§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Maude.]
1.43 am§ Mr. Tony Speller (Devon, North)I have spoken on similar lines in the past on Ilfracombe harbour in February 1983, on regional aid for north Devon in November 1984, on the need for aid for Ilfracombe marina on 25 April 1985, and now today, a year later, on the ineligibility of north Devon and the south-west for access to the European regional development fund, which would be so vital to our area.
North Devon lost assisted area status following the statement on 30 November 1984 by my hon. Friend the Financial Secretary to the Treasury, who was then Minister of State, Department of Trade and Industry. My hon. Friend mentioned the 35 per cent. of the country still covered by assisted area status, and said:
I do not think that it would make any sense to raise that percentage to 40 or 45 per cent." — [Official Report, 30 November 1984; Vol. 68, c. 949.]On that occasion, I voted against the Government, having several months earlier supported the enabling legislation nationally. Change is inevitable, but it should be logical change.The Minister of State referred several times in that statement to travel-to-work areas as the basis upon which development maps are built. I pay tribute to Devon county council, North Devon district council and the Ilfracombe and District Development Committee, all of which have worked hard towards regaining some form of assisted area status, and all of which support me this evening. I also pay tribute to the Ilfracombe Harbour Development Group and the Ilfracombe and District Hotel and Catering Association, which, together with our North Devon Manufacturers Association and the chambers of trade and commerce, have worked in their specific ways for growth and prosperity.
When seeking more aid, it would be wrong not to mention some of our specific industries that have bucked the trend and expanded in hard times, hoping for profit as matters improve. Firms such as Sussmans, Shapland and Petter, Carpenters Workshop and many others, would be a credit to any other part of the country, but it is essential that we retain them in our area. I pay tribute to the work force of north Devon, from messenger to managing director and from shopkeeper to shop steward. Ours is an area where we work together in the common interest, with industrial disputes a rarity.
In November 1984, when my hon. Friend the then Minister of State made his statement to the House, he told us in so many words that although times might be hard in the south-west, they were much harder in Merseyside, Scotland and the west midlands. As a result, the finite funds available were to be given to more industrially depressed areas than north Devon. It was no secret that the Government had made that choice, and it is nonsense to suggest that there was some Euro mystique about the decision or the percentages involved. Before the changes, about 28 per cent. of the United Kingdom population lived in a development or assisted area. Later, the figure was 35 per cent. Within those figures, some areas, like mine, had fallen out, and others, like that of my hon. Friend the 506 Minister of State, Department of Trade and Industry—my hon. Friend the Member for City of Chester (Mr. Morrison)—had the good fortune to fall within the new assisted areas. There was some illogicality here and there.
I voted against the Government on the specific variation which removed most of the south-west from assisted area status, because that status is the key to our locked-out prosperity. Without such status, an area does not have access to European regional development fund grant aid. ERDF money helps the South-West water authority with reservoir construction, Devon county council with road construction and places such as Ilfracombe with much-needed harbour development schemes. With that pump-primping, many good things can happen. Without it, projects trickle out instead of coming flooding in. Less well known in the House, but equally important, is the fact that the Government direct Government business to firms in assisted areas. North Devon has lost out in that respect, despite being highly competitive in price and delivery.
Today, we were visited by workers from Appledore shipyard and other shipyards. Appledore is in the constituency of my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills), who is sadly absent today due to ill health but who supports what I have to say about his constituency. Appledore shipyard has nearly 650 workers and is due to lose nearly 100 of them. A little help from the fund could have enabled work to come to the yard which, although not in my constituency, employs many of my constituents.
I have set out the stall of north Devon at some length. It is an attractive stall full of saleable goods, but it lacks the investment essential for the stallholder to prosper. We are an area of small business and industry. I have mentioned Appledore. Only one other firm — the excellent and world-famous door specialist Shapland and Petter—employs over 600 people in my constituency or that of my hon. Friend the Member for Torridge and Devon, West. We are small business and what is big to us is small beer in the rest of the country.
The unemployment figures show 3,000 out of work in Ilfracombe, but that conceals the fact that 49 per cent. of those aged between 16 and 24 are jobless. Half the young work force without work is as bad as anywhere in the country, yet Ilfracombe could mop up at least half that number if we were given the funds to develop the harbour on a coastline where there is no safe harbour:or north Somerset, north Cornwall and north Devon and nowhere for the south Wales sailors to sail to in safety when the Bristol channel weather is bad.
Tourism is too often looked down on in the industrial world, but the West Country tourist board reported to us only last week that a mere £5,900 will produce a new full-time job in catering and tourism, and the holiday season could be extended, given investment in what could be called non-sun activities. Even in north Devon, the sun does not shine all day and every day.
