HC Deb 08 March 1988 vol 129 cc281-94

10.1 pm

The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Peter Viggers)

I beg to move, That the draft General Assistance Grants (Abolition) (Northern Ireland) Order 1988, which was laid before this House on 1st March, be approved. The purpose of the draft order is to abolish the standard capital grants scheme by the repeal of part IV of the Industrial Development (Northern Ireland) Order 1982. Under this order grants are payable towards new fixed asset investment undertaken by businesses engaged in qualifying activities—in practice most manufacturing sectors—in Northern Ireland. The standard capital grants scheme is similar, although not identical, to the regional development grants scheme in Great Britain.

As announced in the recent Department of Trade and Industry White Paper, the regional development grants scheme will also be abolished, and indeed the Regional Development Grants (Termination) Bill has received its Second Reading and has just completed its Committee stage. Under the provisions contained in that Bill, no new applications for regional development grant will be accepted after 31 March 1988. Similarly, the draft order now before the House provides that standard capital grants will not be payable in respect of expenditure incurred after 31 March 1988.

We have been concerned for some time about the appropriateness of the standard capital grants scheme as a means of assisting industry in Northern Ireland. Indeed, my predecessor announced significant changes to the scheme in 1985 and made it clear at that time that those amendments marked only the beginning of a change in emphasis in the form of support to industry in Northern Ireland.

Our concerns related particularly to the high degree of deadweight and displacement that we saw in the scheme. Deadweight in a scheme means that the investment would have taken place in the company without the grant being made available to it, and displacement is a technical term that means that the Government are subsidising companies to compete with others in the local market. We saw a high degree of deadweight and displacement in the scheme, evidence of deliberate abuse from some quarters and the fact that the legislation for the scheme restricted its application to manufacturing industry in a rigid manner which took no account of the increasing difficulty of distinguishing between manufacturing and service activities.

We therefore commissioned a consultancy survey of standard capital grant recipients to assess awareness of the scheme and to obtain more detailed information about the nature, objectives and impact of the investment being assisted. The survey showed that about 70 per cent. of assisted projects would have proceeded in the absence of standard capital grant and revealed that the grant has largely aided Northern Ireland companies to compete against one another in a limited local market, rather than encouraging them to compete in markets outside the Province. These findings, together with the fact that the grant is not job-related, demonstrated that the standard capital grants scheme is no longer an effective means of stimulating the Northern Ireland economy and therefore does not make the best use of public resources.

While there are several differences in form and effect between the standard capital grants scheme in Northern Ireland and the regional development grants scheme in Great Britain, the decision to end the regional development grants scheme was based on similar conclusions about its effectiveness. This reflects a general and international trend away from automatic and poorly targeted capital grants.

On 12 January I announced the Government's decision to close the standard capital grants scheme in respect of capital expenditure incurred after 31 March, subject to parliamentary approval of the draft order currently before the House.

Northern Ireland, like its competitor regions, will concentrate increasingly on assisting strategic business developments that help companies to perform more successfully in national and international markets. The assistance will go beyond aid for capital investment and will develop the human capital of business through, for example, marketing, management and product quality development.

Together with existing selective assistance from the Industrial Development Board and the Local Enterprise Development Unit, the new forms of assistance will ensure that business in Northern Ireland continues to have the most comprehensive system of support to industry and enterprise in the United Kingdom. Public funds will be used more effectively on strategic business developments and on those firms which can compete with producers outside Northern Ireland.

Many companies which would otherwise have claimed standard capital grant will now turn to the Industrial Development Board or the Local Enterprise Development Unit for assistance, and those good projects which would not go ahead without assistance from Government will be eligible for consideration. I am satisfied that the revised framework for assistance will strengthen industry and enterprise in Northern Ireland.

I confirm that there is no wavering in the Government's determination to have the strengthening of the economy of Northern Ireland as one of their highest priorities. Subject only to the overriding requirement to work for an improvement in law and order, the improvement of the Northern Ireland economy remains our highest priority.

10.7 pm

Mr. Jim Marshall (Leicester, South)

We welcome the Minister's statement on the need to continue to encourage and promote economic development in Northern Ireland. The whole House shares the concern about the high levels of unemployment and poverty in the Province. The only way to overcome that is by containing, and eventually defeating, terrorism and unrest, and by the promotion of a healthy authority in the Province.

