] That is the second time that I have said that, so I do not see why Opposition Members should be surprised. Like all other areas, rural areas will fall to be considered for inclusion or exclusion as the new map is drawn up, and in the light of our consultations.

Sir Peter Mills (Torridge and Devon, West)

Is my right hon. Friend aware that some of us in the south-west are very glad that he is continuing the regional aid policy? From experience, we know that it has been of tremendous benefit. Is he further aware that we welcome the extension into the service industry? Will he make it clear that he will hold the widest consultations about what needs to be done, as experience on the ground in the remoter areas can greatly help?

Mr. Tebbit

I am grateful to my hon. Friend for his remarks. Of course we want to consult widely, and that is why we shall receive comments until May. I understand, of course, that the regional policy is welcomed in the south-west. That is not surprising, as it is a beneficiary in cash terms. Of course those who are not beneficiaries but who are primarily financers of the policy—that is, those in the non-assisted areas—may look at the policy with a slightly more jaundiced eye, but I am sure that they will accept that there is a cost to every social policy.

Mr. Tom Pendry (Stalybridge and Hyde)

Is the Secretary of State aware that if he had met the deputation from Tameside council today, which he cancelled in view of his statement, he would have heard a very powerful case being made for assisted area status? He would have heard that unemployment in Tameside is as high as in the west midlands, that one in four children is in receipt of free school meals, and that one in four householders is in receipt of rent or rate rebates. As the Government have described Tameside as the most deprived area outside London not to be in receipt of assisted area status, what comfort will his statement give the people of Tameside?

Mr. Tebbit

The comfort that my statement should give to the people of Tameside is that, if they find themselves eventual beneficiaries of the policy, by being included within the area of coverage, they will find it more finely tuned to job creation than the previous policy. If, on the other hand, they still find themselves outside the area, they will at least have the consolation of knowing that the whole policy is being operated at a lower cost, and thus at a lower cost to them as well. Like most people, they stand to gain either way.

Mr. Fred Silvester (Manchester, Withington)

Does my right hon. Friend recall that on a previous occasion his hon. Friend the Minister assured us that, when the review was undertaken, all Departments would be considered, and that it would not simply be a matter of that part of regional policy which was on his vote? That is particularly important in respect of inner city policy, for example, where patches of aid lead to great local dislocation. Can my right hon. Friend assure me that all Departments have participated in the review, and that the Government are prepared to consider a regional policy across the whole range of activities, rather than a policy that is confined simply to the Department of Trade and Industry?

Mr. Tebbit

I think that I can best answer my hon. Friend by being short. Yes.

Mr. Bernard Conlan (Gateshead, East)

Is the Secretary of State aware that for many years all responsible opinion in the north of England has recognised the need for a development agency? Did that view play any part in his consideration of the matter? Will the right hon. Gentleman accept that many of us are suspicious when he talks about getting value for money, because that term, when it comes from this Government, is synonymous with a cost — cutting exercise, which would lead to fewer jobs not more?

Mr. Tebbit

The hon. Gentleman misunderstands the extent to which regional policy in the past has been a policy of moving jobs from one part of the kingdom to another rather than of creating a net additional number of jobs. Of course the methods that we have used through regional policy to attract inward investment have undoubtedly brought about a net increase in jobs. But I doubt whether many people today, particularly those who belong to the body which the hon. Gentleman calls "responsible opinion", believe any longer that jobs are created by public expenditure. The former Prime Minister, the right hon. Member for Cardiff, South and Penarth (Mr Callaghan), gave up that proposition a long time ago when he was in office.

Several Hon. Members


Mr. Speaker

I fully appreciate that the statement covers virtually every constituency. I should like to call as many hon. Members as possible, and so I propose to allow questions to continue until 4.30 pm. I hope, however, that that will contribute to shorter supplementary questions.

Mr. Nicholas Winterton (Macclesfield)

While I welcome many of the aspects of my right hon. Friend's announcement this afternoon, may I refer to the comment made by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) about the importance of manufacturing industry, which creates the real wealth of this country? Will my right hon. Friend pay particular attention in his package to the needs of the textile and clothing industry, which is the fourth largest employer in this country? It could well be that much funding will be required by that industry merely to maintain its existing work force, if it is to remain competitive, rather than to add to the work force, which seems to be the fundamental basis behind his announcement today.

Mr. Tebbit

My hon. Friend will see that the statement is not based on sectoral aid to industry and it is nondiscriminatory between one aspect of manufacturing industry and another. I want it to be less discriminatory between the manufacturing and service industries. It is not immediately obvious to me at any rate that it is necessarily more virtuous or more wealth-producing to manufacture ladies' home-perm sets than to run a ladies' hairdressing salon.