Since north Devon lost assisted area status, we have had virtually no inward investment, while along the M4 and M5 corridor areas are increasingly prosperous because of easy access to centres of population. In north Devon, our link road is still "pending". On 23 April I was told by the Under-Secretary of State for Transport that an answer on the inquiry on stage 2 would be given as soon as possible—that marvellous governmental phrase which means as little as possible. My hon. Friend the Minister of State, Department of Trade and Industry confirmed or. 13 May 507 that a review of regional policy will take place this year. That is the key to my argument. My part of the world is a great self-help area, but we cannot finance from sparse local resources the sort of job creation schemes that are needed.
If the Government are to reconsider the assisted area status map, which provides access to ERDF funding—it is not always understood that unless an area has some form of status it does not have access to European funds—it will not be understood in my part of the world if we do not have that access. The prosperity of Bristol, nonsensically considered by Governments of all colours to be the head office of the south-west, improves the figures for Devon and Cornwall. In exactly the same way, the horrific unemployment figures of Ilfracombe were recently massaged into the bad, but not so dreadful, figures of Barnstaple.
I suggest that my right hon. Friend the Secretary of State stops depending so much on the travel-to-work area. That is illogical in sparsely populated rural areas. He should base his thinking on the more logical criteria used by the Department of the Environment and the Development Commission. Those criteria include above average unemployment, an inadequate range of employment opportunities, an outward migration of working age people—neither of my grown children can find a job in my constituency—a population bias towards the eldery and poor access to services and facilities. Every one of those criteria is met in north Devon.
Yet over the past few days, the tin industry in Cornwall, shipbuilding, ship repairing and the small boat businesses of Devon, and the problems of our major industries of agriculture and tourism all fill in the colour red for danger over the future prosperity of my part of the world.
Circumstances change so quickly and drastically. In July last year, Ilfracombe's youth unemployment was 31 per cent. In January this year it was 50 per cent. In July last year, overall unemployment was 20 per cent. By January this year it was 33.5 per cent. Bideford has 30 per cent. unemployment and the Barnstable figure is 22 per cent.
Earlier today, my right hon. Friend the Secretary of State for Trade and Industry made two valid points in the debate on the shipbuilding industry. He said that most shipbuilding areas have the advantage of being in an assisted area, with the access to funding that that brings. Secondly, my right hon. Friend said that a great deal of public money was to be spent through various agencies to help those made redundant from shipbuilding. He also said, in answer to an intervention from me, that it is not easy to alter the boundaries of the development area map. Appledore in north Devon is an efficient, highly productive, under cover, year-round yard. It should be included in a development area because every other shipyard is included in a development area. I suspect that during the review in November 1984, north Devon was probably one of the last areas to be excluded from any formal status. I trust that it will be one of the first back.
§ Mr. Anthony Steen (South Hams)rose——
§ Mr. Deputy Speaker (Mr. Harold Walker)Does the hon. Member for South Hams (Mr. Steen) have the consent of the hon. Member for Devon, North (Mr. Speller) and the Minister to speak?
§ Mr. SpellerYes, Mr. Deputy Speaker.
§ The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher)Yes, Mr. Deputy Speaker.
§ Mr. Anthony Steen (South Hams)First, I pay tribute to my hon. Friend the Member for Devon North (Mr. Speller) for his customary robust and powerful speech on behalf of his constituents and, as important, the whole of Devon and Cornwall. He has done a great service by raising this important matter, even at this late hour.
I should like to make two observations. First it is now well known that regional aid distorts. It persuades firms and businesses to go to areas to which they would not normally go. I speak as a former Merseyside Member of Parliament with experience of how harmful regional aid was to that area. It persuaded car manufacturers to come to Merseyside, but as soon as the economy went into reverse and they encountered problems, they immediately pulled out of the areas in which they had received regional aid. Firms in areas which qualify for regional aid pull out like that because they have the least money to lose. The concept of regional aid must be looked at carefully.
My second point is that in areas like Devon and Cornwall rural deprivation is aggravated by regional aid, because it persuades people living in rural areas to search for work in urban areas which are declared assisted areas and receive funds from Europe to provide jobs. This deprives rural areas of jobs. Rural deprivation is aggravated by the placement of assisted areas in large urban conurbations.
If the purpose of the regional fund is to give larger sums of money to smaller geographical areas that have been redrawn to make them smaller, that is a mistake. There is overwhelming evidence that the more public money we pour into declining areas, the more it accentuates and accelerates their decline. One must place public funds where there is a partnership with private funds, and that means not just in declining, ailing large industrial conurbations, but in areas of growth. The map should be redrawn so that aid is not concentrated in areas that are in decline, but is provided in areas that are growing or arresting the decline.