I should like to take up a couple of issues which the Minister mentioned. He referred to the terms deadweight and displacement. I was certainly pleased to hear his definition of those terms. I found it difficult to find definitions in the summary that the Department of Economic Development gave me on the report by Coopers and Lybrand to which the Minister referred.

In regard to deadweight, the Minister said that 70 per cent. of the investment which benefited under the standard capital grant scheme would have taken place anyway. Even with my lack of knowledge of arithmetic, that leaves a substantial percentage—30 per cent.—on which no comment was made. Are we to believe that the 30 per cent. would not have gone ahead without the standard capital grant? If it had not proceeded, what further disadvantageous effects would that have had on the Northern Ireland economy?

I want to press the Minister further on his remarks about strategic business developments. I accept the need for greater targeting and selectivity in grants, but will he develop further his ideas and concepts about strategic business developments?

The Minister and the House will be pleased to know that we do not intend to divide the House. We are saddened by the demise of the standard capital grant system. My view and that of the Labour party can best be summed up by the announcement of the Confederation of British Industry in Northern Ireland on 12 January 1988: We are saddened to note that an old friend which has served the Northern Ireland economy well for many years is to he wiped out … The impact of the standard capital grant scheme has been very significant. Standard capital grant has supported development of many new manufacturers, helped existing companies expand and has been supportive of re-equipping much of Ulster's industry.

Mr. Roy Beggs (Antrim, East)

Will the hon. Gentleman agree that the removal of standard capital grants will convey to the few people who would consider investing in Northern Ireland the idea that Northern Ireland is less attractive now than it once was? Is it not imperative that the Minister and the IDB ensure that the message goes abroad loud and clear that selective financial assistance will more than compensate?

Mr. Marshall

I am grateful to give my assurance to the hon. Gentleman on that point. I intend to press the Minister further on that later. There is a need to assure prospective investors in the Province and prospective investors throughout the world that the Government mean to assist investment within the Province.

I hope to receive an assurance from the Minister when he replies that the abolition of standard capital grant in no way undermines the Government's desire to continue to invest in the Province. I want an assurance that the Government will ensure that the level of financial investment available is not reduced as a consequence of the abolition of SCG. I share the hon. Gentleman's belief in the need to convey that opinion throughout the world so that we can provide encouragement and so further bolster the Province's economy.

We share the sadness felt by the CBI in Northern Ireland. However, we are prepared to reconsider the evidence which shows that the SCG system has obvious limitations and that refinements are needed in the grant system in the North of Ireland.

The order is the analogous legislation for the Province to the Regional Development Grants (Termination) Bill to which the Minister referred earlier, which applies to Great Britain. While we will permit the order to pass without a Division, we strenuously oppose the Regional Development Grants (Termination) Bill. We are convinced that the existing level of industrial assistance in the Province and the reasonably high levels of public financial support for industry there mean that there is a clear difference between the Government's commitment to economic development in the North of Ireland and their view of the need to encourage further industrial development in the less well-off regions of Great Britain. That is why we shall not oppose the order.

Before we permit the demise of the standard capital grant system the House should again be made aware of the contribution that that system has made to the economy of the North of Ireland. Since 1982, about £250 million has been injected into the economy in support of fixed capital investment. That is a large sum of tremendous significance, in view of the fragility of the economy The Minister should also bear in mind that figures show that the return on invested capital in the North of Ireland is substantially lower than that in the rest of the United Kingdom. The existence of standard capital grant, and, I hope, its successor, will overcome the reluctance of entrepreneurs, because of the return on capital, to invest in the Province. We must ensure that there is enough return on capital to encourage inward investment.

We accept some of the criticisms of standard capital grant, of which I shall mention three. The first relates to Government decisions over the past two or three years. The decision to cut the rate and scope of grant in 1985, and again in 1987, greatly reduced its potential impact on encouraging investment. Secondly, we understand and accept the reservations expressed on all sides of industry, and particularly by the trade unions in Northern Ireland, to the effect that the standard capital grant system is not the most efficient use of public resources for industrial development. In particular, we accept the criticisms of the system that relate to its limited value as a stimulus for the creation of net additional jobs, because of its nondiscriminatory nature.

