Scottish Enterprise Bill (Hansard, 1 March 1999)

§ The Parliamentary Under-Secretary of State for Scotland (Mr. Calum Macdonald)
I beg to move, That the Bill be now read the Third time.
Section 25(2) of the Enterprise and New Towns (Scotland) Act 1990 places a financial limit upon Scottish Enterprise. The purpose of the Bill, as hon. Members who have followed its progress will know, is to increase the financial limit from the present level of £3,000 million to £4,000 million. In addition, it removes the provision enabling the Secretary of State to increase the limit further by statutory instrument.
Scottish Enterprise will reach the current limit in June. The Bill is required to allow it to continue to operate until March 2001. Thereafter, the Scottish Parliament will decide on the funding arrangements of Scottish Enterprise.
The Bill is technical. Both sides of the House supported it in principle on Second Reading and it was not amended in Committee. I therefore commend the Bill to the House.

§ Mr. Oliver Letwin (West Dorset)
The Bill is brief, and the Minister has made a brief speech. With his usual engaging manner, he sought to lull us into a sufficient sense of insensibility so that we would not wish to contribute at length. I certainly do not intend to detain the House for long, but some points need to be raised.
Our deliberations on the Bill have, surprisingly, occasioned some interesting debate. We have considered the question whether the agency to which it refers—Scottish Enterprise—is itself efficient. More importantly, we have considered whether the House, under the proposals for devolution enacted in the Scotland Act 1998, ought to continue to have a role of oversight in relation to the expenditure by that agency, given that the great part of its funding will come from the United Kingdom taxpayer.
I do not wish to rehearse again those arguments which have been amply rehearsed on Second Reading and in Committee. The Minister has been a kind of gentle Ozymandias throughout, asking us, in effect, to make our arguments, but not to press them to the point where he needs to tell us politely to disappear. However, in the course of that debate, we have become increasingly aware of another problem to which we have not yet alluded and, before we leave this subject, it needs to be aired.
Scottish Enterprise is not alone—there are other agencies like it around the United Kingdom. The Welsh Development Agency—the so-called economic powerhouse of Wales—is a prime example. In due course, there may be more agencies seeking to attract investment to a region or a country within the UK. It is to the great advantage of the UK as a whole if investment that would not otherwise come arrives under circumstances where that investment is drawn from outside the UK, where it would otherwise not have arrived in the UK but would have gone outside, or where it simply would not otherwise have been made. The same applies in the case of jobs.
812 Alas, that is not the only kind of activity in which regional or country-based development agencies need necessarily act. They may engage—nothing in their constitution prevents them from doing so—in a bidding war against one another to try to draw investment, and hence jobs, from one part of the UK to another. That is not a problem that afflicts Scottish Enterprise in particular. Nothing about Scottish Enterprise gives rise to the fear that it may seek to engage in such activity, but Scottish Enterprise has that ability. By raising its financial limit this evening, as we shall eventually do, we shall increase, rather than reduce, that ability.
Under normal circumstances—certainly under circumstances that would have obtained before the Scotland Act 1998 and its sister legislation in Wales and Northern Ireland—that potential problem would have existed anyway. Since the enactment of that legislation, that problem has increased and taken on a new character, which this Third Reading provides the House with an opportunity to ponder. Let us imagine the circumstances in reverse: that, in due course, the Government were to introduce parallel legislation in respect of agencies for the English regions. Let us suppose that those English regions were to use taxpayers' funds to engage in a bidding war to draw investment and jobs away from Scotland into the English regions.

§ Dr. Norman A. Godman (Greenock and Inverclyde)
Or into Wales and Northern Ireland.

§ Mr. Letwin
Or let us suppose that the Welsh Development Agency or a similar agency in Northern Ireland were to engage in the same activity, which is already possible. It would then be quite reasonable for people in Scotland to object on the basis that they were partly funding an agency that was drawing jobs and investment away from them. People in other parts of the United Kingdom could harbour similar feelings if, benefiting from this legislation, Scottish Enterprise were to engage in the same activity.
I hope that the House will note that I am specifically not making an argument that is derogatory about Scottish Enterprise and its management, nor do I suggest that there is an asymmetry between the way in which people in Scotland would act or respond, and the way in which people in other parts of the Kingdom would act or respond. On the contrary, I am talking about rational behaviour and attitudes on the part of people throughout the Kingdom. It is a fact of life that no one likes to have some of their money used, via the Consolidated Fund, to fund an agency to take jobs and investment away from their patch in the United Kingdom.
Following devolution, that pattern could all too easily be exploited, in particular by nationalists. If a party wanted to destabilise the United Kingdom and to play on the rational fears that I have described, it could all too easily use the fact that a development agency such as Scottish Enterprise or one in another part of the kingdom is dragging jobs and investment from its part—the part that the nationalists in question happen to defend and to believe should be separate—to another.

