§ 3.52 p.m.
§ THE PARLIAMENTARY SECRETARY, MINISTRY OF PUBLIC BUILDING AND WORKS (LORD WINTERBOTTOM)My Lords, with the permission of the House, I should like to repeat a Statement which my right honourable friend, the First Secretary and Secretary of State for Economic Affairs, has just made in another place. I will use his own words:
"In the course of the Government's consideration of the problems of the development areas and the studies carried out by the Treasury, the D.E.A. and other Departments concerned with the system of selective employment payments, a proposal has been de- 984 veloped for the payment of a regional employment premium to those categories of manufacturing establishments in development areas which already attract premia under the Selective Employment Payments Act. This proposal has been set out in a memorandum which was issued this morning on behalf of the Government by the Department of Economic Affairs and the Treasury. Copies are available in the Vote Office.
"The memorandum was also given initial consideration by the National Economic Development Council at its meeting this morning and will be considered more fully at its meeting in May. I have also arranged with the Chairmen for it to be considered by the Regional Economic Planning Councils in England and my right honourable friends the Secretaries of State for Scotland and Wales will make similar arrangements for consultation on it with their Economic Councils.
"I wish to make it clear that the public presentation of this proposal is an initiative to which the Government attach great importance, because of the high priority which they give to a reduction of the disparity in unemployment levels between the development areas and the rest of Britain and to the achievement of the maximum rate of economic growth consistent with the maintenance of the stability and balance of the economy both internally and externally.
"The view is frequently expressed by the C.B.I., the T.U.C. and other bodies that the opinion of informed and interested parties should be sought and publicly discussed while policy is still in a formative stage. The Government has much sympathy with this view and it is in this spirit that it puts forward this proposal for full consultation and public discussion. Following this consultation and discussion the Government will decide whether or not to submit a proposal for legislation to Parliament."
§ LORD HARLECHMy Lords, we are grateful to the noble Lord for repeating this Statement by the First Secretary in another place. I can say immediately that of course we welcome the idea of instituting discussions with those concerned 985 before inflicting another crazy tax proposal upon this country, as was done last year with S.E.T. We also, of course, welcome the intention of giving help, in so far as it is possible, to the development areas and areas of high unemployment. But do these particular proposals not imply a further grave distortion of the economy? Is it wise to give further subsidies to manufacturing industries only in areas of this kind, where they are basically uncompetitive, while doing nothing whatever to relieve the burden that has been placed upon the service industries, and particularly the tourist industry, which has been dealt blow after blow by this Government, with serious damage in the areas it is now the Government's intention to try to help, such as Wales, Scotland and the South West? At first glance it would appear that instead of reducing the anomalies of S.E.T. they are now to be extended. Has the Government no alternative proposals for helping the development areas which are not open to these grave objections?
§ LORD WADEMy Lords, I also should like to thank the noble Lord for repeating the Statement. While I welcome any recognition by Her Majesty's Government of the serious disparity in the level of employment between development areas and the rest of the country, does not the publication of this proposal, as I think the noble Lord has said, imply the continuation of S.E.T., which in my view ought to be scrapped? Is the noble Lord aware that some areas, such as parts of Scotland and Wales and the West Country, are very largely dependent on tourism, and this proposal will accentuate not only the differentiation but also the anomalies which arise from S.E.T.? Surely this proposal is not nearly radical enough to deal with this whole problem of the relationship between taxation and regional development.
§ LORD WINTERBOTTOMMy Lords, the noble Lord, Lord Harlech, referred to crazy proposals. It seems from the figures that we have seen recently of our balance of payments that if our policies are crazy they are at least successful. There is a problem we have to face, and that is that there is constantly, even under the measures of the present Administration, a much higher rate, in fact a double rate, of unemployment in the manufacturing industries in the de- 986 velopment areas, and these proposals, which this House I am certain will have an opportunity to debate, are designed to combat this continuing disadvantage of the development areas. In spite of its imperfections, I should have thought the noble Lord, Lord Wade, and the Liberal Party as a whole, with their strong emphasis on regionalism, would welcome the great help which this measure will give to the development areas which in the main lie around the fringes of the country, and that is why we recommend them.
§ LORD HARLECHMy Lords, is the noble Lord seriously suggesting that the improvement in our balance of payments is due to the imposition of S.E.T.? If that is his view he is the only person in this House who holds it. Secondly, of course we recognise that there is the necessity for helping the development areas. All we are asking is whether extension of the anomalies of S.E.T. is the right way to do it.
§ LORD WINTERBOTTOMMy Lords, I never suggested that all our problems can be solved by any one facet of our policy, but S.E.T. is one facet of a successful policy. There may be other modifications of that tax to meet the anomalies, but that is not the subject we are discussing.
§ BARONESS EMMET OF AMBERLEYMy Lords, may I ask the noble Lord whether it would not be more sensible to reduce taxation rather than increase subsidies?
§ LORD WINTERBOTTOMMy Lords, in point of fact what we are talking about is increased repayments. That is the subject under discussion—not increased taxation.
§ LORD BYERSMy Lords, the noble Lord seems to be putting it forward as a cure for unemployment. Would he not think again? Can it be right to subsidise wages, even in development areas, when we ought to be encouraging manufacturers to use less labour and greater efficiency in each job? This may well come back on the heads of everybody by subsidising labour at a time when we should not do it. I hope the noble Lord will take seriously these criticisms of S.E.T. It is a crazy, wasteful-of-manpower and everything 987 else, tax system. Even the Ministry of Labour are paying over £1 million in S.E.T., and they are administering the repayment programme.
LORD HAWKEMy Lords, is it not a fact that the people employed in manufacturing industry in this country represent only about two-fifths of the whole employment of the country? Therefore, how can you reduce the disparity between the development areas and others if you confine this refund purely to manufacturing industry? You must extend it to service industries.
§ LORD WINTERBOTTOMUnfortunately, however much one admires the agriculture industry, the growth in the wealth of society as a whole has arisen from the increased output of manufacturing industry, and it is necessary to use our manufacturing resources to the maximum extent. If we have unused resources in the development areas, the only way in which we can combat the magnetic draw of the South and Midlands is to adopt some form of subsidy to manufacturing industry in the peripheral areas. That is one way of combating the drift to the South.
LORD HAWKEMy Lords, if the noble Lord would attract service industries to the North and away from the South he would achieve exactly the same object.
§ LORD LEATHERLANDMy Lords, will my noble friend please bear in mind that if he takes anything away from industry the Opposition say that he is wrong, and if he proposes to give something to industry, equally they say he is wrong. So if he follows his own inclinations probably he will be right.
§ LORD WINTERBOTTOMMy Lords, I am grateful to my noble friend.