HL Deb 08 December 1977 vol 387 cc1767-77

4.15 p.m.

Lord MELCHETT

My Lords, I beg to move that the Appropriation (No. 3) (Northern Ireland) Order 1977 be approved. This order authorises the appropriation out of the Northern Ireland Consolidated Fund of supply requirements set out in the autumn Supplementary Estimates, and it is the second Northern Ireland Appropriation Order to come before the House during the current financial year.

The order will provide £109.6 million, and will bring the total Estimates provision to date for 1977–78 to some £1,254 million, an increase of £106 million over the total Estimates for 1976–77. The schedule to the order details the services for which extra provision is required, and further information is contained in the volume of autumn Supplementary Estimates which has been placed in the Library. The most important items are £46.3 million for assistance to the Northern Ireland Electricity Service; £19.8 million to cover extension of the Meat Industry Employment Scheme until the end of the calendar year 1977; £10.5 million to meet the increased cost of Supplementary Benefits, and £9 million to provide for the extension of the temporary Employment Subsidy to 31st March 1978. My Lords, I beg to move.

Moved, That the draft Appropriation (No. 3) (Northern Ireland) Order 1977, laid before the House on 9th November, be approved.—(Lord Melchett.)

Lord BELSTEAD

My Lords, we are taking four Northern Ireland orders, and in case noble Lords who are waiting for the important debate which is to come think that there will be long debates on these orders, may I say that this is the third slice of the Northern Ireland Budget, as it were, for the current financial year; therefore I should like to say a word on this order, although on the other two orders I would not wish to say anything at all.

The cost of electricity in Northern Ireland, which was the subject of the previous order, must have caused many businesses to hesitate as to whether they were going to invest there. Now that the electricity problem is going to begin to recede, I should like to look at this appropriation order in relation to possibilities for expansion of the Northern Ireland economy, within the policies of the Government, and, so far as I can persuade the noble Lord that I am doing so, within the scope of the order. When the Quigley Report was published in 1976—which was a report on the Northern Ireland economy by senior civil servants in Northern Ireland—it concluded that there were really only three options for Northern Ireland for the immediate future. One was to have a competitive industrial strategy generating its own growth; the second option was to have a heavily subsidised economy; and the third option was to have a deteriorating economy.

The report concluded that only the second option was realistic, although it recognised that State support could lead to industrial growth. I think it is important, for reasons which I will explain in a moment, that we should make our position clear. I think that that analysis, in the special circumstances of Northern Ireland at that time, was right. But I am absolutely convinced that the record of new orders which are being won in the Province—through the efforts of Ministers as well as of businessmen—shows that the objective of Government assistance should be for industry and commerce in the Province ultimately to stand on their own feet, as they are very well capable of doing if they are given the chance.

If I may demonstrate what I mean from the example of the traditional textile industry, at the moment there are six major companies in Northern Ireland, employing something above 20,000 people. Despite the difficulties of the textile industry in the United Kingdom in the last few years, despite the constant security problems, these companies have remained in the Province. I am sure that they would be the first to agree that Government support for certain capital and recurrent costs has made Northern Ireland an attractive place in which to invest. On the 1st August the Secretary of State announced a new initiative. He announced a package of grants for industry, which included higher grants on buildings and plant in the worst areas of unemployment, new grants on R and D costs for new products, and some improvements for existing incentives. It has been very encouraging to hear that, not very long afterwards, Dupont, who are involved in textiles in Londonderry, announced that they were to undertake a major expansion and modernisation scheme, despite the cruel murder of their managing director Mr. Agate some time ago, despite the textile recession, and despite the Londonderry security situation.

From this general scene one question arises. I wonder whether experience is proving that it is wise to offer differential grants in order to attract firms to areas of the highest unemployment. It is noticeable that Dupont has already been involved in Northern Ireland textiles for some years, and although I support the continuation of Government assistance for investment in the Province I am not convinced that soundly based firms, some of them large multinational companies and many of them already operating in Northern Ireland, should have their commercial judgment influenced as to where to locate their operations in this way. This is not my own view. It was the Quigley Report which drew attention to the danger of high rates of assistance which may attract the unstable firm which later collapses.

The order refers to the operations of the manpower services, which is why I bring these remarks under the scope of the order. If unemployment in most of Northern Ireland were running at an acceptable level with only one or two bad areas with high numbers out of work, I should not be making the suggestion I am. But, with unemployment running at over 10 per cent., I should have thought that there was a case for concentrating new investment on growth centres, attracting it by the best flat rates of grant within the available budget which it is possible to give.

