HC Deb 23 March 1983 vol 39 cc865-72 3.31 pm
The Secretary of State for Northern Ireland (Mr. James Prior)

I will with permission, Mr. Speaker, make a statement on the Government's new economic initiative for Northern Ireland.

The House will need no reminding of the unique combination of severe economic and social problems in Northern Ireland. In recognition of those exceptional circumstances, the Government have decided to introduce several new measures to stimulate industrial growth and to assist viable industrial employment in Northern Ireland.

First and foremost, the Government have decided to introduce a new grant that will reimburse new and expanding industries up to 80 per cent. of the corporation tax paid on profits generated by approved projects. That grant will form part of the selective financial assistance packages administered by the industrial development board and by the local enterprise development unit.

A measure of that sort has been widely urged upon us by the Select Committee on Trade and Industry, by the Northern Ireland assembly—which yesterday endorsed a constructive report on industrial incentives—by the industrial development board and by many others. It will be a major new attraction to potential investors.

Secondly, and again in recognition of Northern Ireland's unique economic problems, the existing 75 per cent. derating of industrial premises will be increased to a full 100 per cent. That will both help new investors and bring valuable immediate relief to existing enterprises. Parliament will shortly be asked to approve an order giving effect to that derating from the beginning of the next financial year.

Thirdly, an energy conservation scheme will be introduced to encourage industry to increase efficiency and competitiveness. Grants at the rate of 30 per cent. will be offered on a selective basis towards the cost of approved energy conservation projects.

Finally, the Government intend to introduce two further schemes designed to improve competitive strength and efficiency. There will be a management incentives scheme, which will provide grant aid in appropriate cases to companies to help them recruit good-quality management, and an advisory service to industry will be established to help Northern Ireland companies to improve their production methods and processes.

Those measures reflect the advice the Government have received, especially from the industrial development board. I am confident that they will assist the board in its vital task of helping to conserve and create employment. A vital contribution is also being made by the local enterprise development unit, whose new plan for the creation and development of small businesses I approved last year.

Those specific Northern Ireland measures will reinforce the Government's more general steps to assist industry and the economy. Reducing interest rates and the successive reductions in national insurance surcharge will have as valuable an impact in Northern Ireland as in the remainder of the country.

During the last few years the Government have accorded first priority to programmes designed to assist industry in Northern Ireland. As we have shown in these allocations, and further demonstrated with the measures announced today, the Government will play their part in supporting and promoting the economy of the Province. But a heavy responsibility lies on the people themselves, on their industrial, commercial and labour leaders, and on their public representatives, to bring home just how exaggerated and distorted is the impression which so many outsiders have of the Province. We look to them to demonstrate to the industrialists of the world that Northern Ireland is worthy of their confidence and their investment.

Mr. J. D. Concannon (Mansfield)

Is the Secretary of State aware that unemployment in Northern Ireland stands at almost 21 per cent.? Therefore, the initiatives—albeit minor—are obviously welcome. Indeed, they are long overdue. Does the right hon. Gentleman realise that the one thing of which I could never accuse the Government is shutting the stable door after the horse had bolted? The Government burned down the stable many months ago in Northern Ireland.

Is not the first half of the last paragraph of the right hon. Gentleman's statement an insult to the people of Northern Ireland? Is the right hon. Gentleman aware that Government Monetarist policies are mainly to blame—not the people of Northern Ireland? The Opposition took action when unemployment stood at 10 per cent. in Northern Ireland, which I found highly unacceptable. Is the right hon. Gentleman aware that at that time there were more people employed in Northern Ireland than ever before?

Have not the Opposition been calling for urgent action on the economy for many months—as have the trade unions in Northern Ireland? Does the right hon. Gentleman realise that Northern Ireland has become a country of ghost towns? In Carrickfergus and Strabane unemployment stands at more than 50 per cent. Are not those towns tragic examples?

The Opposition hope that the measures announced will do something to arrest the decline of the economy of Northern Ireland and bring hope to a population afflicted by the twin evils of unemployment and poverty. But is the right hon. Gentleman aware that much more will be required if the economy is ever to recover fully?

