Regional Development Grants (Termination) Bill

HL Deb 11 April 1988 vol 495 cc920-33

3.12 p.m.

Lord Taylor of Gryfe

My Lords, before the House goes into Committee I wish to raise a question that is not strictly related—

Noble Lords

Order!

Lord Young of Graffham

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Young of Graffham.)

Lord Taylor of Gryfe

My Lords, it must be the Easter break that generates a certain amount of enthusiasm to become involved! However, I raised a question this morning with the Leader of the House on the subject of the operation of this Bill and the constitutional position.

I read in the newspapers during the recess that the regional grants had been terminated on 31st March and that the drawbridge was now down, as it was stated, on any new applications. I wish to raise the question whether it was possible, and constitutionally correct, to terminate regional grants before the House had approved the Regional Development Grants (Termination) Bill.

Lord Young of Graffham

My Lords, it is a matter of record that I came to your Lordships' House on 12th January to announce our intention to finish with the regional development grants scheme at the end of March. By the time of the closure date, some 10 weeks ahead, all Commons stages and the Second Reading in your Lordships' House had taken place. There have been many precedents for legislation to be enacted after its provisions come into force. Indeed, it happens every single year with the Finance Bill.

Lord Williams of Elvel

My Lords, in view of the point that the noble Lord, Lord Taylor of Gryfe, has raised, if applications for regional development grants are made after the deadline date while the Bill is still before the House, are they automatically approved or not? If not, why not?

Lord Young of Graffham

My Lords, no applications will be processed after 31st March. There was some 10 weeks' notice. Although firm figures are not yet available, I am told that the best part of a year's applications have been squeezed into the first quarter of 1988. Those will be dealt with as quickly as possible.

Lord Williams of Elvel

My Lords, I am sorry to press the noble Lord. Were such applications to be received before the Act—as it will then be—receives the Royal Assent, will they be processed in the normal way?

Lord Young of Graffham

My Lords, no.

Lord Taylor of Gryfe

My Lords, I should like the Minister to comment on this. If the amendment that the House is about to consider were to be passed, what would be the effect of that, in so far as a Bill has now been implemented before it has the full authority of this House?

Lord Young of Graffham

My Lords, if the amendment of the noble Lord, Lord Taylor of Gryfe, succeeds in your Lordships' House at all stages, and finds approval in another place, we shall have to consider the situation. However, the position is very clear. Ten weeks' notice or more was given that the regional development grants scheme would come to an end on 31st March; and so it has.

Lord Tordoff

My Lords, with respect, it has nothing to do with 10 weeks' or 50 weeks' notice. Here is a Bill that has not passed through your Lordships' House. It seems to me that it is an insult to this House to behave in such a way.

Lord Young of Graffham

My Lords, perhaps I should remind all in your Lordships' House who are looking forward to their changed tax position, or otherwise, that the Finance Bill will not pass through your Lordships' House until the last few days of July, as indeed happens every year.

Lord Tordoff

My Lords, the noble Lord knows perfectly well that the Finance Bill is in a totally separate category.

Lord Wilson of Langside

My Lords, surely the position of the Finance Bill is entirely different. The one thing that is quite clear is that the announcement made by the Scottish Office was not appropriate in law.

Lord Jay

My Lords, surely the Finance Bill is no precedent. The Finance Bill is covered by the Provisional Collection of Taxes Act 1913 and has no relevance to expenditure of this kind.

Lord Young of Graffham

My Lords, nevertheless the position is this. Noble Lords will accept that this Bill has passed all stages in another place. It has had a Second Reading in your Lordships' House. There have been many other cases of Bills in a similar position. There has to be a termination date. Sufficient notice was given and that date has now passed.

Lord Peston

My Lords, can the noble Lord clarify his answer to my noble friend? I think that I misunderstood. Am I right in assuming that any applications made before 31st March will be assessed according to the current law? I refer not to this Bill but the Bill that this legislation terminates. The Minister seemed to say that the earlier applications would not be dealt with in this way, but I do not think he meant that.