Mr. Dafydd Wigley (Caernarfon)

Does the Secretary of State accept that many of us in Wales will see his statement as a curate's egg. Will not the good parts, such as the extension to the service industry, be diluted to some extent if, as in paragraph 49 of the White Paper, the Government are looking for opportunities to reduce public expenditure? We find it difficult to see how there can be an extension into all those other new areas if the overall amount of money is to be cut. Will the Government include consideration of the principle of additionality with regard to EC funds to ensure that there are additional benefits for those areas that receive them? In applying his mind to the issue of the relocation of industries, will he appreciate that a company employing 200 people in an area with 30 per cent. unemployment may be of greater benefit overall than one in an area where there is only 4 per cent. unemployment?

Mr. Tebbit

On the latter point, the hon. Gentleman should try to convince the 200 people who lose their jobs in the area with 4 per cent. unemployment. They are 100 per cent. unemployed at the time they lose their jobs and they might not think that his point was terribly helpful.

On overall expenditure, if the hon. Gentleman takes the view that one can never get better value for money, he might be right. I take the view that one can get better value for money. The hon. Gentleman will notice when he reads the White Paper that we have put a cost-per-job limit on aid, which is extremely helpful in getting better value for money. We have also excluded from aid mere replacement projects, which again is helpful. There are ways of saving money as well as new ways — for example, in the service industry—of spending it.

On additionality, we have a satisfactory arrangement that is working extremely well.

Mr. William Powell (Corby)

Is my right hon. Friend aware that, as a result of decisions taken by Opposition right hon. Members, unemployment in my constituency rose to about 25 per cent. and that, as a result of the policies of the present Government, it has been steadily falling so that it now stands at 18 per cent.? May I assure my right hon. Friend that his statement will be welcomed in my constituency and among my constituents and that the emphasis that he has placed on the social policy in providing jobs will be particularly welcomed?

Mr. Tebbit

I am grateful to my hon. Friend. Of course I am well aware of the effects of Government policies—the previous Conservative Government's policies as well as those of the present Government—on employment in Corby in particular. It is not just Government policy that has been helping to bring jobs back to Corby. It is in very large part due to the initiative of all the people of Corby who have shown what can be done by a city or a town which goes out determined to sell itself and the quality of its people. They have brought the jobs back to Corby and they deserve every congratulation on their success.

Mr. Derek Foster (Bishop Auckland)

If the Secretary of State believes that there is no economic case for regional policy, is that not because his Government's policies have made the whole country into a development area? Does he appreciate that all the jobs gained under regional policy during the 15 years up to 1979 were wiped out in the first two years of the Government's first term of office? Does he appreciate that people in the northern region will be deeply suspicious of his statement because they will understand that it is a cloak of respectability for spending less money on the regions and for disbanding the regions altogether?

Mr. Tebbit

If the hon. Gentleman checks, he will see that I have said that the case is less clear cut on economic grounds and that it is now seen as being primarily on social grounds. The hon. Gentleman said that previous gains had been wiped out, but I must remind him that under the Labour Government there was a fair amount of wiping out while unemployment was being doubled. I must also remind the hon. Gentleman that, since 1979, the whole world has been through a severe recession and the extent to which we have suffered more greatly than many others is not least because of the accumulated inefficiencies of British industry and commerce, the excessive rates of taxation which have been imposed, and the excessive rates of inflation which had been caused by the Labour Government's spending policy.

Mr. Hal Miller (Bromsgrove)

Will my right hon. Friend accept that in the west midlands, which has the fastest rising rate of unemployment in the country, the lowest wages per head, the lowest output per head and the highest dependence on manufacturing, the welcome for his White Paper will be conditioned by the extent to which it reduces discrimination against the west midlands and help for the modernisation of our industry?

Mr. Nicholas Winterton

My right hon. Friend does not want to maintain jobs in manufacturing industry; he wants to open hairdressing salons instead.

Mr. Tebbit

In response to my hon. Friend the Member for Macclesfield (Mr. Winterton), I should say that not only do I have no intention of opening a ladies' hairdressing salon but I would be precluded from taking an interest in such an operation while I was a member of the Government.

I fully understand the points made by my hon. Friend the Member for Bromsgrove (Mr. Miller). He, like me, will have taken some encouragement from the early signs of the recovery in the west midlands as noted by the unemployment figures which were issued in the past week or two.

