Industry Bill (Hansard, 27 May 1982)

§ The Minister of State for Defence Procurement (Viscount Trenchard)
My Lords, I beg to move that this Bill be now read a second time. We have before us today a Bill which is both short and straightforward. Indeed, the Bill is almost shorter than the explanatory note. The two purposes are set out in Clause 1, which is the essence of the Bill. They are, first, to increase the limit on the cumulative amount of selective financial assistance which may be provided under Section 8 of the 1972 Industry Act. Section 8 assistance may be provided for a wide variety of industrial purposes so long as the project is in the national interest and is of economic benefit to the country.
The second purpose is to increase the threshold above which individual offers of assistance are subject to parliamentary approval from £5 million to £10 million I should like to deal with this point first. This will he the first time that the threshold will have been altered since the original 1972 Act. It therefore seems sensible 1326 to take some account both of the increase in project costs and of the rise in inflation. We are therefore proposing to increase the threshold from £5 million to £10 million. The other purpose of the Bill, as I have said, is to increase the cumulative statutory limit which governs all types of Section 8 assistance, including grants, loans and sterling guarantees which remain outstanding. However, I should point out that loans which are repaid and guarantees which expire cease to be a charge on the cumulative total. Effectively, such "receipts"—if I may call them that—are credited to the Department of Industry Section 8 account and become available for other uses. We spend about £80 million a year on Section 8 assistance.
The 1972 Act originally contained a limit for Section 8 of £150 million, with provision for up to four increases by statutory order of up to £100 million each. The statutory limit was raised in the Industry (Amendment) Act 1976 to £600 million again with provision for up to four increases by order of up to £250 million each. Four orders have been made, so the limit now stands at £1,600 million.
The Industry Bill 1982 is a continuation of this process. Our judgment is that we need to increase the cumulative limit. In order to make this decision, we have taken into account four factors: payments that have already been made under Section 8; payments which we are committed to make in respect of projects which are not yet finished; payments which we may make in respect of projects which qualify for assistance under various Section 8 schemes that we have introduced (such as the Small Engineering Firms Investment Scheme); and, finally, payments which we are liable to make in respect of guarantees that we have issued under Section 8. The sum total of all these elements is now in excess of £1,600 million. We therefore need the legislation to provide statutory cover for the extension of the Small Firms Loan Guarantee Scheme and the introduction of the Small Engineering Firms Investment Scheme, both of which were announced in the Budget. In addition, other new shcemes are being considered as part of the innovation package—worth £130 million—also announced in the Budget and, depending on the precise shape of what finally emerges, some may be funded under Section 8.
All of this fits into the context of the Government's policy for industry which, while the Government believe in the main in a market economy and in creating conditions in which free competitive industry will thrive, nevertheless we are also engaged using this legislation and other legislation in trying to accelerate market forces, particularly in the field of encouraging new investment, encouraging industry to adopt new technology, encouraging small business in particular. We believe that there are signs that this policy is working and that the total mixture is working. Employment levels inevitably lag behind economic recovery, but in all other areas the economic signs are encouraging and the Government's training initiatives are designed to ensure that as new real jobs are created there will be people eith the right training to take them.
Initially the new limit authorised by the Bill will be raised from £1,600 million to £1,900 million, with the proviso that it may be increased on four separate occasions by up to £200 million each time, thereby arriving at a maximum of £2,700 million.
1327 My Lords, the Bill is an enabling power; actual levels of expenditure will be fixed within the context of our public expenditure policies. To sum up, we need this extention of the Section 8 limit because it is a cumulative limit and the new schemes need to be accommodated. The rise in the individual limit for schemes which can go ahead without Parliamentary approval is self-explanatory. I beg to move that the Bill be read a second time.

§ Lord Ponsonby of Shulbrede
My Lords, this Bill is welcome in so far as it goes and is in itself non-controversial. It increases the limit, as the noble Viscount has said, of financial assistance to industry basically to take account of inflation. That is something with which we do not have any dispute. However, that does not mean to say that we are satisfied that the proposals go far enough. They go only a limited way towards giving the support and assistance and intervention which we believe is needed in certain sectors of industry.
However, I believe that today is not the occasion to go into the whole question of how government support industry; but we see the need for a sectoral approach to bring about restructuring, re-equipping and re-investment, and that that is desperately needed in certain sections of industry. This support is now more necessary than it was when the 1972 Act first came into effect. We believe that the Bill's provisions, although welcome, are not anything like sufficient to resolve the difficulties that industry faces because of an ever-increasing need to create new employment opportunities, particularly for young people who form an unacceptably large proportion of the unemployed sector of the country's workforce.

§ Viscount Trenchard
My Lords, I thank the noble Lord for those brief remarks and I understand them. The only point I would make is that the Bill before us now is to extend just one part of the Industry Act and that the Industry Act and other Acts have been extended to give considerable support to industry. There were also a number of measures in the recent Budget which were designed to further support industry. However, I agree that this is not the time to debate the adequacy of those measures or the training measures we have introduced.