Lord Young of Graffham

My Lords, let me reassure all in your Lordships' House. Any applications that have been received by the date of closure—by 31st March—will be processed and dealt with in the usual way. Those that arrive on or after 1st April will not.

Lord Taylor of Gryfe

My Lords, I raised this matter with the Leader of the House this morning because of the constitutional position to which the noble Lord, Lord Tordoff, referred. In view of the anxiety that has been expressed, would it be convenient for the Leader of the House, between now and Third Reading, to consider this issue from the constitutional view point and not in relation to the Department of Trade and Industry? It is a matter that affects the power and responsibilities of this House.

Lord Belstead

My Lords, I am delighted to consider any points that noble Lords put to me. However, I must make it clear to your Lordships' House that I accept absolutely what my noble friend Lord Young of Graffham has said by way of answer to your Lordships. Among the answers that my noble friend has given is that there are precedents to be found in legislation.

Lord Cledwyn of Penrhos

My Lords, with respect, it is very dubious that there are so many precedents. I should like to hear of precedents other than the Finance Bill. These we have not heard. I think that a case has been made in this exchange for an extension of the date beyond 31st March. I know perfectly well that there is considerable concern in South Wales, as there is in Scotland, about the way in which this matter has been dealt with by the Department of Trade and Industry. Therefore I support the appeal of the noble Lord, Lord Taylor, that the Secretary of State should give this matter further thought before coming to a final conclusion.

Lord Young of Graffham

My Lords, I am following well-honoured precedents. For example, if noble Lords consider the way the investment grants scheme was terminated in 1971 they will find that exactly such a precedent was followed; that it is customary to give adequate notice; and that the notice applied from a date and the legislation followed. If the legislation were to fall, that would be another matter. But if the legislation is passed, that is the precedent that has been honoured in the past and will be honoured on this occasion.

Lord Wilson of Langside

My Lords, can the Secretary of State tell the House whether the precedents to which he has referred were at any time questioned? One is familiar with bad precedents being established because no one challenged them at the time.

Lord Young of Graffham

My Lords, I shall carry out research into that and write to the noble and learned Lord.

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clauses 1 and 2 agreed to.

Clause 3 [Short title]:

Lord Taylor of Gryfe moved the Amendment:

Page 2, line 45, at end insert— ("(2) This Act does not extend to Scotland.").

The noble Lord said: This amendment is simple and straightforward. It is not a frivolous amendment and it is not an exercise in Scottish nationalism. But it gives the Minister an opportunity, before he makes this dramatic decision to move away from automatic investment development grants, of isolating part of the United Kingdom to see how it works. That is an important thing.

Regional development grants have been an important aspect of regional policy for many years, and a very successful aspect of that policy. Before we make the move away into the uncharted waters of the abolition of RDG, it might be sensible—and it might be attractive to the Minister's bright and imaginative mind—to have one area isolated to see how it works. We could see whether the regional development grants are working effectively in Scotland. If so we might scrap the present legislation. If they are not working in Scotland, then Scotland could be brought within the fold of the national legislation.

There is no doubt that regional development grants have been successful. I commend to the Minister the annual report of his own department dated February 1987, which states: This scheme is an important factor in investment decisions". As we said on Second Reading, I am not arguing that regional development grants are the only factor in making investment decisions. We agreed on that. Also involved are questions of good industrial relations; the experience of Dundee is a disincentive to inward investment in this country. Other factors such as availability of skills are important in making investment decisions. But all the evidence from the Minister's department and from practitioners in the field suggests that the automatic availability of a regional development grant is significant.