Mr. Ken Eastham (Manchester, Blackley)

Is the Secretary of State aware that the Government's aid strategy has been a complete disaster for the north-west, where assisted area status has been taken away from places such as Manchester and Salford? Is he further aware that even today a deputation is visiting the House from GEC, Trafford Park, where there now remain about 5,000 or 6,000 workers where once there were 25,000 workers? The work is now going down to Rugby and Stafford, and the Trafford Park industrial estate, the first one in Britain, is now an industrial desert. What will the Secretary of State do about that?

Mr. Tebbit

The answer to the hon. Gentleman's first question is no. The answer to his last question is that the Government will continue with their economic policies. I hope that the hon. Gentleman will ask himself what more he can do to help reduce our costs in industry to make industry more competitive with those abroad. The hon. Gentleman could conceivably be more helpful than he sometimes is.

Mr. Robert Hicks (Cornwall, South-East)

Does my right hon. Friend agree that the nation as a whole has a social and economic responsibility to the less well endowed parts of our country? In that context, while acknowledging the importance that my right hon. Friend places on the link between aid and job creation, may I ask whether he agrees that regional aids can play as important part in job maintenance as it can in job creation?

Mr. Tebbit

Yes, of course aid can play a part. That is why there will be provision through the regional aid system to assist companies in the regions, or those going to the regions, to finance new processes, new equipment and so on. I find myself in agreement with my hon. Friend, as ever.

Mr. Nicholas Winterton

Why did my right hon. Friend not give me that answer earlier?

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

Will the Secretary of State confirm that since the global amount is to be reduced, and since the present criteria which favour Scotland are to go, today's statement is very bad news for Scotland? As the right hon. Gentleman is against spending public money just to move jobs around, can he tell the House exactly how he will prevent firms like Gomba, after two years free rent at public expense, from moving Stonefield truck production from Cumnock where unemployment is extremely high, down to the enterprise zone in Rochester in the south-east of England? How will he prevent that?

Mr. Tebbit

When regional aid is paid and the conditions are not adhered to, a clawback operates for five years. I understand that the company which the hon. Member mentioned felt that it had been badly treated locally in a number of ways, particularly by the local authority.

Mr. Foulkes

That is nonsense.

Mr. Tebbit

I am not saying what the facts are, but what I understand the company feels. The hon. Member cannot say that he knows better than I what I understand. He should consider whether the area should have tried to make itself as attractive to that company as the area to which it has moved. I cannot understand which criteria are being altered so that they are damaging to Scotland.

Mr. Michael Hirst (Strathkelvin and Bearsden)

Is my right hon. Friend aware that his statement will be widely welcomed in Scotland, where much concern has been expressed about the indiscriminate use of money for regional development grants? Is he further aware that the CBI in Scotland has called for a positive policy of cost—effective selective regional assistance, which includes aid to service industries, which have an impressive record in job creation? Does my right hon. Friend agree that the proposed consultation process on regional policy is infinitely preferable to the damaging changes of policy such as the Labour party pursued when it precipitately cancelled the regional employment premium?

Mr. Tebbit

Yes, indeed. It is clear that the Government have set about making changes in policies in a more constructive and considered way than the last Labour Administration, with their chopping and changing. I am well aware of the wide welcome that is likely to be given to the proposals by responsible opinion in Scotland.

Mr. David Penhaligon (Truro)

Is tourism a service industry in terms of the White Paper? Does the Secretary of State recall exchanges in the House during which he said that mines in my constituency did not qualify for regional development grant because they were not mobile? Does the mobility clause in the White Paper mean that in future mines in Cornwall will receive regional development grant?

Mr. Tebbit

Not necessarily. Technology goes a long way, but the concept of mobile mines is not yet with us. There are reasons why extractive industries are not usually supported in the same way as other industries. I have said that certain classes of service industries will attract support. Which classes are included is a matter for consultation.

Mr. John Watson (Skipton and Ripon)

Can my right hon. Friend confirm that the present system of regional development grants and selective assistance has not only had the effect of subsidising the transfer of jobs from one part of the country to another, but sometimes the transfer of jobs from one development area to another? Is he aware that his intention to change that will be welcome? Can he say a little more about how that intention will be put into effect?

Mr. Tebbit

Principally, in future selective financial aid will not normally be paid in respect of mere transfers when no net increase of jobs is involved. Secondly, in future RDGs will not be paid when there is merely a movement of jobs from one assisted area to another. I hope that that will be helpful in reducing the amount of job shuffling at public expense.

