HL Deb 29 April 1980 vol 408 cc1162-99

4.14 p.m.

House again in Committee.

Debate on Clause 9 resumed.

Lord HATCH of LUSBY

I have only two or three words to say in reply to the noble Lord opposite who spoke following my opening remarks. I think he has misunderstood the purpose of this clause. We are not talking here about an alternative between the Overseas Development Administration and the NEB. What we are talking about is whether the Overseas Development Administration shall have a power to turn to the NEB, to the Welsh Agency and the Scottish Agency, in order to get technical assistance from them to go overseas. This seems to me to be a perfectly reasonable supposition to make. Certainly from my knowledge of what used to be the Overseas Development Ministry they were very anxious to have the opportunity, perhaps not this year but in the future, to use these agencies for the purposes I have already pointed out. I would ask the noble Viscount whether the Department of Industry has been in touch with the Overseas Development Administration over this issue, because I believe that their interests are common. I would appeal to noble Lords, particularly many of the noble Lords who have a special interest in overseas development, and to the Government, not to oppose the removal of this clause, which will take away an opportunity for increasing our contribution, first, to the development of developing countries, and, secondly, and equally importantly, to the development of our own industries in their relationship with the developing world.

The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard)

I am afraid we do resist the removal of the clause for the reasons my noble friend has already outlined, principally that we do not want the NEB or the agencies to scatter their efforts widely. They have never used these powers. There is nothing to stop any other Government body or private body, which has an opportunity to sell know how of any kind overseas, approaching any body, including these agencies, in order to study any particular skills, products or what-have- you. I am quite sure there would not be a refusal in respect of the uplifting of a particular bit of knowhow that had a very good prospect for this country. But we do not want the power in the Bill for the NEB and the agencies to operate overseas. They have enough to do within

CONTENTS
Airedale, L. Ellenborough, L. Mowbray and Stourton, L.
Airey of Abingdon, B. Elliot of Harwood, B. Murton of Lindisfarne, L.
Alexander of Tunis, E. Emmet of Amberley, B. Newall, L.
Allerton, L. Exeter, M. Norfolk, D.
Alport, L. Ferrers, E. Northchurch, B.
Amherst, E. Ferrier, L. Nugent of Guildford, L.
Ampthill, L. Fortescue, E. O'Neill of the Maine, L.
Auckland, L. Fraser of Kilmorack, L. Orkney, E.
Avon, E. Gage, V. Piercy, L.
Balerno, L. Gainford, L. Rawlinson of Ewell, L.
Balfour of Inchrye, L. Galloway, E. Redmayne, L.
Banks, L. Gisborough, L. Reigate, L.
Barrington, V. Gladwyn, L. Renton, L.
Beaumont of Whitley, L. Glenarthur, L. Richardson, L.
Bellwin, L. Godber of Willington, L. Robson of Kiddington, B.
Belstead, L. Gormanston, V. Rochdale, V.
Berkeley, B. Gowrie, E. Rochester, L.
Bessborough, E. Grantchester, L. Romney, E.
Bridgeman, V. Granville of Eye, L. St. Aldwyn, E.
Byers, L. Greenway, L. St. Davids, V.
Caccia, L. Gridley, L. St. Just, L.
Carrington, L. (A Principal Secretary of State.) Grimston of Westbury, L. Sandford, L.
Haig, E. Sandys, L. [Teller.]
Cathcart, E. Hailsham of Saint Marylebone, L. (L. Chancellor.) Seear, B.
Chelwood, L. Selkirk, E.
Chesham, L. Hampton, L. Smith, L.
Chitnis, L. Hankey, L. Somers, L.
Clifford of Chudleigh, L. Hanworth, V. Spens, L.
Clwyd, L. Harmar-Nicholls, L. Strathspey, L.
Cockfield, L. Hayter, L. Swinton, E.
Cork and Orrery, E. Henley, L. Thorneycroft, L.
Cottesloe, L. Hillingdon, L. Thurso, V.
Craigavon, V. Home of the Hirsel, L. Torphichen, L.
Craigton, L. Hooson, L. Tranmire, L.
Crathorne, L. Hylton-Foster, B. Trefgarne, L.
Crawshaw, L. Kilmarnock, L. Trenchard, V.
Cullen of Ashbourne, L. Kimberley, E. Trumpington, B.
Daventry, V. Kinloss, Ly. Vaizey, L.
de Clifford, L. Long, V. Vaux of Harrowden, L.
De Freyne, L. Loudoun, C. Vernon, L.
De La Warr, E. Lyell, L. Vickers, B.
Denham, L. [Teller.] Mackie of Benshie, L. Vivian, L.
Drumalbyn, L. Macleod of Borve, B. Wigoder, L.
Ebbisham, L. Mancroft, L. Willoughby de Broke, L.
Eccles, V. Marley, L.
Effingham, E. Merrivale, L.
NOT-CONTENTS
Aylestone, L. Crowther-Hunt, L. Goronwy-Roberts, L.
Bacon, B. Cudlipp, L. Gregson, L.
Balogh, L. David, B. [Teller.] Hale, L.
Beswick, L. Davies of Leek, L. Hall, V.
Birk, B. Davies of Penrhys, L. Hatch of Lusby, L.
Blease, L. Donaldson of Kingsbridge, L. Henderson, L.
Blyton, L. Elwyn-Jones, L. Hunt, L.
Boston of Faversham, L. Evans of Hungershall, L. Jacques, L.
Brockway, L. Fisher of Rednal, B. Janner, L.
Brooks of Tremorfa, L. Gaitskell, B. Jeger, B.
Bruce of Donington, L. Galpern, L. Kaldor, L.
Cledwyn of Penrhos, L. Gordon-Walker, L. Kilbracken, L.

their terms of reference at home.

4.18 p.m.

On Question, Whether Clause 9 shall stand part of the Bill?

Their Lordships divided: Content, 134; Not-Content, 70.

Leatherland, L. Peart, L. Stone, L.
Lee of Newton, L. Plant, L. Strabolgi, L.
Llewelyn-Davies of Hastoe, B. Ponsonby of Shulbrede, L. [Teller.] Strauss, L.
Lloyd of Hampstead, L. Taylor of Gryfe, L.
Lockwood, B. Ritchie-Calder, L. Taylor of Mansfield, L.
Lovell-Davis, L. Ross of Marnock, L. Underhill, L.
McCluskey, L. Sainsbury, L. Wedderburn of Charlton, L.
Maelor, L. Sefton of Garston, L. Wells-Pestell, L.
Milverton, L. Stamp, L. Whaddon, L.
Northfield, L. Stedman, B. Willis, L.
Oram, L. Stewart of Alvechurch, B. Wilson of Radcliffe, L.
Paget of Northampton, L. Stewart of Fulham, L.

Resolved in the affirmative, and clause agreed to accordingly.

Clauses 10 to 12 agreed to.

4.28 p.m.

Viscount LONG moved Amendment No. 11:

After Clause 12, insert the following new clause: "Power for the Corporation to borrow (.—(1) The English Industrial Estates Corporation may, in accordance with directions under section 10(3) of this Act given with the approval of the Treasury, borrow in any currency from the Commission of the European Communities or from the European Investment Bank, but subject to subsection (2) below. (2) The aggregate amount outstanding in respect of the principal of sums borrowed under this section shall not exceed £30 million or such greater sum not exceeding £50 million as the Secretary of State may with the approval of the Treasury by order specify. (3) The power to make orders under this section shall be exercisable by statutory instrument, and no such order shall be made unless a draft of it has been laid before and approved by resolution of the House of Commons. (4) In section 11(8) of the Local Employment Act 1972 (receipts of Corporation, with certain exceptions, to be paid over to Secretary of State) after paragraph (a) there shall be inserted— (aa) receipts consisting of sums borrowed under section (Power for the Corporation to borrow) of the Industry Act 1980; and".")