§ Mr. Tam Dalyell (Linlithgow)
Not "could"—such a party certainly will. It is human nature.

§ Mr. Letwin
The hon. Gentleman is probably right, as he often is, but I hope that he will note that I am trying 813 to make the case not in the most lurid way, but, on the contrary, in the most cautious way possible. It is at least evidently possible. He may be right that it will occur.
My concern is to make it abundantly clear that I am not trying to arouse or to inflame sentiments. On the contrary, I am trying to assuage. I am trying to put the case in as calm a way as I can to make it clear that we have a collective problem that should be faced by people from all parts of the kingdom who wish the United Kingdom to remain intact.
Of course I recognise honourably that some hon. Members present do not wish the UK to remain intact. They will welcome any mechanism that enables the United Kingdom more rapidly to descend into tension.

§ Mr. Andrew Lansley (South Cambridgeshire)
I am following what my hon. Friend says with care. He will be more familiar with the passage of the Bill than I am, but have the Government at any stage during its passage in the House or in Committee published or presented to the House or Committee a concordat—which, I understand, should occur—between Scotland, Wales and the regions of England about the circumstances in which particularly regional selective assistance is to be made available?

§ Mr. Letwin
The short answer is, of course, no. As my hon. Friend will know, the whole question of concordats is extremely vexed. None of us knows what the juridical status of the administrative contracts between—

§ Mr. Deputy Speaker (Mr. Michael J. Martin)
Order. The terms of the Bill are narrow. We are talking about increasing the borrowing powers of Scottish Enterprise, so we should not go into the powers that a new Parliament in Edinburgh, or any other devolved Parliament might have. We must stick to the Bill before us.

§ Mr. Letwin
Absolutely, Mr. Deputy Speaker. It is true that, under the Bill, the financial limit for Scottish Enterprise having been increased, its ability—were it to choose to do so—to engage in the activities that I have described will increase. That would have to be restricted via a concordat, I think, unless it were restricted by Act of Parliament.
During the debates on the Bill, the Minister has not advanced any suggestion that the Bill should be amended to introduce a mechanism to restrict the activities of Scottish Enterprise in drawing away investment.

§ Mr. Deputy Speaker
Order. We have now come to Third Reading. The hon. Gentleman had opportunities to table amendments in Committee. He could also have tabled what are known as probing amendments. It is not for me to tell him what his job is, but we have landed at the Third Reading of the Bill, which is very narrow. He must keep to the terms of the Third Reading of the Bill.

§ Mr. Letwin
Of course, Mr. Deputy Speaker.

§ Mr. Lansley
On a point of order, Mr. Deputy Speaker. May I seek your guidance? In considering whether we should give the Bill a Third Reading, I must also consider whether there is to be a concordat between Scotland, 814 Wales and England on the circumstances in which grant aid is to be provided for projects. That, surely, is of some relevance. Is it acceptable for us to debate it?

§ Mr. Deputy Speaker
There are always opportunities for hon. Members to find out about such matters. There are many occasions, including Scottish questions, on which the hon. Gentleman can find out about those other matters, but he can only talk about what is in the Bill. I am guided by the rules of the House, which say that we are discussing only Third Reading of the Bill.

§ Mr. Letwin
I am guided by your instructions, Mr. Deputy Speaker. My observations are intended to suggest that there remains a deficiency in the Bill, in that it provides no mechanism to constrain the activities of Scottish Enterprise in relation to drawing investment from other parts of the United Kingdom. That ought to be common ground between all those present who are not in favour of breaking up the United Kingdom. I know that the Minister is not in favour of that. The Opposition are not either, and I believe that others present are not, with the exception of members of one party.
I think that all of us who share that view should regard the Bill as—alas—a missed opportunity. That does not mean that there is something intrinsically wrong with it from a positive point of view, for it does its job perfectly adequately, but it fails to do another job, and, if the Minister considers the issue, he may think that that job is worth doing in some form or another. I hope that, if and when the House must consider further legislation concerning such an agency—I doubt that there will be another Bill concerning this agency, for obvious reasons—the Minister will recommend such mechanisms to his ministerial colleagues. Those observations clearly apply with equal force to any regional agency in England, for example, and such matters would be dealt with in the House.
You were right, Mr. Deputy Speaker, to admonish me for not having raised this matter earlier. On reflection, I think that it would have been a good idea to table amendments. I do not, however, want to let the Third Reading debate pass without having made a point that I consider to be right, even if the person making it is culpable in not having made it earlier. I hope, Mr. Deputy Speaker, that you will allow me to press the Minister. I also hope that the Minister will have a word or two to say about whether the Government accept the general principle. Whether or not they finally agree with the hon. Member for Linlithgow (Mr. Dalyell), who suggested that it was inevitable that the problem would arise, I hope that they will accept that there is a potential for it to arise. I trust that the Minister will tell us that the Government will address, in some manner—they cannot do so in the context of this Bill—the need to prevent a bidding war that would draw investment uselessly from one part of the kingdom to another, to the possible advantage of separatists whom most of us do not wish to prosper.