Turning to another aspect of the order, this order appropriates funds for the work of the Department of Manpower Services and I should like to ask the Government three questions about employment prospects in the Province. First, I understand that there is a delay of about three months on payment of the Selective Employment Premium, which has been retained in Northern Ireland although of course it has been ended in Great Britain. I wonder whether this delay is wise. It would presumably assist firms' cash flows and their willingness to take on employees if payments could be made promptly, and it strikes me that, if it is the Government's view that, as a matter of policy, it is right to continue the SEP in Northern Ireland, it should if possible be paid promptly.

Secondly, I was grateful to the noble Lord for mentioning the meat industry employment scheme which is specifically mentioned under meat processing in the first item in this order. When I raised this subject regarding the future of the meat industry employment scheme on the occasion of the last appropriation order which we took in March, the noble Lord said that his right honourable friend the Secretary of State intended to make an announcement about the future of the scheme as soon as possible. As far as I know, this is the first news which has followed that, and the noble Lord was good enough to tell me in his remarks that the monies in the order will take the scheme up to the end of the year. Are we waiting until the green pound is to be revalued in the United Kingdom? Do not let us run away from the fact that the problem of the meat processing industry in Northern Ireland derives considerably from the differential in the value of the green pound in the United Kingdom. I am not asking the noble Lord to commit himself by saying whether my apprehension is right. Is this really the problem? If it is, then I shall wait impatiently for a revaluation of the green pound, which, for other reasons as well as the problems of the meat industry in Northern Ireland, I think is well overdue.

My third question is whether Harland and Wolff have had the opportunity to take any share in the Polish shipbuilding order? When the Aircraft and Shipbuilding Industries Act was going through your Lordships' House last year, Section 48 was written into it, not least by the efforts of my noble friend Lord Brooke-borough. It laid on British Shipbuilders and British Aerospace the requirement to have full regard to the need to consult and, wherever possible, to co-ordinate their activities with those of any company incorporated in Northern Ireland and engaged in shipbuilding or aerospace, if that company was at least one-third under State ownership. That certainly includes Harland and Wolff.

This is not the time to debate the merits of the Polish shipbuilding order and I have no intention of doing so, but it is the moment to ask whether British Shipbuilders considered Section 48 in allocating this contract, and, if not, why not. The relationship between British Shipbuilders and Harland and Wolff, which is operating in the area of worst unemployment in the United Kingdom, is a very serious matter for this particular shipbuilding yard. I hope that the noble Lord can throw some light on that relationship, particularly as regards the future position of Northern Ireland in shipbuilding and aerospace. Finally, the key to future investment in Northern Ireland remains the security situation, and, with the end of the year just approaching, I give my best wishes to the Government that they may perhaps bring peace to Northern Ireland during 1978.

4.26 p.m.

Viscount BROOKEBOROUGH

My Lords, first of all, I should like to welcome this appropriation order. It is a clear case of the Government showing their determination to maintain the economic structure of Northern Ireland that we have now in this House authorised the payment of £1,200 million for the running of Northern Ireland. It is an enormous burden which is carried by the United Kingdom. I was going to ask the noble Lord, Lord Melchett, whether at a later date, perhaps early in the new year, he would agree to having a debate on the future government of Northern Ireland rather than bringing it into the present question of appropriation.

What is not known so widely here is that local government matters—very mundane matters which are dealt with by county councils, district councils and urban councils—were transferred to the legislative assembly at Stormont just before the Government of Northern Ireland was abolished. Today the position is that nobody can be made accountable for even the most minor matters in the ordinary affairs of Northern Ireland, such as a pothole in a village street. Technically the accountability lies in Westminster. I do not think that is a very satisfactory state of affairs. It is not satisfactory from the point of view of civil servants, nor from the point of view of the ordinary citizens of the country.

The fact that present Ministers work extremely hard, and do their best to see that a legislative anomaly of what we call the "Macrory Gap" exists, is a great credit to them. But it is certainly not a position which can go on for very long. I am slightly worried that the Secretary of State in his present negotiations with political Parties, in the event of his failing to get agreement on a legislative body, appears to be ruling out the possibility of what I will call a higher tier of local government, which is vital if we are to continue with direct rule. I should be grateful if the noble Lord would help us with a debate early after we come back from the Christmas Recess.

