Regional Economic Prospects

HL Deb 16 December 1987 vol 491 cc766-802

5.52 p.m.

Lord Sefton of Garston rose to call attention to the report Regional Economic Prospects, produced by Cambridge Econometrics and the Northern Ireland Economic Research Council; and to move for Papers.

The noble Lord said: My Lords, in a debate on our economy and its relationship to the rest of the world which was held a fortnight ago the noble Lord, Lord Thorneycroft, quoted John Donne: "No man is an Island"; and he related that to the situation of the United Kingdom with regard to the rest of the world.

I thought at the time how apposite was that quotation but how much more apposite it would be to the regions of the United Kingdom where at times it seems that unity is fraying at the edges especially as one moves in the peripheral regions.

The report referred to in my Motion is almost unique in looking at the regional context in the correct way. We are used to having reports about the regional problems which affect the North-West and what the Government intend to do about it and also reports from Scotland, the North-East and Northern Ireland. In essence this report looks at the whole of the United Kingdom. It states the regional problems and asks what are the prospects in the year 2000 affecting those regions?

It does not ignore the affluent South-East. It very clearly draws attention to it. In the 15 minutes in which I have to speak, I do not want to score any party points because the problem of the regional imbalance in the United Kingdom goes back too far and is too deep-seated for the blame to be placed upon any one government.

I have spent nearly half a century in local and regional government trying to bring this problem to the attention of central governments of all sorts—Labour Governments, the Conservative Government under Mr. Heath and now perhaps the one government whose philosophy has taken us back to the pre-war years. I have spent too long trying to demonstrate that if we are to solve some of the problems of the United Kingdom we have to look at the individual parts and the regions within that unique kingdom and treat them as one comprehensive whole.

I should not dream of going back on anything I have said over the last half a century in regard to that necessity. All the while in that half century I have seen the problems accentuate and get worse. Of course the problem did not start after the last war because it goes back much further. I have only to mention 1926, Jarrow, and other places that are marked clearly in the history of this nation, to demonstrate where it started. It began with a slow, ruthless drift, occasioned by market forces which centred on the places which suited it best, and so denied things to the rest of the regions.

It was concealed for a while during the period roughly from 1939 to 1945. Let us admit it—after 1945 the problem as revealed by the unemployment figures and the people's deprivation was covered up by the overmanning that occurred in Great Britain. I am prepared to admit that quite readily.

This regional imbalance was concealed by the task of rebuilding the nation on the basis of a good market because at the time we did not have many competitors. It was not until the 1960s and 1970s that the problems of the regions were accentuated. In 1979 the regime introduced a leaner and fitter industry, in the jargon of the economists. It also shed people as if they were a useless asset. It shed them and left them to cope as best they could. If the Minister on the Front Bench thinks it is amusing, I do not. People were left to look after themselves as best they could.

I summarise this report as saying that there is a divide. That needed to be said because a certain prominent Minister in this Government did not seem to think that there was one 12 months ago. It will get worse and by the year 2000 it will occasion a major swing of affluence to the South over and above what the other regions have already suffered. It says that unemployment will be down by some thousands and nobody would deny that. There will be a strong demand for expansion in the less urban areas of the South and the East Midlands. They will be the growth points. If anyone wishes to know about the economic pressures, I recommend them to read today's edition of the Independent which reproduces a nice, useful map of the South-East of England showing the pressure points of all the developers. The name of Stone Bassett is unknown now but very shortly it will be impressed upon the minds of many people who are concerned about the development of the South-East region.

If the developers have their way it will be the site of a new town. That is the pressure which is building up for the South-East and to which this report refers. The population of East Anglia, the South-West and the South-East Midlands will grow by 43 per cent.; in Northern Ireland and the North-West it will decline by 21 per cent.; this is all by the year 2000. It is no use anyone quoting to me contemporary figures for the number of unemployed or the amount of growth because this report already discounts them. That will be the net result in the year 2000, with all the undesirable effects of that concentration in the South-East; namely, the alienation that already exists in the North and the peripheral regions will get worse and worse.

There are many things which militants in those areas can focus upon in order to draw attention to the discrepancies between North and South. For example, an article in one of last week's newspapers states—and I do not blame the Government because I am quite certain that the Civil Service itself arranged this—that over £30 million is being spent to provide a luxury head office for top Ministry officials and a few Ministers in the DHSS while at the same time people in the rest of the country have to fight for a pittance to keep warm in bad weather.

Page 8 of the report refers to the partial withdrawal of government from measures aimed at rectifying regional disparities. Over and over again in this Chamber I have referred to the occasion when the Government, without thought at all and with just a snap of the fingers, decided to withdraw an agreed scheme to transfer 3,500 civil servants to the North-West. That happened. Distribution depots for the Channel Tunnel will, of course, be sited in the South-East, and the report mentions that. I fear that those distribution depots may well be sited in France.

We have just had some good news about Scotland. JVC is going to employ another 800 people. The effects on the economy will double that, so that will he 1,600 people. Measure that against the forecast in this report of 85,000 jobs gone by the year 2000. Where will Scotland be then? The decline in the North-West in that same period will be worse than any. I am not saying anything about that because I have already said plenty in this Chamber about the privations suffered in the North-West. Until 1977 government services in all those northern regions grew faster than anywhere, but since 1977 that has declined. Only a cursory examination of government policy—both governments—is needed to reveal why.

I have discovered something else. How do the Government assess their figures on growth in regions? I put down a Question asking the noble Lord, Lord Young, what government public expenditure went on south of a line from the Wash to Bristol. I was told that I could not have the figures because they could only be obtained by territorial area. I could not find anybody to tell me what a territorial area is. On the advice of quite a prominent Member of the other Benches I asked again what public expenditure was taking place in a certain year in the greater South-East Region—a region established by the Government. I received the reply that, apart from expenditure which is the responsibility of the territorial departments—and perhaps the Minister will tell me what that means—most public expenditure is planned on a national basis and it is not possible to identify separate expenditure allocated to a particular area. One point of information I managed to wheedle out of the Minister was that 52 per cent. of all civil servants in this country and for whom everybody in this country pays, are sited in the South-East. I could go on for a long time but I have only 15 minutes and 11 have gone.

Over the past nine years on every possible occasion I can think of I have tried to draw attention to the consequences of developing places in the South-East—for example, Canary Wharf, the London dock lands, and so on—to the detriment of the rest of the country. On every occasion, because it was allied to another Bill, I have always received a measure of sympathy.

The noble Lord, Lord Bellwin had great sympathy. The noble Lord, Lord Mellish, thought that it was a problem that we could not run away from. The noble Lord, Lord Ezra, even talked about having a Select Committee to look at this question of the North-South divide. The noble Lord, Lord Simon, wants to hear from the Government what their policy is with regard to the matter of the North-West. The noble Baroness, Lady Seear. called for an intelligent regional policy. The noble Lord, Lord Brabazon, said on behalf of the Government when the noble Lord, Lord Taylor of Blackburn, raised the question of giving an instruction to the committee on the Channel Tunnel Bill that they placed great importance on the matters raised by the noble Lord.

This question of the North-South divide is of great importance and must be looked at. The noble Viscount, Lord Mersey, after going to Liverpool, came back to this House and talked about meeting people of Liverpool who had a fundamental hatred of everything southern and asked why could we not move a government department to Liverpool—something I asked for eight years ago. The reply from the noble Lord, Lord Belstead, was that the Government would look at the problem and see what can be done about it. We have heard nothing. Perhaps the Minister can tell us.

I had a document from the Yorkshire and Humberside authorities pointing out the discrepancies between the region. Other people will probably have that document and I shall not refer to it. However, arising from that report I made some inquiries. Let me tell your Lordships of the money that was paid in 1986 and 1987 in lieu of rates by Crown properties—and your Lordships know what Crown properties are. One has been constructed in Whitehall for the DHSS. London and Westminster combined seem to me to be an area with about the same population as Liverpool, so I have compared the two areas. The money paid in lieu of rates in London and Westminster was £63.1 million and in Liverpool it was £9.2 million. Of course we all know the problems of Liverpool and we all know the assurances of governments of all colours that they are going to do something about the problems that occur in Liverpool.

In 1979, a long time ago, I drew attention to the uncivilised way in which people were herded around London and its environment and how they are packed into public transport like sardines with no regard either to their dignity or to their comfort. In that year people were paid £400. on average, in London weighting to persuade them to stay here—and that includes civil servants. The extra bill met by the Government for civil servants was about £170 million.

Now, of course, the situation has worsened. A reorganised transport system throws one-man buses on the streets and at peak hours stops every vehicle from moving. The average payment for London weighting has now gone to around £4,500. In this week's Independent IBM have confirmed those figures. The nurses are asking for an extra £1,000 for plying their profession in London. They have managed to obtain concessionary agreement from the Anglia Building Society—of which I am proud to be a member, especially in view of its history—with regard to buying houses. Nurses collectively or singly can think of buying a £100,000 house. That is all very good but can we not see any further than the end of our noses? That is not the problem with nurses. The problem is the overload they have to handle in the hospitals inside our capital city. The granting of this very concession inevitably weakens the plight of the homeless in the City of London, of which the noble Lord. Lord Scarman, talked so convincingly.

I have run out of time and I hope that Members of the House will forgive me. I conclude on this note. There is a growing divide in the country. There is an acceptance in the House that there is a problem which needs to be looked at on its own. I have been advised that I should not raise this in the context of the Channel Tunnel Bill but that I should raise it on its own, so here I am raising it. Ultimately, this House will be asked to agree, or the Government will be asked in the first place, whether it is prepared to do something to examine this problem and consider it seriously. I have not attempted to blame any particular government. If the Minister has a brief prepared for him which seeks to defend the Government I recommend that he throws it away if he genuinely wants to understand the problems, because most of the problems stem from a southern-oriented Civil Service.

Are the Government prepared to establish a committee? Are they prepared to issue a consultation paper? Will the Government respond to the report in a formal way? Our society and our way of life rest upon the task of uniting our people—all of them, north and south, whatever so-called classes they are divided into by sociologists.