Mr. Roy Hughes (Newport, East)

I appreciate the need to obtain value for money, but is it not rather callous to try to cut regional aid when between 3 million and 4 million people are unemployed? Does the Secretary of State not appreciate the traumatic experience of areas such as south Wales where many thousands of redundancies have occurred, particularly as a result of steel closures? Is the right hon. Gentleman not aware that such areas are still desperately trying to pick up the pieces and need a bit of continuity?

Mr. Tebbit

I do not think that the policy is callous, because a substantial number of the 3 million unemployed are not in areas which are in receipt of regional aid, but are in paying and job-exporting areas. One must consider them as well. We must maintain a balance. Surely it is right to ensure that we spend our money with care arid seek the best value for it.

I note what the hon. Gentleman says about south Wales. It has been through some extremely difficult times with the decline of the Welsh mining industry, particularly because of the narrow seams which are no longer economic to exploit. We must remember that south Wales has had a spectacular success in attracting inward investment, not least because of the great efforts by my hon. Friend the Secretary of State for Wales, who was on the Bench beside me until a few moments ago.

Mr. John Ward (Poole)

Is my right hon. Friend aware that his answer about job-exporting areas will be welcome in constituencies such as mine? Is he further aware that many of us believe that regional economic aid does not create jobs, but represents a net cost to the taxpayer rather than a bonus?

Mr. Tebbit

I note what my hon. Friend says. Many hold the view, as he rightly says.

Mr. Michael McGuire (Makerfield)

I had given up all hope of being called. Is the Secretary of State aware that his reply to my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) means that the Government intend to perpetuate the disadvantages experienced by the English regions? Is he further aware that it is not quite true to say that jobs are shifted only within the United Kingdom? Does the right hon. Gentleman agree that the regional policy means that the Scottish and Welsh Development agencies have the funds to attract jobs from abroad? Those agencies often take full-page advertisements in our national newspapers describing their spectacular successes. If those funds are not available to the English agencies—I am speaking for the northwest region—they are at a considerable disadvantage. Will the Minister look at the position?

Mr. Tebbit

I shall certainly examine what the hon. Gentleman has said, but he should not underestimate the amount of inward investment that is brought into England as well as Scotland and Wales by use of RDGs, selective financial assistance and the efforts of those who go abroad seeking to persuade foreign companies to invest in Britain generally. There are regional development agencies, including the North-West Industrial Development Association, which receive Government assistance.

Mr. Shore

I believe that the Secretary of State realises that these exchanges have brought out and confirmed the central piece of bad news that the Government, at a time when regional unemployment is at its highest level for 50 years, are to cut regional employment aid. That is the Government's message. [Interruption.] The Secretary of State has said that there is to be a further cut beyond the £100 million to £200 million cut that was announced in 1979 by his predecessor.

The Secretary of State said a great deal about cost effectiveness, and in principle applied cost effectiveness to particular items of regional aid. We have no objection to that, provided that it is done thoroughly and honestly. I encourage the Secretary of State to apply cost effectiveness to Government expenditure generally on unemployment. Is he not aware that he was talking about a sum of about £900 million on regional development aid of all types, as opposed to the direct and indirect costs of about £17,000 million a year to sustain the army of unemployed in idleness? In those circumstances, is it not simply nonsense and a disgrace even to be contemplating further reductions in the amount of regional aid?

Mr. Tebbit

In short, I do not. It is imperative that we receive the best value for our money and that we do not spend more than the economy can afford on any of those items.

My hon. Friend the Minister of State has said to me that he thought that at one stage in an answer I used the letters "RDGs" as opposed to "selective financial assistance" in referring to the limits on what could be paid when projects were moved between one region and another. I shall check the Official Report and ensure that I have used the correct expression.

Mr. A. E. P. Duffy (Sheffield, Attercliffe)

On a point of order, Mr. Speaker. As a new regional policy statement has just been made, will you explain why not one Opposition Member or, so far as I can recall, one Conservative Member, representing the Yorkshire and Humberside region has been called, whereas five Opposition Members from the north-west region have been called?

Mr. Speaker

The hon. Member knows that this is an extremely difficult task. He is really saying that he has not been called. I do my best to balance questions.

Mr. Foulkes

On a further point of order, Mr. Speaker. In answer to my question the Secretary of State attacked the Cumnock and Doon Valley district council. I know the facts about Gomba. The company's only quarrel was not with the Cumnock and Doon Valley district council, but—

Mr. Speaker

Order. That is not a point of order, but an argument with the Secretary of State.