HC Deb 13 July 1988 vol 137 cc348-51
7. Mr. Murphy

To ask the Chancellor of the Duchy of Lancaster if he has any plans to introduce new measures to increase industrial activity in Britain's regions.

Mr. Kenneth Clarke

My Department's enterprise initiative, launched earlier this year, is specifically designed to encourage enterprise and economic growth in all parts of the country.

Mr. Murphy

Bearing in mind that we now have the lowest and least generous industrial regional incentives for many years, with the completion of the Channel tunnel and the introduction of the single European market in 1992, will not south-east England become even more congested and overheated at the expense of other regions?

Mr. Clarke

Too many people in the regions place excessive emphasis on automatic subsidies to capital investment as an instrument of regional policy. We have abandoned the automatic regional development grant and are making very good use of selective regional assistance in order to encourage firms that would not otherwise become involved. In south Wales, the Valleys initiative of my right hon. Friend the Secretary of State for Wales is giving a further boost to development there. South Wales is one of the parts of the United Kingdom that are reviving most strongly, with a very encouraging level of investment, many new jobs and steadily declining unemployment.

Mr. Batiste

Does my right hon. and learned Friend agree that one of the most effective ways of encouraging regional industrial development is by improving the transport infrastructure available to industry? Does he further agree that the biggest boost he can give west Yorkshire industry at the moment is to support the creation of a freight depot at Stourton and rapid transit from it, through the Channel tunnel, into Europe?

Mr. Clarke

I shall certainly draw that point to the attention of my right hon. Friend the Secretary of State for Transport, because I agree that the right transport infrastructure is essential. One thing that has happened is that northern England's economy has revived so rapidly that all of us can see the result of that in traffic congestion. There is a great demand for more railway freight services, and we must rapidly respond to it.

Dr. Reid

Do not the Scottish steelworks make a major contribution to industrial activity? I put to the Minster the point that I made yesterday. The House has been misled by discrepancies in statements made by the Minister and by Sir Robert Scholey. Will the Minister take the opportunity today to make sure that the House is no longer misled, and will he confirm or deny Sir Robert's assertion that, some time ago, the Government were advised by him of the "probability"—I use Sir Robert's word—of the closure of the hot strip mill at Ravenscraig? If that information was given to the Minister, why was it suppressed and not given to the House of Commons in the past few months?

Mr. Clarke

I have looked again at what I said in December, and at what Sir Robert Scholey said. I can see no inconsistency, and I do not understand what all the fuss is about in Scotland. In December I gave the House the forecast of the British Steel Corporation that, subject to market conditions, there was a continuing need for steel to be made at Ravenscraig for at least the next seven years. I also told the House that there was a problem with hot strip mill capacity, and that I therefore could not say the same about the hot strip mill, but that it would certainly be required until the end of this year. After that, as I made clear, everything will depend on market conditions. It is for the chairman and management of BSC to make their judgments about those conditions. As far as I am aware, BSC has as yet made no plans about the hot strip mill, and I do not imagine that it will do so until it sees the state of the market next year.

Mr. Oppenheim

Surely the best new measure for the regions would be to alter the employment policy of the Transport and General Workers Union, which seems to put employment in the prosperous south-east above jobs for the unemployed in Dundee—although Opposition Members still seem keen to accept the union's sponsorship.

Mr. Clarke

I would acid to my hon. Friend's legitimate complaint the union's entirely irresponsible attitude towards the Government's employment training schemes for the unemployed. It seems only too anxious to frustrate the Government's concern to help the unemployed to obtain the new jobs that we are creating. I should have thought that it is only the union's role as a kingmaker in the Labour party that stops it being denounced by more people on that side.

Dr. Godman

Industrial activity in my region of Scotland would be enhanced if the Government responded sympathetically to the floating hotel project being negotiated by Scott Lithgow. What is the present state of the negotiations with the Department of Trade and Industry?