I started by referring to a quotation of John Donne used by the noble Lord, Lord Thorneycroft. I conclude by giving the rest of that quotation. If the deprivation that now exists in the peripheral regions of this land still leads to the kind of problems that we have had in the North, in Northern Ireland, and in Scotland and Wales, perhaps because of the militants who believe they are alienated by the people in the South, then we must remember the rest of that quotation. It continues: never send to know for whom the bell tolls; it tolls for thee". The "thee" is us—particularly those of us who reside in the South. I beg to move for Papers.

6.12 p.m.

Lord Goold

My Lords, I begin by expressing my warm thanks for the kindness and help that has been shown to me by so many noble Lords since my introduction and I crave your Lordships' kindness and indulgence for a few minutes this evening.

Coming from Scotland, I was particularly interested in the report on Regional Economic Prospects to the Year 2000 published jointly by Cambridge Econometrics and the Northern Ireland Economic Research Centre. I must say that I found more encouragement in it than apparently did the noble Lord, Lord Sefton of Garston. The authors of the report conclude that prospects for virtually all regions are improving rapidly and—and this is especially welcome—that unemployment is forecast to fall everywhere except in that tragic part of the United Kingdom, Northern Ireland. However, the report seems to suggest the existence and widening of a North-South divide, and it is on that aspect that I shall concentrate for a few moments.

The reasons behind this interpretation are that the report concludes, first, that more than 1 million people are likely to leave the northern half of Britain over the next 13 years to travel south in search of work; and, secondly, that some regions are likely to enjoy rates of increase in output and employment which are well below those of faster growing regions, notably in the South-East.

Migration has always been a feature of life in the United Kingdom. Rural to urban movement, or the reverse, has been happening for centuries, and I believe will happen always in a dynamic economy. Every area has different industrial structures and from time to time this leads to different economic growth and movement of population. In Scotland we have seen this very clearly in recent years; for example, in the North-East around Aberdeen, where there was an increase in population and development as a result of North-Sea oil exploration and extraction. However, since the fall in oil prices that has to some extent been reversed but, happily, it is now fairly stable.

At the same time as the North Sea oil developments in Scotland there was the problem of a preponderance of the declining heavy industries of coal, steel and shipbuilding. The Government's regional policy has helped to overcome many of the difficulties this caused by attracting much inward investment through the one-door approach of "Locate in Scotland", a branch of the Scottish Development Agency. This Government agency has encouraged, with great success, the partnership between Government and the private sector. Often a little pump-priming has been all that was required to stimulate investment and job creation; and it is significant that every £1 of Scottish Development Agency industrial investment is now attracting £13.50 of private investment in Scotland, compared to only £5 just two years ago. Since "Locate in Scotland" was established in 1981 it has helped to attract planned investment of over £2 billion which will create or safeguard in excess of 40,000 jobs.

The central belt of Scotland, where four-fifths of the population live, has been uniquely successful through inward investment with the electronics industry now employing more people than does the coal, steel and shipbuilding industries combined. Moreover, there are signs of exciting developments in biotechnology which surely must be the area of discovery of the next decade.

Inward investment from America, Japan, Scandinavia and many other countries has not come just because of sensible regional policy, important though that is. It has come also because of the quality of the potential workforce and because of the quality of life. Scottish education, despite some recent setbacks, is highly regarded and the standard of university and training colleges is respected far beyond our shores. This attracts overseas investors. However, so also does the quality of life in Scotland, and it is here that I believe we have the offset in full measure of any economic North-South divide which might—just might—exist. However, even economically I believe that is doubtful because significantly higher living costs in the South, particularly housing costs, mean that the real value of earnings in the South is considerably less than many suppose. A recent analysis by Professor Patrick Minford, significantly at Liverpool University, indicates that the real wage rates of non-manual workers are remarkably similar throughout the United Kingdom; indeed, Scotland is second only to the South-East and very little behind.

Financial considerations apart, there is much to commend life in Scotland, as many noble Lords know very well. I have to admit that when I stand in the Underground train from Westminster travelling towards Heathrow (often getting a seat at Hatton Cross) when I am returning North, I wonder whether the North-South divide exists, but in the opposite direction. However, high unemployment, wherever it is, is destructive and while being happy to read the section of the report which predicts that unemployment in Scotland will fall steadily to the year 2000, it is to be hoped that regional aid will continue and will be directed to areas of greatest need in such a way that will help to create employment which would not come otherwise. In that connection, I do not exclude aid to indigenous industries to encourage investment and expansion among existing companies. Such aid would help to offset the predicted loss of manufacturing jobs, and I believe that there are real signs that such policies are already improving the prospects for manufacturing in Scotland.

In its November 1987 Economic Situation Report, which provides a comprehensive analysis of business prospects in the regions, the CBI said of Scotland, following the fall in equity prices: The current order book and output situation is increasingly buoyant". As evidence of the increasing investment we have seen recently the decision by Ford to locate its automotive electronics plant in Dundee; a major Finnish paper manufacture company at Irvine; the decision by NEC of Japan to make the latest generation of high-powered semi-conductor memory products at Livingston; and as recently as Monday of this week, the announcement by JVC of Japan of a factory employing over 650 people making compact disc players, colour television sets, and so on, at East Kilbride. If this highly satisfactory trend continues—and I see no reason why it should not—I suggest that the prediction in the report of a loss of 85,000 jobs from Scotland by the year 2000 is likely to be unduly pessimistic.

I know that at the present time in England we hear much of the problems of inner cities. In Scotland that is not the main problem. Too often it is the periphery of the cities or the rural areas in which there is deprivation and the highest unemployment. I was interested to hear yesterday the Secretary of State for Wales say almost exactly the same of Wales. Inner-city renewal has been tackled sensibly and well. Glasgow, possibly one of the greatest success stories of the past decade, has improved dramatically due to a large measure of aid from central to local government; and, most importantly, co-operation with the private business community.

The current claim is that Glasgow is miles better—it is not known better than what; whether it refers to the other place, the capital 40 miles to the East, or whether it means miles better than before. Certainly the latter is true, as anyone who has visited Glasgow recently will know. With the garden festival in 1988, and being declared the European city of culture for 1990, Glasgow is no mean city.

However, attention must be directed with urgency to the peripheral areas of the cities and to some rural areas where little has developed to replace the labour intensive farming that ceased years ago. Policies to attract new industries, smaller companies, tourism and forestry, and so forth, must be pursued. In this way the less happy predictions of this report will be forestalled.

Most of what I have said relates to attracting and expanding manufacturing industries. But we must not underestimate, in any way, the service industries which are also doing well in Scotland. Edinburgh is now a thriving, respected financial centre, and indeed 20 per cent. of the total United Kingdom funds are now managed by the financial sector in Scotland.

In conclusion, I should like to say that I hope the House will welcome this report. It is stimulating and in many respects both helpful and hopeful. Where I differ from its conclusions is in the projection of a widening North-South divide and its less than optimistic prediction for the peripheral regions. Some divide there may be; but personally I feel that that is neither new, widening nor necessarily detrimental. With the continuation of good regional policies, urban development corporations, enterprise zones and, more importantly, the development of a strong working relationship—and mutual respect—between Government, local government and the private sector, I believe the prospects are bright for every part of the United Kingdom. My Lords, I thank you for your courtesy and indulgence.

6.22 p.m.

Lord Morton of Shuna

My Lords, it is my pleasant duty to congratulate the noble Lord, Lord Goold, on an excellent, if optimistic, maiden speech. As one who was, like him, educated in Glasgow I agree that Glasgow is miles better. In my view it has been miles better since 1979, which was the last occasion when it had a Tory MP and that may have had something to do with the result.

In view of the noble Lord's wide experience of so many aspects of business in Scotland, his contribution to your Lordships' debate will he of great value—that is, if he can spare the time from his labours to revive the endangered species of his Party in Scotland.

We are, however, very grateful to my noble friend Lord Sefton of Garston for initiating this debate. As he said, it gives us the opportunity to discuss the North-South divide which, according to the report, will—if the Government continue their present policies—become more and more pronounced.

The forecast is that the South-East and the Midlands will have an increase in population and an increase in activity contrasting with a declining North. Furthermore, it is forecast that unemployment, which is not projected to decline below 2½ million—which, if my memory is right, is roughly double what it was in 1979—will continue in the North and North-West and throughout the peripheral regions. As a Scot, I have a slight demur to being said as having come from what is described as "a peripheral region" but perhaps this is not the occasion to go into the Scottish perception of Scotland as a nation.

I wish to speak on the absence of effective regional policies. As regards Scotland the report states: Our forecast for Scottish output and employment in manufacturing reflects Scotland's falling share of national activity in periods of weak regional policy". The question I should like to ask is: why should we have a weak regional policy? The forecast is that the population of Scotland is expected to decline by about 5 per cent. up to the year 2000 in spite of an increasing birth rate and increasing longevity. The reason for the decline is the migration out of Scotland of people of working age. I suggest that that will create a substantial problem, because we cannot lose the working population and expect the young, and the old, to be held up and supported as they should be.

In contrast, we shall have a situation of increasing pressure on the South-East. I agree with the noble Lord, Lord Goold, that if one travels out to Heathrow, or anywhere else, one is given the impression that it is uncomfortably overcrowded. But according to the report we are to get another 1½ million people into that overcrowded area. Is this a good policy for the nation? It is in this context that the Government's statement on British Steel, especially about Ravenscraig, is so depressing. It was an example of what, perhaps, can now be referred to as "Guinnesspeak"; in other words, saying the exact opposite of what one really means to do.

It was clear in Scotland that the statement, far from being any guarantee of continuation of steelmaking in Scotland, was in fact the Government's acceptance of British Steel's decision to close Ravenscraig as soon as it was convenient, and to adopt a policy that British Steel would produce the minimum necessary in a period of depression and allow imports to cover any period of increased demand. That, I suggest, would be wholly wrong for the United Kingdom. It would certainly be disastrous for Scotland where closure of Ravenscraig would put about 25,000 jobs at risk.