The noble Viscount said: I beg to move Amendment No. 11 and, with the leave of the Committee, I should like to speak to Amendment No. 12 because the two amendments are connected. As I read it, this is the most exciting part of the Bill. The Government are now looking for new ways in which to build up morale in young people and in industry, and also for new ways to try to keep unemployment down. We are talking about the English Industrial Estates Corporation (EIEC) which, as many of your Lordships will know, was started in 1930 in order to buy or build unit factories to help the unemployment situation and industry as a whole. Probably many noble Lords on the other side and older Members on this side will well remember that the Government sponsored the EIEC, which has done enormously good work. In recent years industry has run down and the smaller factories and units have not been built. Moreover, young people who want to build factories find it extremely difficult to do so and it is here that this exciting part of the Bill, as I see it, comes into its own.

The amendments are technical and I hope that they need not take up much of your Lordships' time. As the Bill stands, the English Industrial Estates Corporation has no borrowing powers; nor has it ever had such powers, and nor have they ever been needed. As an instrument of the Government's regional policy, the corporation has been financed from the Vote of the Department of Industry, and it will continue to be so financed, except of course in so far as the private sector may provide funds for its activities.

However, it is not beyond the bounds of possibility that the Government might want the Corporation to borrow from the European Investment Bank, or from the European Coal and Steel Community. I do not say at this stage that this is probable or even likely, for much obviously depends on the individual circumstances of each loan or project; and in particular on the desirability of borrowing in foreign currencies, and so substituting the disadvantage of a long-term exchange risk for the disadvantage of temporarily higher domestic interest rates. That is a technical fiscal judgment which I do not think we can usefully debate here—because, as I said, each case will depend upon the individual circumstances. The purpose of this clause is, therefore, simply to allow the kind of borrowing I have described, should it be thought to be a good thing at any time. I may also add that it is identical in substance, if not in words, with comparable provisions in the Welsh and Scottish Development Agency Acts of 1975.

As we are now discussing this project and discussing finance from private enterprise into the EIEC, a year ago the Government felt that this should be broadcast to private enterprise, to those companies or associations, which would like to put up money to back a particular project in an industrial area which is seriously affected. It was soon after coming to power that this idea by my right honourable friend Sir Keith Joseph and my noble friend Lord Trenchard came about.

In February the Legal and General made a move offering the EIEC £5 million to be divided between certain areas to build unit factories to help young people and, therefore, try to alleviate some of the unemployment in certain areas. On 14th of this month the National Coal Board Pension Fund announced to the Government that it also would put up £15 million to back this scheme of building unit factories. This is a time to congratulate those two bodies for their foresight in trying to help the Government and others build factories in order to reduce unemployment and to help the young establish factories of their own.

Over the years money has not been easily forthcoming due to lack of inspiration in industry. In my view, and I am sure in the view of all your Lordships, the fact that both the Legal and General and the National Coal Board Pension Fund are offering help is a very great step forward. We must bear in mind that it was in 1930 that the EIEC originated, and until recently it has been entirely sponsored by Government or taxpayers' money. The idea now is that free enterprise, which is succeeding in its own particular world of industry or otherwise, can help and is being asked to help to build up confidence in the small industries. I beg to move.

Lord LEE of NEWTON

We have no objections in the least to this kind of development. We wish it well. I do not think that at this stage we would wish to commit ourselves on all the details. The noble Viscount said that it is an intricate scheme, but if it is to result in an increase in the number of small factories being built and if it assists in reducing unemployment, especially youth unemployment, it cannot be a bad scheme. I should like the opportunity to look in more detail at some of the things that the noble Viscount has said. If there is any further information that the Government would like to give us, we should be very happy to consider it. However, on the face of it, I wish the scheme well.

Lord ROCHESTER

Our first reaction from these Benches is also to support the idea underlying the amendment which has just been moved. I see no reason why we should not join with the noble Lord, Lord Lee of Newton, in supporting it.

Viscount BARRINGTON

I did not mean to say anything on this amendment, but I should like to join in supporting it heartily for two reasons. First, as a member of the Liberal Party, I believe in helping small businesses. Secondly, for a very long time my father was concerned with the Legal and General. For a number of years he was its Chairman, and when he retired he was made President. I believe that he would have approved very strongly of this scheme, and he was a man whose opinions I greatly respected. But, above all, if it helps small businesses, I should be entirely in favour of it.

Viscount LONG

I am most grateful to the noble Lords, Lord Lee of Newton and Lord Rochester, and to the noble Viscount, Lord Barrington, for what they have said. This scheme started this year. The Government are pressing ahead as hard as they can to obtain the confidence of other companies in it so that they can attract more money, build the unit factories, help the young and so reduce unemployment. It will take a little time, but the scheme has already started and the enthusiasm is a good start—especially that from the National Coal Board Pension Fund, which has given £15 million, and the Legal and General, which has given £5 million.

4.37 p.m.

Viscount LONG moved Amendment No. 12:

After Clause 12, insert the following new clause:

"Treasury guarantees

  1. (.—(1) The Treasury may guarantee, in such manner and on such conditions as they think fit, the repayment of the principal of, and the payment of interest on, any sums borrowed under section (Power for the Corporation to borrow) of this Act.
  2. (2) Immediately after a guarantee is given under this section, the Treasury shall lay a statement of the guarantee before each House of Parliament; and where any sum is issued for fulfilling a guarantee so given the Treasury shall, as soon as possible after the end of each financial year (beginning with that in which the sum is issued and ending with that in which all liability in respect of the principal of the sum and in respect of interest thereon is finally discharged) lay before each House of Parliament a statement relating to that sum.
  3. (3) Any sums required by the Treasury for fulfilling a guarantee under this section shall be charged on and issued out of the Consolidated Fund.
  4. (4) If any sums are issued in fulfilment of a guarantee given under this section, the Corporation shall make to the Treasury, at such times and in such manner as the Treasury may from time to time direct, payments of such amounts as the Treasury may so direct in or towards repayment of the sums so issued and payments of interest at such rate as the Treasury may so direct on what is outstanding for the time being in respect of sums so issued.
  5. (5) Any sums received under subsection (4) above by the Treasury shall be paid into the Consolidated Fund.").

On Question, Whether Clause 13 shall stand part of the Bill?

Lord BRUCE of DONINGTON

I have one technical query to ask of the noble Viscount. At the end of Clause 13, in line 36, on page 9 of the Bill, it says: There shall be inserted the words 'or under the Industry (No. 2) Act 1980'. This is a purely technical point, but I have not yet seen—and nor have my noble friends—an Industry (No. 2) Act 1980. I wonder whether the noble Viscount can help the Committee on this point.

Viscount TRENCHARD

Perhaps I can confirm to the noble Lord that I am correct in saying that this is the Act about which we are speaking—it is this Bill. I see nodding from the Box, so I have hit it.

Lord LEE of NEWTON

Can the noble Viscount say which was the Industry (No. 1) Act?

Viscount TRENCHARD

May I confirm to the noble Lord for sure what the answer to his question is?

