HL Deb 18 June 1990 vol 520 cc703-20

8.47 p.m.

Lord Sanderson of Bowden

My Lords, I beg to move that the Bill be now read a second time.

The main engines of government stimulus to the Scottish economy over the past decade or more have been the Scottish Development Agency, the Highlands and Islands Development Board, the Training Agency and the Scottish new town development corporations. Excellent as each has been, we need new structures to meet the new challenges of the 1990s, challenges which will be the providers of a good industrial base for Scotland well into the next century. That is why, with the evident support of the Scottish people, we propose in April 1991 to establish Scottish Enterprise in place of the Scottish Development Agency and the Training Agency in Scotland and a parallel organisation, Highlands and Islands Enterprise, in the Highlands and Islands. We intend in the course of the next 10 years or so to bring the new towns to full maturity as communities. The Bill before us today gives effect to these proposals.

Our proposals to establish Scottish Enterprise and Highlands and Islands Enterprise were first set out in a White Paper, Scottish Enterprise: a new approach to training and enterprise creation. Our vision to integrate training with other economic development and environmental functions and to give leadership at local level to the private sector won strong support across the spectrum of Scottish opinion.

When we launched Scottish Enterprise and then Highlands and Islands Enterprise last summer we asked senior business men and women and others in the community to play their part in developing their own local economies by setting up local enterprise companies which would contract with Scottish Enterprise and Highlands and Islands Enterprise to undertake a wide range of functions. We have been extremely pleased by the enthusiasm and ability of the consortia which have come forward. Already we have awarded development funding to consortia covering the whole of the Highlands and Islands and all of lowland Scotland except as yet Tayside. This development funding will allow the consortia to draw up comprehensive plans for economic development and training in their areas. Therefore, less than a year from now, Scotland should have in place a complete network of enterprise companies ready to work with Scottish Enterprise and Highlands and Islands Enterprise. Those new companies will give a fresh opportunity to business people and to the wider community to assist in setting priorities and taking decisions which are of great importance to their local economies.

With regard to the new central bodies, we have been particularly fortunate that Sir David Nickson and Sir Robert Cowan have agreed to build on their work as chairmen of the SDA and HIDB by becoming chairmen-designate of Scottish Enterprise and Highlands and Islands Enterprise; and the other board members-designate will bring an impressive range of skills and abilities to bear upon their work. In that work they will have first-rate support. The staff of the Scottish Development Agency and the Training Agency and in that area the staff of the Highlands and Islands Development Board and the Training Agency are already coming together to undertake the work of planning for the mergers, which is proceeding quickly and smoothly.

The Bill is intended to provide an appropriate structure for Scottish Enterprise, Highlands and Islands Enterprise and the local enterprise companies not just for 1991 but for the next decade and beyond. For this reason the general character of the Bill is enabling rather than prescriptive so as to leave as much room as possible for Scottish Enterprise and Highlands and Islands Enterprise and the local enterprise companies to decide for themselves what their detailed arrangements should be. The Government start from the expectation that the new bodies will thrive best with a minimum of constraint and interference. We are determined to give them all possible freedom to act on their own initiative.

The Bill gives Scottish Enterprise and Highlands and Islands Enterprise the full range of powers and functions now possessed by the Training Agency, SDA and HIDB respectively, and thus the ability to play a strong, strategic role on behalf of Scotland. But it does not say precisely how that must be done. It gives wide-ranging powers in relation to training of the employed as well as the unemployed. But it does not tie the hands of Scottish Enterprise, Highlands and Islands Enterprise or the local enterprise companies on how this has to be delivered.

The Bill has been amended to simplify and make more flexible the financial arrangements for Scottish Enterprise: and this move away from the rather burdensome existing arrangements for the SDA was widely welcomed.

The Bill also reflects the distinctive nature of the Highlands and Islands and their needs. Highlands and Islands Enterprise, combining the economic and social role of the HIDB, the training role of the Training Agency and the environmental role previously confined to the SDA, will be even better placed to make a major contribution to the needs of the Highlands and Islands.

In another place we were also glad to incorporate a number of suggestions that improved the enabling framework which the Bill provides—for example to empower Scottish Enterprise and Highlands and Islands Enterprise specifically to increase opportunities for training for racial minorities; to give Scottish Enterprise and Highlands and Islands Enterprise a duty to encourage employers to promote opportunities for women, men, ethnic minorities and the disabled in sectors of employment or training in which they are currently under-represented; to give Highlands and Islands Enterprise a strengthened remit to have regard to the desirability of preserving the characteristic flora, fauna and physical features of the Highlands and Islands; and to give Scottish Enterprise a specific function of assisting the establishment of community and co-operative enterprises.

Conversely, having consulted the SDA and HIDB, we decided not to replicate for Scottish Enterprise and Highlands and Islands Enterprise powers to seek planning permission direct from the Secretary of State in some circumstances that the SDA and HIDB already possess.