This is merely a continuation of the Government's policy which appears in Scotland to be permanently anti-industry. It was difficult to perceive why, at the height of the depression in 1980—that is, the international depression—and at the start of the landing of North Sea oil, the Government should deliberately set out on a policy of high-cost energy and high interest rates. This dealt disastrous blows to industries, such as aluminium and paper-making, which depend very largely on high use of energy, and therefore their economics became difficult. We now have a position in Scotland where the electricity output is something like 60 per cent. more than it can possibly use. That seems to me to be another absurdity.

Unemployment remains the main worry in Scotland. The latest figure shows that long-term Unemployment—the people who have been out of work for over a year—stands at 136,000. The position in Scotland is relatively worse than in any other area, (or in any other region, which is how I should refer to it). The rate of reduction is the lowest of any region.

What is especially depressing is that in Scotland, as a legacy from the last Labour Government—and I was very pleased to see the noble Lord, Lord Goold, praising it, because it deserves praise—we have the Scottish Development Agency. We have an organisation that has proved efficient and effective in bringing jobs to Scotland and improving Scottish areas blighted by the worst of the industrial decline. It is through the work of the Scottish Development Agency, and the Labour controlled Glasgow District Council, that Glasgow is now seen as the inner city which is the example to be followed in other areas.

The existence of the SDA and its approach do not seem to fit in with the Government's free market criteria, and so it has been investigated twice since the Government came into power. The last report published in February of this year said: On balance we are satisfied that the Agency over the first ten years of its existence has borne out the expectation that considerable benefits would flow from such a body in Scotland. The Agency has adapted successfully to the change of approach to regional and industrial development under the present Government … The Agency's high standing with the Scottish business community and financial institutions, the generally supportive attitude of the local authorities, and its reputation beyond Scotland are also indicative of the Agency's performance. We have been particularly impressed by the flair and imagination which have characterised the Agency's approach to its role". We all agree with and welcome the businesses that are being attracted by the organisation. If that is so, and it is so welcomed by the Government Benches, why do the Government provide it with inadequate funding? It could have achieved a great deal more if more resources had been available to it. Why have neither the present Secretary of State for Scotland nor his predecessor been able to expand its work? The Government's attitude towards the SDA has been reluctant but expedient support, moderated by a penny-pinching financial straitjacket.

The extent to which cuts have limited the SDA's capacity is highlighted by the proportion of grant and loan applications that it has been able to approve in each year. Surely not all applications merit support. The trend seems to suggest—indeed the agency stated this in its last annual report— that it is now turning down potentially successful applications for no other reason than that it cannot afford to support them. It now supports about 10 per cent. of the applications, compared with 14 per cent. in 1979.

The approval rate leads some cynics to suggest that the effect of the Government's policy of reducing, the financies available is to force the agency to adopt a quota system. It is clear that far more rather than less regional assistance is required, and that bodies such as the SDA have proved that they are an efficient way forward to recreate an efficient, prosperous Scotland.

Unless the Government change their policy, the forecast contained in the paper will be correct. I have the strong conviction that in 40 or 50 years' time when historians write of the British Isles in the 1980s—I hope they will still be writing about the United Kingdom, but one cannot be sure about that—they will write not of a radical new beginning happening in the 1980s, but of a dead decade of lost opportunities because of the lack of an effective regional policy.

6.33 p.m.

Lord Walston

My Lords, first, I thank the noble Lord, Lord Sefton, for giving us the opportunity to debate this important subject and for introducing it so admirably, and. secondly, from these Benches I thank and congratulate the noble Lord, Lord Goold, on his exemplary maiden speech. It was a privilege to listen to someone who speaks with such fluency and knowledge of his subject and with such commendable brevity. We look forward to hearing far more of his contributions.

I shall not enter into the Scottish or even the Northern Ireland aspect of this subject. It would be far too rash of me to do so. At the outset I say that it has been amply established, even before this debate, that there is a North-South drift. It has been going on for many decades for a variety of reasons. They were economical and technical far more than political in the earliest days.

The decline of the textile industries in Lancashire, the decline of shipbuilding and the heavy industries in the North and of course Glasgow, the decline of Liverpool as a port for a variety of reasons and the movement of shipping to Southampton and to London and, more recently, to Felixstowe, have all been going on since between the last two World Wars, as the noble Lord, Lord Sefton, rightly pointed out. That has been accelerated since then by the ending of former regional policies, as is rightly pointed out on page 14 of the report, which states: Once the disparities within each of the South and Midland regional groupings are put aside, it can be seen that employment growth in each group of regions was similar in 1979. It has been the collapse of manufacturing since then which caused a major divergence in performance". That is one critical factor that we must bear in mind. The drift has also been accentuated, as is stated on page 13 because: Employment has consequently slumped since regional policy ceased to bring major additions through inward investment". One can rightly say that the case has been made out that this long-standing drift from North to South has been accentuated by government policy over the past 10 years. I shall not dwell on that aspect of the matter. I would rather ask your Lordships to turn your attention to a somewhat different aspect of the issue which has not yet been mentioned and which I suspect may not be mentioned.

I do not in any way minimise the great and real hardships that are taking place in the North as a result of that gradual drift, but we should not blind ourselves to the fact that all the new people coming into the area have created new problems in the South. Your Lordships will not be surprised if I refer especially to East Anglia, although there are many other areas in the South and South-East where that has happened.

East Anglia is the fastest growing region in the country. That is a source of pride. It also causes many difficulties. It causes grossly inflated property values, very pleasant for those who are fortunate enough to own a few surplus houses which they can sell but pretty tough on the young people in that region. They were looking forward with the few hundred pounds or possibly few thousand pounds that they had saved and could raise on mortgage to buying a house in which to start their married life. They are now unable to do so.

There is the increase in traffic through villages and market towns. There is the need for bypasses and new roads. Although some of them have been built many are still needed. That causes hardship and discomfort to those living in the area. More important than that, there is a greater load on the hospitals and the schools. Eventually, although it is beginning to happen, there will be a load on local authorities for the care of the elderly. There is a threat to the environment. There is the gradual spreading out (not so gradual in some cases) of villages and market towns, which is essential if new industries and the new people who come from the North and North-East are to be housed.

The noble Lord, Lord Sefton, referred to the proposed new town in Oxfordshire. That was just one example of the pressures that there are and against which we must be on our guard. I am not saying that the South-East should put up a barrier against all those who want to come to the area. Of course it should not, and it could not even if it wished to do so. But I believe in this North-South drift that we should realise not only the hardships in the North but the problems created in the South.

This trend will continue. I refer to page 20 of the report. It is estimated that there will be a million new people between now and year 2000 coming into the South and the South-West. That is a hell of a lot of people to absorb in an area which already has a high density compared with any other part of the United Kingdom. In East Anglia alone it is expected that the population during that time will rise by 10 per cent.

This accelerating drift about which we have been warned can be halted only by government action. I hope that the Government will face squarely the fact that market forces are not the solution to this problem. It is no good saying that the pressure on land in the South will be such that prices will rise and eventually will reach a level where the people in the North will say, "We are not going South. We shall stay in the North whatever the disadvantages may be". That may happen in 100 years' time. It might happen even in 50 years' time. But it will not happen rapidly enough to prevent the hardships, difficulties and distortions that are occurring at the present time. I know that efforts are being made by the Government to alleviate this problem. The noble Lord, Lord Goold, mentioned some of the efforts being made in Scotland. But there can be no doubt that these attempts are far from enough to stem this frightening, all-engulfing tide.

Let me remind noble Lords of the fact stated at page 27 of the report that expenditure on regional policy since the 1970s—that means the end of the 1970s—has more than halved in real terms. It should, on the contrary, have doubled during that time if any impact is to be made on this grave social evil. Otherwise the drift will continue at an ever-increasing pace. The South will become increasingly congested, the North will become increasingly depressed and the North -South divide will become even more marked than it now is.

6.44 p.m.

Lord Blease

My Lords, perhaps I may join with other noble Lords in complimenting my noble friend Lord Sefton on his initiative in drawing attention to this very important report. I should also like to join with other noble Lords in complimenting the noble Lord, Lord Goold, on the very clear manner in which he delivered his maiden speech. At least one aspect of his speech has my complete sympathy. That is the journey north on that very crowded train to the airport. I wish him every happiness in this House and hope that he will take part fully in the debates from time to time.

This report on regional economic prospects is of considerable importance. It was compiled by people who are acknowledged experts and widely experienced in statistical analysis in so far as data are directly relevant to regional economic living conditions. In other words, it is not a government document, nor is it sponsored or commissioned by the Government. The report is also important in its timing. It enables us to be further seized of the acute and serious widening social divisions within the United Kingdom.

Although it was compiled in a Northern Ireland context, and my remarks are directed mainly to Northern Ireland matters, the report, as has already been indicated, has a wider United Kingdom remit and implications. The introduction on page 1 states that the report is concerned, with regional changes in employment, unemployment and population, together with output and consumers' spending". It continues: One of the many changes experienced by the UK economy over the last decade has been a major swing in the relative fortunes of different regions in the country. This change has been so marked as to become an important political issue under the banner of the North-South divide". That has already been mentioned in a very forthright way in this House. It is not a matter which concerns only this side of the Chamber but is a very important political issue throughout the United Kingdom.

A further feature of the report which I consider should be noted in this debate is set out on page 2 under the heading "The Urban-Rural Shift". The report states: Trends in the economic development of local economies do not respect the bureaucratically imposed boundaries of the Standard Regions. In particular there are major divergences experienced within regions "between the highly urbanised areas and the rest … Each of the four peripheral regions contains a major urban agglomeration which it is not possible to distinguish without sub-dividing the regions internally". The report has presented for consideration data in the context of regional economic prospects within a regional framework which is classified under certain features. Those features are underlined by a corporate accumulation of wealth, by job opportunities, population movement and other factors that have already been highlighted.