In the short term, could not a great deal more be done to boost the construction industry? Will the right hon. Gentleman say something about energy conservation? Grants of 30 per cent. will be offered on a selective basis to approved energy conservation projects. How does he envisage an expanding coal market in Northern Ireland, and how will that benefit from the proposed measures?

Will not those who benefit most from the measures be not the people of Northern Ireland—or of Ireland as a whole—but the entrepreneurs who, as I have found, have played the North against the South in the search for higher grants and greater incentives? Do not the Government now realise that the competition between the two halves of Ireland for inward investment benefits neither? A job created in the South is a job opportunity lost in the North, and vice versa. Do the Government agree that economic co-operation between the North and the South is common sense?

Would not a joint working party established by the Northern Ireland industrial development board and the Republic's industrial development agency help to ensure that a job created in Ireland was a job for Ireland? I urge the Government to follow those steps and examine the possibilities for greater co-operation with Dublin. Do the Government appreciate that never were jobs more vital to any part of this country or Ireland than they are in Northern Ireland—not only for the jobs themselves, but for the political atmosphere?

Is the right hon. Gentleman aware that there is 13 per cent. unemployment in my area? I thought that I would never see that day in my lifetime again. However, it must be viewed in the Northern Ireland context of towns with more than 50 per cent. unemployed. I cannot jib at these extras for Northern Ireland, but I wish that four years ago the Government had carried on the policies of the Labour Administration. If they had, Carrickfergus and Strabane would not have found themselves in the mess that they are in today.

Mr. Prior

I thought that that was rather grudging support from the right hon. Gentleman. Had we continued with the Labour policies, Carrickfergus would have suffered exactly the same problems. The House may wish to be reminded that the percentage of unemployed doubled while the right hon. Gentleman was responsible for Northern Ireland, and was increasing at the end of his period of office.

Simply pouring money into rather dubious projects will not solve the problems of Northern Ireland. The right hon. Gentleman asked me specifically about the energy conservation projects. I am placing fuller details of those schemes in the Library. They are designed to help industry to conserve energy in an area in which energy costs are at the top of the scale compared with the rest of the United Kingdom.

I am all in favour of economic co-operation with the South, but one of the purposes of the package is to make it clear to industrialists in Great Britain that there are ample opportunities and advantages in investing in the North of Ireland as opposed to the South, where there has been greater investment from Great Britain in the past few years.

Mr. J. Enoch Powell (Down, South)

With reference to the concluding part of the right hon. Gentleman's statement and to the injudicious remarks of the right hon. Member for Mansfield (Mr. Concannon), is the right hon. Gentleman aware that no economic initiative will be of lasting value in Northern Ireland unless the Government desist from the series of political initiatives that have occupied the lifetime of this Parliament, which are in contravention of the election undertakings of the Conservative party, and of which the consequence is all too clearly seen by the people in Northern Ireland to be the opposite of that which they intended?

Is the right hon. Gentleman aware that he has done well to avoid the trap of a variation in tax levels between one part of the United Kingdom and another and to seek to achieve his purpose by means of a grant rather than by variation in tax? Furthermore, is he aware that the total industrial derating will assuage the grievance that was felt by firms which were on the boundary of the new enterprise zone but not within it?

Mr. Prior

I am grateful for the latter part of the right hon. Gentleman's question, but in relation to the first part of his question I urge him, as a man who could have considerable influence in Northern Ireland, to use his influence more constructively than he has done in recent years. The right hon. Gentleman's views are not on the whole supported by the people of Northern Ireland and his continued expression of them does no good either to Northern Ireland or to his reputation.

Mr. John Page (Harrow, West)

Does my right hon. Friend agree that the remarks of the right hon. Member for Mansfield (Mr. Concannon) were 50 per cent. De Lorean and 50 per cent. Mitterrand, and that that mixture is a cocktail for disaster? Would my right hon. Friend also accept that the measures that he has outlined today should be successful, if the security situation improves?

