Factory Building: Northern Region (Hansard, 22 March 1988)

§ The Secretary of State for Trade and Industry (Lord Young of Graffham)
My Lords, English Estates' development programme in the assisted areas as a whole has already been substantially increased from £33.5 million in 1986–87 to £47 million in 1987–88. For 1988–89 it has been authorised to spend up to £49 million if it can produce the necessary resources from asset sales. However, the long-term solution to meeting the demand for factory space in the assisted areas is to get the private sector back into a properly functioning property market. English Estates has been asked to consider urgently how it can further this objective.

§ Lord Jay
My Lords, would it not be very unfortunate, when unemployment in the northern regions still stands at 13 per cent., 15 per cent. or more, and when there is an unsatisfied demand for factories in the region, that the Government should do anything to cut the finance available for factory building to this authority, which has always been the chosen henchman for this purpose?

§ Lord Young of Graffham
My Lords, I was not aware that an increase from £33.5 million to £47 million represents a cut.

§ Lord Mottistone
My Lords, does my noble friend remember that unemployment in the Isle of Wight is comparable to that in all those areas which have been mentioned, all of which receive some sort of support while the Isle of Wight receives none? Would he care to comment on that matter?

§ Lord Young of Graffham
My Lords, I am extremely grateful to my noble friend, who succeeds in ensuring that I never forget the Isle of Wight.

§ Lord Barnett
My Lords, is the Minister prepared to explain the underlying principles of this policy? Will he explain why it is apparently a good policy to build some new factories but a bad policy to build more?

§ Lord Young of Graffham
Yes, my Lords. I am very glad to be able to explain to the noble Lord, Lord Barnett, that there is something called the private sector. In the past 18 months we have seen such a resurgence of demand in the North-East and the North-West and the northern region itself that quite frankly it is impossible for the Government to build all the new factories; nor indeed is it desirable that they should do so. We have seen an expansion of 50 per cent. in the programme itself but an expansion greater than that in actual demand for factories.
It is indeed a product of the way in which English Estates works and its purpose, which is to build factories where the private sector would not normally go, that in doing so it crowds out the private sector because it can do that at rates with which the private sector cannot compete. Therefore, it is part of our policy to retreat gradually from those areas where the private sector would go and to concentrate on those areas where it would not go.

§ Lord Glenamara
My Lords, was the noble Lord's original Answer entirely accurate? Is it not a fact that English Estates has been told to stop building advance factories except the very smallest ones in the North-East of England in order that private enterprise can build those factories? Is this not inhibiting inward investment to the area?

§ Lord Young of Graffham
No, my Lords. English Estates is being asked not to consider building factories in the future where the private sector will do so. However, I draw to the attention of the noble Lord a letter in the Financial Times earlier this month in which a reputable firm of agents states that it has vacant over 50 units in excess of 10,000 square feet—some 1.5 million square feet of space—already available to be let, and perhaps that should be used first.

§ Lord Williams of Elvel
My Lords, will the noble Lord confirm press reports that a number of companies have not been able to establish themselves in the North-East due to lack of factory space, and that is the complaint? Since we are all so concerned 91 about the persistent level of unemployment in that region, will the Government again consider further expanding its English Estates programme because it is the one single measure that could have an immediate and beneficial effect on the situation?

§ Lord Young of Graffham
My Lords, we are looking for ways in which the supply of new factories in the North-East and the North-West can meet the demand. It seems to be unsatisfactory that we should continue to do this only at the expense of the taxpayer when there is a very good and viable private sector in the rest of the country which provides factories. Surely the objective of regional policy should be to turn the regions into replicas of the rest of the country.

§ Lord Jay
My Lords, surely we need both the private and the public sector here. Can we assume that from now on the Government will provide English Industrial Estates with financial resources equal to those provided in the past five years?

§ Lord Young of Graffham
Yes, my Lords. The resources we are providing will increase from £33.5 million in 1986–87 to £49 million in 1988–89.

§ Lord Glenamara
My Lords, will the noble Lord give a straight answer about the position in the North-East of England? Is English Industrial Estates currently building any advance factories in the North-East of England, and if so, where are they?

§ Lord Young of Graffham
My Lords, to my knowledge it is. I will happily write to the noble Lord with the details and put a copy in the Library.