Thirdly, the shortcomings of the scheme are confirmed in the report by Coopers and Lybrand, to which the Minister referred. Apparently, the report finds that the standard capital grant system has done little to encourage import substitution or stimulate exports, and that much of the investment would have been undertaken in any case. I think that that is the displacement that the Minister mentioned. We accept that these criticisms highlight the disadvantage of non-targeted, non-specific financial assistance.

I was grateful, as I have said, to receive a summary of the report, but I wish the Minister would relent on his insistence not to publish a full report. If we are all to he convinced of the need for change and of the statistical value of the report, it is essential that it be published in full and that hon. Members be aware of its findings, the methodology on which it is based and the assumptions and statistics on which it arrives at its conclusions. I press the Minister again to place a copy of the report in the Library so that all hon. Members can read it in full.

Turning to the future, we realise that there are advantages in having an industrial strategy that gives greater emphasis to development effort. We also recognise that the potential stimulus to the economy can be much greater with selective financial assistance and the setting and achieving of agreed expansion plans and employment levels. In that regard and in common with the Government, we recognise the achievement of the industrial development board and NEDO.

Given the need for further capial investment and in the light of the relatively low return on capital in the Province, will the Minister consider retaining the standard capital grant in certain industrial sectors where firms have proven their export capabilities and potential? The Minister may recall that I put that question to him in our written submission on the draft order. The Minister kindly replied to it as well as to other questions, but I believe that he was rather negative. Perhaps with a little further prodding and encouragement he may yet see the need and desire to continue some form of standard capital grant for those areas of the economy that have shown that deadweight and displacement are not the main reasons for the distribution of that grant. I hope that I can elicit an answer from the Minister about that.

We believe that if we are to get the best out of the economy of the North of Ireland, it is essential that the work force of the Province, through their trade unions, should be involved in the decisions and discussions that are allied to the dispersal of the new selective financial assistance. I asked the Minister about that in our written submission and I have already received a reply from him, but, needless to say, I am not satisfied.

The Minister said that the trade unions are involved through the Industrial Development Board, but we believe that that involvement should be extended so that trade unions are able to make representations on behalf of their members in small firms. We believe that it is in the interests of the work force and the trade unions for the selective assistance to succeed. We believe that there is a greater likelihood of success if the work forces are directly involved in the negotiations.

Even if the Minister is not prepared to accept my argument, and even if he gives a negative answer to my question, he must accept that the work force of the Province have most to lose from the failure of the Government's economic strategy there. Therefore, as they have most to lose or most to gain, I believe that it is only fair and proper that their voices should be heard at all levels of negotiations.

In common with the hon. Member for Antrim, East (Mr. Beggs) I must press the Minister further regarding the level of financial assistance that will be given on investment. I have pressed the Minister on this matter before and he has been somewhat equivocal. It would be dreadful for the North of Ireland if, as a result of the passage of the order, the level of capital investment in the Province was diminished.

I hope that the Minister will be able to reassure the House and Northern Ireland that the order and the abolition of the standard capital grant system will not result in a reduction in the global sum of money available for industrial development in Northern Ireland. Such development is of paramount importance if we are to encourage further investment in Northern Ireland.

We believe that the Minister should use the opportunity to provide the House with an unequivocal statement on this matter. The people of Northern Ireland and the elected Members from Northern Ireland deserve nothing less.

10.24 pm
Mr. William Ross (Londonderry, East)

It appears that an order a night is becoming the standard for Northern Ireland, as we debated another Northern Ireland order last night. In that debate, the hon. Member for Kingston upon Hull, North (Mr. McNamara), whom I am glad to see has joined us, said that, because Labour Members had opposed the parallel legislation for Great Britain, they had to stay and oppose the corresponding order for Northern Ireland.

The House will appreciate that I listened with some surprise to the hon. Member for Leicester, South (Mr. Marshall) when he said that the Labour party would not oppose this order. As I understand it, from a perusal of the debate and of the voting list on 25 January, when the almost parallel legislation for Great Britain was discussed, 212 Labour Members voted in force against it. Although we were grateful for Labour Members' support last night, we should be even more grateful if they would support us on every occasion by opposing legislation for the United Kingdom as a whole, as is their duty as a national party.

