Highlands and Islands Development Board

HL Deb 21 March 1984 vol 449 cc1227-37

3 p.m.

Viscount Massereene and Ferrard rose to call attention to the work of the Highlands and Islands Development Board and its cost to the national ecomony; and to move for Papers.

The noble Viscount said: My Lords, I initiated this debate for two reasons. First—and here I have to declare an interest—I have property in the Western Highlands and Islands, and I have spent a large part of my life there from my early years. But my chief reason for putting down this Motion was that the Highlands and Islands Development Board is in its 20th year. It came into being as a brain-child (if that is the right expression) of the Labour Government of 1965. Most of your Lordships will be familiar with the financing of the board, which is financed by the Treasury. The board finances various projects in the Highlands by means of grant and loans. Taking it overall, the amounts of the grants and the loans are about equal. You sometimes get more grant assistance and at other times more loan assistance. On the grants, the board hopes to retrieve the money after five years. Of course, whether it does so is not always certain. Regarding the loans, they are subject to a very small rate of interest, and the loans repayment terms are a matter of negotiation.

The board also invests in equity; but these days some 75 per cent. of the projects which the board go into are financed by private investment. That was not so when the board first started. The objects of the board, as your Lordships will know, are to promote jobs in the Highlands and Islands especially and preferably for local people; also to improve the amenities, to stop depopulation; and also to help and advise regarding the improvement in public services. The board started in 1965 and I am afraid for a few years they made some serious mistakes. But the Western Highlands and Islands are not an easy part of the nation in which to invest money. This is because with some people there is an attitude there which can, in a way, be compared with that in Spain, the attitude of not doing today what you can do tomorrow. But tomorrow never comes.

I feel that if the board had taken early advice of people who had more experience of the Highlands and Islands, they might not have made so many mistakes at the beginning. The late Lord Leverhulme gave millions to the Hebrides at the turn of the century. If he had been alive at the start of the board in 1965 I am sure we could have learned a lot from him. I should like to say that the population of the Highlands and Islands, which, as your Lordships know, includes the Shetlands and the Orkneys, is at the moment 352,000-odd compared with 371,000 in 1921. The population during this period reached its lowest in 1961. I can personally remember when the population of the Island of Mull, where I happened to stay, was twice the number it is today.

However, that is not the board's fault. The reason is that in those days people did not have to have TV sets or two cars, or deep freezers and gadgets. Although their standard of living was lower, the population was larger but quite self-supporting. There were no subsidies; but the people in those days cultivated the land far more than is now the case. There were far more in-shore fishermen; there was far more private employment on the estates. There was no unemployment and the people on the whole were more self-reliant. But, as I say, the high standards of today make impractical the existence of a population as large as it was in the 1930s. The board have been very generous to Mull; but the population has remained at about half what it was in the 1930s. Again, that is not the fault of the board. If the board had not helped, then the population would have been lower than it is now. And I think that that applies to all of the Highlands and Islands area, to a certain degree.

What I can never understand is that the first two chairmen, who were both very charming people, were professors of urban planning. It is rather as I remember the Army—although this is an old joke—where it was said that if you a had a recruit who was a driver, you made him a cook; and if you had a cook, you made him a driver. But it does seem rather odd to me that the early chairmen of the Highlands and Islands Development Board were professors of urban planning. They had no experience of the Highlands, no pertinent experience. No doubt some of their advisers had such experience; but their advisers were not very successful.

The local people—and I am not speaking now only regarding the Isle of Mull—were given grants and loans, but with disastrous results. That is not so today. I remember one occasion when the board wanted a boat to take tourists out to a small group of islands off Mull. Two boatmen were given grants. The first recipient was a man who got drunk and ran his boat on the rocks—and that was £5,000 or £10,000 written off. I do not think that the next recipient took anyone out. He hopped it to America with most of the money. There was a third man, who did take people out; but in the end it was a financial disaster for the board. There was a man, a retired colonel of a Highland regiment, who had no money. He asked for a grant and was refused it. He bought a boat on hire-purchase and ran the service. He ran it excellently and it cost the taxpayers nothing. I am giving those examples, but I think that perhaps the advisers were not very good in those earlier days. Now it has all changed.