In that context, my hon. Friend the Member for Devon, North has performed a great service, because he has pointed out that areas like his and mine in south Devon should be included. They are not large industrial conurbations at the end of their lives: they have a future and are areas of great growth. We need the help of Europe to make those areas grow faster and create more jobs. I should like to hear what the Minister has to say, and I know that the House will welcome him to the Dispatch Box and hope that he will be able to say some helpful and constructive things.
§ The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher)I should like to thank my hon. Friends the Members for Devon, North (Mr. Speller) and for South Hams (Mr. Steen) for bringing this subject before the House. It is a tribute to their tenacity that not only tonight but on previous occasions they have sought to defend their constituents' interests by seeking Adjournment debates.
509 I join my hon. Friend the Member for Devon, North in his commendation of the work force in the south-west of England in general and in his constituency in particular. That work force is noted for its moderation, diligence and excellent record as a wealth creator in services and manufacturing. My hon. Friend the Member for Devon, North graciously spoke about the support of my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) who is indisposed and cannot be here tonight. I am sure that he will read the Hansard report with interest. My hon. Friend the Member for South Hams and my hon. Friend the Member for Devon, North spoke eloquently about rural deprivation.
Although this is not the sort of debate in which one should take issue with colleagues, I am sure that my hon. Friend the Member for South Hams will agree that most forms of regional aid — whether section 7 or development area assistance — involve just such a partnership. In other words, there is a minority percentage of money going in from the public sector which means a greater proportion of private sector spend. Where possible, we try to incorporate the idea of a partnership between the public and private sectors when it comes to the deployment of funds for the support of investment of one sort or another.
I repeat my thanks and those of the House to my hon. Friends for presenting this opportunity of debating the important issue of the application of the ERDF to north Devon and the south-west of England generally.
Under ERDF rules, assistance is normally available only for areas receiving domestic regional aid. We have rehearsed these arguments on previous occasions. The main areas in the United Kingdom that are eligible for ERDF are, therefore, the assisted areas. Thus it can be seen that eligibility for the ERDF reflects United Kingdom domestic regional priorities and this leads me to two main aspects underlying present ERDF eligibility in Devon and Cornwall.
First, there is the assisted areas map. Changes in the assisted areas map announced in 1984 resulted, for the reasons that I stated earlier, in changes in ERDF eligibility for parts of north Devon and the south-west of England. Perhaps I could refer to the map review by saying a few words about travel-to-work areas—a core point raised by my hon. Friend the Member for Devon, North—and their importance to regional policy.
The new assisted areas map reflected the most recently identified employment needs of the country, because the basis of the map was the new TTWAs. The assisted areas map is based on TTWAs because they are the closest available approximations to self-contained labour markets covering the whole country. We do not pretend that they are perfect, but they are the closest approximations. They are therefore the best available basis for nationwide comparison of relative need for employment opportunities.
TTWAs are also the smallest areas for which the Department of Employment publishes rates of unemployment. Data on community patterns based on the latest census in 1981 became available in 1984 and formed the basis of a review of TTWA boundaries carried out by the Department of Employment. The procedure adopted in the review identified "job foci"—wards or groups of wards with concentration of employment—and then attached to these those wards with which there are strong commuter 510 flow links in order to meet the self-containment criteria of the percentage level of those both living and working in the area.
As my hon. Friends are aware, the Government undertook a fundamental review of our regional policy in 1984. There was a wide measure of consultation with interested parties outside Government and nearly 500 submissions were received from organisations and individuals. As a very important element of that review, we amended the assisted areas map so that it should more closely reflect the areas of greatest need and changes in the pattern of employment since the previous review. Before deciding which areas should receive assisted area status, we looked at a variety of objective indicators.
The parts of Great Britain that have suffered particularly severely from the effects of the recession are those which, as my hon. Friend the Member for Devon, North identified, have had a high dependence on traditional industry. We looked at industrial and occupational structures in order to assess in which areas this was most particularly a problem.
I listened carefully to my hon. Friends and understand the arguments that they deployed as well as the development problems of their constituencies. No doubt those development problems may figure in some future consideration of a map, but I cannot say tonight when this review will take place.
We also considered the levels of those economically active and growth in labour supply to gain an indication of the future size of labour markets. The final two criteria we considered were an urban indicator and distance from main markets, again factors to which my hon. Friends referred.
My hon. Friend the Member for Devon, North will see from this that the designation of assisted areas was an issue which was given a great deal of careful thought. On the basis of the objective criteria that we considered, we could not justify continuing Devon and Cornwall's assisted area coverage at its previous level in preference to the relative needs of other parts of the country.