As the House will appreciate, we are here purely and simply because of the misrule, or direct rule, under which Northern Ireland suffers. When I compare the situation of Northern Ireland today, in every aspect, with that which prevailed 16 years ago, I confess that I do not see much improvement. Indeed, I see a great deal of movement in the other direction. That is the clearest proof possible of how sadly the present system of government has failed.

The order is important. It should be a Bill. I would have preferred a United Kingdom Bill, so that we could probe the matter, in conjunction with other hon. Members who represent the rest of the kingdom, but if the legislation for Northern Ireland is so different that it cannot be encompassed in a United Kingdom Bill, there is no good reason why there should not be a Northern Ireland Bill for it. We would have an opportunity to contribute to that debate, just as I am at present participating in the debate in Committee—on a Bill that affects Britain but not Northern Ireland.

The Minister knows perfectly well that he cannot change a jot or tittle of the order. If he managed to persuade the House that the final date should have been 31 December 1987, or that it should be 31 December 1988, the Minister simply could not do anything about it. He would be completely stuck. If we had a Bill which dealt with all the nuances and problems, such an exploration in depth might have been sufficient to change his mind. However, that would be difficult, as the Government are not normally ruled by reason and logic. Despite the failures of the direct rule system, they continue to pursue the wrong policy.

I recently had an interesting conversation on a plane journey between Washington and Minneapolis-St. Paul with an American business man, who said that it did not matter two balls of blue what monetary inducements were offered. He said that the only thing that mattered was whether there was terrorism. He could not see many people shoving a great deal of money into Northern Ireland until that problem was resolved.

That is a matter with which the Government have steadfastedly refused to deal in the manner in which they dealt with it the other day, when another part of the British Crown colonies and dominions was affected. The Government must forsake the mistaken policies that they have pursued hitherto and get on with governing Northern Ireland properly.

After all, Mr. Haughey has recently made it perfectly plain that the Irish Republic has given the thumbs down to a devolved Government, so what is the point of trying to flog a dead horse to life? After all, the Government have now put themselves in the hands of that Government to a large extent in matters relating to the constitutional position of Northern Ireland. Therefore, there is no point in trying to pursue these matters in direct opposition to Mr. Haughey's view that they should not come into operation at all.

I think that I have spoken for long enough on this matter, for I see no reason to help the Government in their efforts to put across the appearance of democracy, fair play and discussion by the procedure that we have followed so consistently for 16 years. This whole thing is a farce. It mocks and diminishes democracy, and the sooner that it is done away with the better. I see no point in, and have no intention of, trying to put clothes on this naked Government when it comes to legislation for the reduction of grants for Northern Ireland.

10.30 pm
Mr. Eddie McGrady (South Down)

Once again, as the hon. Member for Londonderry, East (Mr. Ross) said, it is now the hour for Northern Ireland debates. I am getting used to speaking and thinking on my feet at this hour of the night. However, at least tonight we are spared the 39 pages of detailed legislation, the five schedules and the rest, because all that we are dealing with is paragraph 3, which is two lines. That is a simple thing to deal with when compared with the tremendous difficulty that we had with last night's legislation.

I intend to devote my remarks entirely to the subject at hand rather than to the constitutional and political issues of Northern Ireland. I suppose that the order is not unexpected in the wake of the changes in legislation that occurred in Great Britain earlier in the year. However, it is significant that the thought processes that have produced the Minister's introductory proposals seem to be those that have been fostered in many agencies in Northern Ireland over the past 12 to 18 months.

It is significant, for instance, that the Department of Economic Development produced a document entitled "Pathfinder" which has been adopted as a child by LEDU—the Local Enterprise Development Unit—and peddled with great courage and enthusiasm. It contains the ethos and the thinking behind the abolition of the standard capital grant for Northern Ireland. Indeed, it removes what is probably the only major remaining differential in grant aid between Northern Ireland and the rest of Great Britain. That means that an area that, because of its endemic and gross unemployment, was previously treated with some favour or encouragement in the way of extra grant is now having another prop removed from it.