It is no good crying over spilt milk, but in those days the board was rather wasteful of money. One criticism I would perhaps make is that the board appear to have a finger in every pie in the Highlands and Islands, whether it is forestry, agriculture, tourism, the fishing industry, transport, or boat building; one could go on and on. I wonder whether there is not some overlapping and duplication, because, after all, we have the Scottish Development Agency, the local authorities, the Ministry of Agriculture, the Highland Regional Council, the EEC, and so on. There appears to be overlapping, and in any case too many cooks spoil the broth.

One disaster, which was not the board's fault, was the closure of the pulp mill at Fort William. The Government planted hundreds of thousands of acres all around that area, and now there is no pulp mill. It closed because of the high cost of electricity. I am told that in Canada the cost of energy is five times less than in this country. I am also told that it is less in Australia. That closure was a tragedy.

Then 14 months later there was the closure of the smelter at Invergordon. There is now some redress due to the fact that quite a lot of activity is going on in connection with the repair of oil rigs, and so on. The board have done a lot of get back employment in that area. They have also tried it in Fort William, and I am told there is some hope that the pulp mill may be starting up again. I hope that is right, because sending pulp to Norway and Sweden is completely uneconomical. Today some of the plantations are not thinned, and even if they are thinned, the trees are left on the ground.

The board's report—I have it here, and I must say it is a good report, beautifully produced—suggests that there should be more planting because the Forestry Commission has not taken up all the land it was allowed to plant during the last year. But I should like to say that if we go on planting and planting, though it produces employment, very soon all the lower slopes of the hills will be in sitka spruce and that will make all the higher ground completely valueless, because anything living on the higher ground will not have any wintering.

Also, I should like to warn the board that I know of a salmon farm (which is not mine, but is on my land) where the experts take the fresh water all the time and test it. They have found that where there are spruce, in particular sitka spruce, planted down to a loch, there is far higher acidity, especially when timber is being cut. There is there one big loch that the hotels rely on for fishing facilities for their tourists, and it is now very near danger level. It would be a disaster if the Forestry Commission, by planting around the lochs, killed the fish in them.

I see that my time is running out, and I must not take too long, but I should like to mention that tourism is extremely important to the Highlands. The board have been extremely helpful with regard to tourists and they gave £4 million in 1982. But there is a danger, to which I have previously referred in this House, that when tourists go to the Highlands, if there are tens of thousands of them and there is no control, they tend to spoil what they go to see.

I have now spoken for 14 minutes and I should like to go on for half an hour, but, on the Chief Whip's instructions, I shall sit down. Of course this is a very big subject to cover and there are so many facets of the Highlands that I have not touched on at all. Before sitting down, I should just like to congratulate the new chairman of the board. I think he has done very well and his heart is in the work. We are getting a lot of jobs. The board have created, or retained, over 22,000 jobs in 5,989 projects during the last 10 years. The board now receive quite a good interest from their previous investment, though obviously it cannot hope to equal the expenditure. Expenditure in 1982 was £15 million-odd over income, but on the whole I think it is money well spent. I was very anti the board when it first started, but I have changed my mind. My Lords, I shall sit down now, but I am so pleased to see that so many of your Lordships, who are such great experts on this matter, are going to speak in the debate. I beg to move for Papers.

3.17 p.m.

Lord Grimond

My Lords, I must congratulate the noble Viscount on choosing this subject. I am delighted to be able to debate the work of the Highlands and Islands Development Board, and I agree with almost the whole of the noble Viscount's speech. If I have one quibble it is over the wording of his Motion, because I think it could have called attention not only to the cost of the board to the national economy but to its benefits. I think it has been of great benefit, not only to the Highlands but also to the economy in general.

In my more boastful moments I claim to have suggested this board. It is a boast made by hundreds of other people but I keep up my own. I think it was obvious to anyone who knew the Highlands that it lacked capital, it lacked an injection of new thought about employment and therefore the board was necessary. I would maintain that it has justified those who advocated its creation.