§ Mr. Lansley
Some months ago, I tabled parliamentary questions asking what had been the maximum cost per job of provision for projects in Scotland, Wales and England. The responses showed that, in Scotland, the maximum cost per job had reached £17,000, whereas in Wales and England it had reached £15,000. On the face of it, therefore, there is scope for Scottish Enterprise to 815 use the resources available at a higher maximum cost per job than would be possible in other parts of the United Kingdom.

§ Mr. Letwin
My hon. Friend, as he does so often, makes an interesting point. I suppose that, in raising the financial limits for Scottish Enterprise, the Bill would potentially aggravate the situation.

§ Sir Robert Smith (West Aberdeenshire and Kincardine)
Has the hon. Gentleman considered the consequences of not passing the Bill?

§ Mr. Letwin
There is ample evidence on the record, from statements made on Second Reading and throughout the Committee stage, to suggest that Her Majesty's Opposition have no intention of preventing the Bill's passage. We recognise that it needs to be passed, because Scottish Enterprise needs to continue its work, much of which—notwithstanding the comments that we have made about its efficiency—is valuable.

§ Mr. John Bercow (Buckingham)
I appreciate the position taken on the matter by Opposition Front Benchers and Back Benchers, but I am conscious also of my hon. Friend's reputation as a Unionist. Is he saying that he is prepared to countenance, by supporting the Bill, a situation in which we acquiesce in, or vote for, differential treatment of different parts of the United Kingdom?

§ Mr. Letwin
My hon. Friend was right to seek, on my behalf, that I should protect my reputation as a Unionist; I hold nothing dearer. We are told nowadays that that view is shared on both sides of the House, and that is much to be welcomed.

§ Mr. Bercow
Action speaks louder than words.

§ Mr. Letwin
Alas, in some respects, that is true.
The purpose of the Bill is not in any way to aggravate the problem that I have been describing. If the Bill's provisions were abused, it could lead to an aggravation of the problem—but that is not the purpose of the Bill itself. I fear that, if the Bill is passed without amendment, it will be a missed opportunity to cure a potential problem. I do not by any means go so far as to say that, in itself, it will cause a further problem.
The Opposition shall therefore not be pressing the matter so that it causes friction or difficulty for Scottish Enterprise itself or for the Government. We do, however, urge the Minister to take on board the points that I have made. I hope that, in his usual manner, he will tell the House that he recognises the seriousness of the issues and that he will seek to address them in one way or another.