I commend to the Minister the reading of the discussion that took place in another place on this subject in which a distinguished Member of his own party, with considerable experience in the department which he now leads, pointed out that he was not persuaded that this change is desirable. He went on to point out the difficulty of boards making investment decisions when the finance manager or finance director brings to the board a proposition for a large investment and is asked, "Is there a grant if we go to Scotland, Wales or any of these other areas?" The answer would need to be, "Not yet. We will need to submit our case to the DTI, who will examine it, probably guided by a group of businessmen who give their services in this area. They will go through the same procedure as the regional selective assistance". That is not good enough for boards who have to make decisions and want to know where they stand. To depart from this basis into a speculative idea that "it will work and when we have examined it with the DTI and the help of some businessmen, we will decide then whether you will receive an investment grant or not", does not make for attraction of industry or good business decision-making.

In his reply on Second Reading the Minister said that his department had conducted a survey and that 40 per cent. of the companies surveyed had said that the regional development grant had made no impact on investment decisions. I presume from that that 60 per cent. of those surveyed decided that it was an important factor in making the investment decisions. I commend to the Minister these survey findings of his own department in the hope that they may just influence him to make the change that is suggested.

The new grants, the present arrangements, are only four and a half years old. They were introduced in December 1983. When they were introduced it was said that this scheme provided the basis for longstanding regional policy and investment decisions. But four and a half years is not a very long time to test the effectiveness of the new scheme which the Government commended in this Chamber in December 1983.

I suggest that we give it time to see whether it is working. Based on my own experience in Scotland I would suggest that the present arrangements have had considerable success. "Locate in Scotland", which is interested in inward investment, has created 45,000 new jobs and attracted investment of over £2 billion since 1981. This is important. Should we discard this effective instrument and take a chance on the enthusiasm and energy of the noble Lord, Lord Young, or should we just hold on to it for a longer period? For example, I noted that the Minister said that this regional development grant does not really matter all that much. When I was on holiday I read in the Glasgow Herald that Mr. Lang, the Minister responsible for industry in the Scottish Office, had said: More than 2,000 … businessmen tried to 'beat the drawbridge' on the end of the Government's regional development grant during last week. Some 2,000 people in Scotland applied for the regional development grant in the final week. This suggests that it is some kind of incentive to investment. Obviously if 2,000 people take the trouble to submit these applications and seek assistance under the RDG, that is some incentive to investment.

I suggest to the Minister that he should think again. Other countries have different forms of investment and different forms of incentive, but, as someone who has travelled throughout the world seeking inward investment for Scotland on behalf of the Government as well as in my own private capacity as a banker, I know that this matters. When one has to meet the competition from Germany, France, but more importantly from Spain, Portugal and Southern Ireland, one has to have important investment incentives in one's armoury in order not to lose that investment.

I suggest to the Minister that before we discard this we should perhaps consider it again. I sincerely trust that he will find my rather simple amendment acceptable. I beg to move.

3.30 p.m.

Lord Peston

I suppose that in one way the amendment of the noble Lord, Lord Taylor of Gryfe, is a forlorn hope, because it is essentially an amendment which totally undermines the nature of the Bill. I recall the Second Reading debate. We agreed then that the purpose of this legislation was not to end regional policy. We agreed that we still believed regional policy to be of great significance and that we might regard it as becoming more significant in the future than it had been in the past. I gather that we are not to interpret what the Government propose to do here as somehow the Government announcing that regional policy is at an end. We were all interested in that common view that we held.

As the noble Lord, Lord Taylor of Gryfe, has said, we were all agreed that regional policy is not only about subsidies and grants. Again, that is common ground. The point at issue is the question of automatic versus non-automatic grants. I recall making the point that I was fairly open-minded about the matter and that I was interested in a grant system that worked and which was (to use an expression which I dislike intensely) "cost effective"; in other words, to put it in a form which I like, which was "efficient". We favour an efficient grant system but, as I understand the matter, the Government are taking the view that a non-automatic targeted system will be more efficient than the automatic system that they are seeking to abolish in this legislation.

I take the liberty of interpreting what has been said by the noble Lord, Lord Taylor of Gryfe, as meaning that we do not know for certain whether the system will be successful, and the least we can do is to monitor it. He suggests that the system could be monitored by creating an experiment in Scotland. It would run the old system which we could compare with that running in England and Wales. It is an interesting idea, to say the least, but it undermines the legislation.