§ Mr. SpellerI am grateful to my hon. Friend for giving way and also for his full description. I have a letter of 13 May, signed by my hon. Friend the Minister of State, which says that there will be a new review during This year. I just bring to the attention of my hon. Friend the Parliamentary Under-Secretary that, whether it be in tin or shipbuilding, there have been fundamental changes since the review two years ago.
§ Mr. ButcherI am coming to that point almost immediately. In those areas of Devon and Cornwall which remain assisted, since the introduction of the new policy offers of regional selective assistance of nearly £6 million have created 1,300 jobs, while regional development grants of £600,000 have created 217 jobs.
I am fully aware of my hon. Friend's concern, which he has expressed on many occasions, but there is nothing that I can usefully add at this stage to what he has already heard. We are carrying out a review of the administration of regional policy with the objective of ensuring that the schemes operate with maximum effect and economy from the point of view of both user companies and staff operating them. As my hon. Friend will undoubtedly be aware, there are many other hon. Members who also claim 511 —many with vehemence—to have the most pressing case for their areas to be upgraded or reinstated as assisted areas.
§ Mr. SteenPerhaps my hon. Friend could feed in to his Department the point that I was trying to put across. The criteria for assisted area status might be considered as well. By concentrating on the rundown areas, one is pulling work away from areas which are not yet run down.
§ Mr. ButcherMy hon. Friend made that point clearly in his concise speech. When in due course the policy is re-examined, that will be a factor for consideration and the same historical criteria that have been used on previous occasions may not necessarily be used. This may be the occasion when he and I should take issue on the so-called mature or declining areas and those which he believes are yet to go into decline unless something is done. Coming from an erstwhile urban environment, he will recognise that there are still urban parts of the country which look forward to an industrial renaissance, albeit very much with their own private sector and locally based initiatives being at the heart of it. We must entertain hopes that there will be such combustion in the so-called mature industrial areas.
I must re-emphasise that, while we shall, of course, listen to all representations, it would have to be a very strong case indeed to justify adjustments which could have repercussions elsewhere and undermine the stability of the present assisted area map. Such stability is essential to the success of a policy intended as an incentive to private sector investment.
I now turn to the second aspect of the related question on which I have already recently given my hon. Friend a parliamentary answer and on which I had an exchange recently in the House with the hon. Member for Dunfermline, East (Mr. Brown) That is the role of the European Commission in the decision about the working population coverage of the assisted areas map as a result of the 1984 regional policy review. I appreciate that this question has been the source of much concern recently in the south-west and so perhaps I could again take the opportunity of relating to the House the circumstances of our decision.
As a Community member state we are under an obligation, under the provisions of articles 92 and 93 of the treaty of Rome, to obtain the approval of the Commission for any proposed changes in regional aid systems. If changes are implemented without Commission approval, the Commission may demand repayment of any aid granted illegally.
512 As a result of the last regional policy revision in 1984, the United Kingdom Government decided on various changes to our systems of regional aid. One of the main features was an increase in the assisted area coverage of the working population in Great Britain to 35 per cent. Before formal notification, the United Kingdom undertook informal discussions with the Commission on the proposed changes and, as a result, had good reason to believe that the Commission would not approve any map that went beyond 35 per cent. without undertaking a major appraisal of United Kingdom regional aid. That could easily have resulted in a decision by the Commission to force a cut to below 35 per cent. Bearing that and other considerations in mind, the United Kingdom Government decided to introduce an assisted areas map covering 35 per cent. of the working population of Great Britain. That was of course an increase from 27 per cent. at the outset of the review. It was officially notified to the Commission, which raised no objection.
The legal obligation to obtain the Commission's approval would apply to any future changes in United Kingdom regional aids that the Government might wish to make. We have no reason to believe that the Commission's views on assisted area map coverage have since altered.
As a consequence of the Government's decision in 1984 on the assisted areas map, those areas that lost assisted area status, because we did not feel they merited preferential treatment over the rest of the county, also lost eligibility for the ERDF. They did not lose assisted area status just because they were outside the 35 per cent. coverage. A number of other areas excluded from the map were worse off, in terms of the objective comparisons which were made, than some of the areas in Devon and Cornwall which lost assisted area status. Such areas would thus have had stronger uses for inclusion if coverage had been widened.
This has been an unusual Adjournment debate because it has been justifiably introduced as a means of seeking to obtain clarification and, indeed, to exert pressure on behalf of constituents. In due course, the coverage and criteria of assisted area maps may be further considered. Whay my hon. Friends have said tonight will have to be referred to in such a course of action. However, I cannot say when that will happen. All I can do is thank them for their sense of timing and tenacity in defending their constituents' interests.
§ Question accordingly agreed to.
§ Adjourned accordingly at twelve minutes past Two o' clock.