§ Queen's Recommendation having been signified——
10.27 pm§ The Minister of State, Scottish Office (Mr. Ian Lang)I beg to move,
That, for the purposes of any Act resulting from the Enterprise and New Towns (Scotland) Bill ("the Act") it is expedient to authorise the payment out of money provided by Parliament of sums required by the Secretary of State—so long as the relevant aggregate amount outstanding shall not exceed £3,000 million.
- (a) for paying sums to Scottish Enterprise, in so far as not already authorised by the Resolution (Enterprise and New Towns (Scotland) Bill [Money]) of 9th January, in respect of the exercise of its functions and in respect of its administrative expenses;
- (b) for making loans to Scottish Enterprise for the purpose of the exercise of any of its functions; and
- (c) for fulfilling guarantees given by him in respect of sums borrowed by Scottish Enterprise from persons other than the Secretary of State or given by the Treasury in respect of sums borrowed by the Scottish Development Agency from such persons,
In this Resolution—general external borrowing" has the same meaning as in the Act;relevant aggregate amount outstanding" means the aggregate amount outstanding, otherwise than by way of interest, in respect of—The new money resolution has had to be introduced because of the extensive amendments that the Government have tabled to the financial arrangements that are to apply to Scottish Enterprise. I hope that we shall have an opportunity in Committee tomorrow to debate the various amendments substantively and I look forward to explaining the purpose behind them and their effects at more length then."subsidiary" has the meaning given by section 736 of the Companies Act 1985.
- (a) the general external borrowing of—
- (i) Scottish Enterprise and its subsidiaries; and
- (ii) the Scottish Development Agency,
- (b) sums issued by the Secretary of State in fulfilment of guarantees under the Act or by the Treasury or the Secretary of State in fulfilment of guarantees under Schedule 2 to the Scottish Development Agency Act 1975, being sums which have not been repaid;
- (c) sums paid (other than by way of lending) to Scottish Enterprise by the Secretary of State out of money provided by Parliament but with there being deducted—
- (i) any such sums repaid to the Secretary of State by the body; and
- (ii) any such sums paid in respect of the administrative expenses of Scottish Enterprise; and
- (d) loans guaranteed by Scottish Enterprise and by any of its subsidiaries; and
On this occasion, I hope that it may suffice if I simply sketch out, first, the objectives behind our amendments;secondly, the technical means by which the objectives will be achieved; and, thirdly, the implications for the money resolution. Our objectives can be expressed briefly—they are to simplify and to make more flexible the financial arrangements for Scottish Enterprise. I hope that 1032 Opposition Members will share those objectives. They will be achieved primarily by doing away with both public dividend capital and national loans fund lending, both of which have proved complicated and inflexible, and replacing them with voted loans.
Voted loans will allow far more flexibility in comparison with the limitations of public dividend capital and national loans fund lending. I expect that to be widely welcomed by those who operate the financial arrangements. Because the loans will be voted, there will be no diminution of parliamentary oversight—indeed, quite the reverse. Our intention is to use voted loans only for those functions funded at present from public dividend capital or national loans fund lending. However, the provisions that we propose would in principle allow the flexibility of using grant in aid and/or voted loans for the full range of Scottish Enterprise functions, with the single exception of administrative expenses which are to be limited to grant in aid only. That will allow the maximum scope for responding to future circumstances.
The amendments that the Government have tabled in Committee, as well as deleting powers in relation to public dividend capital and national loans fund lending and inserting instead new powers in relation to voted loans, also make two other consequential changes. They make explicit provision to allow a special payment of grant in aid to the Scottish Development Agency to extinguish the outstanding PDC and NLF obligations and they make provision to recover to the Consolidated Fund the future receipts relating to those investments made with PDC or NLF resources that remain in being when the PDC and NLF regimes disappear.
A further modest but useful amendment gives the Secretary of State for Scotland, rather than the Treasury, the power to guarantee external borrowing.