Clause 13 agreed to.

Clause 14 [Regional Development Grants.]:

On Question, Whether Clause 14 shall stand part of the Bill?

Lord BRUCE of DONINGTON

In accordance with the traditions of the Committee, it is necessary for me to make a statement of an indirect financial interest in some of the matters that may be touched upon by Clause 14 and, indeed, by earlier clauses. I shall be quite specific to the Committee about this. I am partner in a firm of chartered accountants called Halpern and Woolf and we are acting for a company overseas which, at the moment, is seeking to settle in this country. On their behalf I am already in correspondence with the Department of Industry. I express the hope that those who know my political views as often Expressed in this House will consider that my observations on the Bill are unlikely to be influenced by the interest I have just disclosed.

I beg to leave out Clause 14. This clause is ostensibly quite a harmless one in that, as the noble Viscount made clear in his Second Reading speech, all it really does is to consolidate in Act form Statutory Instruments Nos. 1642, 975 and 837 of 1979. But knowing the Government's attitude in relation to Bills and their meticulous care about what they leave out and put in, it occurs to me that the reason why the Government desire to formalise, or rather put into statutory form, those matters that have already been the subject of statutory instruments is that they regard them as very largely a closed chapter. We are now enshrining the effect of these statutory instruments in an Act of Parliament, and therefore the noble Viscount is taking his stand upon that, and the Government in future will take their stand upon the Act.

I had hoped that the noble Viscount and the Government would not put this clause in the Bill at all and would have left the matter as it was before, when, by laying instruments before the House under the provisions of the Industry Act 1972, they could have exhibited some flexibility. There can be no doubt as to what has happened over the last year since the Conservative Government took office. They have first regraded the whole series of areas for special assistance. There were special development areas, development areas, and intermediate areas, each of which carried certain grant benefits at various percentage degrees.

What the Government did last year was in one or two instances to upgrade certain areas—that is to say, from intermediate area to development area, or from development area to special development area—but, in the overwhelming mass of instances covering the whole of the country, practically every area was downgraded. The particulars of the regradings are set out in the Assisted Areas Order 1979, No. 837. This has had an enormous impact, as indeed the Government expected that it would, because the Government's principal object, which they were quite frank about, was to save money. So a whole series of assisted areas in the country were downgraded and the financial outlays, in terms of the percentage of development area grants granted in respect of each type of area, were also downgraded.

I should have thought that in current circumstances, as I said yesterday, the Government would be a little more pragmatic about this, instead of putting down Clause 14, which consolidates the orders to which I have referred, as being tablets of stone to which they can now return and say, "It is in the Act. In the light of the current economic situation, which we are reliably informed is going to worsen, we are not going to be able to vary the Act". I think that that is unwise. As I told the Committee yesterday, much water has gone under the bridge since the time that this Bill was first thought up—I should guess in June and July of last year.

As I sought to explain to the Committee yesterday, the effect on the regions of the growing crisis has been patchy. Therefore, it is not wise to freeze the existing form of regional aid as reflected in Clause 14; rather, it should by now have taken account of the changed circumstances. May I illustrate the kinds of considerations I have in mind, and particularly that of unemployment? Un- employment has already gone up to about 1½ million, and all confident predictions, to which there is no dissent, say that it is likely to go to 2 million within the foreseeable future.

The effect of growing unemployment has not been the same in every region. The new unemployment figures were published on 14th March last. If one relates these to the figures for a year ago, one finds—and I am now talking in terms of percentages—that the percentage of unemployed in the South-East area is exactly the same as it was last year, while in East Anglia the unemployment rate percentage has declined by about 6 per cent. Those are the most favourable areas. As regards the other areas in the country, in the South West the rate has gone up by 12 per cent.; in the West Midlands, by 13.6 per cent.; in the East Midlands, by 6.2 per cent.; in Yorkshire and Humberside, by 5.17 per cent.; in the North, by 8.6 per cent.; in Wales, by 3.7 per cent.; in Scotland, by 5 per cent.; and in Northern Ireland, by 4.78 per cent.

These are quite significant increases in the percentage of unemployment that has taken place within one year. As the figures I quoted illustrate, they are patchy. The South East and the eastern part of the country remain virtually immune in terms of the shift of percentages. It is the rest of the country which is really feeling the impact of increasing unemployment. It is exactly this situation that the assisted areas scheme was originally devised to try to ease. I hope that even at this late stage the Government may feel constrained to eliminate this clause altogether. It would leave them with some freedom of manoeuvre to exercise the same kind of powers as were exercised in 1979, except this time to exert them in an upward direction. An abundant case has already been made out by the developments of the last three or four months, particularly in the steel industry, to justify some upgrading of some areas that were downgraded by the Government in their July review.

I therefore hope the Government will not take a dogmatic attitude to this, because they may rest assured that we shall return to this question at quite frequent intervals as the grisly forecast and as the story—of which we had advance notice in the Budget Statement—unfolds itself with the ruthless pursuit of the dogmas to which the Government are committed. I hope the Government will not place themselves in a position from which eventually, under sheer force majeure, they find themselves having to say, "We really needed more powers than we have. We were a little inflexible. We now propose to do what we should have done a long time ago".

Lord ROCHESTER

We debated at some length last July what I understand has now become the content of this clause. I then spoke and we on these Benches voted against making cuts in regional aid of as much as £233 million out of £609 million over as short a period as the next three years. I suggested then that it might have been better to adopt a more gradual approach to the problem, not simply to limit the extent to which there was disagreement between the political parties on this sensitive subject but also to enable the Government to see what effect their policies were having on investment, profitability and so on.

The noble Viscount, Lord Trenchard, then made the point that the bulk of the savings to be achieved would not take effect until the years 1981–82 and 1982–83 and that it was the cash flow of industry in the regions then that would be the crucial factor. We are now within one year of the first of those two periods and I am no happier now than I was then. Since that time, as the noble Lord, Lord Bruce of Donington, reminded us, unemployment has risen to the point where today more than 1½ million people are out of work and it has also become clear, as he reminded us, that there will have to be much more restructuring, for example, of the steel industry, than appeared likely nine months ago.

Last July the Minister said that, with the limited amount of money available, it was better to concentrate on areas most in need of aid. I acknowledge the force of that argument, and indeed that in the recent Budget provision was made for the establishment of what are called enterprise zones in certain inner city areas, which are to receive specially favoured treatment, thus encouraging, we must hope, the establishment and development of small new enterprises and indirectly offsetting in those areas the raising of the minimum qualifying values, of which we were told last year, for plant and buildings to £500 and £5,000 respectively.

At that time the noble Viscount further said that under the arrangements of regional development grants inherited from the previous Government he had discovered much waste and that that was exemplified by the fact that there were many non-assisted areas with worse employment than applied in a great number of assisted areas. He repeated that view yesterday, and from these Benches I acknowledge that we approve of the elimination of such waste, and indeed inefficiency. But I am still very troubled about the whole subject of regional aid. Unemployment is increasing all the time, never mind the question of the distribution of such money as is presently available for regional development grant. Surely there is now an even stronger case than there was nine months ago for the provision of an overall increase in the amounts of regional grant, from the European Community, if that can be negotiated with our partners in Europe, but if not then from within our own resources.