It may be that there is some overlap between bodies; for example, between some local authorities and the board. If that is so, by all means let us straighten it out; but I do not think the fault lies primarily with the board. I say that because as the years have gone on the Highlands and Islands Board has branched out from the provision of capital and the encouragement of new enterprises to take a very acute interest in the whole social framework of the Highlands. It has been, for example, instrumental in setting up co-operatives and dealing with social problems throughout the area. I know of no other body which is in a position to do that over the whole area. Furthermore, it is a very special area. I need not tell your Lordships of its traditions, of its language and of its economy, which are in many ways quite different from the rest of Scotland.

If I have two very small criticisms of the board, I think it is true to say that they are both being met. First, like many other bureaucratic bodies, it began to creep up in numbers; and, secondly, it seemed to me at one time too centralised on Inverness. I do not know how many people are employed in its Inverness offices now, but there were over 200. However, it has now taken some trouble to spread its wings and send out its officials over the whole Highlands area, which I welcome.

We should bear in mind that it has gathered together an extremely expert staff. It would be invidious to mention too many names, but I must mention Mr. Storey, who was at one time the development officer of the Shetlands, and who I regard as a most outstanding man in understanding the Highlands and encouraging these social developments, to which I attach considerable importance.

I have one major suggestion to make. It has long rather concerned me that in the Highlands, and indeed all over this country, we drain off national savings. If you look at the accounts of the Aberdeen Savings Bank, you will see that there are very considerable savings in the Highlands and there are also very considerable oil revenues. And what happens to them? For the ordinary person, the only outlet for his savings is either a building society, a savings bank or Government securities. Therefore, they are taken out of the area, they are taken south and instead we get back grants and loans from central Government.

Apart from this being expensive, I do not think it helps the area. We could mobilise a lot of local patriotism in the Highlands for Highlands enterprises. I should like to see the board, in conjunction with the banks, the joint stock banks, some merchant banks and the savings bank, set up a bank or an institution in the Highlands which will take in local savings and will use them for the development of the area. I should also like to see such a bank give expert advice to the fairly small number of entrepreneurs who are prepared to set up businesses in the area, to existing businesses and to co-operatives, which have a very considerable future in the Highlands.

This happens in Europe; it does not happen in this country. There are Scottish banks and new Scottish banks. There is what is called the Adam Bank in Edinburgh and there are people in the Highlands who have banking experience. I should very much like to see the board go into this, because not only does enterprise in the Highlands lack capital, but very often it lacks expert advice; for instance, on accountancy matters. In Spain, for instance, the Casa Popular Laboral supervises the enterprises which it has helped to set up and gives that kind of expert advice.

I should also like to see some of the oil revenues going to the board. There is a considerable debate going on as to what should be done with the very large oil revenues which are accruing in the area. No-one will know better than the noble Lord who is to reply about those large sums of money which are accruing from oil. I believe that the board, and possibly the ICFC, in conjunction with banks, could invest this in not only industry but agriculture, social development, fishing and so on in a way which would be highly beneficial to the whole area.

Very soon, we shall have the report—I am not quite certain whether or not we already have it—of the Montgomery Commission on the Highlands. I shall be interested to see what they recommend as to the future economic development of the Highlands and Islands, and as to the relationship between the Highlands and Islands Development Board, local authorities and other authorities, public and private; and, indeed, private landlords in the whole area. I have discussed this matter with the chairman. Finally, I should like to congratulate the chairman and his staff, as well as his predecessor, on the work that they have done. I think they can claim to have made a very considerable contribution to the improved living standards and economy of the whole Highlands area.

3.25 p.m.

The Earl of Dundee

My Lords, in rising to speak in this House for the first time, I would ask for your Lordships' patience and, as a lowlander from North Fife, I would also look for the leniency of noble Lords from the Highlands, in case by mistake I now proceed to say anything with which they disagree. I am very glad that my noble friend Lord Massereene and Ferrard has introduced this debate today on the Highlands and Islands. Although the territorial area concerned is as much as half that of the whole of Scotland, the problems of the Scottish 6 per cent. living there are so different from those of the rest of the country that, presumably, it must always be difficult to do justice to them in any general debate on the Scottish economy as a whole.