This supplementary money resolution provides the necessary supporting framework for the amendments. It supplements the original money resolution by referring to the new funding mechanism of voted loans and by authorising the payment of grant for all Scottish Enterprise's functions. It also gives authority to the Secretary of State to use money provided by Parliament to fulfil guarantees given by him in respect of borrowing by Scottish Enterprise.
Finally, the supplementary resolution provides that the total financial resources available to Scottish Enterprise are not to exceed £3 billion. That is in line with the amendment to clause 23 that the Government have tabled. The revised limit now includes the full range of programmes and activities for which Scottish Enterprise will be responsible, whereas the limit published in the Bill was not so comprehensive. I can, however, assure the House that there has been no change in the underlying figures; it is simply that now all funding items, except administrative items, have been brought into account.
I hope that I have explained the rationale for, and effect of, our financial amendments and the consequential need for this supplementary money resolution, and I commend it to the House.
§ Mr. Tony Worthington (Clydebank and Milngavie)We shall have the opportunity tomorrow to discuss the money resolution in detail in Committee if we wish to do so, but this is a useful opportunity to debate the question of 1033 money. During the six weeks of the Bill's passage through the House, it has become increasingly obvious that the Government face major problems—not in this detailed technical financial material but in the availability of money to Scottish Enterprise. It has been an illuminating few weeks, during which all that we seem to have got from the Minister is talk of flexible enterprise or enterprising flexibility. We need to go into more detail on the question of money.
The funding seems to be disappearing. Week by week we move further away from the intention in the explanatory and financial memorandum:
It is intended that the resources made available by the Secretary of State to the two new bodies should initially be broadly equivalent to that which would have been provided for their predecessor bodies combined.We have said that that is about £500 million, but that money seems to be disappearing. The grant in aid, which is the main source of money for the SDA, was cut in real terms by £3 million last year, while the grant to the Welsh Development Agency rose by £6 million. The SDA seems to be chronically strapped for cash. People are not even proposing projects any more, because they know that there is no chance of their being accepted.I should be more likely to believe the commitment in the Bill if it came from the Secretary of State for Wales but the Secretary of State for Scotland has a credibility gap in respect of the resources to be provided for Scottish Enterprise. I am told by Welsh Members that the Ebbw Vale garden festival and the valleys initiative are both going ahead. When the Glasgow garden festival went ahead, everything else seemed to stop because of the problems of financing. The Welsh Development Agency had 510 staff in 1988–89 and 580 in 1989–90—an increase of 70 in a year. The contrast with the SDA's staff, who are seeking every opportunity to leave, is considerable.
It is not only the grant-in-aid money that is in doubt; the Scottish Development Agency has also been told to sell its property portfolio. Last year the surplus on the property portfolio was £13.6 million. That is being sold off, and the proceeds will go to the Treasury. Where is that surplus—the income—to come from in future to fund Scottish Enterprise and Highlands and Islands Enterprise? Parts of the equity portfolio are also being sold off, which will give a short-term return to the Treasury, but not to Scottish Enterprise.
When we look at what has happened to training, we see that the money absolutely disappears. Expenditure in Britain on training has been substantially cut, and not just in absolute terms. The cut per trainee is falling; for a youth training scheme trainee it is planned that expenditure should fall from £50 to £33 per week by 1992–93. Employment training expenditure will be cut from £1,040 in real terms in 1989–90 to £1,002 in 1990–91. The expenditure per filled place per week will fall from £97 to £90. Technical and vocational education initiative expenditure for participating students will fall from £229 in 1989 to £90 in 1992. As the number of educational compacts increases, the amount of money to spend on each compact falls from £143,000 to £100,000.
The Confederation of British Industry says that we need a skills revolution, but in Scotland the Training Agency's budget is being cut. In Scotland the budget for next year, comparing like with like, is nearly £30 million down, without allowing for inflation. If we allow for inflation, the budget is nearly £50 million down. The 1034 budget for Scottish Enterprise will be much closer to £400 million than £500 million. By next year there is likely to be about £50 million off the training budget, and about £10 million—we cannot be exact—off the property income, and some more money off the equity income. Goodness knows what will happen to the grant in aid.