There are several aspects, some of which have not yet been mentioned in this debate. First, there is the North-South divide. That has been mentioned by other noble Lords. Secondly, there is the fourfold division within the United Kingdom. That is spelt out very simply in the report, and is qualified to a considerable degree by the statistical analyses and the charts. The fourfold division consists of southern England, a highly prosperous area; the Midlands; the industrial North; and the peripheral regions, which include northern England, Wales, Scotland and Northern Ireland. These four regions are in the highly depressed and declining areas. It is therefore not right to claim that there is simply a North-South divide.

There are two other factors working within the changing pattern of the divisions within our community. The four regions are pulling against each other; and within the regions there are substructures which I believe should be further explored and examined. Those are the urban and rural communities. In this area there are dynamic and challenging factors in the subdivisions existing within these classified regions that give rise to wide social and economic variations. The report requires a further exploration of this dynamic factor between urban and rural developments and vice versa that exists in the United Kingdom. A particular aspect of this is the movement from urban to rural areas. I believe that some of the new experiments taking place in the setting up of small businesses and the breaking up of huge factory estates in certain areas have facilitated this experimental factor and have potential for exploitation in all regions.

It is within this framework that the report puts forward its projections and forecasts. We have heard reactions from other noble Lords who have spoken about the North of England and Scotland and we shall probably hear from Wales eventually. Each region has its own definite and distinctive problems. They must be dealt with in terms of the culture, the identity, the strengths and weaknesses of each area.

The report portrays a very depressing and despairing picture of Northern Ireland. I readily acknowledge that the separate and distinct political features in Northern Ireland are not strictly comparable with other regions in the United Kingdom. That does not mean that a debate on the United Kingdom economy should exclude Northern Ireland or, perhaps more importantly, it does not mean that politicians and others in Northern Ireland should relegate the economic issues of Northern Ireland to the sidelines of a wider political debate. No, my Lords, there is strong interaction and strong social connection between the standard of morale, self-esteem, self-belief and hope in the community and the existing levels of employment opportunities, corporate wealth and social well-being in that community.

Table 3 on page 7 of the report deals with the projected regional growth and decline during the 14 years from 1986 to 2000. Northern Ireland is grouped as one of the three regions of decline. In Northern Ireland employment will fall by 5.4 per cent., while it will increase in the United Kingdom by on average 7.2 per cent. In East Anglia it will rise by 24.2 per cent. Output will rise in Northern Ireland by 30.5 per cent., with an average for the United Kingdom of 52.5 per cent. and in East Anglia by a magnificent total of 88.2 per cent.

The table also projects population growth. In Northern Ireland it estimates that the population will decline by 7.3 per cent., while the average for the United Kingdom will show a rise of 1.6 per cent. and in East Anglia, as we have already heard, a rise of 15.9 per cent. is anticipated.

Along with other noble Lords and many in Northern Ireland I am not complaining about the higher levels of economic activity or general well-being in other regions. I do not wish to see any levelling down of well-being or any redistribution of corporate wealth. I believe that a strategy ought to be adopted by the Government which will allow for equality of opportunity by expansion and make the benefits of social well-being available to all in our community. I am proud to say that Northern Ireland is set on a course of seeking to have self-sustaining employment generated from within the Province itself.

For well over 70 years various United Kingdom governments have sought policies for regional development. I do not want to list the various Acts that have been in operation since 1934. We have already dealt with that. The White Paper on regional economic development issued in December 1983, Cmnd. 9111, entitled Regional Industrial Development, states in its introduction: The Government are committed to maintaining an effective regional policy to ease the process of change in areas which have been dependent on declining industries and to encourage new businesses in those areas … It is essential to ensure that regional policies are economic and effective in creating genuine jobs. The time is right to review the efficacy of our present system of regional industrial incentives". The report we are debating has spelt out in no uncertain way that the Government's measures have been inefficient and an utter failure as regards regional development.

I know most of the members of the Northern Ireland Economic Research Centre. It comprises people with active professional roles and functions in industry, banking and the universities. I believe them to be highly committed and to have a strong sense of public service. I have no doubt that much of the detail and the challenging facts of the report will be actively tabled and pursued at government and statutory board levels and by different advisory boards. Indeed I propose to inquire from the service, from several different bodies and appropriate sources whether they have studied the implications of the report and what action they propose to take. That is my task and the commitment I make in this debate. The Government have commenced an initiative called the pathfinder report which intends to process an industrial task force in Northern Ireland. Other regions have put forward proposals.

I conclude by making a request to the Minister who is to reply—I have not discussed this with my noble colleague on the Front Bench. I believe that the nature of the debate requires the appointment of a Select Committee of the House. I make that suggestion as a strong recommendation and proposal and I urge that terms of reference for a Select Committee be considered and the Minister takes this request to the Government. I apologise for having overrun my allotted time.

6.57 p.m.

Lord Simon of Glaisdale

My Lords, the noble Lord, Lord Sefton, has once again put your Lordships in his debt by drawing attention to what in my respectful submission—I speak as an admirer in general of the Government's conduct of the economy—is the most serious question now facing us economically. He set us a notable example as well by eschewing party points. The venue being Westmister and not Old Trafford or Headingly, he also even managed to squeeze out a friendly reference to a document from Yorkshire.

It is extraordinarily difficult for a layman to evaluate this document, but it puts the discussions that we have had on many occasions recently into a new perspective by projecting forwards what we can all see and what we all know. I said that the report was difficult for a layman to evaluate, and particular humility is imposed by the fact that on the list of speakers there are two noble Lords with distinguished academic backgrounds as economists. I hope that I may be allowed to say that I feel it is a particular privilege to be taking part in a debate, after so many years, with the noble Lord, Lord Jay.

The way it strikes a layman, especially this layman, is that except for the East Midlands, which is a revelation, there is little if any reduction of the present disparities in prosperity between the various regions. I have always disclaimed speaking of a North-South divide as economically dangerous, because, as the noble Lord, Lord Walston, said there are disparities within the region. Nevertheless, even if the line is moved further north, it is impossible to avoid the conclusion that disparity in general prosperity between the North of England and the South is likely to continue. I was dismayed when we last debated this matter on the Motion of the noble Lord, Lord Windlesham, to hear a right reverend Prelate adopt the phrase "North-South divide". It is therefore of social significance—dangerous social significance in my view—as well as being an economic menace. That is the first thing that struck me.

The second is the point made by the noble Lord, Lord Walston, about the pressures on the South-East of England. The authors of the report were cautious about development of the South-East because of the pressure on land and housing in the area. Both are very expensive. There must therefore be some danger of overheating in that area. Your Lordships will surely agree that an overheated economy—I speak subject to correction by the experts—is liable to be just as inefficient as a stagnating one. We have seen that in my lifetime at any rate.

The noble Lord, Lord Sefton, fairly said that the Government did not create the problem. That was echoed by the noble Lord, Lord Walston. However, it is fair to say that it is for the Government of the day to solve it if possible and certainly to alleviate it. In my respectful opinion their present policies are not calculated to do that. What the Government have done is to rely on the urban development corporations. They have been a shining success in the docklands area but, as the noble Lord, Lord Peston, pointed out when we last debated the matter, it is very unsafe to think that they can be transferred without question to other deprived areas. Conditions were singularly propitious for the success of the docklands development. More is needed. To set up an urban development corporation is the right beginning, but it is only a beginning.

Having spoken on this matter and dragged it into every debate wherever possible—even that on the Canary Wharf light railway—I am anxious not to repeat what I have said on other occasions, but I should like to deal with three matters. The first is the effect of interest rates, the second the question of local pay negotiations and settlements and the third the relocation of government departments.

I do not want to say anything about interest rates generally except that there is general agreement that, if there is to be a substantial recovery in manufacturing industries, the lowering of interest rates is a priority. That must impose some caution on those of us who do not hesitate to propose extra spending, and thus extra borrowing, on some favourite project of our own.

I wish to mention one event in interest rates that seems to me significant, the raising of interest rates during the summer. It was announced shortly before the economic statistical indicators were published. Every commentator that I noted thought that the indicators would be adverse and that the object of raising interest rates was to prevent overheating of the economy. In fact, the statistics were universally favourable. That leaves as the only conclusion that the Chancellor was afraid that the economy was becoming overheated, or in danger of becoming so, which had been the view of the City for some time. However, that could be only part of the economy. It could not possibly be the North, which continued to stagnate; it was the South-East. I mention that merely as an indication that the present prosperity disparity makes the management of the economy by the Government much more difficult. Unless the Government are prepared to remedy that disparity the management is likely to fail.

I am afraid that I cannot see the time indicator. I hope that some noble Lord will tell me when I am near the time limit.

Lord Beaverbrook

My Lords, the noble Lord has been on his feet for nearly 11 minutes and he is now speaking at the expense of subsequent speakers in the debate. We are already running 10 minutes late.

Lord Simon of Glaisdale

My Lords, I must sit down without mentioning the relocation of industry and government departments and the desirability of regional and local pay settlements.

7.8 p.m.

Lord Jay

My Lords, I agree entirely with my noble friend Lord Sefton that this is a valuable report. Its statistical precision should not be taken too seriously, however, since I fear that the economic future cannot be measured to one decimal point. Its conclusions, as the authors of course realise, must depend on all kinds of assumptions about external sources such as the price of oil and the liberation of the United Kingdom from the common agricultural policy; and, above all, the policies of United Kingdom governments. For instance, the authors assume gloomily that oil will cost 48 dollars a barrel in the year 2000 and, even more gloomily, that present government policies will be continued into the 1990s. On the latter assumption, they are probably right in concluding that despite all the investment going on and the excellent projects such as those eloquently retailed by the noble Lord, Lord Goold, they predict—and I am afraid they are right to do so—that national unemployment will remain at over 2½ million until 1990, and that the nation will suffer an acute worsening of what they call the North-South divide in those years.

I do not say the North-South divide has been created, but it has been re-created by the halving of regional expenditure in real terms since 1979 and the dismantling of the crucial industrial development certificate system which previously prevailed, and thus the North-South divide has worsened. This has been made even worse by the natural drag of EC membership on British trade and industry towards the South-East.