The Minister's argument and presentation seem to be that the effectiveness of the standard capital grant is nonexistent. I suggest that he considers the consensus of industry and manufacturers in Northern Ireland. My hon. Friend the Member for Leicester, South (Mr. Marshall) quoted the Confederation of British Industry. I am not used to quoting the CBI but I go back earlier than did my hon. Friend.

When the Government were changing the rate from 20 per cent. to 12.5 per cent., the consensus in the CBI was that that was nothing short of crazy and destructive". It also stated: Over the years, the SCG scheme has been used to install the most modern machinery available. This has enabled Northern Ireland to turn in excellent productivity figures. This process must not be halted. This decision"— that decision was to reduce the grant to 12.5 per cent., not tonight's decision to reduce it to zero— now reduces the capital grant rate below that available elsewhere. From today"— certainly from tonight—today, then, was 13 October 1987— Northern Ireland is less attractive to investors in comparison with other development regions". That is the consensus of manufacturing and engineering industries in Northern Ireland. We should take seriously the fact that that reduction was described as "nothing short of crazy".

I have a copy here of a letter dated, 26 November 1987 sent by the chairman of the CBI, Harold A. Ennis, to the Minister commenting on the proposed changes. Some comments made tonight have been relatively selective and I shall select the counter-arguments in the same paper.

The CBI did a survey of its membership and it was placed against a survey done by the Department of Economic Development. It reached, strangely enough, exactly opposite results and it makes a number of comments by way of example. It says: Four companies reported that investments totalling £1.8m were under serious threat due to reduction in Standard Capital Grant and another has cancelled a planned investment of £533,000. Again, comparing the Department's figures with its own survey, it says: Whichever of our figures presents a truer picture, the fact remains that the companies having to find the extra 7½ per cent."— now 25 per cent.— will be in weaker financial position to respond to other demands. It goes on to point out that the main thrust of the Minister's and the Department's argument was that SCG was not job-targeted, but SFA — selective financial assistance—was no more targeted to job creation than SCG was.

That is the CBI's considered opinion, and the Department should be looking at not the creation of jobs coming out of the particular one-off grant-aid investment, but the totality of jobs coming out of the general basis of grant that is being applied.

The Minister referred to the fact that selective financial assistance would be managed through the Industrial Development Board and the Local Enterprise Development Unit. What has been said now is that, instead of being entitled to grant to assist production costs, employment ratios, and so on, schemes will have to be prepared and submitted to the IDB. But that can take up to two years. The norm is about 12 months, but it can take up to two years. Even small industries cannot work in that way. And even then the applicant is subject to vetting and interpretation. The CBI perceives that there would be a considerable amount of what it calls "non-qualification" of applicants.

If we examine the type of industry in Northern Ireland generally, forgetting for a moment the major industries—the shipbuilding and the engineering in Belfast and Derry—we are talking mainly of a work ethos which is small industry, with four or five to 10 employees, perhaps 20 at the outside, scattered in the rural countryside which comprises most of Northern Ireland. These are the people who the Government say are going to produce jobs; this is the area in which we are to get a decrease in unemployment. But it is precisely the small industry that is under attack through the withdrawal of SCG. The small man will have little time and little ability to do cash flows and balance sheet forecasts into the next millennium, as is sometimes required.

For the Minister to say that industry in Northern Ireland will be assisted by the redirection of the funds released from SCG into research and development and marketing is all very well, but it will be even less job-oriented than the present system.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

If the hon. Gentleman came from an area such as mine in the west midlands, he would know that Northern Ireland gets five times the amount of help per person that we do, so why do the Northern Irish go on whining as they do?

Mr. McGrady

I apologise if I was whining. I thought that I was just stating facts. I am not aware of the economic statistics relating to the hon. Gentleman's constituency; I can only talk about life as I know it in Northern Ireland. The figures are there to show, for Department after Department, social deprivation, unemployment and the consequences of terrorism. All are indicators. If the hon. Gentleman is interested, he should read the report of the Adjournment debate on 24 February, where he will see a significant number of factors that make Northern Ireland an area that requires particular assistance.

