HC Deb 13 June 1989 vol 154 cc829-35
Mr. Battle

I beg to move amendment No. 248, in page 34, line 41, at beginning insert 'Subject to subsection (2A) below'.

Mr. Deputy Speaker

With this it will be convenient to take the following amendments: No. 249, in page 34, line 41, at beginning insert 'Subject to subsection (3A) below'. No. 250, in page 35, line 1, after 'above', insert `but subject to subsection (2A) below'. No. 251, in page 35, line 1, after 'above', insert `but subject to subsection (3A) below'. No. 252, in page 35, line 7, at end insert— '(2A) No Regulations made under subsections (1) or (2) above shall operate to prevent a relevant authority which does not have assisted area or aid status for exercising its power to provide financial assistance by way of grants, loans or guarantees under section 26(2) above, or otherwise to create any restriction which would have a differential effect on the exercise of such powers for those purposes as between authorities in different areas.'. No. 253, in page 35, line 16, at end insert— '(3A) No Regulations made under subsections (1) or (2) above shall prohibit the exercise by a relevant authority of its powers under section 26(2) in relation to activities

  1. (a) which fall within the scope of any scheme for the 830 promotion of employment, training or enterprise sponsored by any Department of State; or
  2. (b) in respect of which the authority receives financial assistance from the European Community.'.
No. 254, in page 35, line 19, at end insert— `(4A) The Secretary of State shall, within two years of the first date on which any regulations under this section come into effect, undertake a review of the operation of such regulations, and publish the results. (4B) The Secretary of State shall, as part of the conduct of any review established under subsection (4A) above, consult the local authority associations and such other organisation or individuals concerned with the promotion of local employment and enterprise as appear to him to be concerned.'.

Mr. Battle

We now move on to part III of the Bill which deals with economic development. We welcome the introduction of clause 26 and the introduction of the new economic development powers. We found it surprising that, although one clause introduces the new power, it is followed by another three pages in part III which take away the provisions of the power. The margin note to clause 27 defines them as: Restrictions on promotion of economic development. The restrictions will be left to regulation, and we do not yet know what that will be. To that extent it will be in the hands of the Secretary of State. We should sort it out here and now, on the face of the Bill, and ask whether it is necessary to restrict this power once it has been given. The power seems to be given with one hand and swiftly taken away with the other.

Economic development is not new in local authorities. Certainly, some of them have played a vital role in the analysis of the development of the local economy, and have contributed to it. Before I came to the House I served as a member of Leeds city council which was active in the early 1980s in precisely this way, and we used what provisions we could from the urban programme and other sources.

It is fair to say that Government priority in economic development tends to be focused particularly on travel-to-work areas and areas with assisted status. Under the new regulations, will the power be restricted to those areas? If so, many local authorities will miss out because the designations of those areas and often the industries that cover them cover wide areas that mask real areas of deprivation and areas in need of economic development.

I shall give an example from Yorkshire and Humberside to illustrate my point. Unemployment at the coast in the town of Bridlington stands at 19 per cent. but that is covered by the Bridlington and Driffield travel-to-work area in which the unemployment rate is only 4 per cent. The local problem in Bridlington is disguised because the case is judged simply by the travel-to-work area.

In my own city, Lord Joseph, who represented a part of Leeds, redefined the boundaries of the travel-to-work area. In defining the relationship between Leeds and Bradford, a part of south Leeds, which was one of the poorest parts of the city, was left out of the travel-to-work area for assisted area status purposes. The Pudsey area which was one of the wealthiest parts of Leeds was drawn in under the Bradford assisted area status. Substantial pockets of inner-city deprivation can be masked in that way. In my constituency, Armley is practically an urban village of the kind that grow up around key local industries such as textiles and engineering. Where those industries have been hit hard there are pockets of unemployment.

The local authorities that engage in economic development are not only in the large cities, but in rural areas where the population may be much smaller. Many rural authorities are involved in such development, through grants and loans to small businesses and the like. Their official statistics, when compared with the figures for densely populated areas such as the large cities, will not show up the local need.