In addition, the local enterprise companies are likely to need extra staff for decentralisation. A calculation was made by the Training Agency that it would need about 540 extra staff for Britain. If Scotland needs an extra 50 staff, how will they be paid for? It is likely that a decentralised Scottish Development Agency will also need extra staff. It looks as though we shall be about £60 million to £100 million short.
A few weeks ago the Secretary of State was bouncing around with his new toy, Scottish Enterprise. He was buoyant about it, but the dream is coming to an end because he is now caught between a rock and a hard place. On one side he has Bill Hughes and the Prime Minister——
§ Mr. Norman Hogg (Cumbernauld and Kilsyth)Not him again.
§ Mr. WorthingtonYes, I am sorry. I find it essential to mention Mr. Bill Hughes because it causes great embarrassment to the Government, and that is what we are here for.
On the one hand there are the problems of Mr. Bill Hughes and the Prime Minister, who seem to be addicted to strong local enterprise companies; on the other hand there is a commitment to strong, central core funding. Today's Glasgow Herald has the headline "Losing the SDA" and talks of a European development agency being set up just when we in Scotland are about to do away with the SDA. It is a careless article, but the flavour of it is that Scottish Enterprise is not seen as positive, but as a loss. We must challenge the Government to say from where the money is to come. I mentioned the Training Agency, the property portfolio and the grant in aid. I am sure that other hon. Members will want to talk during the debate about their fears over the loss of money to the new towns.
The Government have a major credibility problem—which they will have to face within the next few weeks—of how to fund the organisation. Tens of millions of pounds have to be found and there is no sign yet of where the money will come from.
§ Mr. Norman Hogg (Cumbernauld and Kilsyth)I had not intended to speak in the debate, until I arrived at 9.30 this morning and was confronted by my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington), who asked me to speak for five minutes tonight. Perhaps it was a mistake to agree, but it is my duty to do so. After all, the issue is important.
I did not understand a word of the Minister's speech, but I think I share that predicament with most of humanity who have been attempting to follow his remarks in the Standing Committee. I notice, incidentally, that he has filled up the Order Paper with hundreds of technical amendments—at least, I suppose he will say that they are technical; if they are not, we shall be here until Christmas. The amendments will cost a great deal of money, which necessitates tonight's money resolution.
1035 About £150 million a year is spent, from the public purse, on the Scottish Development Agency. We spend about £100 million a year on the development corporations. That is a great deal of money, and it has been spent, year in, year out, ever since we set up the new town development corporations.
The Minister has always agreed with me that the new town development corporations have played an important part in bringing inward investment to Scotland. They have worked in support of Locate in Scotland, and their recent achievements have been considerable. I pay tribute to their work. They have brought employment to Cumbernauld new town and to other new towns, such as that in the constituency of my hon. Friend the Member for East Kilbride (Mr. Ingram).
If we are spending £100 million a year on the new towns, what will we spend on them after the corporations have been wound up by the Bill? Will money on the same scale still be spent on the new towns, with the express purpose of achieving inward investment and of keeping the new towns attractive to outside industry? I hope that the Minister will be able to say something about that, even though, strictly speaking, the money resolution does not touch on that matter. At this time of night one does not have to be, strictly speaking, in order but I hope, in any case, that the Minister will reply to my important point.
§ Mr. LangThe hon. Member for Cumbernauld and Kilsyth (Mr. Hogg) was candid enough to admit that he had not understood what I said, and so much was plain from his contribution, which, although extremely interesting in the context of a matter that we shall debate in depth when we discuss the new town clauses in the Bill, was not relevant to the resolution, which is a supplementary money resolution relating to Scottish Enterprise.