I have mentioned in other debates the requirement of extra money for the IDB. In an area that is acknowledged to have the worst housing conditions in Europe, budgets are reduced to such an extent that the automatic cost will be 3,000 jobs in the next year. We can add to that the unknown number of jobs that will be lost through budget cuts to health and social services, with ward and hospital closures. The current 21 or 22 per cent. unemployment figure will no doubt shoot up dramatically.

This seems a very regressive step towards helping industry in Northern Ireland to recover. I know that—as the hon. Member for Londonderry, East has said—my words will not change the Government's attitude, or the legislation, by one iota. However, I feel that the withdrawal of subsidies, coupled with other factors—such as the 9.2 per cent. increase in electricity prices about to be imposed in Northern Ireland, for no good reason—will impose a considerable burden on a struggling economy.

Apparently, I have caused annoyance by my repeated references to the high unemployment rate, for which I make no apology. That high unemployment will be exacerbated by this problem.

When the legislation goes through—as it obviously will—I ask the Minister to consider whether there is a better method of applying the funds available. Perhaps it would be possible to help the people I am talking about by providing an extra job or two—not 200 jobs—in a way that will cut out the massive bureaucracy involved in going through LEDU and the IDB. Perhaps a compromise scheme between SCG and the new financial assistance is possible. I ask the Minister to consider it as a matter of urgency.

10.42 pm
Mr. Viggers

I shall try to respond to the points that have been made during this short but significant debate.

The hon. Member for Leicester, South (Mr. Marshall) has studied the abolition of selective grant in some depth, and we have been in correspondence about it. The hon. Gentleman asked: if 70 per cent. of investments using standard capital grant would have been made anyway, what about the 30 per cent. that would not? The answer is that selective financial assistance will still be available in Northern Ireland, and can be given in all the cases to which SCG would be appropriate. Similarly, the Local Enterprise Development Unit has had a further 10 million allocated to it in the past 12 months, encouraging just the kind of smaller operation to which the hon. Member for South Down (Mr. McGrady) referred. Those are two of the forms in which assistance will still be available.

Mr. Jim Marshall

I am grateful for that information. I had half-expected the reply. Does the Minister not accept that the new system will be far more labour-intensive, in the sense outlined by the hon. Member for South Down (Mr. McGrady) the need to go into detail with individual firms far more than with the standard capital grant? Will that mean that the length of time before approval will be greatly extended, or will more people be employed to make more rapid decisions?

Mr. Viggers

The hon. Gentleman is entirely correct to say that an automatic grant is the simplest form of grant which no doubt is why it is popular with business people, who want to be certain that their applications will be accepted. I have taken special steps to ensure that there is speed in response to the applications, and I shall deal with that matter later.

I mentioned two ways in which grants will be available to those for whom standard capital grant will no longer be available. We have undertaken that no worthwhile project will fail for lack of support from the Industrial Development Board, which is an important commitment.

The hon. Member for Leicester, South asked for some idea of the way in which we propose to spend the money that will not be spent by way of standard capital grant. Standard capital grant is being phased out, but a number of applications will perhaps be bunched around the period ending 31 March 1988. At present, standard capital grant is available to companies that can show that they have incurred the expenditure before that date.

I am very proud of the schemes that have been introduced during the past 18 months, during which time I have been responsible for the Department of Economic Development for Northern Ireland. I have a list of 21 schemes that have been introduced over the past 18 months, and I shall deal with the larger of them in terms of financial commitment. There is a quality initiative scheme administered by the IDB and the LEDU—the research and development grant scheme—to which £5.6 is allocated. The local enterprise programme concentrates on smaller operations, in which the hon. Member for South Down showed special interest. It is intended to develop one, two or three-man businesses, and it will generate considerable business. About £1.6 million has been allocated to local enterprise programmes.

The Technology Board for Northern Ireland has been allocated £500,000 and it is trying to promote further technological advance. About £1.6 million has been allocated to the IDB's marketing scheme, and £3.6 million has been allocated to the Antrim technology park, which is proving to be a centre of excellence for high-technology firms. Some £500,000 has been given to the pilot manpower training scheme.

We are allocating more funds to specialist schemes that promote management, marketing and awareness of exports. The phasing out of standard capital grant will not lead to a diminution in our commitment to the growth of industrial development in Northern Ireland.