However, it is a serious point which I hope the Secretary of State will take up in his response. It is that, because regional policy is important and we wish to see it succeed, one would like to feel that in the DTI and other departments efforts will be devoted to monitoring the new policy. In a year or two—or in whatever time we agree might be a fair test of the new system—we hope that the noble Lord will come back and give us the outcome of the monitoring. I hope that if such monitoring takes place he will also be willing to come back and say that it does not seem to have worked and that those noble Lords who wished to act in another way may have been right. However, I agree that economics are never as clear cut as that.

In interpreting the amendment as a plea for careful monitoring of the policy in order to ascertain whether the non-automatic system will work, in so far as it will be introduced, I believe that it is an important idea and I have sympathy with what has been said by the noble Lord, Lord Taylor of Gryfe.

Lord Wilson of Langside

I was disappointed to hear the noble Lord, Lord Peston, say that the amendment was a forlorn hope. Perhaps naively I had assumed that, surrounded as he is on the Front Bench by Scotsmen, he was about to tell the Committee that, with their enthusiasm for devolution, they had persuaded him that this was an appropriate step to take.

I do not see why this could be regarded as a wrecking amendment. I hope that the Secretary of State, who is a man of considerable vision, will consider the amendment most seriously. I also hope that, after the forceful presentation of the case in its favour by my noble friend Lord Taylor of Gryfe, he would have been ready to reconsider the matter.

Much is done in different ways North and South of the Border, which runs along the Tweed and the Cheviot Hills. That does not upset us. However, there is a perfectly valid political reason for regarding this matter more seriously than it has been up till now. It is that North of the Border the enthusiasm for the present Government is markedly less noticeable than it is South of the Border. I was glad that my noble friend Lord Taylor of Gryfe made clear to the Committee the fact that this is not a Scottish nationalist ploy. I do not believe that the noble Lord and myself are tainted by undue Scottish nationalism. I believe that there is political as well as economic and industrial wisdom in accepting the amendment.

The noble Lord and his colleagues laugh about this matter and that slightly disturbs me. Recently some Members of the present Government visited Scotland. I have some sympathy with them because there was something in the point which they made: namely, that the Scots—particularly under the present Government, which seem to bring out the worst in us as a nation—were a disgruntled lot, always complaining and asking Westminster to do something for them. It is not in that spirit that the matter is raised here.

I am and always have been a devoted supporter of the Anglo-Scottish symbiosis. I sense that there is less enthusiasm for it South of the Border now that there is no Empire with which we can help, nor any threat on the Northern frontier from a French army or navy, as there was when we formed the unusual and highly successful partnership. Could we not have a little political as well as economic and industrial vision? If coincidentally it helped to restore the Government's reputation in Scotland, I would see no harm in that. I believe that this is a perfectly practical and sensible amendment. I do not believe that I can usefully add a further word to the most impressive case presented to the Committee by my noble friend.

Lord Harmar-Nicholls

I was disappointed to hear what the noble and learned Lord, Lord Wilson of Langside, had to say. I remember that he and I battled together when there was a suggestion of separating parliamentary control of Scotland. I believe that he recognised, as we then argued, that there was one unit and that we should not separate parts of the United Kingdom on the basis that the benefits that they could receive were different.

I believe that the Bill is sensible and correct, and that it is wrong to distribute money automatically on a regional basis instead of sorting out the areas which need it, and I believe that that is right. If it is right for England, I believe that it is also right for Scotland. If one is convinced that the general idea behind the Bill is correct, it would be wrong to separate Scotland and deny it the benefits that will flow from it. I believe that we must move together on this issue.

I do not believe that my noble friend needs a great deal of support from these Benches in resisting this amendment. I think that the noble Lord, Lord Peston, made an admirable speech. He described the terms and the potentialities of the Bill most accurately and he clearly came down on the side of believing that it should be pursued because it is good. If it is good for England we should not rob Scotland of the advantages of benefiting from that good.

