HL Deb 23 March 1983 vol 440 cc1115-9

3.47 p.m.

Earl Ferrers

My Lords, it might be to the convenience of your Lordships if I were to repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Northern Ireland. The Statement is as follows:

"I will, with permission, Mr. Speaker, make a Statement on the Government's New Economic Initiative for Northern Ireland.

"Mr. Speaker, the House will need no reminding of the unique combination of severe economic and social problems in Northern Ireland. In recognition of these exceptional circumstances the Government have decided to introduce several new measures to stimulate industrial growth, and to assist viable industrial employment in Northern Ireland.

"First and foremost the Government have decided to introduce a new grant which will reimburse new and expanding industries up to 80 per cent. of the corporation tax paid on profits generated by approved projects. This grant will form part of the selective financial assistance packages administered by the Industrial Development Board and by the Local Enterprise Development Unit.

"A measure of this sort has been widely urged upon us by the Select Committee on Trade and Industry, by the Northern Ireland Assembly (which yesterday endorsed a constructive report on industrial incentives), by the Industrial Development Board and by many others. It will be a major new attraction to potential investors.

"Second, and again in recognition of Northern Ireland's unique economic problems, the existing 75 per cent. derating of industrial premises will be increased to a full 100 per cent. This will both help new investors and bring valuable immediate relief to existing enterprises. Parliament will shortly be asked to approve an order giving effect to this derating from the beginning of the next financial year.

"Third, an energy conservation scheme will be introduced to encourage industry to increase efficiency and competitiveness. Grants at the rate of 30 per cent. will be offered on a selective basis towards the cost of approved energy conservation projects.

"Finally, the Government intend to introduce two further schemes designed to improve competitive strength and efficiency. There will be a Management Incentives Scheme which will provide grant aid in appropriate cases to companies to help them recruit good quality management. And an Advisory Service to Industry will be established to help Northern Ireland companies to improve their production methods and processes.

"These measures reflect the advice the Government have received, particularly from the Industrial Development Board, and I am confident they will assist the board in its vital task of helping to conserve and create employment.

"A vital contribution is also being made by the Local Enterprise Development Unit, whose new plan for the creation and development of small businesses I approved last year.

"Mr. Speaker, these specific Northern Ireland measures will reinforce the Government's more general steps to assist industry and the economy. Reducing interest rates and the successive reductions in National Insurance surcharge will have as valuable an impact in Northern Ireland as in the rest of the country.

"Over the last few years the Government have accorded first priority to programmes designed to assist industry in Northern Ireland. As we have shown in these allocations and further demonstrated with the measures announced today, the Government will play their part in supporting and promoting the economy of the Province. But a heavy responsibility lies on the people themselves, on their industrial, commercial and labour leaders, and on their public representatives, to bring home just how exaggerated and distorted is the impression which so many outsiders have of the Province; we look to them to demonstrate to the industrialists of the world that Northern Ireland is worthy of their confidence and their investment."

My Lords, that concludes the Statement.

Lord Underhill

My Lords, noble Lords will be grateful to the noble Earl for repeating this Statement, and generally we welcome consideration that is given to any new initiatives which can help to reconstruct industry in Northern Ireland. Noble Lords will recall that during our recent appropriation debate concern was expressed by many noble Lords at the manufacturing position in Northern Ireland: at the fact that there are more unemployed than at work in the manufacturing industries and at the fact that in certain parts of Northern Ireland male unemployment is approaching 50 per cent. Therefore, we welcome consideration that is given to new initiatives.

As to deciding whether these are the right ones, one would need to consider them more carefully than simply having a Statement read out this afternoon. At the moment, the proposals for a Management Incentives Scheme and the Advisory Service to Industry are vague. They may be very beneficial, but until we know further details, we do not know exactly how they will work out. I am pleased to note that the proposal for corporation tax has the emphasis on new and expanding industries. But one would need to look very carefully at whether the proposals for grant for corporation tax and the derating will work out.

During our appropriation debate I referred to the programme which had been produced by the Northern Ireland Committee of the Irish Congress of Trade Unions, published only in January this year, which urged—and I believe that many other noble Lords take this view—that it is essential that in Northern Ireland we not only take steps to rebuild industry, but also tackle the social deprivation which exists in many parts. They must go together. The Northern Ireland committee of the Irish trade unions urged that there should be a public sector investment programme which would not only assist to reduce unemployment but at the same time would assist in tackling some of the problems of social deprivation. They believed that their proposals would provide an extra 40,000 jobs and at the same time would reduce the very heavy burden which is falling upon the financiers owing to the social service benefits that are required. Therefore, while generally welcoming the initiative, we should need to look more carefully at the actual proposals to see whether they are the right ones to meet the situation.