The hon. Member for Leicester, South asked why we could not make the Coopers and Lybrand report available. The survey was carried out on a confidential basis. The 300 companies questioned appreciated that they were being asked questions on a confidential basis. If we wanted to publish the whole of the report it would be necessary to seek the permission of those companies first, because they gave information which they expected to be used solely for the purposes of Government research.

Further, it would be easy to identify a number of the companies from the results if they were published. It would not be right to publish without their authority or to seek their authority purely for the purpose of publishing the whole of the report. We have published a summary, which we hope will show the way in which the survey was considered by the Government, and it is intended to provide the basis on which our action was taken.

Mr. McGrady

Is the Minister aware that the companies that were questioned—the CBI has confirmed this—had no idea that the research was in respect of capital grants?

Mr. Viggers

I am not sure whether that shows that the survey was carried out well, or badly. If the people who were questioned were not aware of the purpose of the survey, it shows that it was done in a canny way, if I may import a word from another part of the United Kingdom. Quite often, the purpose of market research is not to allow the person being interviewed to know the purpose of the interview. If the person being interviewed knows the purpose of the interview, it sometimes influences his response. If the hon. Gentleman wishes to discuss that matter further, I shall be happy to do so outside the Chamber.

The hon. Member for Leicester, South made the point in correspondence that we should retain the standard capital grant where companies have proved their export potential. As selective financial assistance is already available, and as his proposal would require the Government, or one of their agencies, to inquire whether a company had been diligent and successful in pursuing exports, that would import selective financial assistance similar to the existing scheme. The hon. Gentleman's proposal would not add anything, because we already have the opportunity, through selective financial assistance, to do more through the medium of standard capital grant. Therefore, I can assure him that nothing is lost and that his proposal would not add anything for companies in Northern Ireland.

Mr. Jim Marshall

I do not know whether to be grateful to the Minister for that reply: I am sure that I am not. The Minister will agree that we are talking, not about particular firms, but about sectors of the economy in Northern Ireland that have shown that they are able to use the standard capital grant system and be involved in import substitution or in stimulating exports. If the old system were to apply to industrial sectors, the criticisms that the Minister makes of my suggestion would not apply.

Mr. Viggers

I think that we are going wider than the hon. Gentleman wants. Standard capital grant is restricted to manufacturing, and the line between manufacturing and the service sector is increasingly blurred. Who is to say, for instance, that someone working on computer-aided design and manufacture is in manufacturing or in the service sector? There is much more freedom within the selective financial assistance system than within standard capital grant. I can assure the hon. Gentleman that his proposal would add nothing to what is already available under selective financial assistance.

Mr. James Kilfedder (North Down)

I am grateful to the Minister, who has shown great concern about unemployment and industry in Northern Ireland since he took over his job. As he knows, there is a need to attract more high-tech industry to the Province, and as he is also aware, the Irish Republic is doing its best worldwide to bring high-tech industries to the Republic. Can the Minister say whether this change will put Northern Ireland at a disadvantage in attracting foreign firms?

Mr. Viggers

The purpose of the change is to promote further investment in Northern Ireland and to assist the efforts of companies within Northern Ireland. We hope that it will be possible for further assistance to be made available for companies such as those within the North Down development organisation in the hon. Gentleman's constituency, which I have visited twice in the past four months. It will be of benefit to us all if we can support enterprise in this way.

The hon. Member for Leicester, South asked for trade union representation and contribution to discussions. There are two trade union members on the Industrial Development Board for Northern Ireland and trade unions also have their members on the Northern Ireland Economic Council. There are trade unionists on the Local Enterprise Development Unit. They make a welcome and significant contribution to the work of those bodies, and they well reflect the views of trade union members.

Finally, the hon. Gentleman asked whether there would be any diminution of our commitment to industrial development in Northern Ireland. I repeat that that is not our intention. We intend to strengthen the economy of Northern Ireland.

The hon. Member for Londonderry, East (Mr. Ross), who is not in the Chamber at present, raised again the manner of dealing with Northern Ireland business by way of orders that cannot be amended in any way and which tend to be discussed in debates the latter part of the evening. The Government recognise that the way in which Northern Ireland business is discussed is by no means satisfactory.