In something the Minister said yesterday—unfortunately we do not yet have copies of the Official Report in a very readable form, so I cannot confirm the exact place—I thought I detected a feeling that we had been through all this before and so now we could pass over it all quite quickly; that Parliament had taken its decision and that was that. But as the noble Lord, Lord Bruce, indicated, the situation has changed. It has deteriorated quite a lot since then and the Government have shown no sign I can detect of feeling that their regional policy needs to be reviewed, and in a way which means that it will adapt to this changed situation. Unless, therefore, the noble Viscount has something to tell us which can reassure us, he must take it that we are not in a position to support the Government's regional policy as at present we understand it.

Lord BROOKS of TREMORFA

I get a little weary, and I am sure some of your Lordships are wearying, of my constantly referring to the fact that much of the economy of Wales relies on the fact that the public sector is predominant, and the main clause in the Bill is to allow the agencies to dispose of assets to promote private ownership. In effect, therefore, what the Bill will be doing in Wales and in other similar areas will be acting as a bludgeon—not promoting industrial growth but making the situation a great deal worse than it is. An article in the last Sunday Times by the political editor suggested that some people were putting a most sinister interpretation on many of the policies of the Government, and he wrote: Whereas unemployment in the North, the North-West, Wales and Scotland hovers around 9 per cent., in South-East England it is 4 per cent. By superimposing a map of unemployment on the map of political power, encouraging discoveries can be made. Recession hits Tory areas far less quickly than areas which the Tories can never hope to control". The article also said: The Tories have become the party of the South and must act accordingly". I am sure that that sinister view has no justification whatever. Nevertheless, I must constantly point out the effect that many of the policies of this Government are having on areas of high employment. They will make the situation much worse than it already is.

The importance of regional development grants cannot be over-emphasised when we look at the situation in our regions. I think it fair to say that potential developers look for other aspects in a particular area, if they are considering relocating. They want to know whether the right kind of labour is available. They also want to know whether communications—road, rail, sea, and air—are of a kind which will help their particular development.

But regional grants are also important to industries already in an area. I recall in a previous existence, when leading the South Glamorgan County Council, fighting to secure development area status for my county. In the end we succeeded and it had a marked effect. I can think of a couple of examples. There was a major manufacturer who for some time had been thinking of expanding, and the fact that we had secured development area status allowed that manufacturer to expand, since the grants became available. I must say that I was most disappointed in, I think, 1978 when the Government abolished the regional employment premium at a stroke, without consultation with anyone. That took £35 million from the Welsh economy; just over £5 million of it from my own county. That was an example of how the Treasury works when it has the power, and indeed it is given power in some of the clauses in the Bill.

I agreed with the noble Viscount, Lord Trenchard, when he said—I think this is what he said—that it might be time to look at the way in which we draw the boundaries of our assisted areas. I do not believe that anyone can be satisfied with the way we do this at present. It is a patchwork quilt. Most of the areas are drawn on the basis of the travel-to-work areas, and I wonder whether it might not be better for the Government to look at structure plan areas, perhaps, or even at regional assistance being given to entire sub-regions. That might well prove to be a much more efficient way to give assistance to areas. In South Wales, for example, many of the people who will be made redundant at Port Talbot and Llanwern live many miles outside the normal travel-to-work areas, and they certainly will not be assisted by some of the changes that the Government have made in the redrawing of the development areas. With those few remarks I support my noble friend, who suggests that we vote against the clause. I am pleased that the noble Lord, Lord Rochester, has said that, without some blinding flash of illumination coming from the Government, he and his colleagues also intend to oppose it.

5.3 p.m.

Viscount TRENCHARD

It might be for the convenience of the noble Lord Lord Bruce of Donington, and his colleagues if, rather than write to him, I now clear up the reason why the 1980 Industry (No. 2) Act is mentioned in Clause 13—a point which he raised a short while ago. The reason is not a particularly good one, and we think that we will get the matter right in the end. The reference in Clause 13 is in fact to the Bill currently under discussion, which was my guess at the time the matter was mentioned. As originally printed, the Bill referred in this clause to the Industry (No. 2) Act 1979 in order to distinguish it from the Act passed earlier in the year by the previous Government. With the turn of the year it was changed to 1980 but the printers omitted to drop "(No. 2)", and this will be corrected in the final print. That clears up that point.

The noble Lord, Lord Bruce of Donington, in his introductory remarks in relation to regional policy correctly stated that if the clause now under discussion were left out, it would make no difference to the current position, nor to the changes and policy announced in July. I realise that the purport of his remarks was: Should we not retain more flexibility, which we might attain in the way mentioned? I shall be explaining that in some areas of regional policy we retain very considerable flexibility—as much, I fear, as we are likely to be able to use in current circumstances and in the present economic necessities of the national Exchequer. It is also unsatisfactory in the long term that provisions of legislation should be out of line with circumstances in which grant is actually paid. Therefore, on those grounds, together with what I shall have to say about our regional policy and the degree of flexibility left in it, we must resist the proposal to leave out the clause.

Noble Lords opposite, when they referred to the problems of the regions, and in particular to Wales—which has been mentioned several times in the debate, though the point also applies to hard-pressed areas in the North of England and in Scotland—spoke as though the changes that we have made have been a serious move towards providing less help for the areas in greatest need; but this really is not borne out by our changes. We have kept the 22 per cent, grant in the special development areas, which are the hard core of areas which have not responded adequately to this same rate and to the policies of the previous Administration; we have not altered it at all. We plan to take other measures in addition, including the proposals for the enterprise zones, as well as extra support for factory building for small businesses, which now run into a whole host of areas; and I believe that these points enable me to say that in the special development areas we are doing more—and that we now have evidence that we are even obtaining some private money to help us to do more—than the previous Administration. We are certainly not doing less in the areas of greatest need.

Since noble Lords criticised us, I must once more repeat that we found that 43 per cent, of the population of Great Britain lived in assisted areas, as classified when we came into office. We found that the average unemployment in the entire intermediate areas—the most numerous—was to the decimal point exactly the same as the national unemployment figure, and when we looked below the surface we found large numbers, with unemployment well below the national average unemployment level. That was not a tenable situation.

Furthermore, it diluted the drawing power of the areas of greatest need for the maximum share of investment that can be influenced by grant; and not all investment can be influenced by grant. As the noble Lord, Lord Rochester, knows, there are many other reasons for developments being sited in certain places, and on the whole these are probably more important than those connected with grant. But so far as the grant drawable investments are concerned, we now have a situation where the remaining heavy rates of grant are concentrated solely on those areas of greatest need. This, for less money, is likely to move more investment to those areas than the widely-spread, "throw-your-money-around" scheme, which I am afraid I have to say we inherited. I do not agree, and in any previous remarks I made I certainly did not mean to give the impression which the noble Lord, Lord Brooks, suggested, that I think the TTWAs are on the wrong basis. I know of no other.

Both Administrations have looked at this time and time again. I have spoken at length to Ministers occupying the seat that I now occupy. I have spoken at great length to the noble Lord's right honourable friend Alan Williams on this subject; and I do not think there is any way round the TTWAs. The Department of Employment is being asked, as it was under the previous Administration, constantly to look at individual cases to see whether the TTWAs are drawn correctly; but I do not think we can depart from them.

This is the point at which I want to bring in the question of flexibility. We have flexibility here, and we have used it. We have upgraded Shotton and Corby, and we have undertaken to look at other areas currently very likely to be affected, and in Wales in particular. We shall act as soon as that likelihood becomes clear. So we retain the flexibility to change the grading of areas; and within the money available to this country against our economic situation and the economic situation which we inherited, I believe we are making the most sensible use of our resources. We have adequate flexibility, and we are bringing in other aids to try to start rebuilding sound growth in these areas.