As is all too evident, not only do the Highlands and other rural areas tend to suffer more when the rest of the country undergoes inflation and recession, but, conversely, even when conditions improve elsewhere there is still a risk that people will succumb to the temptation to leave their home ground in order to find jobs in the south. In view of this, it is very heartening to note that the steady decline in Highlands population, which began in the 1850s and continued relentlessly well into this century, at last came to an end in the 1960s, and for the net gains in population and jobs that have occurred since the late 1960s a great deal of credit should be given to the work of the HIDB.

Of course, North Sea oil exploitation in the early 1970s, which has led to much welcome employment, would have probably done so anyway, irrespective of the existence of the board or of some other form of Government aid. Yet population and jobs began to improve before North Sea oil came along and, if the HIDB had not been operating for the last 19 years, I think that many opportunities which have been taken would have been missed, and that our present hopes for the future prospects of the region would not have the same foundation.

But the questions which are implicitly put to your Lordships in this debate today are: how expensive is the board to run; how responsible has its work been for the present level of achievement, and how likely is it in future that its work can lead to better conditions? One criterion of cost measurement is to compare the money spent in creating a job with the money thereby saved in unemployment benefit and other Exchequer losses. Using this measurement, my information is that the average cost of creating a job in the Highlands and Islands between 1971 and 1983, at 1983 prices, has been £4,200. The deduction from this of unemployment benefit and other Exchequer losses per capita thus means that the real comparative cost to the Exchequer has been a figure even lower than £4,200. That national cost is surely good value for money and if that is the case, even if it were to be related to a national population total of millions, surely it is all the better value for money when it comes to be related to a regional population total of only 340,000.

My other point on the HIDB's costs concerns the powers and remit of the board in general. As these are so wide, it follows that the comprehensive annual figures produced can give us a fairly clear picture of what has been going on and, presumably, a far clearer picture than could ever have been given by one or two separate agencies, each with narrow and specific remits, had they had the task collectively of reporting on the same issues instead. By this, I do not mean to suggest to your Lordships that some Government departments and agencies are better at adding up their figures than others, nor am I particularly anxious to advance the theory that, nowadays, Highlanders always tell the truth. At any rate, no-one has as yet provided me with irrefutable evidence on either subject.

But simply in the interests of clear presentation of figures, accurate monitoring of costs and, hence, relative adjustments to priorities of spending in the region, it would appear to be as important now as it ever was that the powers and remit of the HIDB remain more or less as they are for a total land area such as the Highlands and Islands, as large and varied as it is.

The work of the HIDB and how that is carried out are, of course, separate and further considerations. Can it be said that the right kinds of jobs are being promoted and that all places in the community are benefiting as much as is reasonably to be expected? I imagine there must always be a temptation for any development agency to favour growth areas and population centres, rather than other places. At the same time, there can never be any point in ignoring an opportunity from however predictable an area, particularly if, from it, further jobs and ancillary industries may well spread out elsewhere later on.

In that regard, in general, from recent HIDB figures it is evident enough that there has been a fair coverage of assistance in grants, loans and shares throughout the geographical areas and economic sectors concerned, which happens to have produced a total of jobs created and retained between 1974 and 1983 of 22,000. And over the last year or so, the successive annual increases in applications for joint venture reflect the fact that the board is winning the confidence of its region. But how strong is our own confidence that these hopeful trends can last indefinitely? For the main aim must surely be to continue to sustain growth, after any welcome intervention such as North Sea oil has come to an end, and to continue to increase employment, irrespective of some other opportunities, which may be finite or which, through improved technology and efficiency, will probably employ decreasing numbers.

In this context, I should like to mention one or two points, not necessarily because I think they are being neglected but because I believe their potential for the long term should always be stressed and developed every bit as much as for earlier dates. The first of these is forestry. Many of your Lordships will remember the keen advocacy in this House by my father of the afforestation of the Scottish Highlands. For that reason alone I should like to mention the subject today. Among current problems are the joint needs to develop timber processing and markets for existing thinnings and here the HIDB has a useful role to play, along with the Forestry Commission and other bodies. But for the long term what matters most is sticking to planting targets. Provided that the Forestry Commission continues to be encouraged to acquire land for this purpose and private forestry continues to be given incentives to plant all through the next century, the Scottish Highlands should at least be able to look forward to some level of mature timber reserve for increased jobs and materials. But if any government are side-tracked from these planting targets—and there is always this temptation, since afforestation takes at least a generation to produce a result—any such government would do a long-term disservice to the future of the Highlands and Islands.