Given present policies and those assumptions, we are therefore heading for dereliction in the North and West with actual depopulation in Scotland, Northern Ireland and the North-West region; and also, as the noble Lord, Lord Walston, rightly pointed out congestion, bad housing, shortage of land and skilled labour in the South-East. I must say that if that is really the prospect this is a clumsy and uneconomic way to run a modern economy. Quite apart from the human hardship, it is as inefficient as a factory manager crowding all his machines into the one corner of the factory and leaving all the rest of his space unused, or someone buying a house at a high cost and deciding to live in only one room, or indeed building a hospital and failing to pay the nurses to work in it, which also seems to be this Government's policy.

It was the understanding of that truth, that that is an inefficient way to run an economy, which was one of the factors which enabled us to expand our war production so successfully during the war and hold unemployment at such low levels even in the North and West throughout the 1950s and 1960s. It is a solemn thought to recall today that in June 1951 the unemployment percentage in the northern regions—that is Northumberland and Durham—was 1.5 per cent. when now it is nearer to 20 per cent.

There are two fundamental truths that this report does not fully bring out and that indeed much conventional economic wisdom ignores. First, migration and depopulation do not necessarily cure unemployment. It was found in the 10 years after the war, when we had a strong regional policy, that each new job brought into the needy areas generated roughly one further job through the extra spending of the first worker brought in.

Similarly, however, that means that when one worker leaves an area the loss of his purchasing power in most cases probably throws out one further worker in the area. This is often neglected. It means that net outward migration reduces population but it does not reduce unemployment. That of course is the economic reason why migrations produce the prolonged dereliction—a sort of cumulative dereliction—seen in so many of these areas both in the 1930s and since 1979.

The second neglected factor is that most of our working population, strangely enough, live in families though you would not guess that from much conventional economics or from some White Papers. As one modern economist put it: In classical economics, children are neither seen nor heard. In real life an unemployed miner in Durham, say, whose wife or daughter has a job in the bank or in the post office, is hardly likely to move to the South-East at the risk of the one stable job already in the family, even if he could both find a home and afford to buy it.

For those reasons, a great deal of the conventional talk about labour mobility—a blessed phrase—really has little validity. In this country it so happens that nearly 10 times as many people change their jobs every year as change their homes. Job mobility exists on a large scale; but change of home on that scale simply does not, and cannot, exist in any real world. The moral of that is that for economic reasons it is more economic nationally to start new work and employment in the areas where idle workers live than to try to re-create their houses, schools, roads, hospitals and transport in some other distant and already overcrowded area.

Again, it was the realisation of that truth which helped the total output of this country, taken as a whole over the whole country, to rise faster in the 20 years after 1945 than it ever had before or has done since. Ignorance and neglect of it now is, I fear, recreating not merely the dereliction in the northern and western areas but also the congestion and homelessness which is growing, and the absurdly high cost of houses and land, and the transport muddles in the South-East.

With no IDC controls—which we virtually have not got now—and less and less regional capital spending, all this is likely to get worse. We shall suffer from. I fear, what the report describes as, A strengthening of the North-South divide— they say "strengthening", but that means it is getting worse, which has become increasingly evident"— since the end of the 1970s. In that case the nation as a whole will be needlessly impoverished as a result. This report tells us pretty candidly and convincingly where we are going if present negative policies on these issues are continued.

7.18 p.m.

Lord Polwarth

My Lords, in view of the remarks and timely reminder of the noble Lord, Lord Beaverbrook, I suppose that my correct duty would be simply to desist from contributing to the debate so that your Lordships would catch up the missing 10 minutes at a stroke. I shall not be quite so self-denying but I shall do my best. Anyway the voice of Scotland has been heard from both sides of the House already. The noble Lord, Lord Goold, blew the Scottish trumpet loud, clear and, if I may say so, very well. I sincerely hope that he will continue to play the same instrument in your Lordships' orchestra regularly. I also support everything that he said. I particularly support what he said about the work of the Scottish Development Agency in turning round the Scottish economy to its present state.

Perhaps I may remind the noble Lord, Lord Morton of Shuna, who I think took a good deal of credit to his party for the creation of the Scottish Development Agency, that these efforts to attract new industries into Scotland began long before, and under an entirely private operation of the Scottish Council for Development and Industry, in which all parts of the community took part, and which laid the foundations. In fact I am not sure that the Scottish Development Agency was not partly born out of a degree of admiration and envy for the Scottish council's previous efforts. That does not lessen its achievements, and perhaps I am a little less pessimistic than the noble Lord, Lord Morton, about its future. Of course it could spend more money. As we have heard today the National Health Service could spend more money. I could spend more money.

I think that the role of the Scottish Development Agency is very much that of pump priming; it has been the pump primer for private enterprise and it has been part of a most effective partnership. I think that all noble Lords wish it well in its continued operation. I should like to give a caution against the idea of providing more funds. The SDA has the admiration and envy of a number of other regions south of the Border. I am not sure what will be the reaction of some of Lord Morton's colleagues from the north-east, Merseyside, Wales, or Northern Ireland if the SDA were to have more money. I think that there would be an all-round demand for more money.

However, I still think that despite the successes achieved in Scotland we must continue to have a strong regional policy if we are not to slide back in the face of certain of our natural disadvantages and of the ever present pull of the metropolis and the South-East.

I shall not lay too much store on the report. I cannot assess the reliability of this computer-driven crystal ball. It sets out many figures as fact and who can tell how accurate they will be by the year 2000? I believe that there is still a need for a strong regional policy, but the time may have come for a change in its nature. No longer is it a matter of dangling money as a carrot in front of new capital projects. I should like to see it turn to something more subtle; towards creating the best conditions and environment for industry and the economy to flourish in the regions, and for local initiative and enterprise to flourish.

I know that a good deal is already being done, including the creation of enterprise zones, and so forth. However, there is scope for more to be done. There could be more emphasis on training in the regions; more emphasis on support for innovation and development of new products; perhaps a little less meanness with regard to higher education establishments in the regions as opposed to those in the rest of the country; and. above all, help with the infrastructure, particularly transport facilities. Our distance from the south and the continent of Europe is a disadvantage. I think that a new regional development policy might involve itself in those areas, but those suggestions are only pointers.

I believe that the Government are in the middle of a policy review. I hope that in the course of that they will heed the words of your Lordships today and the submissions of bodies such as the Scottish council, which has experience at the grass roots and is in touch with those directly affected.

Finally, I strongly endorse what has been said by the noble and learned Lord, Lord Simon of Glaisdale, and other noble Lords as regards the effect not only in the peripheral regions but in the reverse direction. I believe that regional policy is almost as important for those areas south of the dividing line as it is for those that are north.

It is interesting to note that according to the report the South-East—namely, London and the area to the south—is forecast to grow much more slowly simply because it is already suffering from saturation. The next danger is that the new magnets of attraction, the centres of easy travel distance to London—whether they be Cambridge, Peterborough, Milton Keynes, Reading, Basingstoke or Southampton—may in their turn become overheated. I cannot believe that it will be in the best interests of those towns and in the interests of those who wish to enjoy a reasonable quality of life in those areas.

I welcome the rethinking of policy by the Government. I hope that that rethinking will be thorough and imaginative and that the new policy, when produced, will be pursued with firmness and resolve.

7.24 p.m.

Lord Peston

My Lords, I should like to congratulate my noble friend Lord Sefton on introducing the debate. However, having listened to some of the comments that he made, I think that he regards me, and those like me in the South, as part of a problem rather than as people anxious to help with a solution.

I should also like to congratulate the noble Lord, Lord Goold, on his maiden speech, which I thoroughly enjoyed. I particularly agree with his reference to the quality of life. It is clear that he sees himself as sharing the historic mission of the Scottish nation, namely, to civilise the English. We look forward to hearing more of that from him in due course.

In one way the report is easy to interpret; in another way it is very difficult. It is generated in a sophisticated but mechanical way as part of an econometric model. Looking at the tables for the projected growth of the British economy, they are deeply pessimistic, so much so that I find them hard to believe. It is probably erroneous to interpret them as forecasts. We should interpret them as a warning or a statement of what might happen unless something is done. That is how I wish to interpret what I have read in the report. I am not saying that what is stated in it cannot happen; I am saying that it ought not to be allowed to happen.

One ought to underline that which is stated in the introduction to the report referring to the change of policy stance. It states: During the era of postwar full employment up to the mid-1970s, a combination"— and note the word "combination"— of market pressure and government policy ensured that growth in the peripheral regions kept pace with that in the south, despite major handicaps such as the switch from domestically produced oil to imported oil. Since the mid-1970s, and more significantly in the 1980s, neither market forces nor government policy have acted in this direction". The report goes on to say: These factors have combined in the 1980s with stagnation in public spending in the partial dismantling of regional and financial controls and incentives to cause a reversal of the previous convergent tendencies". That is the basis upon which we should debate what ought to happen. I believe that the noble Lord, Lord Polwarth, referred to new government policy. This is not a government document and, as far as I am aware, there has been no government statement of new government policy.

Lord Polwarth

My Lords, I may be wrong but I was under the impression that, independent of this report, the Government are engaged in a review of regional policy.

Lord Peston

My Lords, I hope that that is the case, and in the Minister's reply I hope to hear a statement along those lines. However, I do not think that as yet your Lordships have heard a statement to that effect. My main conclusion is that a statement as regards policy is precisely what is required. To repeat the point made in the document, I see that policy as a combination of the reinforcement and encouragement of market forces, which is clearly needed, but equally a great degree of government intervention.

Speaking as an economist, I regard the report as far too narrow. As the noble Lord, Lord Jay, said, regional policy is not simply an economic problem but one as regards our whole way of life. It is a social problem and to some degree it is also a political problem. We are interested in having a policy because we wish to remove the sheer economic waste connected with regional disparities. However, social damage is also involved.

I am well aware that, for example, the Scots are resilient people and they do the best that they can in the circumstances in which they find themselves, adverse though they may be on occasions. However, that is no justification of those circumstances; it simply points up the fact that they are human beings acting as best they can. That should not cause one to detract from the need for policy intervention in order to help them and the other regions.