11.30 pm But value of assistance to local areas ought to be widely recognised. For example, Ashford, Kent—in the overheated south-east—uses financial powers to relocate badly-sited small businesses. It may need to exercise those powers even more if British Rail's proposals go ahead. Why not? There is no reason for Ashford to be penalised, and no reason for it not have discretion to exercise the new power.

I shall not rehearse our Committee debate; the Minister's response then, however, gave us the impression that we were talking about financial assistance itself rather than the primary power. Our concern is with the power itself; why not leave it with local authorities, and let them choose whether to provide financial assistance?

The Institute of Local Government Studies at Birmingham university recently carried out a survey on the impact of possible geographic restrictions if the new power is applied. Of the 330 authorities that responded, 148—about 40 per cent.—were identified as having no special-area status, and of the authorities providing direct financial assistance nearly half were located in the south-east. Most were in the shire districts, with a moderately sized population; about half were Conservative-controlled and one third Labour-controlled. One conclusion in the report states: "the findings suggest that the restriction of powers to give financial assistance to businesses to places with special area designation would curtail these activities in a number of highly active authorities, some of which are operating in areas of high unemployment. In addition, a number of authorities which do not offer financial assistance at present are active in other fields of economic development. They may also be prevented from expanding their activities, for example to respond to change in local unemployment rates, if the proposed restrictions are enacted".

It is clear that the regulations could well have that effect, inadvertently or otherwise. We are not in a position to say, because we do not know what will be in them. We do not think that some authorities should be penalised as against others. I repeat that we are not talking about the amount of financial assistance; indeed, the Government have the power to cap such assistance. What we are talking about is the power itself. The power presented in clause 26 is welcome; why can it not be for all?

Mrs. Virginia Bottomley: I welcome the hon. Gentleman's support for the rationalisation of the economic development power in the Bill. As he said, local government has been involved in economic development over the years but has had to use a wide range of measures to justify it. Even section 75 of the Weights and Measures Act 1986, I understand, can be used as a basis for setting up an advice system for consumers, and it is important to give the powers some coherence.

The hon. Gentleman said that much of the Bill is concerned with restrictions and limitations. We believe that that is appropriate. Because of these measures, the hon. Gentleman's constituency and those of many Opposition Front Benchers are likely to benefit more than my constituency or that of my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer). Consultations are taking place with local authorities on the precise form of the regulations. The hon. Gentleman believes that they should not prevent local authorities giving assistance in grants, loans and guarantees where those authorities do not have assisted area status or otherwise discriminate between authorities. We want to find a way of having regard to the criteria that face different local authority areas and ensuring that they can use the economic development power, especially through loans, grants and guarantees. This would be inappropriate in some of the more privileged areas.

The amendments taken with amendment No. 248 relate to concern about the unnecessary and unhelpful restrictions on the scope of the regulations as they apply to other Government Departments and the European Community. I assure hon. Members that my Department keeps in close touch with all other Government Departments that have an interest in the use of the new power. In that way, we can ensure that the power that we are giving local authorities does not have an adverse effect on those activities in which they are involved at the request or on behalf of other Government Departments.

The amendments mention training. It is important to emphasise that the Government have a strong view about the crucial importance of training in establishing businesses. It is certainly not our intention that the regulations should inhibit that in any way.

Amendment No. 254 provides that, if the regulations cause any difficulty, there will be a requirement to review them within two years. That is unnecessary. We shall continue to examine the effect of the regulations.

I hope that the hon. Member for Leeds, West (Mr. Battle) accepts that there are certain economic development measures that it is appropriate and right to target towards areas of greatest need. We wish to finalise those matters in collaboration and on the basis of discussion with local authority associations. It is important to ensure that those powers operate in conjunction with the provisions of other Government Departments and assistance from the European Community. We shall, of course, continue to examine the operation of these measures and review them accordingly. I hope, therefore, that the hon. Gentleman will not feel it necessary to press his amendment.

Mr. Battle

The Minister referred to other Government Departments—that was an interesting analogy. In providing nationwide support under the enterprise initiative or the enterprise allowance scheme, the Government recognise that if they give an enabling power, they need not impose restrictions. Can I instead suggest that local authorities should determine whether to exercise that power? When talking about the economy, Ministers have referred to level playing fields. I see no reason why we cannot have a level playing field in determining the use of a local authority's economic power.