Mr. Prior

Clearly, the political and security situation has been one very important reason for the lack of industrial inward investment over the past few years, but I believe that there are, and have been, great advantages in inward investment in Northern Ireland, particularly in view of the very good industrial relations there and the excellent productivity of Northern Ireland workers. I therefore hope that these measures will have a major impact.

Mr. Stephen Ross (Isle of Wight)

This is a generous package which is worthy of a positive response. I echo the right hon. Gentleman's call to local leaders in industry and politics in Northern Ireland to take the initiative. It would be a good idea to give greater emphasis to the creation of worker co-operatives in the areas of highest unemployment, such as those referred to by the right hon. Member for Mansfield (Mr. Concannon). What is the likely response, and what is the estimated cost of the measures?

Mr. Prior

The estimated cost of the two measures —the energy conservation scheme and the 100 per cent. industrial derating—is about £9 million to £10 million. It is impossible to say what the cost of the corporation tax relief grant will be, but it will certainly not cost very much in the early years and it is specifically related to increased employment. A company that wished to take advantage of it would have to show not only that it was increasing employment but that it was engaged in an arm's-length operation, away from any of its other operations in Great Britain or other parts of the world.

We would support the creation of local co-operatives, and they could be supported through the local enterprise development unit. I have no political hangups about giving support to co-operatives, if they come forward.

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

The Secretary of State said that he was all for economic cooperation. [HON. MEMBERS: "Reading."] If I cannot read my notes of the statement, how can I make my points to the Secretary of State? Does the Secretary of State agree that the incentives for new projects and the advisory service to industry could only benefit from co-operation with the Dublin Government, who have had such demonstrable success in respect of the former and far more success than we have had in this country? Has the right hon. Gentleman also assessed the employment impact of his measures in the areas of highest unemployment?

Mr. Prior

No, it is impossible to assess the employment contribution that the measures will make, but it will be considerable. I accept the point about competition between North and South. One of the reasons why we have introduced the measures is to bring company taxation far more into line with what is on offer for inward investment in the Republic of Ireland without damaging the integrity of the United Kingdom tax system.

Mr. Nicholas Winterton (Macclesfield)

I warmly welcome the constructive package announced by my right hon. Friend, especially the energy assistance and the industrial derating. Will he assure the House that never again will large sums of taxpayers' money be given to companies, especially those with proprietors from overseas, without adequate security for the taxpayer? In that connection, does my right hon. Friend agree that the remarks of the right hon. Member for Mansfield (Mr. Concannon) were ill judged, bearing in mind that the British taxpayer lost a huge amount of money as a result of the Labour Government jumping into bed with a man who could not be trusted and should never have been trusted?

Mr. Prior

I generally find the remarks of the right hon. Member for Mansfield (Mr. Concannon) well judged, but I thought that they were ill judged today. One of the advantages of the corporation tax relief grant is that a company must be making profits before it can take advantage of it. That is entirely in tune with our philosophy and may avoid some of the problems experienced in past years through supporting companies of rather dubious profitability. I hope that a combination of the new industrial development board and the work done by the assembly will ensure that money spent in Northern Ireland is spent to good effect.

Mr. Reginald Freeson (Brent, East)

The Secretary of State referred to great opportunities being created for inward investment by the private sector. Is he aware that there are great opportunities for inward investment by the Government? Does he agree that the biggest single economic generator is the construction industry and that the way to get things moving in Northern Ireland, as elsewhere in the United Kingdom, is through a massive injection of investment into the construction industry, beginning with a major housing programme to include construction of new houses and improvement and rehabilitation of older houses? What steps are proposed to achieve that?

Mr. Prior

I do not know when the right hon. Member for Brent, East (Mr. Freeson) was last in Northern Ireland. There is a massive housing campaign now with about £400 million for new and improved housing. That is far more than in any other part of the United Kingdom, so we are giving a great deal of help to the construction industry in Northern Ireland.