The hon. Member for Clydebank and Milngavie (Mr. Worthington) said that the money was disappearing. He will see, if he reads the resolution, that the total financial resources available rise from £1.2 billion to £3 billion—so the money can hardly be said to be disappearing. The hon. Gentleman also talked nonsense about net grant in aid and the SDA's budget. He knows perfectly well that what matters to the agency is the money that it has to spend, and that is covered by its gross expenditure budget. Anyone who looks at the record over the last decade will see that, at constant 1988–89 prices, the budget has gone up from £140.7 million in 1978–79 to £160.2 million in 1990–91. That is an increase in real terms of some £20 million and reflects the resources that the Government are putting into the agency and the increasing success of the agency's economic activities. It is nonsense to talk of a reducing budget.
The hon. Gentleman mentioned Wales. If he looks at his own favourite measure, that of Government provision for Wales, he will see that in 1979–80 the Welsh Development Agency received Government provision of £48.4 million compared with Government provision for the Scottish Development Agency of £64.9 million—a difference of about 30 per cent. In 1988–89, the difference had risen to almost 40 per cent. from a Government 1036 provision of £66.6 million for Wales to £91 million for the Scottish Development Agency. The hon. Gentleman is on weak ground in trying to compare us with Wales.
The sale of the agency's property portfolio will not adversely affect the funding of the agency and in due course Scottish Enterprise. The Government have determined provision for next year and the following two years—the first two years of Scottish Enterprise—to maintain a constant level of gross expenditure. If receipts fluctuate we will take that into account in fixing the Government's direct contribution. The Training Agency budget is £9 million lower for 1989–90 than for last year, although it is still substantially up on the figure of £120 million in 1988–89.
§ Mr. WorthingtonThe Minister says that it is £9 million down, but that applies only if the Minister counts in this year's figures which were centrally counted last year. If the Minister compares like with like, the amount in the budget this year and what was spent last year under the same headings in the Scottish budget, he will see that the gap is nearly £30 million.
§ Mr. LangThe figures that I gave the hon. Gentleman of £267.3 million for 1990–91 compare with £210 million in 1988–89. That is a substantial increase. If he looks at individual programmes he will see that expenditure in Scotland on the youth training scheme had an outturn in 1986–87 of £85.1 million while the estimate for the current year is £104.6 million. The figure for training unemployed adults was £23.5 million in 1986–87 and the estimate for 1989–90 is £131.4 million. Those figures are a credit to the Government and show that we are providing the necessary resources to meet the needs of our programmes. Those programmes are increasingly effective in delivering results. We are anxious to make provision for the future of Scottish Enterprise in a flexible way that is relevant to its needs. The supplementary money resolution does that, and I commend it to the House.
§ Mr. Donald Dewar (Glasgow, Garscadden)It is worth rising briefly to express some disquiet and dissatisfaction at the way in which the Minister gabbled through his rather unconvincing brief in an attempt to allay the substantial doubts of my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington).
I appreciate that this is a supplementary resolution and that we are dealing with the finances of Scottish Enterprise. I certainly do not wish to stray beyond that. I am aware of the figures on the face of the resolution. They are megabucks. Much money is talked about, but my hon. Friend the Member for Clydebank and Milngavie was trying to establish exactly how much will be available on the ground in real spending terms for the first financial year of the new organisation. In that context the Minister was less than helpful.
I recognise that we can argue interminably about the record of the Scottish Development Agency and Government expenditure, but the commitment of the Government in the past few years has been anything but whole-hearted. I detect the Government's sleight of hand. When it is convenient Ministers talk about net Government contributions, but when it is not convenient 1037 they talk about gross spending, knowing that much of that comes from the sale of assets. On many occasions the record of the agency has been inhibited by difficulties.
At one time people in the SDA said that there was no financial problem, but that the trouble was in getting forward schemes that were suitable for expenditure and which the agency wanted to support. There is no doubt that in recent years it has been a different picture. We have repeatedly been told that there are good projects that the SDA would like to support, but that it is not in a financial position to help. That has increasingly been illustrated by some discontent with the performance of the SDA, when its budget was squeezed during the successful Glasgow garden festival.