Lady Saltoun of Abernethy

Unlike the noble Lord, Lord Harmar-Nicholls, I live in Scotland and I know how people there are thinking and feeling. I entirely agree with every word spoken by the noble and learned Lord, Lord Wilson of Langside. I hope that the Government will think seriously about this matter. I believe that some regions have special needs and that Scotland is such a region, particularly at this moment.

Lord Peston

I hope that the Committee will forgive me for speaking a second time but I believe that the discussion is getting slightly out of control. I understood that the amendment was not specifically directed to Scotland; that we were not debating Scotland; not interpreting the Bill as being in some sense anti-Scottish. I did not approach the amendment in that way and I am now a little taken aback to find myself in the middle of a Scottish versus English debate. I hope that that is not the case.

Lord Young of Graffham

I am grateful for the opportunity to debate this amendment. The noble Lord, Lord Taylor, has made a number of points about Scotland and the Scottish economy, and has argued forthrightly that regional development grants should be retained in Scotland. I hope that the noble Lord will understand if I am equally forthright in explaining why the Government do not feel able to accept this amendment.

The arguments against retaining the regional development grant scheme apply not just to the North of England, Wales, the South or Scotland; they apply to the whole of Great Britain. Economic recovery with falling unemployment and a rising trend of investment is not confined to any one part of our nation. Therefore, the Government have strenuously resisted any attempts to make such distinctions in the new policies which we announced on 12th January. We strongly believe that a mere automatic scheme of investment subsidy is now wrong, regardless of where it operates. It makes no assessment of need or viability before parting with taxpayers' money. The spectre of some 2,000 Scotsmen queueing up for free grants in the last week of March is probably only equalled by the same vision of hundreds of Welshmen or many thousands of Englishmen queueing up for exactly the same purpose.

That way of disbursing money cannot be cost-effective particularly at a time when investment trends are rising anyway and the cost-effectiveness of taxpayers' money is not restricted to any one area. I try not to labour these points because, as the noble Lord, Lord Williams of Elvel, chided me at Second Reading, I have made them before and shall no doubt make them again. However, repetition does not invalidate them.

As the noble Lord, Lord Peston, accepts, the plain fact is that we are not abandoning regional policy—far from it. We are trying to and will maintain a system of regional selective assistance which is tried and tested. Worthwhile projects which need assistance in order to proceed will receive it. I made it clear on a number of occasions that that includes the very important category of inward investors who have made such a great contribution to the Scottish economy.

Perhaps I may answer the suggestion that regional development grants have been crucial in attracting such investors. It is worthwhile remembering that even when regional development grants have been available, many firms have come to the intermediate areas of Britain where, by definition, only selective assistance could have been offered. Telford in the West Midlands is one good example of a new town that has benefited in that way.

Concern has been expressed this afternoon about the ways in which grants will be made available under selective assistance, which we are keeping now that automatic grants will no longer be available. Understandable concern has been expressed about the effect on inward investment and about removing the guarantee whereby particular projects will qualify for grants. How will potential investors be able to tell what they might receive? The potential investor can receive an early indication of whether or not his project is likely to qualify for regional selective assistance. Inward investors can a priori qualify to meet the criteria of international mobility and, if the project is a good one, of economic benefit to the UK. It is also worthwhile noting that the Federal Republic of Germany recently abandoned its system of automatic grants in favour of a more selective one.

In order for inward investors to have some idea of the grant which might be offered at which levels of assistance can be quoted, they will be averaged as there is a wide range above and below the average. The factors influencing the level of the grant offered can be discussed in general terms ahead of a detailed appraisal of application.

We are confident that the three departments which administer the scheme are geared up to cope effectively with inquiries. During the course of the debate I was asked whether we had made adequate provision to start to process regional selective assistance applications. With regard to my department, in the current financial year we have made provision for 126 man years of effort to be available to regional officers for regional selective assistance work. If that is inadequate we have made contingency arrangements for adding further staff to that effort.