I should like to refer to Class 1 of the appropriation, on which the noble Lord referred to help for the meat industry. I do not intend to go into that any further because my noble friend Lord Belstead has very eloquently and comprehensively dealt with that and many other problems. I have a great worry about the milk industry. Under EEC regulations, on 1st January the ordinary milk producer in Northern Ireland is going to suffer a direct cut in price of 7p a gallon. That is an enormous reduction in price and I know that the Government are doing their best and are not in the least complacent about it. Can the noble Lord give the processors and producers—the milk processing industry is an important part of the community—an undertaking that this cut will not take place?

The next question is on Class 3. My noble friend Lord Belstead referred to the question of availability of grants to industry in Northern Ireland, to encourage firms who would not normally go there to do so, and also for companies which are in Northern Ireland to expand. For a long time these grants were a great incentive to industry and by 1968–69 industry was flocking in and the Province was assuming an air of prosperity, unemployment was being combated and technical industries were getting a broad base.

Gradually, as more and more areas in the United Kingdom are declared development areas, the edges of these particular types of grant are being blunted. While they are still most effective for any industry that is already there, it appears to me to be clear that they are no longer effective in bringing new industry—original industry—into the Province in the way that they used to be.

In the 1970 Development Programme and, indeed in the Quigley Report, the question of increasing grants beyond a certain level was highlighted. The opinion was formed—it was certainly formed by the Northern Ireland Government at that time—that there comes a stage when it is unwise to increase a grant beyond a certain point. In our neighbouring Irish Republic there is an incentive that appears to be drawing industry in a very large way, and the sort of industry that we want—that is, export orientated industry. It is called the "tax holiday".

I think that the time has come for the Government to look seriously at the question of the tax holiday. At present there is a committee in Brussels examining the whole question of whether the tax holiday which exists in Southern Ireland is within the terms of the Treaty of Rome. In the event of the EEC Committee reporting that it is within the terms of the EEC, and if it in fact is, will the Government give an undertaking to look seriously at the matter with a view to establishing it in Northern Ireland, because all grants distort commercial decisions? They all disturb the pattern of industry, and this grant or this particular incentive of a tax free holiday in the South of Ireland, which also has grants, appears to have done the trick. The future of Northern Ireland will definitely rest on having an industry which is prosperous and up to date. Therefore, I welcome the order.

4.33 p.m.

Lord MELCHETT

My Lords, once again I should like to thank the two noble Lords who have spoken for their support for the order, which, as both noble Lords have made clear, contains some extremely important allocations of money for Northern Ireland. Both noble Lords touched on the position of industry and industrial incentives. I think that they both acknowledge the fact that the Government have attached the greatest possible priority, first of all, to keeping firms that are already in Northern Ireland there, and keeping as many people as possible employed by those firms. Secondly, the Government have attached the greatest possible priority to attracting new investment to Northern Ireland from whatever source we thought we might be able to attract such investment. Indeed my right honourable friend the Secretary of State and my honourable friend the Minister of State have both in recent weeks and months been trotting the globe searching for jobs and looking for increased opportunities. In that process they have secured the greatest possible support from the trade union movement, the CBI and industrialists in Northern Ireland. In that respect it has been an extremely worthwhile and effective team effort.

I do not think that it is fair for the noble Viscount, Lord Brookeborough, to suggest that the incentives are now no longer attractive enough to encourage outside investors to come to Northern Ireland. I do not think that that accords with the experience of those people who have been talking to potential investors overseas. I do not think that that view is borne out by the extent of interest that has been shown by new investors in Northern Ireland in recent months.

There are, of course, always much better incentives over the hill somewhere or other which it is possible to say the Government should be offering. Indeed, the Government continually keep under review both the level and the type of incentives. However, there is a great deal of flexibility in what we are able to offer at present as well as a great deal of flexibility in the extent to which we can offer individual companies particular packages which suit their own financial circumstances, particular types of investment and so on. I do not think that we have found that our existing powers and financial resources have been a major constraint. There are many other constraints in attracting investors to Northern Ireland. I do not think that this has been one, although, as I have said, we anxiously keep the package under review to see how we can improve it whenever possible.

The noble Lord, Lord Belstead, referred to the new investment by Dupont in Londonderry. That is extremely welcome. However, it points to one continuing difficulty which we must face in Northern Ireland. Although that particular investment keeps Dupont in Londonderry it will in the long run lead to a reduction in jobs, but not to a loss of all the jobs which would have been the case if the new investment had not taken place. However, there is a massive number of jobs to replace over the coming years in Northern Ireland, let alone attracting sufficient extra jobs to reduce the level of unemployment, which both noble Lords have acknowledged is appallingly high.