Another Highlands product of long-term relevance, but this time one which is perhaps more palatable to governments and to everybody else, is Scotch whisky. While it is not difficult to predict a date when the energy in the North Sea will no longer be there to be consumed, there is surely no good reason at all why spirit from Highlands distilleries should ever cease to be there to be consumed either by the international markets to which it is currently exported, or even in moderate and patriotic amounts in the refreshment areas of your Lordships' House. Surely every effort must be made to support Scotch whisky and its markets. In that regard, I am very glad that in his Unstarred Question in this House last November my noble friend Lord Tanlaw reminded the Government of the present plight of the Scotch whisky industry, and in particular that of the 106 distilleries which are situated in the Highlands and Islands.

Lastly, there are two Highland industries which, almost by definition, ought to be able to flourish wherever people are to be found: the tourist industry, which brings visitors to all places in the land, and that part of the service industry which supports the local communities themselves. If the effort persists to raise standards of accommodation and tourist attractions overall, tourism in the Highlands and Islands should bring in wealth and jobs for many years to come. More important than anything else, however, is the long-term viability, cohesion and growth of existing communities where the service industry has a major part to play and where, correspondingly, national aid and incentives are imperative to counter the higher prices which are to be found in isolated villages and small towns.

My Lords, in summary, I think that the cost of the HIDB to the national economy is well justified by the present level of spending, by the number of jobs created and by the nature and number of incentives already given. If this work can continue and if long-term aims are never forgotten, not only will the national economy be fully repaid in due course by the increased wealth of the region but the national community will benefit from the success, the variety and the inspiration of the Scottish Highlands and Islands.

3.36 p.m.

Lord Shackleton

My Lords, it is a great privilege to congratulate the noble Earl on his maiden speech. His father was well-known to us in this House. He had a distinguished career in the Commons and a very distinguished career in this House. He contributed greatly to our debates and to our counsels. The noble Earl has shown in his maiden speech that he will make a significant contribution to our affairs. It was lucid, very well delivered and modest. In fact, it followed every rule. The fact that he is a lowlander and therefore perhaps feels not fully entitled to speak makes it easier for me, as an Anglo-Irishman, to participate in this debate. The noble Earl can be well pleased with his speech. I hope that we shall hear frequently from him, not only on the Highlands and Islands but on other subjects, too. Unfortunately, he has not been the twelfth Earl long enough for his career to be put into Who's Who, but we shall study it with interest when it appears.

I am reminded of a joke which may be known to the older generation who remember the First World War. In order to qualify to be an officer in a Highland regiment one had to own property in Scotland. One officer who managed to get into a Highland regiment said, when asked for his qualifications, "I have a pair of trousers being cleaned by Pullars of Perth". This is an old joke but it gives me my qualification: I lost a pair of ski socks at Aviemore. My entitlement and my interest in the Highlands spring from a number of events: first, coming back from Northern Greenland, when our propeller had fallen off our schooner, we managed to beach at Castle Bay, Barra. Rather to our horror, we found that it was the Sabbath. Luckily, however, Barra is one of the few Catholic islands in Scotland, so on that occasion we were not without entertainment.

My particular interest in the debate springs from my interest in ski-ing. I should like to speak about this, because ski-ing is of very great importance to the economy of the Highlands and Islands. It is important for the work of the Highlands and Islands Development Board. I do not believe that many people are aware of the size of the industry and of the problems that confront it. On any one day there may be as many as 5,000 people ski-ing at Aviemore. They have 10 ski tows and four chair lifts—probably more than they have in other Highland resorts. In the course of a season as many as 300,000 people may ski at Aviemore.