§ Mr. Dennis Canavan (Falkirk, West)
I welcome the Bill's Third Reading, and the potential additional investment—an increase in the aggregate amount outstanding from £3 billion to £4 billion—that it will provide for Scottish Enterprise and its subsidiaries. There will be a general welcome for the increase not only in 816 the House, but across Scotland. In his reply, however, will the Minister be good enough to give us some indication of how he envisages that additional money will be used to regenerate the Scottish economy and to try to improve job opportunities for the people of Scotland?
The Minister may recall that, last week, at Scottish Question Time, I pointed out that, according to International Labour Organisation statistics, last year unemployment in the United Kingdom fell by 98,000, whereas there was a 9,000 increase in Scotland. That was before the recent declaration of redundancies at places such as Wrangler, BP, Kvaerner, Bishopton and Volvo. In the past month, in the Falkirk area alone, more than 1,000 redundancies have been announced. It has been the biggest spate of redundancies in the area for many years.
I was very disappointed indeed last week with the Secretary of State's reply to my question. He said: A little perspective would be rather more helpful than suggesting that the end of the world is nigh."—[Official Report, 23 February 1999; Vol. 326, c. 166.] That reply went down like a lead balloon in Falkirk.
Last week, the Secretary of State never even replied to my suggestion of a top-level meeting, comprising a high-ranking Minister and representatives of local people and the local business community, to discuss the area's jobs crisis. I am grateful that my right hon. Friend the Secretary of State for Scotland has just entered the Chamber.
I hope that the Scottish Enterprise Bill will offer, through Scottish Enterprise and Forth Valley Enterprise, an opportunity for more investment in areas such as Falkirk. I should like the Minister or the Secretary of State to confirm that, and to outline specific proposals for action.
As the Secretary of State and the Minister may know, recently, with representatives of the local community, I took part in a delegation that went to see Lord Macdonald of Tradeston, who has responsibility at the Scottish Office for business and industry. We made a very strong case for assisted area status in the Falkirk area, to encourage industrial and economic development. That case was supported by the chairman of Forth Valley Enterprise, who participated in the delegation. I hope that the additional investment that the Bill provides will help him to put some money where his mouth is and ensure that Forth Valley Enterprise works in partnership with potential inward investors in the private sector to persuade them to come to our area and ensure that something is done to reduce the appalling and unacceptable level of unemployment.
The Bill should increase the investment potential of Forth Valley Enterprise, which should help to save existing jobs and create new ones through inward investment. I should be grateful if my hon. Friend the Minister said how he thinks that the Bill will help to regenerate the economy in the Falkirk area and improve the employment prospects of my constituents.

§ Sir Robert Smith (West Aberdeenshire and Kincardine)
I shall be brief, because this is a short Bill and I do not want to hold up other matters to be discussed later this evening that affect Scottish business. Scottish legislation will not hold the House up in future and we shall have time to scrutinise other issues more closely.
817 I welcome the fact that the Bill provides for transitional arrangements to keep Scottish Enterprise alive and active until the Scottish Parliament takes control of its affairs, guiding and directing the most efficient use of the money in Scotland to be invested for the benefit of Scotland.
Given that no amendments were tabled in Committee or on Report, the Bill has clearly not attracted much controversy. The fact that the Official Opposition have said that they do not intend to vote against it suggests that it deserves to be passed quickly, so that we have time to scrutinise other measures.

§ Mr. Tam Dalyell (Linlithgow)
I intervened earlier on the hon. Member for West Dorset (Mr. Letwin) because he could not see that the hon. Member for Moray (Mrs. Ewing) was looking as though she were the cat who had swallowed the cream. The truth is that she has swallowed the cream. Every Member of the Holyrood Parliament will inevitably behave like the nationalists in this matter. People struggle for their institution. Conflict will certainly materialise in some form. That is why I intervened to say that it will, rather than it could.
My hon. Friend the Minister said that the financing of Scottish Enterprise would be a matter for the Scottish Parliament. We have a Treasury Minister on the Front Bench. What is the Treasury view of the Minister's statement? Is it fully endorsed by the Treasury? I should be very interested to have confirmation of that, because I wonder whether it has been agreed by the Treasury.
I should like to follow up the point made by my hon. Friend the Member for Falkirk, West (Mr. Canavan). There is a problem with assisted area status. The area that I have the good fortune to represent is one of the more prosperous parts not only of Scotland, but of Britain. However, Ministers had better be careful about killing the proverbial goose that laid the golden egg. Thousands of people from Lanarkshire and 1,500 to 2,000 people from Fife come into west Lothian every day because of the factories in Livingston and elsewhere that we have been fortunate enough to attract.
Ministers must be careful because, even now, this is a fragile economy. My hon. Friend the Minister knows all the arguments that have been expertly deployed by West Lothian district council. I should like an answer to the question on assisted area status, and how this will be dovetailed.

§ Dr. Norman A. Godman (Greenock and Inverclyde)
Mr. Deputy Speaker, I shall be brief—so brief that I shall sit down before 9 o'clock. My hon. Friend the Member for Linlithgow (Mr. Dalyell) referred to the hon. Member for Moray (Mrs. Ewing) as a cat who had swallowed the cream. However, I totally reject the Cassandra-like projection offered by my hon. Friend. I know of one candidate hoping to secure a seat in the Scottish Parliament who would reject entirely the notion that she was a nationalist.
I reject also what the hon. Member for West Dorset (Mr. Letwin) had to say about the Scottish Parliament and its monitoring of Scottish Enterprise's expenditure. I have 818 every confidence that the kind of candidates that all parties are putting forward for the Scottish Parliament will carry out—

§ Mr. Deputy Speaker
Order. I have given some leeway, but I cannot allow discussion of candidates. The Bill is narrow—it proposes to double the borrowing powers of Scottish Enterprise. That is all we can talk about.