Therefore, although the noble Lord, Lord Belstead, says that our aim must be to attract viable industry which will, in the long run, having had the benefit of incentives and grants, be able to stand on its own feet and make a profit—because that is where the future of the industrial infrastructure of Northern Ireland must lie—we must face the fact that for some years to come there will be a continuing need for public funds both to attract industry and to help in other ways, as the selective employment premium does, to reduce the loss of jobs and increase the number of new jobs which are created.

The noble Lord, Lord Belstead, also asked about the differential rates of grant available in Northern Ireland. It is true that there is a differential rate of grant between mainly Belfast and some of the growth areas like Ballymena and Craigavon, and many of the areas where unemployment is worse—for example, Londonderry and Strabane; indeed, now West Belfast has been included in that third category. I do not think that the differential rates are sufficiently different to mean that a company that would have invested in a growth area where the rate of grant may be slightly lower than in others, would be discouraged from investing in Northern Ireland at all. The package as a whole is sufficiently flexible for us to prevent that from happening. I am not aware of any examples where that has been the case.

It is a fact that unemployment is a great deal worse in some areas in Northern Ireland—for example, parts of Belfast and much of the West of Northern Ireland—than it is in other areas where the unemployment is possibly comparable to some of the worst in Great Britain. The Government have a continuing duty to do everything we can to get new jobs into those areas where male unemployment may be running in some small localities at 30 per cent. or more. Indeed, not to make a special and extra effort for those areas would be extremely difficult to defend.

Both noble Lords referred to Harland and Wolff and the noble Lord, Lord Belstead, asked about the Polish order. As he knows, the question of placing the Polish order is a matter for British Shipbuilders, but there has certainly been contact with Harland and Wolff. It would be fair to say that, although, in the present state of the shipbuilding industry, any order for any yard must be looked at and is almost always to be welcomed, the fact is that the size and type of vessels of which the Polish order consists are not ideal for Harland and Wolff. Harland and Wolff currently has a considerable number of orders under way which must be completed by 1980 and they consist almost entirely of very large ships: two large crude carriers of 333,000 tonnes dead weight; a bulk carrier of 119,000 tonnes dead weight; and it recently secured two LPGs of 50,000 tonnes dead weight and two product carriers of 66,000 tonnes dead weight. The Polish ships are 16,000 and 4,000 tonnes dead weight. There are two types of ship in the order, but they are a great deal smaller than the bulk of the order book at Harland and Wolff. I certainly agree with the noble Lord—this was implicit in his remarks—that Harland and Wolff still desparately need more orders. The Government, in conjunction with British Shipbuilders and Harland and Wolff, are continuing to do all they can to secure the extra orders that the yard will need over the coming years.

The noble Lord, Lord Belstead, asked about Selective Employment Premium and the delay in payment. As far as I am aware, once it has been agreed that a Selective Employment Premium will be paid, claims are settled within a very short period of time—three or four days. It is true that each SEP claim covers a 13-week period, but the advice that I have is that to try to reduce the period for which each claim is settled would produce an intolerable administrative burden. There are a very large number of establishments—2,300—currently in receipt of SEP, and approximately 160 claims, averaging £1,800 per claim, are received each week. I think that any speeding up of the process would probably lead to a great deal more administrative work, both for the Government and for the firms themselves. If the noble Lord has any particular problem in mind, I shall be happy to look into it.

Finally, I turn to the agricultural questions. We always seem to manage to debate orders of this sort at a time when Statements are imminent, rather than just after they have been made. As I have made clear on previous occasions, the Government are very well aware of the problems that face the meat industry in Northern Ireland, and a recent visit by my honourable friend the Minister of State at the Ministry of Agriculture, Fisheries and Food has shown that we are making great efforts to impress on all our colleagues in the Government the particular problems that will face Northern Ireland. The noble Viscount, Lord Brooke-borough, mentioned the price of milk in the coming months. Once again, a further announcement on the Meat Industry Employment Scheme is expected very shortly. As I say, the timing of your Lordships' debates is not always ideal. However, we are continuing to keep the need for that scheme and any other assistance to Northern Ireland's agriculture under review. I rest on the fact that our record to date has shown that we are prepared to implement these good intentions with substantial financial assistance.

On Question, Motion agreed to.