I do not want to bandy words about the performance in Wales, but I think that the financing of the Welsh Development Agency has been more generous in the past year or two. I do not think that the 30 to 40 per cent. gap that the Minister was talking about was conclusive. It was interesting to note, as we have remarked before, that the Welsh Development Agency is going to survive, and that a very different structure from that picked for Scottish Enterprise has found favour with the Secretary of State for Wales.
The real issue—the one that we have never got to the bottom of—is exactly what will be available to Scottish Enterprise for training and for the traditional role of the SDA.
My hon. Friend the Member for Clydebank and Milngavie talked about the training budget. Of course, the expenditure figures that were being used by the Minister of State included a number of items for 1990–91 that did not appear in the expenditure for 1989–90. The enterprise allowance scheme, with £40.7 million, is an obvious example, and there are a number of others. If I wished maliciously to delay the House, I would run through them, but I will not on this occasion.
The figure is due to drop by some £9 million. It is not clear whether there is to be additional money for all the imaginative new schemes that we are assured will emerge from the local enterprise companies, once Scottish Enterprise is up and running.
I remember that I said one or two somewhat doubting things during the exchanges, when the Secretary of State made a statement on the Floor of the House about public expenditure in Scotland during the coming two or three years. I pointed out at that stage—I think, with some justification—that there was concern about the way that the industry budget of the Scottish Office was going to decline in cash terms. I questioned whether that was a wise decision at a time when the Scottish economy undoubtedly faces problems with investment, and when the cold wind of recession is undoubtedly beginning to blow. I also asked what that meant for Scottish Enterprise, because, if the industry budget is cut, it does not seem to augur well for the atmosphere of the new launch of Scottish Enterprise or for the kind of funding available to it.
I was told, somewhat tartly, by the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind) that I should know my business better than that, and that that was not the time to make an announcement about that particular matter. I took that rebuke as bravely as I could, but I think that I am entitled to ask the Minister when will be the right time.
My hon. Friend the Member for Clydebank and Milngavie referred to the fact that the memorandum on 1038 the front of the legislation, to which the money resolution is attached, predicts that the spending power of Scottish Enterprise will be broadly equivalent—I think that was the phrase used—to the existing budget. I presume that the existing budget is index-linked, although even that is not made entirely clear. Presumably there will be some allowance for inflation. If that is so, I am sure that you will be the first to understand, Mr. Deputy Speaker—although I know that I cannot ask you to agree, as that would be improper—that that would be a sad anti-climax after the kind of expectations for Scottish Enterprise that Ministers raise in their more optimistic moods.
I remember one Sunday when I gritted my teeth to sit in front of my television set to watch the Secretary of State for Scotland on "On the Record". It was not a particularly stimulating hour, but one of its more interesting features was the distinct hint dropped by the Secretary of State that he was going to win his battle with the Treasury and that there would be substantially more cash for Scottish Enterprise than was outlined in the broadly equivalent standstill budget referred to in the memorandum on the financial effects of the Bill.
I do not suppose that the Minister of State will want to announce actual figures. That might be asking him to do too much and he might not be in a position to do so—I can readily accept that. He may not be able to be as flexible as that, although "flexible" seems to be the fashionable adjective of the night. I think, however, that we are entitled to say a word about the budget, and to ask when the amount—which we hope will be an increase, going beyond the principle of "broad equivalence"—will become public knowledge. That is not an unreasonable request, particularly when we are considering a supplementary resolution dealing with the finance of Scottish Enterprise.
There is no doubt that the rather superficial support that was marshalled for the idea of the one-door approach when Scottish Enterprise was first launched is now beginning to evaporate. My hon. Friend the Member for Clydebank and Milngavie referred to an article in the Glasgow Herald, but there are many other illustrations of the diversity of view about how the organisation should be organised, the basis on which it is founded, the likelihood of obtaining the proper talent and whether the structure is sufficiently—what is the right word?—flexible to do the job as it is advertised.