Just as important as staff numbers is the fact that we are working hard to improve the efficiency of our resources. We have, as the Committee has heard, recently introduced simplified procedures for grants of up to £25,000 and are taking further steps in this direction. Most applications are processed within three months and nearly all within four months. Generally speaking, applicants should face no significant delays if the case is a normal one and in particular if all the right papers and information have been submitted with the application.

Therefore, although I can well understand the concern, I do not believe that it is justified and I am confident that we can continue to provide inward investors and others with the service they need to make a timely decision on the project.

To attract firms into the regions from elsewhere is worthwhile and important but it is not enough. What is even more fundamental to regeneration is the promotion of strong, self-sustaining, local enterprise. The emphasis must be placed on encouraging the indigenous firm, particularly smaller firms, to set up, grow and acquire the skills which will enable them to compete with firms in other areas and overseas. That is the motivation behind the enterprise initiative, and that initiative is highly relevant to the assisted areas. For that reason we are offering higher rates of assistance there than elsewhere. As nearly two-thirds of the population in Scotland live in an assisted area, Scotland stands to benefit to a very great extent.

Even if automatic grants were the answer for severely disadvantaged areas, I find myself in disagreement with the noble Lord, Lord Taylor of Gryfe, because I believe it is not only untrue but unfair to give Scotland that bleak title. Of course there are pockets of high unemployment in Scotland; there are also pockets of high unemployment in London and the South-East. I believe that I should remind your Lordships' Committee that in the year to February 1988 unemployment in Scotland fell by more than 42,000 to the lowest level for five years.

Recent surveys report that business optimism, output, orders and exports are all rising. If we look at the figures between 1979 and 1986, we see that productivity in the United Kingdom grew by 3.8 per cent., and that it grew by 5.1 per cent. in Scotland. A recent survey of 470 American electronic companies showed the Scottish Development Agency to be the most successful attraction agency out of 150 European organisations. The Scottish CBI and the Scottish council for developing industry, of which the noble Lord, Lord Taylor of Gryfe, is such a distinguished member, were among the most enthusiastic in their welcome of our new policies. Scotland is benefiting from the country's economic recovery just as is every other region. Unemployment is coming down; it is even coming down in Dundee despite the best endeavours of certain people.

I believe that it is possible to do the regions a grave disservice by painting them too bleakly, and Scotland should occasionally stand up and portray how well matters are going rather than how it needs other help. Perhaps I may assure the noble Lord, Lord Peston, that over the next year or two we shall look at the way in which this operates. Should it appear that it is not operating well, despite all the logic, then I shall certainly not hesitate to come back.

In summary, this amendment would destroy the important integral basis of our regional policy, which is drawn up on the basis of the assisted areas map and not out of territorial distinctions which could become divisive. Therefore, I oppose this amendment.

Lord Taylor of Gryfe

I am disappointed that the Minister has not responded to the invitation to have this monitoring process which the noble Lord, Lord Peston, has suggested. I can find no other way of operating it other than by the proposed amendment. We could have this interesting monitoring sample to see how the measure works. That should commend itself to a Minister who is not afraid to experiment in his department and in other areas with which he is involved. He makes a most unusual claim. In rejecting the amendment and in changing the system of regional development grants, he has said that Scotland is doing remarkably well. It is doing remarkably well under the present system and it is the present system that we are seeking to retain. Of course unemployment is declining and of course there are more people in Scotland in the electronics industry than there are in coal mining, steel and shipbuilding combined, and that is a triumph. It is a triumph for regional policy and for the Scottish Development Agency, which has been the instrument of the policy which the Minister now hopes to discard. That is the unfortunate fact.