I am glad that the noble Lord, Lord Brooks, said that he felt that the newspaper report which he quoted had no foundation. I wondered why he quoted it in that case; but I can assure him that politically, if anything, the changes we have made certainly do not help the party on this side of the Committee. We won large numbers of seats, which took us to power, in areas which will lose their grant, and many their assisted area status altogether; and I take this opportunity, because this is right in my own personal sphere, to assure noble Lords that absolutely no political considerations have come into this situation. Nor will they.

In resisting this Motion I must end by saying that noble Lords opposite seem to me to regard their record in office in relation to unemployment and in relation to the economic factors (which, I agree, are making unemployment worse at the current time) as though it had nothing to do with them. Your Lordships will remember what the noble Lord, Lord Brooks, has also mentioned: that at a stroke, when the International Monetary Fund said, "You are spending too much", the regional employment premium was stopped, not for the transition period of two parts ending in 1982, if I may say so to the noble Lord, Lord Rochester, but at a stroke—the words which the noble Lord, Lord Brooks, used—because of necessity.

My right honourable friend the Chancellor of the Exchequer, in addition to supporting the various measures to get factory building going, which we recommended, has in his Budget put any resources and room for manoeuvre he has to reduce the PSBR with a view to achieving the result of lower interest rates at the earliest possible opportunity.

I do not think we should question his overall judgment of how much money and room for manoeuvre he has, but I should like to suggest that within the situation that we have inherited we have done a lot of new, constructive things which stand a good chance, if well supported, of rebuilding growth, particularly at the grass roots. The force of necessity to make economies has of course been a factor in our changed regional policy, but in doing it in the way in which it has in fact been done, which, if I may say so to the noble Lord, Lord Rochester, is in line with the views of the European Commission—namely, to concentrate the aid on the areas of greatest need—we have as strong and as effective a regional policy for those areas which we all want to see recover; and, in addition, we have many other factors which we hope will restore growth. I ask your Lordships to resist this Motion.

Lord ROSS of MARNOCK

I should like to think that I was persuaded that the Government have shown great imagination and have foreshadowed great changes in regional policies which were going to be effective, but I must confess myself deeply disappointed indeed by what the noble Viscount has said. I have been involved in regional policy for the greater part of my life in another place. That was a matter of 33 years, and for a quarter of that time I was Secretary of State for Scotland. I was deeply involved indeed. The noble Viscount says, "Look what you did; you took away REP at a stroke". We also increased, at the same time, the amount of money which was being spent on selective assistance; and, as the noble Viscount knows, REP was not unrelated to certain things which were said in Europe about what we could do and what we could not do—and I certainly had no responsibility for taking us into that mess, some of the repercussions of which we have heard about today.

I remember all the stories we were told about the regional policy of Europe; how it was going to help us. Now we have the noble Lord, Lord Thomson, confessing that after all his efforts the richer areas are richer and the poorer areas are poorer, and there is virtually no regional policy at all. I had to stand by and see a firm which was viable in Kilmarnock, in a special development area, being taken away and concentrated in a non-assisted area in France—and the Government could do nothing about it. I think we are in a very difficult position at the present time as a result of the Government's general policies; and if the noble Viscount thinks for one single minute that an enterprise area somewhere, be it Clydebank or somewhere else, of 200 square yards is somehow or other going to solve the problems of Scotland and the West of Scotland, he had better have another think. I took his words down—new, constructive things; progress. Where is the progress? It is getting worse every day.

I do not know whether the noble Viscount has seen the publications of his own department as to employment. The number of unemployed in Scotland is touching on 200,000. It is even worse in the North. It is 9 per cent. there. I think Scotland and Wales are 8.4 per cent. There is nothing here at all. At a time when we should be spending more money on these areas—other countries are doing it—we are spending less. The noble Viscount says, "Ah!, but we are spending more of it in particular areas". You only spend the money if you attract the industry. You only spend the money, the grant, if you get the investment.

Viscount TRENCHARD

May I interrupt? The vast majority of the regional programme, as the noble Lord knows, is the regional development grant. The noble Lord knows also that this is an automatic expenditure on virtually all capital investment of all the firms that are in the area already and that that is where the bulk of it goes.

Lord ROSS of MARNOCK

Yes, indeed, but we are giving the grant at 22 per cent, and the industry must find the rest of it, 78 per cent. The fact is that, with the present interest rates that stem from the Government's economic policy, we are not getting the investment which was supposed to be the basis of the Chancellor's first Budget last year. It is getting too late for alibis now. We are not getting the investment. When we left office, month by month unemployment was going down; now, month by month it is going up; and it has got to record figures as far as Scotland is concerned.

The last time the figure was reached was under the same type of Government in 1974 when things were so bad that we did not even produce the January unemployment statistics. I can tell the noble Viscount that at the time the figure was over 200,000 in Scotland. This is not good enough. The enterprise zones will not solve any problem.

Another thing that he omitted to mention—and this is one of the differences of policy between the Labour Government and this Government—is that when we made cuts (and we made savage cuts, but not quite as savage as those being imposed now) we increased the amount of money that went into industrial policy, into the SDA, the Welsh Development Agency and NEB, and there was direct Government assistance and effort to keep ahead of the industrial position; and we were winning to a certain extent on that. Today the Government's whole attitude towards regional development so far as this Bill is concerned is purely negative. Look at the last amendment about overseas aid. The noble Lord, Lord Rochester, was quite right, it was not worth talking about. The Government wasted time on it unnecessarily, but it was not doing any harm. Now we get this—where we are reducing the amount of aid available.

Have the Government paid any attention to what is happening in the Republic of Ireland where one office is able to amass all the information, all the grants, all the aid, available and go out and get mobile industry coming in from abroad? Here we are cutting down on the money available for the Scottish Development Agency, cutting down on the right of the Secretary of State in respect of the agencies to give them powers in respect of selective assistance. Whether we like it or not, we are fragmenting our effort. There is the Department of Industry, there is the Scottish Development Agency and there is the Scottish Office—and by the time prospective investors get round them all they have lost heart and the Irish are in and have the development. This is happening time and again; and in respect of Europe, as well.

A noble Lord: And Wales!

Lord ROSS of MARNOCK

What the Government are doing is symptomatic of what they are doing elsewhere; it is symptomatic of inadequacy.

The noble Viscount said, "We won a large number of seats in industrial areas". In Scotland? It is as well not to specify. There is somebody down in Southend who testifies to the failure in Scotland.

Viscount TRENCHARD

I did not say in Scotland. It is in the north of England, in the main, where there were major Conservative gains.

Lord ROSS of MARNOCK

The noble Viscount did not specify where. He said "A large number". I am pointing out that where he certainly did not win a great number of seats in the industrial areas was in Scotland. He lost his most important seat in industrial Glasgow. A haven has been found in Southend. The Labour Party won five seats in Scotland, higher than ever before. Of 44 seats, the Tories get 22. Can the noble Viscount understand the frustrations in Scotland with a situation like that? And when we find an enterprise zone, what is it?—200 acres, did I say? This is one of the great imaginative thoughts by which to solve the problems of Scotland! It does not begin to do so. The noble Lord should strengthen the position of the Scottish Development Agency, giving them more freedon to go out instead of hamstringing them in the way he is doing it.