§ Dr. Godman
I beg your pardon, Mr. Deputy Speaker. However, I wanted to make the point that any extra investment—we are talking about an extra £1 billion, not £3 billion—should be used to re-energise those parts of the country which have been hit badly by job losses. I need hardly remind my hon. Friend the Minister of the 650 jobs disappearing from National Semiconductor, the 350 jobs to be lost at Amp in Port Glasgow and job losses at Royal Ordnance Bishopton and elsewhere. It is essential that that money be used to maintain work and to bring in highly skilled work.
Finally, I wish to make a plea for the Gourock waterfront, because the infrastructure needs to be developed. If that can take place with money from Renfrewshire Enterprise, the whole area will be a much better place in which to live, and it will attract more investment and more jobs.

§ Mrs. Maria Fyfe (Glasgow, Maryhill)
I wish to put it on record that there is enormous Back-Bench appreciation of the huge increase in the budget of Scottish Enterprise, and we expect great things from it. I am speaking as a Glasgow Member of Parliament, representing one of a number of constituencies with high and continuing levels of unemployment. My hon. Friend the Member for Linlithgow (Mr. Dalyell) said that everybody in the Scottish Parliament would be a nationalist. The truth of the matter might be that we will all be Glasgow nationalists, Edinburgh nationalists, Aberdeen nationalists and so on.
There are serious concerns, and that is why there will be enormous resentment about the remarks of the Opposition spokesman, who begrudged us the extra money for areas of our country which have badly needed money to make employment possible. Instead, some have had money sucked out of them—as has been the case with Glasgow.

§ Mr. Dalyell
May I just clarify something? I did not say—nor would I ever say—that my hon. Friend or any of our colleagues were nationalists. I said that members of the Scottish Parliament would behave as if they were nationalists.

§ Mr. Deputy Speaker
Order. Perhaps it might have been better if I had stopped the hon. Gentleman making those remarks in the first place. I will certainly not allow him to do so in an intervention. I believe in any case that the hon. Member for Glasgow, Maryhill (Mrs. Fyfe) has finished.

§ Mr. Macdonald
This has turned out to be another interesting debate on a narrow and technical measure. I should remind the House that the Bill increases the 819 borrowing limits for Scottish Enterprise—it does not, of itself, increase the funds available. It allows Scottish Enterprise to continue to be funded, and it allows the Government to continue to provide Scottish Enterprise with the money it needs to carry out its work.

§ Mr. Lansley
Will the Minister answer the question asked by the hon. Member for Linlithgow (Mr. Dalyell)? Is the Treasury content for the Scottish Parliament to ask Scottish Enterprise to increase the limit further, even though it may be taking on borrowing powers or contingent liabilities, without any further limit being set for national economic reasons?

§ Mr. Macdonald
It will be for the Scottish Executive to decide how much money to provide to Scottish Enterprise out of the Scottish block. That is what devolution is all about. The Treasury is fully satisfied with the Bill.
It is legitimate to ask about inward investment, but not necessarily in the context of the Bill; it might be more appropriate in discussions on the Scotland Act 1998. The Government accept that it would be sensible to have effective co-ordination of financial assistance offered throughout the United Kingdom. It is in no one's interest to have an auction or bidding war. The White Paper on devolution envisaged that United Kingdom guidelines and consultation arrangements for the devolved bodies would be set out by concordat.
There is nothing new or special about that in principle. The incentives that can be offered to inward investors will depend on assisted area status, which is itself dependent on various European Union rules and regulations. It is not uniquely a United Kingdom problem. It is a matter of concern throughout Europe that we should not get unfair playing fields or uncompetitive practices, so we will seek to establish in the United Kingdom, by concordat, the same principles that we want to agree throughout the European Union.
Some of my hon. Friends have expressed concerns about unemployment and job losses in their constituencies. That is a matter of concern to the Government, which is why we need to ensure that Scottish Enterprise continues to function and put its strategy into effect. Thanks to the new deal and other measures, unemployment—the claimant count—is at its lowest in Scotland since 1977, under the previous Labour Government, and we should take some pride and satisfaction from that; but every job loss is a matter of genuine and grave concern not only to constituency Members but to the Government.
Scottish Enterprise recently published its strategy. The Bill is technical and will simply allow the borrowing limits to be raised to allow Scottish Enterprise to continue to carry out its work and the Scottish Parliament to institute future arrangements as appropriate. I commend the Bill to the House.