Nevertheless, simply pouring in more and more Government money will not solve the problems of Northern Ireland. It already receives a far higher proportion of aid—between £1,000 million and £1,200 million—than any part of the United Kingdom. The proportion of gross domestic product supplied, as it were, by the Government is far greater than elsewhere. Northern Ireland now requires the development of good, sound manufacturing investment which can support a highly skilled work force and is privately oriented and not dependent on Government support.

Mr. R. C. Mitchell (Southampton, Itchen)

Although one welcomes the proposals, will the Secretary of State explain why they were not introduced at least two years ago? How do the proposals compare with the equivalent incentives provided in the Republic?

Mr. Prior

It is always possible to argue that these measures should have been introduced in the past but the fact is that they are being introduced now. I believe that they will be generally welcomed. They follow very much the advice that has been given to us by the new industrial development board which has been set up for only about six months. These measures, taken with the other measures which are available to assist industry in Northern Ireland, now make Northern Ireland the most attractive place for investment in the whole community and possibly in the whole of the Western world.

Sir Kenneth Lewis (Rutland and Stamford)

May I congratulate my right hon. Friend on the undoubted influence that he now has in the Treasury? I take it that a certain amount of dampness is creeping in there at this late stage. Having expressed pleasure for what has been done for Northern Ireland, may I ask him to use his influence on behalf of many places on the mainland where we could do with some derating of industry because industry has been caned by some of the high rates on this side of the water?

Mr. Prior

I am grateful to my hon. Friend for what he has said but even he will accept that, great though the demands may be on this side of the water, the problems of Northern Ireland are unique and have to be treated in a unique manner.

Mr. Arthur Lewis (Newham, North-West)

Further to the Secretary of State's reply to the hon. Member for Macclesfield (Mr. Winterton), the right hon. Gentleman will know that, with regard to profits, accountants are very good at producing anything one wants. What action will be taken to ensure that the initiative is properly monitored and that we do not have more De Loreals? Will the House check it from day to day? Will the Government require Northern Ireland Members to check it or will they leave it to people in the Northern Ireland Office who appear not to do their job properly and allow such things to go on?

Mr. Prior

It is De Lorean, not L'Oreal, which, as the hon. Gentleman will know, is a cosmetics firm.

Mr. Nicholas Winterton

So was De Lorean —cosmetic.

Mr. Prior

The hon. Member for Newham, North-West (Mr. Lewis) is on to a perfectly serious and important point. It is important that checking should be adequate to ensure that there is no room for abuse. We shall have to draw up tight arrangements. They must not be so tight as to put people off using them, but the hon. Gentleman is on to a serious point. I have already consulted the Inland Revenue, and we will be setting up a special monitoring organisation.

Several Hon. Members

rose—

Mr. Speaker

Order. I propose to allow questions until 4 pm, when I shall call Front Bench spokesmen, but whether everyone is called will depend on the length of questions.

Sir John Biggs-Davison (Epping Forest)

When there are such difficulties and when such efforts are being made by my right hon. Friend, the IDB and private enterprise, might one not expect the British Broadcasting Corporation to have shown itself, if not helpful, at least objective in its "Panorama" programme insultingly called "Britain's Wasteland"? Has my right hon. Friend had any conversation with the governors of the BBC about the programme, which was so unbalanced and distorted and dwelt so much on the negative and not on the positive?

Mr. Prior

I agree very much with what my hon. Friend has said. I am taking an early opportunity to talk to the BBC about it.

Mr. Robert Parry (Liverpool, Scotland Exchange)

what discussions has the right hon. Gentleman had with the Northern Ireland committee of the Irish Congress of Trade Unions and when does he expect next to meet the committee? Does he not agree that any economic proposals must be discussed with and supported by the committee? As the Member responsible for the Transport and General Workers Union membership in Northern Ireland, I fully support the view taken by my right hon. Friend the Member for Brent, East (Mr. Freeson) concerning a massive programme of reconstruction in the building industry.

Mr. Prior

I shall be seeing the committee early next week.