One can view the problem of the North-South divide as a problem of the North, but I tend to view it the other way round, as the noble Lords, Lord Walston and Lord Jay, emphasised; namely, that it is very much a problem of the South. There is the pouring into the South of so many people, the congestion, the rise in house prices, undoubtedly the pressure to remove certain aspects of the green belt in due course and other things of that sort. I am bound to say, speaking as a southerner, that I find this development somewhat undesirable. Therefore one aspect of regional policy must be not to say. "Oh dear, there is just a problem in the North". There is undoubtedly also a problem in the South, which means that the matter should be dealt with on a national basis, not piecemeal but all together.

What then are we led to consider? If I may say so, the other limitation of the document is that it does not offer us much by way of policy initiatives. There are just three aspects of policy which I should like to mention. I too hope to sit down in less than 10 minutes and provide time to others.

I know that noble Lords opposite will feel bound to disagree, but I must say that the problem is insoluble without a modicum of an increase in public expenditure. I find it very puzzling when listening to noble Lords opposite that they describe all sorts of activities which need to be done, involving public expenditure at least to some degree, and then they add, "But we don't want to spend any more public money". I do not understand the point; I have continued to ask about it. You may wish to build up an infrastructure which will certainly involve private sector finance as well, but I can honestly see no solution which can succeed without some additional public finance. That is my first thought. I certainly hold the view, although occasionally it gets governments into trouble, that one ought to fine-tune public expenditure rather more towards the outer regions and away from the central regions.

Secondly, I wish to refer to an old theme which many of us have advocated, in that the problem is unemployment. That is certain, and one of the major worries about divergence, or lack of convergence, is that it occurs in an area of unemployment. Looking at it when unemployment has passed its peak and is falling somewhat, we can argue about how much and how we interpret the statistics, but on any of them, unemployment is falling to some degree, although the rate of fall is not as great in the areas which need it most.

I am particularly worried about the point raised by the noble Lord, Lord Morton of Shuna, that in Scotland there seems to be a very definite stickiness in the rate of fall in unemployment; it is deepening. My view is that the least one ought to do is as far as possible to lower the marginal costs of employers taking on employees. Therefore, the message which has been put forward by many of us in the past that there should be a differential change in the employers' national insurance contribution is certainly one which the Government ought to think about yet again.

My third point is much more in the way of a question. I must admit that I do not know the answer. It refers to the poll tax, and there was reference today in The Times to one study on the subject. Analytically, or a priori, it seems to me that the introduction of the poll tax will be disadvantageous to business in the already backward regions. However, I would not go so far as to say that that view is yet totally supported by a suitable analysis or by empirical research.

I hope that in considering this matter the Government will in due course come to your Lordships' House to tell us more about what they know or what their economists have found out on the likely impact of the poll tax on regional economical activity. For the moment, to say the least, I am pessimistic but my mind is not closed.

I conclude by repeating the proposition that regional problems are important, regional policy is important. The issues lie before us. We have been warned. The time has now arrived for positive action.

7.34 p.m.

Lord Crickhowell

My Lords, I share the concern shown by the noble Lord, Lord Sefton of Garston, who opened this debate, about the nature of the problems we face. It may be a surprise to some that I also very much share the views of my noble friend Lord Polwarth about the importance of regional policy. I have long been an advocate of regional policy.

However, I was going to start my remarks with a point made by the noble Lord, Lord Peston, about the inherent limitations of this kind of report. I have to confess to a profound scepticism about this kind of exercise in econometric modelling. In fairness to the authors, I should say that they point out the shortcomings of the approach themselves when they mention that their aims have necessarily been limited to what is essentially a projection of past trends. But all my experience in government leads me to doubt that in a rapidly changing world forecasts based on past events have very much validity. If we are just to take this as a warning of what might happen, perhaps I shall confine my remarks and not make some of the other criticisms which I might have made of this report.

When we look at the regional detail, some of the absurdities become even more manifest in carrying forward projections over a period of 13 years. Indeed, when I look at that part of the United Kingdom with which I am most familiar, Wales, I discover that some of the forecasts have already been overtaken by events and that the forecasts, for example, of unemployment set out in the table towards the end of the report now look pretty nonsensical against a background of 18 months of continuously falling unemployment in Wales.

What has happened in Wales illustrates both the possibilities which are there to be exploited and the difficulty of carrying forward past trends. That is because over the last decade or so we have come to the end, I believe fundamentally, of a great era of industrial change and decline which has gone on for the greater part of three-quarters of a century. It has now bottomed out because it can probably go no further. Those old basic industries are no longer the foundation stone for the Welsh economy, except of course that steel will continue to play a crucial part in the great steelworks in South Wales. But we have seen, as in Scotland, the rapid development of a new industrial base. We have seen Wales, I think for four years running, attract around 20 per cent. of all the inward investment in the United Kingdom with about 5 per cent. of the population, and unemployment has been falling fast, as I pointed out.

The danger of reading the kind of forecasts which are contained in this report into the future too literally is that they tend to reinforce preconceptions and some of the attitudes which cause the most damage. I believe that all our experience shows that changing attitudes both of outsiders to what is going on in a region and of those who are actually in the region about their capabilities and performance can be as important as any act of government.

We have only to look, for example, at the change in the performance of the steel industry in South Wales at the great plants at Llanwern and Port Talbot to illustrate that point, or at some of the spectacular developments that have taken place not just in this country but in other parts of the world as a result of urban renewal schemes in cities which seemed to have no future at all. We find that, for example, in cities like Baltimore or Pittsburgh in the United States. We have heard already in this debate of the extraordinary transformation which has been taking place in Glasgow. Under the guidance of the Scottish Development Agency I went there a couple of months ago and I was deeply impressed by what I saw.

This takes me to a further point, which was raised by the noble and learned Lord, Lord Simon of Glaisdale, when he said that we should not rely on UDCs. I agree with him about that but I do not believe that the Government have been relying on UDCs. What we have been seeing is an important development of regional policy and change in the instruments which can be used. I believe that the growth of urban renewal projects of one kind or another and the introduction of the urban development grant in 1982 were the most important initiatives by this Government borrowed from the United States. The launching of urban development corporations of the kind which have had such success in the London docks have enormous potential for success. South Wales is one example where there is all-party support for the great renewal project around Cardiff Bay. All these are part of a developing regional policy.

If we can transform the urban environment, if we can restore those cities which were in decline and losing their professional classes and the magnetism they once held so that they form a focus for development around them, we will make a very important contribution indeed to regional policy; and I believe that the sort of developments that we have under way in Cardiff will be as important to the Welsh valleys as they are to the capital city. So, yes, we need a regional policy but we need perhaps to change its emphasis.

That brings me to four points which I want to make. In changing that regional policy we must, as the noble Lord, Lord Goold, said in his admirable maiden speech, have as a major objective the need to generate the maximum private sector contribution. We must use public money in order to create a multiplier effect so as to create a partnership between the public and the private sectors, which I believe is the key to our success in this whole area, as indeed it is in many other areas where we face problems, not least the health authorities, which we were considering earlier this afternoon.

We must recognise the importance of new attitudes. That was the central problem that I faced when I first took over as Secretary of State for Wales. There was a view of Wales held in many parts of England and a view of their future held by the Welsh themselves. One of the most hopeful things that has happened is the new-found sense of confidence and pride in performance that we have seen and that we have heard about again this week in another part of the United Kingdom, the North-East, where Nissan has announced major investment, as the workforce rightly said, because of its performance in the first phase of that development.

Thirdly, we have to develop the urban initiatives about which I have already spoken and about which, in view of the time, I shall say no more. Fourthly, we need a strengthening in the regions of the financial and professional services. This is a subject about which I have spoken in the past. Indeed I caused irritation to some of my friends in the City by what they regarded as an attack on them when I referred to the gap that I saw between some of the financial institutions in the City and our old industrial regions. I am glad to say that I think matters have begun to improve, but there is still a gap.

I very much welcome the fact that in Wales we have seen a dramatic reversal of the exodus that was taking place in the 'sixties and 'seventies of the professionals, the accountants and solicitors, as the great firms merged. They are all coming back with strong partnerships and organisations. I wish that we had the strength of the financial institutions that my friends have in Scotland. I believe that if we could do more to create those strong financial and professional units that existed in the old industrial regions in the first Industrial Revolution we would do more than anything else to change the prospects for the future.

That is the point on which I wish to conclude. I frankly do not believe any of the forecasts that are contained in this document. I think that when we come to look at it in 13 years' time it will be very difficult to find a table which bears much relationship to what has happened in practice. What we should be debating today is not the validity of this very doubtful econometric exercise but the policies we need to make sure that the more gloomy forecasts do not come true and that the growth that is forecast in the report is shared by the regions as well as by the South-East.

7.44 p.m.

Lord Dean of Beswick

My Lords, perhaps I may first apologise to your Lordships for not being present to hear the earlier speakers, but I was at a meeting in the Palace where my presence was required. Also I should like to say how deeply I appreciate the title of the Motion introduced by my old friend and colleague Lord Sefton, which is on a subject which is very germane to all of us today. I know that the report covers a national perspective, but I hope your Lordships will bear with me as an indigenous northerner if I retain my cloth cap and speak from that angle.

The possibility cannot be discounted that things are not going to happen. This is a very serious report by very serious people and it states that the one area that does not show signs of improving by the turn of the century is the North-West. I have to say, though I live just outside the North-West, that that is my experience. Let me very quickly give some figures.

Between 1979 and 1986 there was a marked sectoral shift in the nature of employment. During that period the number of people employed nationally in manufacturing fell by 28 per cent., while service sector employment increased by 7 per cent. The processes of restructuring and closure in manufacturing industry have had the greatest impact in the northern regions, whose economies historically have been reliant on a manufacturing base. Manufacturing still accounted for 28 per cent. of employment in the North-West in 1986, compared with only 21 per cent. in the South-East. While there has been some manufacturing job loss in the southern regions, this has been largely ameliorated by the increase in employment in the service industries. Unfortunately, the North has not benefited from a similar experience.