The Scottish Development Agency is a Government-funded institution, but I was interested, while the Minister claimed its support for his new ideas, to get the policy announcement of the SDA. Though they are civil servants, and inhibited as they are, they said—and I quote the words of the chief executive of the SDA: Over the period since the SDA was set up, Regional Development Grants have played an important part in encouraging new capital investment in Scotland. At a time of major industrial change, new growth industries and technologies have been established in Scotland, benefiting both output and employment. It is too early to predict how the pattern of industrial investment in Scotland will be affected by the changes announced today.". This does not sound like a very enthusiastic welcome for the proposals of the DTI. There is scepticism. It is true that the Scottish Council for Development of Industry, of which I am the vice-president, says that it is prepared to go along with this, combined with a package which includes the movement of government offices out of London and a revision of the rating system to make it more efficient and more acceptable in Scotland, but it was part of a package. I suggest that it would be wise, now that the Minister has told this Committee of the immense successes of his policy in Scotland, not to reject that package. He should hold on to it and see if south of the Border they do better under the regional selective assistance scheme and then make the decision.

I detected in the Minister's speech a little change of emphasis as regards regional policy. He asked why Scotland and certain other areas should automatically get these grants. They get the grants because these areas are under-utilised as regards industrial activity. They have resources which are under-utilised and also an infrastructure which is under-utilised. They have large numbers of skilled people coming from the universities and schools who are finding their way down to the overheated economy of the South-East of England. It is in order to correct that imbalance that we have positive regional incentives. I detected in the Minister's speech just a little feeling that if the South-East is prosperous—incidentally, we are going to pay 50 per cent. of all consultants' fees to improve business activities in the South-East of England—that overheated economy will pull the other areas along with it.

It has not happened that way and such is not the history of post-war Britain. What has happened with the greater economic activity arising from the prosperity of the South-East is that the area has been able to attract labour and skills and invest in new equipment. Conversely, the regions have been unable to do that. It is in order to correct this imbalance and this continual magnetic pull towards the South-East, which is economically and politically indefensible, that a positive regional policy is called for. I regard the Bill as a departure from that positive regional policy and I commend the amendment to the Committee.

Lord Young of Graffham

I hope the noble Lord will forgive me if, before he presses the amendment, I emphasise two particular points. Firstly, this does not mean in any way a move away from a regional policy. When I came to your Lordships' House on Second Reading, I pointed out that we were spending more money and not less. It is a qualitative change. I am sure that in his private life the noble Lord would question giving out money irrespective of proof of need. I would rather give taxpayers' funds only in those cases where they would make a difference. That is one reason for the move away from automatic grants and towards selective assistance.

The noble Lord also brings into question the enterprise initiative. It is necessary to look at the evidence of the long and slightly unhappy history of regional policy since the war and to see what it has produced. The policy has bred in many of our regions a branch economy. It has achieved that by the giving of automatic grants mainly for industrial development. What we have seen is the closure of factories in many parts of the regions—for the moment I take England and do not comment on Scotland—and a move towards the South of many of the service economies such as the consultants, the advertising agencies, accountants and many others.

What the policies of my department are there to do is to make the regions, including Scotland, a mirror image of the rest of the country. It is for that reason that we wish to depart from the psychology that says that temporary manufacturing occupations go to the regions and the rest of the activities go to the South. The whole purpose of the enterprise initiative is to ensure that the best business practice is spread around the economy.

This is not an act of faith. This decision was taken after discussion with many heads of our chief industrial concerns. Time after time they assured me in private that they would take the grants because they were there but that this did not actually affect their decision whether to go to an area. I was recently in Japan and I spoke with many potential inward investors. They do not look for the temporary accommodation of grants, they look towards the provision of skills in an area, and that is what we wish to do. This Government are concerned to improve regional policy and also to improve the economy in Scotland. I believe that is what the Bill will do.

3.57 p.m.

On Question, Whether the said amendment shall be agreed to?

Their Lordships divided: Contents, 62; Not-Contents, 94.