We are still left with unspecified restrictions. The Government seem to be uncertain about clause 26. They are prepared to introduce it, but it is as though they are feeling their way with a piecemeal introduction because they are not willing to go the whole way in letting local authorities use the power.

This is not a special pleading for my own constituency. Leeds has lost its assisted area status; it has gone to Bradford. The irony is that I am pleading on behalf of many unemployment black spots in the south, such as Thanet and Clacton, and areas such as Selby. These areas could well use the new start up and small business provision. It should be a nationwide power. It ought not to be restricted.

We ought to divide the House and press the Government not to restrict the power. We should prefer it to be available to all local authorities. We cannot live in the hope that unspecified restrictions will be provided in the future, according to circumstances. Every local authority would then have to appeal directly to the Department, according to its own particular circumstances. Either it is a general power or it is not.

Mrs. Virginia Bottomley

The economic development power is an important power. Any question of restriction applies only to grants, loans and guarantees of borrowing to businesses run for profit. All other forms of assistance will be permissible everywhere. All inner urban areas, rural development areas and derelict land clearance areas will be included.

The Government are happy to consider other areas, but it is important to stress that consultations are still taking place to ensure that there are no arbitrary cut-offs. I repeat that it is the provision of financial assistance that will be restricted. Other forms of assistance—training, advice and guidance—will be available throughout the country.

Mr. Battle

Again the Minister has missed the point. I am not talking simply about ITEC training. The key point relates to loans and grants to small businesses. Of course the question is whether a business is being run at a profit. I hope that the Government are concerned that businesses should be run at a profit. It is not a charitable operation; it has to do with economic development.

I should have thought that the Government would be surprised that we are pressing the issue, because we agree with them on that point. However, the Government say that they intend to restrict the power in the case of of some authorities but not in the case of others. The question has nothing to do with the amount of money. It is simply whether any local authority in Britain can exercise that power. I am still not happy with the Minister's reply. Therefore, I shall press the amendment to a Division.

Question put, That the amendment be made:—

The House divided: Ayes 49, Noes 154.