Lord Hampton

My Lords, I, too, should like to thank the noble Earl for repeating the Statement which was made by the Secretary of State in the other place. We welcome the measures as a token of the Government's concern for, as was said, the severe economic and social problems in Northern Ireland, subject, of course, to further review and consideration. In Britain we are continually being pressed by those in Ulster and elsewhere to do more to help overcome the great distress at present being experienced in Ulster. Now, on the advice and representation of the Select Committee on Trade and Industry, the Northern Ireland Assembly, the Industrial Development Board and others, we are doing just that.

I hope that it will be broadcast to the world that we are glad to help, but we wholeheartedly endorse what the Secretary of State said in his closing paragraph. He said: … the Government will play their part in supporting and promoting the economy of the Province. But a heavy responsibility lies on the people themselves", to show that the Province is worthy of support and trade. It is a vicious circle that must be broken—cut down the terrorism and trade will improve and, in turn, terrorism will be less tempting.

There are just two questions which I should like to ask the noble Earl. First, can he give an estimate of the cost of increasing the existing 75 per cent. derating of industrial premises to 100 per cent? Secondly, how do these concessions compare with incentives offered South of the Border?

Earl Ferrers

My Lords, I am grateful to both noble Lords for the welcome which they have given to this Statement. I agree with the noble Lord, Lord Hampton, that it is very important that everyone in Northern Ireland should do his best to show and to encourage other would-be investors that Northern Ireland is, in fact, a good place in which to invest. As the Statement says, the Government are prepared to play their part in doing that, but substantially much of this depends upon the conduct of everyone in Northern Ireland.

I entirely understand the wish of the noble Lord, Lord Underhill, to study the measures more carefully. The noble Lord wondered how the Management Incentives Scheme would work. The object is to make a move to Northern Ireland more attractive for the manager of a foreign company which the Industrial Development Board is trying to encourage to invest in Northern Ireland, and also to encourage existing Northern Ireland companies to recruit the best possible management for a given job, wherever the recruited manager might at present live.

The noble Lord also wondered how the advisory service would work. In brief, it would serve all manufacturing industries, providing 15 man-days of consultancy free to companies which employ more than 50 people, and five man-days to firms with fewer employees. The noble Lord, Lord Hampton, asked what would be the cost of derating from the 75 per cent. to 100 per cent. The anticipated cost is £7 million. He asked how these measures compare with those measures South of the Border. I can only answer him by saying that it is very difficult to give strict comparisons both North of the Border and South of the Border, because so many different factors operate. However, the grant for corporation tax relief is a very substantial one. In fact, 80 per cent. of the tax payable by corporation tax will be returned by way of a grant to those firms which have gone through certain approved processes and which have actually employed more people and increased their output. That grant will be available for 20 years. I think that that is a very considerable move to attract people to Northern Ireland.

Lord Donaldson of Kingsbridge

My Lords, we should like to welcome this Statement from the Government. Direct intervention of this kind is absolutely warranted by the very difficult state of conditions in Northern Ireland; and, in my opinion, we could do with a good deal more of it elsewhere, but that is another point. I am particularly pleased that the first thing which is suggested—the new grant of up to 80 per cent. of corporation tax payable—has been specifically supported in advance by the Assembly, because this makes the Assembly feel that it is at any rate being listened to by the Government, which is important. We welcome the intervention whole-heartedly. The noble Earl gave my noble friend from the Liberal Benches an estimate for one of the items. Will there be an estimate for the cost of the whole package, because I think we should like to see it?

Earl Ferrers

My Lords, I am grateful to the noble Lord, Lord Donaldson, for his welcome too. He has, needless to say, asked me a question to which I cannot give him an answer which he would find wholly satisfactory, because it is difficult to say exactly what the amount of the corporation tax relief grant will be. It depends on the number of firms who take it up, the amount of extra employment, and the amount of extra productivity. The derating I referred to as being worth £7 million; the energy conservation measures should be worth about £2 million; and with regard to the advisory service and the manufacturing services it is really too difficult at the moment to be able to say exactly what they will cost. I am afraid that I cannot, for the reasons I have given, give the noble Lord a precise reply.