DIVISION NO. 1
CONTENTS
Amherst, E.	Jay, L.
Ardwick, L.	Jeger, B.
Attlee, E. [Teller]	John-Mackie, L.
Aylestone, L.	Kennet, L.
Basnett, L.	Kinloss, Ly.
Bonham-Carter, L.	Leatherland, L.
Bruce of Donington, L.	Listowel, E.
Burton of Coventry, B.	Llewelyn-Davies of Hastoe, B
Caradon, L.	Lloyd of Hampstead, L.
Carmichael of Kelvingrove, L.	Lloyd of Kilgerran, L.
Cocks of Hartcliffe, L.	Longford, E.
Davies of Penrhys, L.	McGregor of Durris, L.
Donaldson of Kingsbridge, L.	McIntosh of Haringey, L.
Elwyn-Jones, L.	McNair, L.
Ezra, L.	Mais, L.
Falkland, V.	Mishcon, L.
Gallacher, L.	Molloy, L.
Galpern, L.	Nicol, B.
Graham of Edmonton, L.	Paget of Northampton, L.
Grey, E.	Peston, L.
Halsbury, E.	Ponsonby of Shulbrede, L.
Hampton, L.	Ritchie of Dundee, L.
Hanworth, V.	Sainsbury, L.
Hooson, L.	Saltoun of Abernethy, Ly.
Houghton of Sowerby, L.	Seear, B.

Serota, B.	Underhill, L.
Stallard, L.	Walston, L.
Stoddart of Swindon, L.	White, B.
Taylor of Blackburn, L.	Williams of Elvel, L.
Taylor of Gryfe, L.	Wilson of Langside, L. [Teller.]
Taylor of Mansfield, L.
Tordoff, L.

NOT-CONTENTS
Ailsa, M.	Joseph, L.
Allenby of Megiddo, V.	Kinnaird, L.
Alport, L.	Lauderdale, E.
Ampthill, L.	Lawrence, L.
Annan, L.	Long, V.
Arran, E.	Lyell, L.
Balfour, E.	Mackay of Clashfern, L.
Bauer, L.	Macleod of Borve, B.
Beaverbrook, L.	Malmesbury, E.
Belhaven and Stenton, L.	Margadale, L.
Beloff, L.	Marley, L.
Belstead, L.	Marshall of Leeds, L.
Bessborough, E.	Merrivale, L.
Birdwood, L.	Mersey, V.
Boyd-Carpenter, L.	Monckton of Brenchley, V.
Brabazon of Tara, L.	Morris, L.
Brougham and Vaux, L.	Mowbray and Stourton, L.
Bruce-Gardyne, L.	Munster, E.
Butterworth, L.	Nelson, E.
Caithness, E.	Nelson of Stafford, L.
Cameron of Lochbroom, L.	Newall, L.
Campbell of Croy, L.	Nugent of Guildford, L.
Carnegy of Lour, B.	Orkney, E.
Carnock, L.	Oxfuird, V.
Coleraine, L.	Porritt, L.
Constantine of Stanmore, L.	Renwick, L.
Cottesloe, L.	Russell of Liverpool, L.
Crickhowell, L.	Saint Brides, L.
Cullen of Ashbourne, L.	St. Davids, V.
Davidson, V. [Teller.]	Sanderson of Bowden, L.
Denham, L. [Teller.]	Selkirk, E.
Dundee, E.	Shannon, E.
Effingham, E.	Sharples, B.
Faithfull, B.	Skelmersdale, L.
Fortescue, E.	Somers, L.
Fraser of Kilmorack, L.	Strange, B.
Gardner of Parkes, B.	Strathspey, L.
Gibson-Watt, L.	Sudeley, L.
Greenway, L.	Terrington, L.
Gridley, L.	Teviot, L.
Hailsham of Saint Marylebone, L.	Thomas of Gwydir, L.
	Thorneycroft, L.
Hardinge of Penshurst, L.	Trumpington, B.
Harmar-Nicholls, L.	Vaux of Harrowden, L.
Hesketh, L.	Ward of Witley, V.
Hylton-Foster, B.	Wise, L.
Ironside, L.	Young of Graffham, L.
Jessel, L.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 3 agreed to.

House resumed: Bill reported without amendment.