HC Deb 27 January 1988 vol 126 cc302-4
10. Mr. Malcolm Bruce

To ask the Secretary of State for Scotland if he will give the latest estimate of the number of jobs created by regional development grants in Scotland since 1984.

Mr. Lang

Revised regional development grant has been associated with the creation of over 25,000 jobs in Scotland since 1984. The old regional development grant scheme was not linked directly to job creation.

Mr. Bruce

While the Government's proposed changes will be welcome in areas such as mine, where we do not have access to regional development grant, will the Minister nevertheless acknowledge that the lack of automatic availability of grant could be at considerable cost to Scotland in terms of investment in the coming year? If there is to be a programme of selective assistance, will he ensure that the criteria are fully understood and appreciated so that investment is not driven away because people have to wait too long before they know whether they will get assistance?

Mr. Lang

I am grateful for the fact that the hon. Gentleman welcomes some of the provisions in the recent enterprise initative. He will have noted that Aberdeen is one of the areas where a higher rate of consultancy assistance grant will be payable. The take-up of applications available under the selective assistance scheme will depend entirely on the number of applications forthcoming. We intend to publicise the scheme widely to ensure that the funds available are taken up.

Mr. McLeish

Will the Minister reflect on the fact that he has reduced expenditure on regional development grant from £170 million in 1986–87 to £66 million in the current year? That is against a background of three points: first, manufacturing employment in Scotland has fallen below 400,000 for the first time this century; secondly, the figures in the MSC "Labour Market Quarterly" report of November 1987[Interruption.]

Mr. Speaker

Order. Do not read them, please.

Mr. McLeish

The figures show that in terms of the 10 economic units in the United Kingdom, Scotland has had the smallest increase in the number of employees between June 1986 and 1987, and the biggest reduction in manufacturing jobs in any economic region in the United Kingdom. Can the Minister take pride in such a background when cutting regional development grants?

Mr. Lang

I do not recognise the background that the hon. Gentleman describes. In the first place, the proportion of regional aid coming to Scotland has risen from 20 per cent. in 1979 to over 30 per cent. now, and, in the second place, the background is one of falling unemployment and rising investment, manufacturing output and manufacturing productivity.

Mr. Bill Walker

Does my hon. Friend agree that if regional aid as practised by successive Governments since 1945 had been successful, as is claimed by the Opposition Benches, the areas of high relative unemployment would not be the same today as they were immediately after the war? The sad fact is that the areas of high relative unemployment are much the same, so the system obviously does not work. Therefore, the new system that is being introduced must at least be an improvement on what has gone on in the past.

Mr. Lang

My hon. Friend is absolutely right. It is not without significance that the Labour Government cut the industrial programme in the Scottish block allocation by 13 per cent. during their last three years.

Mr. McAllion

Does the Minister realise that the automatic availability of regional development grant played an important part in Ford's decision to locate its latest plant in Dundee, thereby bringing 400 desperately needed jobs to an area of high unemployment? Does he share the people of Scotland's view that, in the fiercely competitive business of attracting major inward investment projects into areas of high unemployment in Scotland, it is essential to get the total package of incentives right, so that we can out-compete areas such as Spain? How are we to do that if that total package is gravely weakened by the removal of automatic regional development grant from development areas such as Dundee?

Mr. Lang

The successful attraction of Ford to Dundee had nothing to do with the availability of automatic regional development grant. The company would have been equally entitled to regional selective assistance and the package available to it could have been exactly the same. The fact is that inward investment, which is such an important and successsful part of our economic industrial policy in Scotland, will not be jeopardised by the changes that we are making.

Mr. McLoughlin

Will my hon. Friend, as a Minister in the United Kingdom Government, give some thought to how many jobs have been created by regional aid and how many jobs have been switched from various parts of the United Kingdom? Is he aware that there is deep resentment in Belper, in my constituency, where jobs were lost when English Sewing, part of the Tootal group, was switched to Scotland? Jobs are important in every part of the United Kingdom, not just in Scotland.

Mr. Lang

My hon. Friend is right to point to one of the disadvantages of regional assistance, when it simply moves jobs around the country. A recent study, which has been published, shows that about 600,000 jobs have been created, but 150,000 of them have subsequently been lost. That is a strong argument against automaticity and in favour of a more selective approach.