Division No. 238] [11.42 pm
Abbott, Ms Diane Davis, Terry (B'ham Hodge H'l)
Banks, Tony (Newham NW) Dixon, Don
Barnes, Harry (Derbyshire NE) Foster, Derek
Battle. John Golding, Mrs Llin
Beith, A. J. Howarth, George (Knowsley N)
Bermingham, Gerald Howells, Dr. Kim (Pontypridd)
Blunkett, David Illsley, Eric
Brown, Nicholas (Newcastle E) Ingram, Adam
Clay, Bob Kennedy, Charles
Cohen, Harry Lewis, Terry
Corbett, Robin Livsey, Richard
Crowther, Stan Lofthouse, Geoffrey
Cryer, Bob Loyden, Eddie
Cunliffe, Lawrence McAllion, John
Maxton, John Smith, J. P. (Vale of Glam)
Meale, Alan Soley, Clive
Michael, Alun Spearing, Nigel
Morgan, Rhodri Taylor, Matthew (Truro)
Murphy, Paul Wallace, James
Nellist, Dave Welsh, Andrew (Angus E)
O'Brien, William Welsh, Michael (Doncaster N)
Patchett, Terry Wise, Mrs Audrey
Pike, Peter L.
Prescott, John Tellers for the Ayes:
Robertson, George Mr. Frank Haynes and
Skinner, Dennis Mr. Allen McKay
Smith, C. (Isl'ton & F'bury)
Aitken, Jonathan Hicks, Mrs Maureen (Wolv' NE)
Alison, Rt Hon Michael Hind, Kenneth
Amess, David Hogg, Hon Douglas (Gr'th'm)
Amos, Alan Howarth, Alan (Strat'd-on-A)
Arbuthnot, James Hughes, Robert G. (Harrow W)
Arnold, Jacques (Gravesham) Hunt, David (Wirral W)
Ashby, David Irvine, Michael
Atkinson, David Jack, Michael
Baker, Nicholas (Dorset N) Jackson, Robert
Baldry, Tony Janman, Tim
Bendall, Vivian Jessel, Toby
Bennett, Nicholas (Pembroke) Jones, Gwilym (Cardiff N)
Bevan, David Gilroy Jones, Robert B (Herts W)
Boscawen, Hon Robert Knight, Greg (Derby North)
Boswell, Tim Lightbown, David
Bottomley, Peter Lilley, Peter
Bottomley, Mrs Virginia Lord, Michael
Bowden, Gerald (Dulwich) MacGregor, Rt Hon John
Brown, Michael (Brigg & Cl't's) Maclean, David
Burns, Simon McLoughlin, Patrick
Carlisle, John, (Luton N) Maples, John
Carrington, Matthew Miller, Sir Hal
Carttiss, Michael Mitchell, Andrew (Gedling)
Chapman, Sydney Mitchell, Sir David
Chope, Christopher Moss, Malcolm
Clark, Dr Michael (Rochford) Moynihan, Hon Colin
Clarke, Rt Hon K. (Rushcliffe) Needham, Richard
Conway, Derek Nicholls, Patrick
Coombs, Anthony (Wyre F'rest) Nicholson, David (Taunton)
Coombs, Simon (Swindon) Nicholson, Emma (Devon West)
Cope, Rt Hon John Norris, Steve
Couchman, James Paice, James
Currie, Mrs Edwina Patnick, Irvine
Davies, Q. (Stamf'd & Spald'g) Patten, Chris (Bath)
Davis, David (Boothferry) Pawsey, James
Day, Stephen Peacock, Mrs Elizabeth
Douglas-Hamilton, Lord James Porter, Barry (Wirral S)
Durant, Tony Porter, David (Waveney)
Emery, Sir Peter Powell, William (Corby)
Fallon, Michael Raffan, Keith
Favell, Tony Redwood, John
Fishburn, John Dudley Renton, Tim
Forman, Nigel Rhodes James, Robert
Forsyth, Michael (Stirling) Riddick, Graham
Forth, Eric Ridley, Rt Hon Nicholas
Franks, Cecil Ridsdale, Sir Julian
Freeman, Roger Roberts, Wyn (Conwy)
French, Douglas Rowe, Andrew
Gale, Roger Sackville, Hon Tom
Garel-Jones, Tristan Shaw, David (Dover)
Gill, Christopher Shaw, Sir Giles (Pudsey)
Goodhart, Sir Philip Shephard, Mrs G. (Norfolk SW)
Greenway, John (Ryedale) Shepherd, Colin (Hereford)
Gregory, Conal Shepherd, Richard (Aldridge)
Griffiths, Sir Eldon (Bury St E') Skeet, Sir Trevor
Griffiths, Peter (Portsmouth N) Smith, Sir Dudley (Warwick)
Grist, Ian Smith, Tim (Beaconsfield)
Gummer, Rt Hon John Selwyn Soames, Hon Nicholas
Hague, William Stanbrook, Ivor
Hamilton, Neil (Tatton) Stanley, Rt Hon Sir John
Hargreaves, A. (B'ham H'll Gr') Stern, Michael
Harris, David Stevens, Lewis
Hayes, Jerry Stewart, Andy (Sherwood)
Heathcoat-Amory, David Stradling Thomas, Sir John
Heddle, John Summerson, Hugo
Taylor, Ian (Esher) Wardle, Charles (Bexhill)
Taylor, Teddy (S'end E) Warren, Kenneth
Temple-Morris, Peter Watts, John
Thompson, D. (Calder Valley) Wells, Bowen
Thompson, Patrick (Norwich N) Wheeler, John
Thurnham, Peter Widdecombe, Ann
Townend, John (Bridlington) Wilkinson, John
Tracey, Richard Winterton, Nicholas
Trippier, David Wood, Timothy
Twinn, Dr Ian Young, Sir George (Acton)
Viggers, Peter
Waddington, Rt Hon David Tellers for the Noes:
Wakeham, Rt Hon John Mr. Kenneth Carlisle and
Waller, Gary Mr. Stephen Dorrell.

Question accordingly negatived.

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