Industrial Policy (Hansard, 29 January 1992)

§ 10. Mr. Oppenheim
To ask the Secretary of State for Scotland whether he will make a statement on industrial policy for Scotland.

§ Mr. Lang
The central aim of the Government's industrial policy, in Scotland as in the rest of the United Kingdom is to create the conditions for sustainable growth in the economy.
I have today written to my hon. Friend elaborating on how my Department promotes that central aim. I am arranging for copies to be placed in the Library of the House and published in the Official Report.

§ Mr. Oppenheim
Will my right hon. Friend remind Opposition Members that under the old hands-on, interventionist industrial policy that the Labour party is supposed to support, British Steel lost £15 billion and our steel trade was in massive deficit, whereas now British Steel is the most efficient in Europe and we run a healthy surplus on our steel trade? Does he agree that there is something spurious and deceitful about a party that criticises the Government's hands-off policy on steel and calls for a return to interventionism, but does not have the guts to commit itself to keep Ravenscraig open if Labour came to power?

§ Mr. Lang
My hon. Friend is absolutely right to identify the double thinking of the Labour party. It is significant that last Thursday a motion was tabled in the name of the Leader of the Opposition calling on the Government to use every possible means to intervene in the Scottish steel industry, while at the same time the Leader of the Opposition was quoted in The Financial Times as saying that it isn't intervention that the steel industry needs". I do not think that the Labour party has any idea what any of its policies add up to.

§ Mr. McAllion
Does the Secretary of State accept that the success or lack of success of his industrial policy will determine the level of mass unemployment in Scotland? Does he also accept that the only circumstances in which unemployment will be a "price worth paying" in Scotland is when it is paid in full by the Scottish Office Front Bench? Why do the right hon. Gentleman and his hon. Friends not do Scotland a favour, pack their collective bags and go now?

§ Mr. Lang
The Conservative party needs no lessons from the Labour party about employment and unemployment. Every Labour Government increased unemployment. In four of the past five years unemployment has fallen, and it will fall further when the economy is moving, when investment is rising and when there is increased prosperity. All those things will be achieved by the Government's policies—they would never be achieved by the high taxation policies of the Labour party. Following is the information The central aim of the Government's Industrial policy is to create the conditions for sustainable growth in the economy.
The Government believes that since it is the private sector which creates wealth, the Government must seek to create the environment in which companies are encouraged to establish, develop and expand, in order to create both wealth and employment. Good public services and living standards can be provided and maintained only in tandem with entreproneurial activity.
Central to the creation of such an environment is the rigorous control of inflation. The Government's policies have resulted in the United Kingdom having inflation below that of the European Community average. Independent forecasters expect falls in the underlying rate of inflation in the months to come.
The success of these policies, and of the work of my Department, can be shown through the progress Scotland has seen over the past 10 years.
During the 1980s Scottish manufacturing productivity by an average 5.2 per cent. per annum, contrasting with a mere 2.0 per cent. in the 1970s and 4.1 per cent. in the 1900s. In this respect, Scotland's performance in the 1980s was stronger than any of the leading 7 OECD economies.
Since 1981, Locate in Scotland has recorded planned inward investment by companies totalling £4.2 billion, associated with the intended creation or safeguarding of some 80,000 jobs. Even after appropriate discounting of total company forecasts of prospective employment, to around two-thirds of the initially planned figures, this is a record to proud of. It shows that inward investing companies see our economy as providing an environment in which they can operate successfully. Exports of manufactured goods from Scotland have also been buoyant, with an increase of 26 per cent. in real terms since 1979.
Company and VAT registrations and the numbers of self-employed in Scotland have all increased substantially since 1979. The number of companies registered in Scotland rose by almost 70 per cent. from 1980 to 1991, while the number of VAT registered companies rose by 23 per cent. despite the significant real terms in the registration threshold.
Self-employment in Scotland stands at a historically high level, having increased by almost 50 per cent. between 1979 and 1990 compared with no growth over the previous 3 decades.
The privatisation of the two electricity companies in Scotland and of the Scottish Bus Group has led to greatly increased opportunities for employee-share ownership, and in the case of the electricity companies, to more individual shareholders in Scotland. Around half a million Scots applied for shares in the electricity companies and some 400,000 continue to hold their shares.
There have also been a number of encouraging trends in the more recent period, particularly in the Scottish 943 labour market. The Scottish civilian workforce in employment, for example, has seen a growth of 137,000 or 6.5 per cent. over the period June 1987 to June 1991.
In terms of unemployment, the seasonally adjusted total has fallen by over 98,000 in the 4½ year period to December 1991, a fall of some 30 per cent. This has resulted in the differential between Scottish and United Kingdom unemployment rates falling from 3.1 percentage points to just 0.2 percentage points over the same period, the lowest such differential since the war.
Despite these major economic advances, Scotland has been affected by recessionary trends in the United Kingdom as a whole and in the rest of the world during 1990 and 1991. My aim is to minimise these effects, and those of necessary structural changes, and to make the Scottish economy more resilient to future economic downturns using the policy instruments outlined earlier. There are already clear indications from forecasters and official statistics that Scotland has outperformed the United Kingdom economy in each of the years since 1988.
The Government are committed to removing the excess rates burden on Scottish business as quickly as possible. Good progress has been made; non-domestic rates were reduced by £80 million in 1990–91 and a further £100 million in the current year. They will be further reduced by £60 million in 1992–93. These large reductions have encouraged investment and employment, particularly in the service sector which does not benefit from derating.
Another keynote of the Government's industrial policy has been the freeing of previously state-owned assets, allowing the more effective use of these resources under private sector management. This policy, which is increasingly being seen in countries throughout the world as essential to economic efficiency, has promoted efficiency and increased incentives as well as widening share ownership among the general public.
My Department works within Scotland to promote these aims and to foster the development of an environment in which business can flourish. It aims to enhance the role of private enterprise in the economy; to maximise the value added by industry and commerce in Scotland through the modernisation and expansion of competitive industrial and commercial activity; and to encourage a broad and diverse economic base. It promotes the vital links that exist between business and education allowing each to understand better the needs of the other. Through its administration of regional support measures it assists the establishment of viable economic activity in less advantaged parts of Scotland. It promotes the progressive development of the roads and transport infrastructure and the maintenance and improvement of transport services; and it fosters general environmental and economic improvements, essentially through the recently established Scottish Enterprise and Highlands and Islands Enterprise and their associated networks of business-led local enterprise companies.
In promoting enterprise in Scotland my Department, either directly or through publicly funded bodies:— —gives financial and advisory support for competitive firms, entrepreneurial activity, inward investment, the science and technology base, exporting and training; —encourages deregulation where the burdens imposed on business outweigh the potential advantage to the public interest; —seeks to identify gaps which the market is not able to address and seeks ways of filling those gaps; 944 —seeks to ensure that the markets in land and capital are meeting the needs of new or expanding enterprises; —supports urban regeneration, development in remote areas and tourism; —secures the building and maintenance of the trunk road network and allocates resources for local authority road and transport systems; and —secures assistance to appropriate areas from European funds.
I will oversee continued development of the business environment in Scotland to ensure that the many major advances made in the 1980s and early 90s are continued in the future. In particular I will look to: the networks of local enterprise companies, together with Scottish Enterprise and Highlands and Islands Enterprise, to capitalise further on the integration of economic development and training which they uniquely enjoy; the promotion of Scotland's links with the rest of Europe; the development of Scottish Trade International to further boost export performance; and the further development of the economic climate which will best allow firms to develop, expand and meet the challenges set by the completion of the Single European Market.