Mr. Clarke

I can add nothing to what the hon. Gentleman already knows. We have well-established rules applying to shipbuilding projects, under which intervention fund support is available to certain yards and always has been. We also insist that any Government support must be based on economic common sense and at a price acceptable to the taxpayer. As far as I am aware, no negotiations on the Scott Lithgow project have yet come to a head.

Mr. Sackville

Is my right hon. and learned Friend aware that the economic attractions of the north-west have never been greater, and that the massive investment in fibreglass making by Pittsburgh Plate Glass near Hindley Green is a good example of an American company realising that? Does he agree that the only thing likely to stop that favourable trend is the emergence of further loony Leftism among local councils?

Mr. Clarke

I am glad to say that my Department gave considerable help to Pittsburgh Plate Glass. I agree about the attractions of the north-west, where we find that the take-up of the new enterprise initiative is higher than would be expected. In view of the number of eligible firms, there is a great deal of inward investment. We need to get rid of the last councils that remain hostile to this kind of investment and take foolish actions that discourage investors from coming in.

Mr. Salmond

Would the Minister care to address the impact of the dismemberment of Ravenscraig, on industrial activity? How can he argue that the continuing anti-Ravenscraig bias shown by Sir Robert Scholey is in any way compatible with his claim that Ravenscraig is somehow in genuine competition with other steel plants? Does the Minister really believe that, through privatisation, the Government can wash their hands of such a disgraceful betrayal?

Mr. Clarke

I can never understand why Scottish interests so often lead to descriptions such as "the dismemberment of Ravenscraig" when nothing of the kind has happened. In December I gave a careful assessment based on British Steel's own forecasts of its needs and of the market place. That made our position clear, and nothing has changed since then. We can say only that the future of the hot strip mill is guaranteed until the end of this year. Thereafter it must depend on the market place and on British Steel's need to provide hot strip products in the most cost-effective and competitive way.

Mr. Watts

Does my right hon. and learned Freind agree that the upward trend in imports of capital goods, which accounted for nearly all the deficit last month and which adds to our productive capacity, is the best way in which our industry can expand to meet the great demand that is currently being met by imports, and that it will spread industrial prosperity through the region?

Mr. Clarke

I agree with my hon. Friend. Much of the deficit to which my hon. Friend the Minister for Trade referred a moment ago is accounted for by imports of capital goods, which are part of industry's investment. Many consumer imports are attracted here by the growth of our market. There is nothing to worry about in that deficit, much of which is the inevitable result of the continued expansion of this country's economy. In the old days the trade deficit was based largely on public sector deficits, which is why they caused so much more concern than this deficit ought to cause now.

Mr. Caborn

Has the Chancellor of the Duchy of Lancaster had time to read the latest publication of the Institute of Civil Engineers, which deals with urban regeneration? If so, does he agree that, like many other reports from both academic and professional bodies, it suggests that there is now a real call for planning and regional co-ordination, something which this Government have not done?

As the Minister responsible for the inner cities and the regions, will the right hon. and learned Gentleman tell the House what lead is given by the Government in moving their Departments to the regions and encouraging research establishments to locate in the regions? So far as the regions are concerned, what input has the right hon. and learned Gentleman had in the work of the Monopolies and Mergers Commission, which has been of real concern to many in the north? Will he now deal with industrial regeneration and stop playing about with the cosmetics and with glossy pamphlets?

Mr. Clarke

There has not only been a great deal of co-ordination, but a great deal of decision-making and action in relation to urban regeneration. The hon. Gentleman could visit many of our major cities in which he would see the physical and other signs of the revivals that are taking place in our inner-city areas.

I agree that the costs of maintaining such a large Civil Service in London will inevitably lead to sensible decisions to relocate parts of the Government machine outside London. Indeed, that is being done and I expect the majority of my Department of Trade and Industry to be located outside London shortly, the major move being that of the Patent Office to Newport in south Wales. I know that other Departments are contemplating similar moves.

On the question of industrial activity, we have already described the way in which industrial investment is going to south Wales, the north-west and other parts of the country. The forecasts of the Confederation of British Industry for manufacturing investment in this country are extremely high and expect a growth of about 18 per cent. this year, with continued growth in investment into 1989.