I should apologise that I was not here yesterday to help my noble friends. I had an important engagement in Scotland. Noble Lords here can nip out and come back. Based in Scotland, one cannot do that. I am glad that they are taking this stand against this particular clause and I hope that we are joined by many others who feel concern about the position. There are parts of Scotland which are becoming derelict areas. We allow this to continue at grave risk. There is more than one way of defeating nationalism. A good regional policy is the best way.

Lord BRUCE of DONINGTON

I do not wish to deny the noble Viscount the pleasure of recording his party's victories at the polls. Magnanimity in victory is not seldom the truest wisdom, so we are told. Even in defeat we should not wish to grudge him his temporary moment of triumph. I should, however, like to deal with one or two of the observations that he has made. The noble Viscount seemed to express some surprise that the intermediate areas should have an unemployment rate approximating to that of the national average. If one reflects on it, the word "intermediate" itself lends currency to the use of averages.

Quite clearly, if some parts of the country (particularly in the prosperous South-East) have unemployment rates below the national average, and if in the special development areas they have rates of unemployment higher than the national average, it would surely follow that the intermediate areas are likely to have unemployment at around the national average. I do not think that that should have given the noble Viscount any particular cause for statistical surprise. However, to rest an argument on it is, I would suggest, rather an unsafe move on his part.

I should like to revert to the whole purpose of this amendment. It is true that we do not enshrine in a statute a photograph at a given moment of time showing the position that has been established by the various orders to which I have referred. I think it is unwise to do that on the basis of the Government's own expressed intentions of having things outside the Act that are not strictly relevant to it, with a rigidity that expresses the iron in their soul; so when they insist on something being put in, one is quite sure that they mean business. I prefer to have the flexibility.

One final point. The noble Viscount, together with some of his colleagues, is able to reproach us on this side with some of the measures we took when we were in office. Confession is good for the soul. I must say on reflection that in some of the restrictive steps we took in the last Administration which were based on public sector borrowing requirements by the Treasury that were at least £4,000 million out in the event—£ 4,000 million for one year and £3,000 million for the next succeeding year of 1977—we paid overmuch attention to those figures that were erroneously provided to the Government. We hope that the noble Viscount will have better luck with the advice that he or his noble friends get from the Treasury model—that is when they have the courage to publish exactly what figures the Treasury model reveals.

If confession is good for the soul, perhaps he might communicate that to his noble friend Lord Cockfield who, it will be recalled, was financial adviser to the noble Lord, Lord Barber, at a time of the greatest expansion in the monetary supply that has taken place since World War I. I hope that when these matters are referred to in future there may be a becoming expression of humility which is, I must confess, much more natural to the noble Viscount than the political stance which he occasionally finds it necessary to take up. In the meantime, I must ask the Committee, if they will, to support the amendment.

Viscount TRENCHARD

I must not detain the Committee on this matter for long. We resist the amendment. I feel that, in the words of Lord Rutherford, We have not got much money, so we must think". That is appropriate. Those words could have been appropriate to previous Governments—and I stress the word "Governments".

I want to say to the noble Lord, Lord Ross of Marnock, in furthering the interruption which I made in his contribution, that one discovered of course that a large part of the regional development grants were going to the replacement of capital of large companies—and my own old concern was typewriters. Replacements were receiving grants if they were in the right area, either SDA or DA. I cannot believe that that would have been classified by Lord Rutherford as a matter which had been given enough thought. As I have said before, I was pleasantly surprised at the degree to which one could make economies—leaving the statistics for further elaboration on another occasion—in intermediate areas that had unemployment rates very much lower than non-assisted areas—and we inherited a lot of that. There is a huge quantity of replacement expenditure in all these areas. We probably have not perfected it yet.

The selective aid which the noble Lord, Lord Ross, mentioned, was given on criteria under Section 7 which did not attempt to test the very difficult aspect of whether the project would go ahead without grant. I have recalled to the House before—I think last July—that I sat in for the better part of a day on the Northern Regional Advisory Board, where, in half the cases to which I listened, it was declared that the project would go ahead without grant but that it met the criteria for grant. Therefore, the grant was awarded. So I found it not too difficult to devise what I say again is a thoroughly effective regional policy at much lower cost.

Finally in resisting the amendment, I feel that the unemployment record of the previous Administration (under which unemployment doubled) has to be taken into account, together with the economic factors which we have discussed so often and so recently. The noble Lord, Lord Ross, correctly said that unemployment dropped to a degree in the months of last year. I certainly do not wish to suggest that only the last Administration has printed more money than it should have done. I doubt if my noble friend Lord Thorneycroft, the chairman of our party, who I see sitting on our Benches, would necessarily claim that either.

In so far as the unemployment rate has been going down until very recently, this was the direct result of the money "spurt" started in 1978, helped also by the catastrophic exchange rates of 1976 and 1977, which gave us a degree of temporary boost to orders. I know that noble Lords know those two reasons were the only reasons, but not in the assisted areas, for a define in national unemployment. We have to get the national economy growing on a sound basis. That will take some while to get under way. We admit that. Without a successful national economy, no regional policy on earth will be of help to the areas of the greatest need.

5.36 p.m.

On Question, Whether Clause 14 shall stand part of the Bill?

Their Lordships divided: Contents, 122; Not-Contents, 77.

Clause 15 [Assistance under section 8 of the Industry Act 1972]:

5.46 p.m.

Viscount LONG moved Amendments Nos. 13 and 14:

Page 11, line 9, at beginning insert— ("(1) For subsection (4) of section 7 of the Industry Act 1972 there shall be substituted— (4) Financial assistance shall not be given under this section in the way described in subsection (3)(a) above unless the Secretary of State is satisfied that it cannot, or cannot appropriately, be so given in any other way, and the Secretary of State, in giving financial assistance in the way so described, shall not acquire any shares or stock in a company without the consent of that company. (2) In section 8(1) of that Act, after paragraph (b) there shall be added— and (c) the financial assistance cannot, or cannot appropriately, be so provided otherwise than by the Secretary of State". (3) For subsection (3) of section 8 of that Act there shall be substituted— (3) Financial assistance shall not be given under this section in the way described in subsection (3)(a) of the last preceding section unless the Secretary of State is satisfied that it cannot, or cannot appropriately, be so given in any other way, and the Secretary of State, in giving financial assistance in the way so described, shall not acquire any shares or stock in a company without the consent of that company"."). line 11, leave out ("the Industry Act 1972") and insert ("that Act").

The noble Viscount said: I should like, with the Committee's leave, to take Amendments Nos. 13 and 14 together. This might be quicker for your Lordships, since they are technical. I beg to move these amendments. The first amendment, No. 13, seeks to re-introduce into the 1972 Industry Act certain safeguards which were in the original Act and were repealed in 1975. The amendment will have two effects: first, it will require that assistance, either under Section 7 or Section 8 in the form of loan or share capital, shall only be given in that form if the Secretary of State is satisfied that it cannot, or cannot appropriately, be given in any other way. Secondly, it will require that assistance under Section 8 shall be given only when it cannot, or cannot appropriately, be provided other than by the Secretary of State. We feel it is right that both safeguards should be put back on the statute book.

So far as the first is concerned, it is important that the Secretary of State should be able to acquire a share in a company only where this is absolutely necessary. It goes without saying that this amendment will make no difference to the policies pursued by my right honourable friend the Secretary of State for Industry, but we believe it is right that this safeguard should be on the statute book and that any future Secretary of State who wished to use acquisition of share capital as a means of obtaining increased State control over industry should at least have to obtain the consent of Parliament for the relevant legislative power.