Many people say, "Why go ski-ing at Aviemore? It is cold, wet and you can't be certain of the weather". I am bound to say that some of the coldest and most miserable ski-ing I have ever had in my life—colder, even, than when I was in Greenland or at my prep school—has been at Aviemore. On the other hand, I have known marvellous snow and sun there. Indeed, there is very good snow at Aviemore at present and it will probably continue right through into June. It is a pity that the ski reports which are supposed to appear in the newspapers do not appear very regularly.

Perhaps I may pay a tribute to those who developed Aviemore. I am told that Bob Clyde, the manager of the ski lift, Mr. Frazer and others were originally rock climbers who, when climbing in Glencoe, saw people sliding around with planks on their feet and thought it was interesting. Bob Clyde literally built the ski lifts at Aviemore. There are now 12,000 beds in that area. It is fair to say that it has been the catalyst for the whole of the Spey Valley. They have problems: they were not allowed to extend into the neighbouring area. The Nature Conservancy Council have made much of the HIDB area into a site of special scientific interest. There is a problem and skiers do have a destructive effect. Nonetheless, it is so important to the economy that I hope that in regard to the development of both roads, which are essential, and further ski-ing grounds they will have the help that I am sure they have earned by their efforts. For those who say that it is the same distance as Switzerland, it is worth noting that one does not have to cross a frontier. One has only to travel on a sleeper and one can be on the ski slopes at 10 o'clock the next morning. I have waited a long time for an opportunity to say that and to congratulate those who have developed that facility. I shall not refer to the other ski centres.

I have a second reason for feeling gratitude to the Highlands and Islands Development Board; namely, the help they gave me in relation to my report on the Falkland Islands. Before I went to the Falklands, in trying to find an analogue, I rushed up to Shetland. As a result, I talked to the Highlands and Islands Development Board. They lent me their development officer, Mr. Bob Storey, and they were uniformly helpful. They were the only people in Britain to understand the problems of the Falklands. I have been very impressed by the degree of commitment and expertise which they offer on practically every subject in the world, which they bring to bear in isolated areas, and their willingness to give advice.

Previous chairmen of the board have included one whose name I cannot remember but who played the bagpipes—

Lord Ross of Marnock

Sir Andrew Gilchrist, my Lords.

Lord Shackleton

Yes, my Lords, and they have all been enthusiasts. If mistakes were made, it was inevitable—even though the number of failures they have in supporting activities is only about 4 per cent.

I will conclude these brief remarks by paying tribute to my noble friend Lord Ross of Marnock because he was the father and author—and people I have talked to over the past few days constantly refer to that initiative. Perhaps it was an easier moment to get that sort of proposal through the Cabinet than is likely today. Although there are some critics, it has achieved a reputation, and it is something of which my noble friend can be very proud—even if the noble Lord, Lord Grimond, also thought of it before.

What the position will be as a development area under the new regional grants system and others, and whether they may be classed in a way that affects their position of what I believe is called peripherality in relation to the EEC (and their grants from the EEC are dependent on the grants they receive in the United Kingdom) I do not know. The noble Earl, Lord Dundee, has already shown what a very low price the creation of a new job is in the Highlands. In many parts of this country, it may cost £100,000 to £200,000 to create a new job. And so the cost in the Highlands and Islands is really a bargain. They have sought to build up resources which are relevant to the Highlands—not only timber but fish, fish processing, and tourism.

It is rather interesting that small-scale units have also been established. I will mention just two of them. There is one company in Skye called Galetec—and if we stop for a moment, we can guess what that means—making transducers. That company has won an export award. Then there is Clansman Holdings, which is making and marketing tweed in Lewes and employs some 200 people. Some of their expertise is helping to create similar industries in the Falklands. On the whole, they are concentrated on small areas and small activities, and a great proportion of the benefit goes to the people who live there. There is strength in their flexibility and determination to create activities with high value added.

I hope that the Highlands and Islands Development Board and those who live in that beautiful region flourish. There are difficulties, but I have no doubt that this is a most valuable activity. Whatever criticisms may be made, the proportion of failures is probably lower than that of most publicly-run activities. I, for one, am grateful for the work that they have done for the Highlands and Islands.