We do not pretend that this method of legislation is perfect, and for that reason our existing procedures provide for extensive consultation in Northern Ireland, which took place in this case. We appreciate the difficulties posed by unamendable Orders in Council, but we believe that the problem is best addressed in the context of discussions about the future government of Northern Ireland, and we are always willing to talk about the issues to all interested parties and to consider constructive suggestions.

The hon. Member for South Down made the point that standard capital grant was the only distinctive advantage held in Northern Ireland and implied that phasing it out was a diminution in our commitment. I repeat that there is no question of our diminishing our commitment to economic development.

The hon. Gentleman also quoted responses from the CBI. I quote back to him a report from the press in Northern Ireland, where the director of the CBI was reported as saying that changes in the national level of regional development grant, which are similar to our abolition of standard capital grant, represented a bold shift in the way that the Department of Trade and Industry supports industry in Great Britain. In many ways the Industrial Development Board, the Local Enterprise Development Unit and the Department of Economic Development are ahead of the game in the DTI. We certainly have a more generous support system.

I was asked by several hon. Gentlemen whether it would be possible to assure them that future applications for support would not be held up by red tape or bogged down in delay. The hon. Member for South Down mentioned periods of delay which he alleged were experienced by applicants to the IDB and the LEDU. I was concerned that that should not be the case, and I have personally reviewed with the IDB and the LEDU their procedures to ensure that they are as fast and as flexible as possible.

I am told, and we have checked, that the average time taken by the IDB to process an application from the time of first full application through to the time that the grant is awarded is an average of 16 to 17 weeks. It has a special, so-called green channel appraisal system which enables it to deal with matters much more rapidly. We are dealing with public money, and it is appropriate that there should be proper checks and balances in the application system.

The LEDU, with its business start-up scheme in enterprise grant cases, has an average application to completion time of three to four weeks. The possible delay in servicing the applications concerns the IDB and the LEDU, as well as the Government generally. I can assure the hon. Gentleman, who perhaps has been told by the occasional disgruntled applicant of an exceptional delay, that I have personally investigated every case that has been put to me and I have not found any cases of unjustifiable delay.

Mr. McGrady

The figures that I quoted were not my own, but those published by the CBI.

Mr. Viggers

I should like to see those figures. The figures were put to me by the CBI in Northern Ireland in the presence of the IDB, and we discussed them. We have been through the figures in question and I was satisfied that the IDB was performing differently from the manner suggested by the CBI. If there were undue delay, I would be concerned. As I said, I have personally investigated every case that has been put to me and I have not found an example of unjustifiable delay.

The Industrial Development Board and the LEDU have recognised the need to focus management attention on total quality, and both bodies have introduced programmes in the past year directed towards that end. I have already referred to the IDB's marketing support assistance. The LEDU is in the process of simplifying and streamlining its grant for research and development, marketing, management development and quality development, and will shortly launch these in a revised form, better shaped to stimulate firms to undertake projects with real potential for future increased employment.

Similarly, in industrial development, the Department of Economic Development has successfully tested a unique and effective aid to business development in the form of its pilot manpower training scheme. I am currently examining whether this scheme should be operated on a permanent basis. I am particularly anxious that small companies should not be disadvantaged by the change from standard capital grant to selective assistance.

Following consultation with business interests, the LEDU has devised straightforward arrangements for the smallest firms to apply for assistance on small projects that will create employment or have significant wider economic benefits, and these arrangements will be in place early next month. I have also asked both the IDB and the LEDU, as I have mentioned, to ensure that their procedures and resources will enable them to respond speedily and effectively to any increased work load.

Several hon. Members have mentioned the commitment that Government have to industry, energy, trade and employment in Northern Ireland. I can give the figures to reveal the extent of the Government's commitment. Northern Ireland has 268 per cent. of the average United Kingdom identifiable expenditure per head, and it is entirely right that Northern Ireland should receive that benefit during these times. I am satisfied with the quality of the investment that is being made at the moment, and I am satisfied that unemployment is falling. I believe that the proposals will assist in improving the economy of Northern Ireland, and I commend the order to the House.

Question put and agreed to.

Resolved,

That the draft General Assistance Grants (Abolition) (Northern Ireland) Order 1988, which was laid before this House on 1st March, be approved.

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  2. BUSINESS OF THE HOUSE 61 words