As for the second amendment, No. 14, I believe this more or less speaks for itself. As the Committee will be well aware, the Government are not generally speaking in favour of subsidising industry, and our policies are intended to provide a climate in which industry can generate sufficient profits to meet its own industrial needs. We accept that in the present circumstances there continues to be a need for Government support in some cases, but it is right that Government should intervene only when the private sector cannot meet the need, and that is what the amendment seeks to ensure. I would ask your Lordships to support these amendments. I beg to move.

Lord BRUCE of DONINGTON

We on this side of the Chamber are indebted to the noble Viscount for the explanation he has given of Amendments Nos. 13 and 14. I must admit I was a little curious when I was tracing through the effect of this amendment back to the Industry Act 1972, because I found that it provided that for subsection (4), Section 7, of that Act "there shall be substituted"—and then it quotes the rest of the amendment.

On turning up the Industry Act, I found that those words were already there. The noble Viscount did not indicate which Act had repealed those particular sections of the Industry Act since 1972; and so it goes on all the way through. Every time I endeavoured to trace this amendment to the Act which it purports to amend, I found the words already there, except for when he comes to Section 3: For subsection (3) of section 8 of that Act there shall be substituted—". And then once again there is subsection (3), which starts: Financial assistance shall not be given …". It goes all the way down and tallies exactly with the Industry Act 1972, except for the following words: (b) shall not acquire more than half, by nominal value, of the equity share capital of any company". Even though it has not been specifically altered by this series of amendments, it seems that the real effect of this long list of amendments is to eliminate from the Industry Act 1972 Section 8(3)(b).

I would have thought that if it had been the intention of the Government to amend Section 8(3)(b) of the Industry Act 1977, they could have put down a straight amendment to that effect. I do not understand the technique that the Government have apparently adopted here, of putting down an amendment which squares in every way with the section of the Act it is said to amend, with the exception of one particular subparagraph which is repealed without the amendment saying so. I would be the first person to acquit the noble Lord of any kind of subterfuge in the matter, and it may be that I have got it entirely wrong. However, I make it a habit when amendments come up for consideration to trace them right back to the Act. It may be that there is some quite simple explanation for it. If so, I would be very glad if the noble Lord would elucidate the matter.

5.53 p.m.

Lord RENTON

I too am grateful to my learned friend Lord Long for his explanation. Frankly, as has been said by the noble Lord, Lord Bruce of Donington, we have a very confused situation before us as a result of Amendment No. 13. Like him, I have no objection to the substance of the amendment, but I feel that it is leading us into an unsatisfactory structure so far as this legislation is concerned. If noble Lords will be so good as to turn to Clause 15 as it now stands without the amendment, we see that it says that the provisions of Schedule 1 to this Bill shall have effect. If we turn to Schedule 1, we see that it is headed, "Limits on Financial Assistance under Industry Act 1972 Section 8". It so happens that subsections (2) and (3) of this amendment, No. 13 also, in effect—however it has been done in relation to the previous legislation—limit the financial powers that may be used.

Therefore, if the Amendment is passed in its present form we shall find ourselves limiting the financial powers which arise under Section 8 of the 1972 Act in two different places in this Bill. We shall be limiting them in the first schedule in detail and we shall be limiting them in Clause 15 also in detail, whereas it might be better to deal with the whole lot in the first schedule. I ask my noble friend to consider the advisability of asking the draftsman to look at this again, because it will not be found satisfactory by the users of the statute.

The story does not really end there. We find that in Clauses 5 and 8, as well as in Clause 15 and Schedule 1 to the Bill we are limiting the financial powers that are being granted or altered under this Bill, and we are doing so by referring back in the case of Clauses 5 and 8 to the 1975 Act and in the case of the first schedule to the 1972 Act. Surely we should be trying to make our legislation as simple as it can possibly be made. I should have thought that it might be better to have perhaps one clause to replace Clauses 5, 8 and 15, roughly in the terms of Clause 15, with one schedule to embody the whole of the detail. Then it would be possible for the users, if they wanted to find out what the limits on the financial powers were going to be, merely to read the one schedule.

It would not be reasonable to expect my noble friends to reply here and now to this argument which I suggest to your Lordships is one that should receive the further attention of the draftsman, but I hope that either my noble friends will not press the amendment now or, if they do so, they will ask the draftsman to have a good look at it and table the necessary revising amendments at the Report stage.

Viscount TRENCHARD

I am grateful to my noble friend Lord Renton for not expecting me to take in all the possible consequences of writing three clauses and the schedules that support them in a different way. May I say to my noble friend that at the Report stage I shall give a statement as to why Parliamentary Counsel have advised this as the most appropriate form for the amendment. All of these amendments will be consolidated into the Act, and that should alleviate the problem of understanding, which is a very important point raised by my noble friend. Therefore, if he would consider that, I undertake to come back at Report stage on the question whether his suggested way of achieving the same aim convinces the experts in the Government and Parliamentary Counsel.

Perhaps I may leave it there, with one other remark to the noble Lord, Lord Bruce of Donington, who again is not opposing the substance of the clause but is puzzled about the way in which we have done it. What we are trying to do as an aim—and I shall also make clearer to him at the same time, at Report stage, exactly why it is done in this way and not in other ways—is to reinstate some of the provisions of the 1972 Act, which were repealed in the 1975 Act. That is what my noble friend referred to. Therefore, we are changing the law in relation to some aspects which were repealed in 1975. But the reason why some parts of the 1972 Act which were removed in 1975 are not put back now, is that we are not seeking to re-install all parts of the 1972 Act which were repealed in 1975. That is the best I can do for now, from my knowledge of the Bill, and perhaps both noble Lords would accept my assurance that I will give them a detailed explanation before the Report stage, and publicly at the Report stage, if they ask me to do so.

Lord RENTON

I am deeply obliged to my noble friend Lord Trenchard. When he says that these will be embodied into the Act, he presumably means a consolidation Act in due course; and, if so, when is that consolidation Act likely to be put before us? My other point is this. With the deepest respect to him, may I remind my noble friend that the drafting of statutes is the responsibility not of Parliamentary Counsel but of Ministers?

Viscount TRENCHARD

I accept the latter point, and may I return to the former together with the other points?

On Question, amendments agreed to.

Clause 15, as amended, agreed to.

Clause 16 [Advice for businesses]:

The DEPUTY CHAIRMAN of COMMITTEES (Lord Nugent of Guildford)

Amendment No. 15?

Lord RENTON

On Clause 16, I have a very small point on which I think it would be—

The DEPUTY CHAIRMAN of COMMITTEES

The noble Lord is out of order. I have called Amendment No. 15.

6.2 p.m.

Lord GISBOROUGH moved Amendment No. 15:

Page 11, line 14, after ("may") insert ("by order").

The noble Lord said: With your Lordships' leave, I should like to take Amendments Nos. 15 and 16 together, which I think are effectively similar. Clause 16 gives unfortunate blank cheque provisions to the Secretary of State and he, or a future Secretary of State, could create a large bureaucratic advisory machine which could, in effect, direct industry. The distinction between advice and direction can become somewhat blurred, as was seen during the days of blacklisting. There is, therefore, much scope for abuse with this provision, and I believe that the powers now sought in this clause should be circumscribed by a requirement to lay any scheme before Parliament for approval, and I hope that these amendments so provide.