Mr. Bob Cryer (Keighley)

But would not the Secretary of State accept that the Government's initiative amounts to intervening in the market place and that market forces are not providing jobs in Northern Ireland? Perhaps he could draw it to the attention of the Secretaries of State for Industry and Employment that market forces are not working in the rest of the United Kingdom either.

Will he spell out what type of projects will receive the 80 per cent. corporation tax allowance? Will they include those projects which already receive 100 per cent. corporation tax allowance plus grant aid? What sort of grant aid is to be given to recruit managers? Should this not be carefully scrutinised? The Opposition wish to see jobs created everywhere, but we do not wish to see money given needlessly. Would not Mr. De Lorean have qualified for grant aid to recruit managers?

Mr. Prior

Mr. De Lorean certainly would not have qualified for aid for making profits. To that extent, this corporation tax relief grant is specially designed to encourage profitable companies, and not the reverse. As for the aid for managers, it has proved difficult in a Northern Ireland context to attract managers of the right quality. We believe that we can help individual companies, as part of a package of aid, to subsidise certain managerial posts to attract them to Northern Ireland. Anything that we can do to make Northern Ireland more attractive will be of aid to industry there.

Mr. Leslie Spriggs (St. Helens)

Is the right hon. Gentleman aware that unemployment anywhere is a recipe for disaster? As the Government can govern neither their own country nor Northern Ireland, is he prepared to propose to the Northern Ireland people that they take over the autonomous government of their own country, or to ask all of the people of Ireland whether they are prepared to take over their own country and run the economy of Ireland as one country?

Mr. Prior

No, Sir.

Mr. D. N. Campbell-Savours (Workington)

In what sense are the "severe economic and social problems", which the right hon. Gentleman described as being of an exceptional nature, any worse than those in other parts of the United Kingdom such as the northern region, where unemployment is higher?

Mr. Prior

There may be pockets of unemployment in Great Britain which are as high as the average in Northern Ireland, but there are pockets in Northern Ireland which are considerably higher than anywhere else. They are also accompanied by a degree of violence, which, thank heavens, is not present in Great Britain. There are exceptional circumstances and conditions in Northern Ireland which should make the House sympathetic to the special treatment that we are seeking to accord.

Mr. Dennis Skinner (Bolsover)

How has this post-Livingstone initiative managed to get past the Milton Friedman litmus test that is operated by the Government? If there is sufficient money available, will the Government bear it in mind that it would be a good idea to get hold of that bloke MacGregor and send him across to Northern Ireland to run the scheme?

Mr. Prior

On the latter point, I can only say that I was extremely grateful to Mr. MacGregor for placing an order with Harland and Wolff for a large ship for the British Steel Corporation. I should like very much for him to come back to Northern Ireland to place a few more orders. If the hon. Member for Bolsover (Mr. Skinner) does not know a good man when he sees one, I do.

Mr. Concannon

Is the Secretary of State aware that I said that the unemployment rate in Northern Ireland under the Labour Government was unacceptable? At the same time, if the Secretary of State has not been advised, he should be advised that there were more people in Northern Ireland at work during that period than ever before. It was found that with the hope of the Government trying to do something to provide jobs, more people were registering for work than ever before. I am sometimes amazed by the stance of the right hon. Member for Down, South (Mr. Powell), who says one thing in this House but whose actions back in his constituency are exactly the opposite. I never found that he complained about public money going into his constituency to create jobs for his people. If the Opposition can be pilloried for anything, it is that they paid money for people to work and not for people to languish in the dole queue and for unemployment benefits. Will the Secretary of State answer the main question? What type of jobs and how many jobs will the package attract to Northern Ireland?

Mr. Prior

I cannot answer that question because I simply do not know the answer. The result will depend entirely on inward investment. I do not know what attitude others will take to inward investment but I suspect that the absence of local taxes and the equivalent of 10 per cent. corporation tax for companies making a profit will be pretty attractive to incoming investment. To that extent, I believe that the scheme will have a marked effect on unemployment levels. Much will depend on the attitude of employers, inward investors and the people of Northern Ireland themselves. I am satisfied that the people of Northern Ireland deserve this break and I think that they will take full advantage of it.

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