In the period 1978 to 1987, some 46 per cent. of the net increase of 0.2 million people employed in service industries was located in the South-East. By contrast, the North, the whole of Yorkshire and Humberside, recorded a reduction in the numbers employed in services. We have heard repeatedly from Government Ministers that the reversal of the tremendous unemployment figures that we were experiencing would be brought about by a substantial increase in service industries. This is obviously not a lifebelt that is being thrown out to people in the North-West.

But what are the answers? Immediately after the election, the Prime Minister indicated that the main thrust would be to refurbish and regenerate the hard core of our inner cities. Some of your Lordships may remember that I initiated in your Lordships' House on the Tuesday before we rose for the Summer Recess a debate about the inner cities, through an Unstarred Question. I was commended by the Government Front and Back Benches on the reasonable way in which I asked what were the Government's intentions. Surprise, surprise! On the first Wednesday that we returned after the Summer Recess the Government themselves chose to discuss the problems of the inner cities in a full day's debate in which I did not take part. But I was a little disappointed that I heard nothing more forthcoming than I had heard in July.

So what is happening now? The Government have stressed all along that they expect a substantial input of private capital to make an impact on this refurbishment and regeneration of the inner cities, but now what has happened? First, we have had an addition of three more urban development corporations announced, which in my opinion were not necessary, because, overwhelmingly, local authorities involved are in the process of planning and negotiating. Elected members and their officers are at the point of producing schemes of their own volition and dealing with investment people, planners, builders, etc. I have said before in this House that the Government are insistent on these urban development corporations. I do hope that they will adopt a reasonable and commonsense approach and that in some of the places where they are insisting on urban development corporations they will approach the local authorities concerned or their representatives as regards initiatives.

However, there is something that is more distressing to me. I do not say this in an over-critical way but rather in a helpful way. There was a Question asked of a Minister in another place by Mr. John Heddle. It was replied to on 1st December. The Minister replied that of the 30 schemes that had been submitted to the Government for urban regeneration in a variety of ways only one had been approved. He said that the others were still being appraised.

I put it to the Minister that that is not good enough. I have previously been a little sceptical about whether private industry would become involved in this issue. I know now that the national chairman of the Phoenix Partnership, which is involved through its initiative in drawing people together to produce inner city development without the costs of a development corporation, has expressed concern about the imposition of urban development corporations when he and his officers are making progress. I have to say that they are deeply concerned about the lack of government progress on this matter.

I am told that the Government have not employed one additional officer to deal with the task of progressing applications for inner city renewal. I know reputable people personally and their companies in the private sector individually who have a lot of money to invest and who are literally queueing up to do so. They are at the point where schemes are almost nearing fruition but they are now wondering whether the Government are really serious. I must put this to the Minister and I hope he will take it seriously, because it is a very important point. If the Government are serious, will the Minister ask the Secretary of State in another place to set up an organisation apart from the Department of the Environment and the Department of Trade and Industry that will cut across the obvious jealousies that we all know have arisen and do something about this matter? There are rumours that a special Minister who will be responsible for this area will be appointed in the near future.

If the Government do not do something about this it will be sad to think that the very people who are prepared to put money into our inner cities—as is desired by all of us: Government, Opposition, Conservative local authorities and Labour local authorities—will start to back off. That will occur if no action is taken and no rabbits come out of the hat. They will do that because there are plenty of other places in the world where they can invest money. In my opinion once they start to back off we can forget for evermore any possibility of inner city regeneration in the nation as we know it.

7.53 p.m.

Lord Williams of Elvel

My Lords, my noble friend Lord Sefton of Garston has done us a favour in introducing the debate on this report. I shall be as brief as I possibly can because I wish to allow the Minister his full time to reply to this important debate. I do not particularly wish to comment on the report itself in any detail other than to make some points about the analysis. The first concerns the general growth rate up to the year 2000 of which my noble friends Lord Peston and Lord Crickhowell were critical. I think that they were probably quite right. One cannot say now what will happen in future or place any confidence in forecasts.

Nevertheless if we look at the rapid growth scenario in the report it still turns out that a regional disparity exists. So whether we have a slow growth or a high growth the major problem that the report sets out still exists. The problem that the report refers to in very considerable detail is the increasing disparity on whatever growth scenario one might adopt between the different parts of the United Kingdom. Whether one puts the line at the northern edge of the Midlands as is done in the report or whether one puts it lower or whether one suggests that it is a problem of the South rather than the North or vice versa, the report makes it absolutely clear that there is a major problem here and that it is getting worse.

We must now see what must happen if the problem is to be in any sense cured and if the trends are to be in any sense reversed. I believe it to be absolutely true that in the past decade, or at least in the 1980s, there has been a much lower emphasis on regional policy than previously. My noble friend Lord Jay referred to the post-war period. I think that was a very successful period in terms of regional policies as my noble friend pointed out. The noble Lord, Lord Walston, remarked, as does the report, that in monetary terms regional selective assistance from the Department of Trade and Industry has halved in real terms between 1979 and this year.

There have been of course a number of successes. The noble Lord, Lord Goold, in a very distinguished maiden speech which we were all glad to hear, pointed to Glasgow. The noble Lord, Lord Crickhowell, also pointed to Cardiff. In my view those are two outstanding examples of co-operation between central government, in the form of the Scottish Development Agency or the Welsh Development Agency which are agencies of central government; local government; and the private sector.

We should all support those initiatives but I return to the point that was made very well by my noble friend Lord Peston. Those initiatives depend on an injection of public money. One must start with the public money in order to get the multiplier effect to which the noble Lord, Lord Crickhowell, referred. We should certainly support that approach to the regeneration of some of the very rundown areas of the United Kingdom which have, as the noble Lord, Lord Crickhowell, said, suffered from the closing down of major parts of their former basic industries of steel, coal and shipbuilding. That is certainly an approach that we on this side of the House would endorse.

I was very sad to hear the noble Lord, Lord Blease, refer to the situation in Northern Ireland. That is a depressing situation. I do not think that we have had any equivalent initiative in Northern Ireland. One would certainly like to see that. I wish to ask the Minister if he would be good enough to respond to the question which underlay what the noble Lord, Lord Polwarth, said and which certainly underlay what my noble friend Lord Peston said. Yes, the DTI is undertaking a study of regional policy. Can we now hear in which direction that policy is to go because there was, as I understand it, a fairly deliberate leak in the Financial Times on 1st December which is headlined: Britain plans to limit regional aid". It is alleged in the article that the Government plan to end industry's virtually automatic entitlement to aid in Britain's assisted areas, in other words to abolish regional development grants.

Regional development grants are giving value for money in creating jobs, which is what they were meant to do. They work on the principle of no jobs, no grant. Again I turn to Wales. Last year in Wales 1,180 projects were approved for regional development grants at a total grant value of £56 million. Over 17,000 jobs were associated with those projects. That is a cost of £3,000 per job which is approximately half the cost of keeping an unemployed person while he is unemployed. Therefore the regional development grants really do give good value for money. I cannot for the life of me see why the Government wish—if they do wish—to abolish such a system and revert to the complex and difficult system of selective regional assistance.

I want to give the Minister time to reply so I shall pass over a number of points that I wanted to make. I want the Government to listen to the advice of Mr. John Banham which he gave at the annual dinner of the Wales CBI Council as reported in the Western Mail. The paper stated that it was: extremely unwise to change a situation that was apparently working so well". We have had so many changes in different kinds of regional aid programmes. If one is working well why change it?

Finally, will the Minister tell the House when the Secretary of State will be making a Statement on the matter? It was promised for the new year. My sources tell me that the date of 11th January has been pencilled in. If that is the case, we should like to know about it.

Your Lordships will all be grateful to the noble Lord, Lord Sefton, for raising this matter. I have covered my points as quickly as I decently could in order to allow the Minister time to reflect and reply. I believe that however one treats this particular report, we have debated an essential and important issue in the Britain of today. I hope that the Minister will come forward with an adequate response.

8 p.m.

Lord Beaverbrook

My Lords, this has been a most worthwhile debate on a subject of considerable importance and I am most grateful to the noble Lord, Lord Sefton of Garston, for introducing it today.

The authors for the report that we have been discussing are to be congratulated on attempting the heroic task of forecasting economic prospects for the remainder of the century and on their clear and digestible report. I do not wish to dwell on the intricacies of forecasting but I should like to make a non-technical observation. If accurate forecasts of employment, population, unemployment and output in the regions could be made so far ahead, infrastructure and other planning would greatly benefit. But it will be 14 years before we know how good the forecasts are.

Meanwhile, I am sure that the authors of the report will forgive me if I say there are some good reasons for questioning the forecasts. First, the report says that the UK unemployment rate will fall below 10 per cent. just before 1995. In fact it did so in October, before the report was published. I agree with my noble friend Lord Crickhowell that the largest falls in unemployment in the period between June 1986 and October 1987 were in some of the parts of the country about which the report is most pessimistic. In Wales, for example, the reduction is from 14.5 per cent. to 12.1 per cent.; in the West Midlands it is from 13.1 per cent. to 10.8 per cent.; and in the North.West unemployment has fallen from 14.6 per cent. to 12.4 per cent.

The noble Lord, Lord Sefton, referred to the report's prediction of 85,000 jobs to be lost in Scotland by the year 2000. Any projection over such a long period must be highly speculative and I should add that in 1985 output per employee in Scottish manufacturing was 6 per cent. above the UK average. Since 1979, real manufacturing output per head has risen by 5 per cent. per annum. That pace of improvement augers well for the future.

Secondly, the forecast is based on projections of the national industrial structure. Others have found this an unreliable way to forecast regional employment one to two years ahead, let alone 14. Regional forecasts are, as mentioned by the noble Lord, Lord Blease, subject to particular uncertainties. In looking at the recent development of the national economy we have the benefit of more comprehensive and up to date figures. It is very encouraging, therefore, that expansion is indeed what those figures show.