That argument will continue. You and I, Mr. Deputy Speaker, may well read press reports of further crisis meetings of representatives of the Prime Minister's office. which Mr. Bill Hughes—as author and progenitor of the scheme—will attend to complain about the way in which it is progressing, and the bureacracy that he believes is choking it. Others will claim that it is not so much being choked as running out of control, with friction and confrontation built in almost by definition.
Above all, however, the concern about resources will continue. I do not expect the Minister to put us out of our misery today—I fear that he will have to leave us in a state of anticipation—but it would help me, at least, if he could say a word about when the long-awaited announcement about additional finance will be made. I have never been in office, and I have not his knowledge of the financial timetables involved in legislation such as this.
We are now running up to the start line. Chairmen are being appointed and boards are being formed; yet the Minister has told us—no doubt honestly—that there are not even any draft agreements between the existing SDA 1039 and Training Agency and the local enterprise companies. There are not even any draft memos and articles of association to be made available to those of us who are following events closely in Committee. That is rather mysterious: it suggests a certain hand-to-mouth, make and-mend approach to important parts of what we are told is the flagship legislation of the decade for the Government. I can remember when that term was applied to the poll tax, but it seems that there have been second thoughts.
Many details have not been filled in, and the financial details should take pride of place. I hope that, with the leave of the House, the Minister will be able to speak again, and that he will tell us when we shall know what the budget of Scottish Enterprise will be. Presumably the budget will be "divvied up"—if I may use a Scottish colloquialism—among the local enterprise companies very shortly. They will be out of the development stage and up and running within months, and the necessary decisions cannot be delayed for long. It will take some time to make arrangements for the division, the assessment of bids and the final allocation for each company; the timetable must therefore be fairly tight. No doubt it is already well defined in the Minister's mind, and I do not think it is too pressing or improvident of me to ask him to say a word about it.
§ Mr. LangI had already replied to the debate when the hon. Member for Glasgow, Garscadden (Mr. Dewar) chose to rise to his feet, which was somewhat surprising. Nevertheless, I shall repeat some of the points that I made.
The Scottish Development Agency has never suggested to us that its budget was insufficient for its needs. It has increased in real terms compared with when Labour was in power, and it is fulfilling a far more effective role than it was 10 years ago.
As to the Glasgow garden festival, I have not heard it suggested that there were insufficient resources available from the SDA for that venture. The general opinion is that it was a triumphant success.
The hon. Gentleman tried to draw unfavourable comparisons with Wales. I do not know whether he believes that my right hon. Friend the Secretary of State for Wales should have the say-so over apportioning the Scottish Office's resources, but that seems to be an undesirable undevelopment.
The Training Agency's programmes and resources have varied, as has its resources. But that variation reflects changing circumstances. The hon. Gentleman may not have noticed that unemployment has been falling, that there have been demographic changes, and that more and more young people leaving school are entering higher and further education. It would be wholly inconsistent with the Government's responsible approach to the handling of resources not to take account of such changes. For those reasons, the budgets of the SDA and the Training Agency are more than adequate.
As to the Scottish Enterprise budget for 1991–92, the hon. Gentleman has held his present post long enough to 1040 know the calandar of events in which budgets are spelt out. This year will be no exception. I commend the order to the House.
§ Question put and agreed to.
§
Resolved,
That, for the purposes of any Act resulting from the Enterprise and New Towns (Scotland) Bill ("the Act") it is expedient to authorise the payment out of money provided by Parliament of sums required by the Secretary of State—
In this Resolution—
so long as the relevant aggregate amount outstanding shall not exceed £3,000 million.general external borrowing" has the same meaning as in the Act;
relevant aggregate amount outstanding" means the aggregate amount outstanding, otherwise than by way of interest, in respect of—
"subsidiary" has the meaning given by section 736 of the Companies Act 1985.
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c1040
- ENTERPRISE AND NEW TOWNS (SCOTLAND) BILL [WAYS AND MEANS] (No. 2) 47 words c1040
- SOCIAL SECURITY BILL [WAYS AND MEANS] 80 words