The desirability of the Government's small firms information centres is highly debatable, and the chambers of commerce feel that they can do a very much better job, at much less cost. When the Conservative Party Leader was speaking before the election, she said that every activity should be scrutinised to be sure that it cannot be more effectively carried out by private enterprise, and there is a strong argument that these small firms information centres are high on the list of those things which could be done without. The axing of the SFICs would yield useful and lasting economies, and would substantially contribute to the reduction of bureaucracy.

The attraction of cutting back on this activity is that little or no hardship would result, since the chambers of commerce already provide a most comprehensive information service which meets virtually all the varied needs of small firms. In some respects, their service is far superior to anything offered by the SFICs. For example, the entire field of exporting is an area where the chambers have built up unrivalled expertise. Chambers expect to cover the cost of services from subscriptions and charges, but the SFICs are not free; their services are paid for by the taxpayer. Chambers have dealt with more requests for information and assistance with documentation than the SFICs, and the figures confirm this. I beg to move.

Lord MONSON

The noble Viscount, Lord Long, in speaking to Amendments Nos. 13 and 14, said, if I may paraphrase him, that this Government did not believe in subsidising industry unless that was absolutely essential. The amendment of the noble Lord, Lord Gisborough, seems to me to be very much in tune with that philosophy, and I hope therefore that the Government will give it serious consideration.

Lord BRUCE of DONINGTON

Far be it from me to wish to intervene in any way in the argument of principle that seems to have developed, between one section of the noble Viscount's party and the other. I must say that when I saw the clause I glowed with some pleasure to feel that the Government were so generously disposed, in spite of the financial stringency which they have imposed, to give advice; presumably on the basis that advice costs nothing.

But I can very well conceive of circumstances where entrepreneurs, on whom the incentives of recent Budgets do not seem to have made any very great impact, or who may not have been encouraged by the exhortations to direct their skill, enthusiasm, drive and initiative—which I believe are the popular terms—towards establishing their businesses independently of advice, might consider it necessary to take advice from the Secretary of State. My own sincere hope—which is to some extent endorsed by my fear—is that, when the Secretary of State in another place is asked for advice by the people whom this clause is designed to benefit, he will not give them a dusty answer.

Baroness SHARPLES

I should like to support my noble friend the Minister in regard to this amendment, because I feel that small businesses require assistance and I do not believe that the chambers of commerce can provide the assistance which they need.

Lord ROSS of MARNOCK

Far be it from me to defend the Government, but somebody has to do it. I do not know whether the noble Lord who moved the amendment appreciates that he would not achieve throughout the whole country what he wants to achieve. As I understand it—and I hope I shall not be told I am wrong—Section 2 of the Scottish Development Agency Act is still unrepealed. If the noble Lord looks at that, he will find in Subsection (4)(l) that the SDA may, provide or assist in the provision of advisory … services … for any person or any undertaking". If that is available in Scotland, I am sufficiently generous to ensure that it should be available in England. So I think we should ensure, by support of the Government, that English persons and undertakings are given a similar kind of help.

Viscount TRENCHARD

I welcome the lighter note that has now come into the proceedings. Let me say to my noble friend who moved this amendment that there is nothing that we want to do more than to encourage chambers of commerce to perform the very important functions which they do perform up and down the country. But I have to say—and I do not think that chambers of commerce themselves would resist this statement—that they are stronger in some areas than in others, and that they have more members in some areas than in others. But our purpose will be to make our efforts complementary with theirs and not competitive, wherever we can possibly do that. I hope that that assurance will go a long way towards convincing my noble friend that it is unnecessary to press his amendment.

The small business start-up rate in Scotland, England and Wales has been deplorable for a very long time. From his studies, my right honourable friend the Parliamentary Secretary believes it to have been about half the rate of important Continental countries over the last decade. That is why we have introduced many measures to try to speed small and independent businesses and why my right honourable friend the Chancellor of the Exchequer has included a number of very important measures in the Budget. The associations representing independent and small businesses have welcomed those measures.

As far as I can see, the amendment would require the Secretary of State to seek Parliament's approval in each case of advice. At the moment the service handles about 8,000 cases per annum, so that would not be very practicable. The counsellors of the small business department are all retired and experienced businessmen. They are not, in that sense, pushing out bureaucracy; they are there to help would-be entrepreneurs with problems of business, particularly where chambers of commerce and other sources of advice are not available.

An amendment was introduced in the other place which requires the Secretary of State to give an account of the amount of advice and the progress of his advisory services once a year, and that your Lordships will find in Clause 16(3) of the Bill. I feel, therefore, that there must be considered to be adequate parliamentary control over what is not a large expenditure—and cannot be a large expenditure by the nature of the service and the demand. I hope that my noble friend will see fit to withdraw the amendment.

Lord LEATHERLAND

Before it gets to that stage, may I ask a question about Clause 16? May I ask the Minister how many extra civil servants will be needed to fulfil the functions set out in that clause? If no extra civil servants will be needed, do not the presence of this clause and the duties flowing from it indicate that the civil servants are not now fully employed?

Viscount TRENCHARD

As I have said, these counsellors are retired businessmen, introduced for the purpose of giving advice. The arrangements for their employment are local, regional, and we are feeling our way. This has been described to the House on a previous occasion—in the small business debate introduced by my noble friend Lady Sharples and also in announcements which we have made. If the noble Lord would like me to do so, I will give him more details of this; but one cannot compare these counsellors with the number of civil servants as such. We have stated that we shall report as we get more evidence of their effect, or otherwise. They have already been instrumental in the Post Office pension fund: being prepared to put up money to back small businesses in a scheme which I have also announced to the House.

Lord GISBOROUGH

I thank the noble Lord the Minister for that explanation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 16 not moved.]

On Question, Whether Clause 16 shall stand part of the Bill?

Lord RENTON

This is a short point but it might be of interest to your Lordships, and perhaps of importance. In subsection (3) of Clause 16 we find that the Secretary of State shall prepare and lay before Parliament a report on the exercise during the year of his powers under this section". Perhaps one would not need to worry about the phrase "before Parliament" but for the fact that in Clause 3(4) we find that the Secretary of State shall prepare and lay before each House of Parliament a report on the exercise during that year of his powers under subsection (2) of that clause. And in subsection (5) on page 4 we find that under the Companies Acts he shall lay before each House of Parliament a copy of any accounts which … are laid before the company". When different words or phrases are used in the same statute they are assumed, by a rule of interpretation, to have different meanings. Being ever jealous of the powers of your Lordships' House, I am just wondering whether the mere statement that this report shall be laid before Parliament ensures that a copy will be laid before your Lordships.

Viscount TRENCHARD

I undertake to ensure that a copy will be laid before your Lordships and I shall cover this technical point, along with my noble friend's other technical points, at the Report stage, as recently promised.

Clause 16 agreed to.

Remaining clauses agreed to.

Schedule 1 agreed to.

Schedule 2 [Repeals]:

Viscount TRENCHARD moved Amendment No. 17:

Page 16, line 42, column 3, at end insert— ("In section 22, the words from "and" to the end.")

On Question, amendment agreed to.

Viscount TRENCHARD moved Amendment No. 18:

Page 16, line 52, column 3, at end insert— ("In Schedule 4, paragraphs 1(a), 2(a), 2(b>)(i), 3 and 4, and Part II.").

On Question, amendment agreed to.

Schedule 2, as amended, agreed to.

House resumed: Bill reported with the amendments.