Your Lordships will be familiar with the strong—indeed remarkable—recovery in output, in productivity, in profitability which has taken place since we passed the trough of the recession in 1981. The gross domestic product has been expanding by an average of almost 3 per cent. each year, productivity is up by half and the profitability of non-North Sea activities, is, at 9 per cent. for 1986, at its highest level since 1973. Recently, the recovery in manufacturing output has been particularly strong.

What is equally encouraging is that the strong performance in the economy is expected to continue. As my noble friend Lord Young said earlier, it was clear from the CBI's recent survey of industrial trends that industry shared that view, and that confidence had not been dented by the falls on the stock markets. That has been confirmed by the latest CBI survey published this week. That should be reassuring to those of us—all of us—who see growth in the national economy as a vital element of success in the regions.

For several years the Government have been creating a climate of economic and fiscal policies which, when applied nationally, are conducive to the prosperity of all parts of the country. Clearly, the Government's prudent management of the economy is providing the basis for regional disparities to be tackled effectively.

Those disparities are sometimes represented in terms of the North versus the South. I do not subscribe to the media notion of a North-South divide. Policy measures have to go beyond a geographical dividing line and look at the areas of real need wherever they are. In my view a more relevant distinction is between those areas which have been able successfully to embrace change in technology, consumer demand and competition and those which have found it hard to adapt. In the latter category I am thinking in particular of those areas where the great labour-intensive heavy industries of the past were concentrated, including in our older industrial cities.

It is true, as the report shows, that regions to the north and west of the Severn-Humber line were particularly severely affected by the recession in the UK and other industrial countries in the early 1980s. The report usefully summarises some reasons. A higher proportion of jobs in the North were in manufacturing, which suffered much more than employment in services. The North has a higher proportion of old urban areas, which have been losing jobs to small towns and rural areas. But there is no reason to believe that those special factors will persist. As I have illustrated, the figures show that the benefits of economic growth are accruing to all regions and projecting the trends of the early 1980s into the next century serves no useful purpose.

I can assure the noble Lord, Lord Jay, that the Government's policies are designed to target support on the areas and on the people that most need assistance, wherever they are. My right honourable friend the Secretary of State for the Environment has, for example, taken measures to assist the North through the derelict land programme, while much of the initiative taken in inner cities has been directed to the North through the urban programme, the urban development grant, the Urban Development Corporations and the enterprise zones. I can assure the noble Lord, Lord Dean of Beswick, that the UDCs which have been set up will show what can be achieved by positive attitudes to private sector development. Only last week my right honourable friend the Secretary of State for the Environment announced that he proposed to set up mini-urban development corporations in Leeds, central Manchester and Bristol, as well as to extend the Black Country's development corporation to take in parts of Wolverhampton.

There has been a sustained and determined effort to bring publicly owned idle land back into use. In the past 12 months over half the 10,500 acres brought back into use has been in the North. Proposals for a unified business rate and revaluation of non-domestic rateable value will help businesses which want to establish in the North or are already there.

I have already mentioned the inner cities. The inner cities initiative which is the responsibility of my noble friend the Secretary of State for Trade and Industry is an important part of our strategy for regional regeneration. This is a new concept, working at ground level with the local communities, local businesses and local authorities. The initiative consists of 16 task forces in pilot areas, with the specific aims of improving employment opportunities, encouraging enterprise, improving employability and improving the environment of the community. This year, the task forces have a budget of £14 million, mainly for pump-priming projects. Although the initiative has only been running for 20 months, the results are already very encouraging, particularly in terms of our success in drawing in private sector support. For example, over 200 companies are now directly involved with task forces, and over 300 projects have been approved. Over 250 businesses have been helped by task force projects.

Alongside the initiative, there are the five city action teams in London, Birmingham, Liverpool, Manchester/Salford and Newcastle/Gateshead. Those city action teams have budgets of £1 million each to spend in 1987–88 on projects aimed at regenerating our inner cities. So far the city action teams are making good progress in committing their funds across a broad range of enterprise and employment-related activities.

Perhaps I may say to the noble Lord, Lord Morton of Shuna. that the Scottish Development Agency, which is the main instrument of economic and environmental regeneration in Scotland, has had its budget increased by 9½ per cent. in real terms since this Government came to office. Its total expenditure since 1979 is in excess of £760 million. I am in agreement with my noble friend Lord Polwarth and the noble Lord, Lord Williams, that the role of the SDA is to prime the pump for local initiative and enterprise.

I congratulate my noble friend Lord Goold on his excellent maiden speech. Given the range of difficulties of multiple social and economic deprivation faced by people in such areas, a wide range of policies is bringing help. The Govenment's policies are crucially important for people in urban areas in Scotland. The Government are committed to an effective regional industrial policy. In 1984 the Department of Trade and Industry made changes to its policy so that the assistance under the department's regional schemes of support was more closely targeted on the areas of the country most in need. This was in keeping with the objective set out in the 1983 White Paper, Regional Industrial Development, of encouraging the development of indigenous potential within the assisted areas with the long-term objective of self-generating growth in these areas. Since 1984 the DTI has given financial support totalling £735 million towards projects in the assisted areas of England which will generate investment and new economic activity.

I should like to say to the noble Lord, Lord Walston, that the regional policies of the Government go a lot further than just the provision of large sums of money. It is incidentally no coincidence that the assisted areas map which was revised in 1984 covers 70 per cent. of the working population of the North (taken as the North-East, the North-West, Yorkshire and Humberside) compared with 22 per cent. in the rest of England. In Scotland and in Wales the figures are 64.7 per cent. and 89.4 per cent. respectively.

As your Lordships may be aware, the English Industrial Estates Corporation has an important role to play in furthering the regional policy objectives of the Department of Trade and Industry. It provides manufacturing, traded services, warehousing and office facilities. It manages over 4,500 small factory units where previously many businesses could not set up or expand because suitable premises were not available. It has pioneered the provision of special rental terms with the aim of helping small start-up businesses located in assisted areas.

English Estates has been asked to undertake a new development programme to provide managed workspace in inner city areas in order to stimulate local employment and enterprise as important aspects of the process of regeneration. To secure the maximum impact locally in furthering the climate for enterprise, English Estates will seek substantial private sector and local community involvement, particularly in the running of the workspace. English Estates is particularly well placed to take on this new programme given its wide experience in recent years of developing small units in the assisted areas and its increasing involvement in urban regeneration schemes.

My noble friend the Secretary of State for Trade and Industry has recently set new objectives for his department. These are designed to produce a climate which will promote enterprise and prosperity in all areas of the country not least by building on the strength of successful industries and developing new enterprises. I can tell the noble Lords, Lord Williams of Elvel and Lord Peston. that in the light of these new objectives my noble friend is looking at the whole range of his department's activities, including those of a regional nature, to ensure that they support in an effective way the department's prime objective of assisting in the wealth creation process. It is hoped that an announcement will be made in the new year.

I say to the noble and learned Lord, Lord Simon of Glaisdale, that while the interest cut on 3rd December was indeed the third cut since the stock market fall, we remain committed to keeping downward pressure on inflation.

Lord Simon of Glaisdale

My Lords, if the noble Lord will forgive me for interrupting, I was dealing with the summer interest rise and not the recent interest cut.

Lord Beaverbrook

My Lords, I was dealing with the recent interest rate cuts, which are very important in the management of our economy.

The Government are committed to increasing the prosperity of all our people in whatever part of the country they live and work. Our policies have improved significantly the performance of the national economy and our achievements provide the basis for regional differences to be tackled effectively. This is an objective in which we can all share.

Lord Simon of Glaisdale

My Lords, does the noble Lord propose to sit down without dealing with the important issue raised by the noble Lord, Lord Sefton, namely the deployment of central government departments into the more deprived areas?

Lord Beaverbrook

My Lords, I have outlined a number of the Government's initiatives which in themselves add up to many projects for dealing with these problems.

8.14 p.m.

Lord Sefton of Garston

My Lords, there are eight minutes left to the time when this debate should finish. I shall not take up the whole of the time because I think that I should make recompense in some way for the fact that I pinched three minutes of the time of other speakers. I apologise to them.

I should like to offer my congratulations on a good maiden speech to the noble Lord, Lord Goold, I am sure that he and many other noble Lords in this Chamber would not wish me to agree with everything that he said. We look forward with interest to hearing him speak again, because there are bound to be more debates of this nature. It is evident that almost everyone who spoke in the House today contributed to the idea that there is a major problem.

We have just heard, as I forecast that we would, the brief from the Government. It was the same brief as I heard from Labour Governments; it was the same one sent to Liverpool City Council and Merseyside County Council and even to the regional economic planning council. The brief is always the same.

The problem remains and as one drives down the M.1 one can see encapsulated in a few words the attitude of some people towards our system, because, on a bridge over the motorway is written "Elections change nothing". That is a reflection of the thoughts of some people in the outlying regions of this so-called United Kingdom.

I am not going to attempt to reply to everything. I should like to thank everybody most sincerely for taking part in the debate. I thank the people who have produced this report. Let me say loud and clear, so that no misunderstanding arises between falling interest rates and rising interest rates, that I look forward with interest to a detailed examination by the Government of the problems of the South-East of this land. Are we going to tolerate, as a civilised society, the spread of congestion and homelessness and all the other problems associated with expansion in the South-East'? I believe that that will be the major problem for the rest of this century. I look forward to the review which is to take place and about which we are to hear very shortly concerning the Government's intentions about regional problems.

I conclude, although I am still within my allotted time. I am amazed that I have kept within time. Let me repeat my questions. Do the Government consider the report sufficient to give a studied response to it'? Are they prepared to give this House their backing and have a committee coolly and objectively examine all the problems of the region?

Those are two specific questions and I do not ask for answers tonight. Over the last nine years whenever I have raised the question of major developments in the South-East I have been told that I am wrong and I should not do it. I am now taking the first opportunity to raise the matter completely divorced from anything else. Therefore the Government cannot dodge the answer. I hope the Minister will write to me and tell me whether the Government intend to proceed on these lines by means of either a Select Committee, a Standing Committee or a Royal Commission? May we have a response from the Government to this report? With those words, I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.