I turn now to Part II of the Bill, on new towns. The objectives of Part II are to enable the winding-up and dissolution of the Scottish development corporations to be carried out in a manner consistent with their individual circumstances over a realistic period of a decade. They embody the Government's carefully considered response to the very full consultation process begun in October 1988, spanning publication of our White Paper in July 1989 and the introduction of this Bill. The Government are committed to ensuring that the successes of the Scottish new towns will in no way be arrested by the dissolution of the corporations. As the 1988 consultation paper emphasised, we are concerned to "maintain the momentum".

Our proposals are distinctively Scottish. They have been framed to maximise the chances of the development teams' skills continuing to be available. They also seek to ensure the smoothest possible transition from present arrangements. Much of the work to be done in the winding-up and dissolution process is technical. It will also be demanding on the staff of the corporations.

Clause 33 replaces and extends the provisions in Sections 36 and 36A of the New Towns (Scotland) Act 1968 relating to the procedures for the wind-up and dissolution of the development corporations. The main effects are to provide for individual wind-up orders to be made for each corporation, allowing maximum flexibility in determining when a development corporation should begin the wind-up process; to extend the scope for corporations to dispose of their property, rights and liabilities; and to provide for their transfer after a wind-up order has been made. The clause also empowers the Secretary of State to make grants in order to relieve any financial burden which is imposed by the transfer of corporations' property to another body.

The Bill also contains certain financial provisions affecting the development corporations. The corporations have always been financed mainly by borrowing. The original expectation was that corporations would incur revenue deficits in their early years which would be met by borrowing but that progressive development of the new towns would create sufficient surplus in time to repay that borrowing. However, it became evident in the early 1980s that they would be unlikely ever to generate sufficient surpluses to service and repay their accumulated debt. This Bill therefore provides, in Clause 34, for the payment of grant to meet the cost of essential infrastructure provision which cannot be financed by borrowing and, in Clause 35, for a financial reconstruction of the corporations to reduce the level of debt outstanding.

Our provisions were criticised in another place as being insufficiently detailed. Experience in the wind-up of the English development corporations, begun in 1963, has convinced us of the need to give the corporations sufficient scope to manage wind-up in a positive manner. The development corporations have substantial tasks still to complete, as set out in their 1988 development profiles. Their management must be allowed adequate scope to realise both those tasks and dissolution, and our lack of prescription reflects our confidence that the corporations will deal effectively with those two imperatives while remaining fully accountable to Ministers. There are, therefore, matters on which decisions have yet to be taken, but this is where decisions are not needed, and with wind-up likely to be spread over almost the next 10 years this should come as no surprise.

There is one subject in particular where it is desirable not to take immediate decisions, and that is housing. We have discussed our proposals at length with the Scottish Local Authorities with New Towns (SLANT). I believe that both parties, the Government and SLANT, are fully aware of the respective positions. The White Paper committed the Government to consultation towards the end of the winding-up period with all interested parties, including representative tenants groups, on the transfer of housing remaining in development corporation ownership at that time. No one knows now how much housing there will be in each town. Transfers, which may include transfer to the district council, depending on the outcome of consultation, will then be effected. However, any housing still remaining in development corporation ownership on the actual day of dissolution will be transferred to Scottish Homes. Any tenant transferred under those arrangements will remain a secure tenant.

This Bill prrovides the framework for the future for the Scottish economy. The need to provide for the eventual winding up and dissolution of new town development corporations is acknowledged by all sides, while virtually the whole Scottish community has expressed its support for the creation of Scottish Enterprise and Highlands and Islands Enterprise.

The Bill gives effect to these vital developments for Scotland's future. I believe that it is the most important development on the industrial front for many a long year and I commend it to your Lordships' House.

Moved, That the Bill be now read a second time. —(Lord Sanderson of Bowden.)

8.59 p.m.

Lord Carmichael of Kelvingrove

My Lords, I am most grateful to the Minister for his detailed exposition of the Bill. I am also grateful for the fact that he sent me copies of the Notes on Clauses. I apologise to him for not being in my place when he started, although I do not think that I missed a great deal—not that what he says is not always of vital importance, but he was obviously just clearing his throat when I came into the Chamber.

The Minister made some interesting points in his speech. Perhaps we shall go into those further when we reach the new town proposals which were given some trouble in another place. I am glad that it seems that there have been some second thoughts on that point.

It would be very wrong if I did not say to the House—because I have expressed the view to everyone else—that I believe that this is a vitally important Scottish Bill. It is one of the most important in the past few years after the poll tax measure, which the noble Lord, Lord Glenarthur, so ably took through the House, yet we are debating it at nine o'clock in the evening. It is dreadful from the Scottish point of view that that should be so. That may sound wrong coming from me since I am the only person on this side of the House to speak on the Bill. The fact is that there are not enough of us and if there is any indisposition on this side of the House there are only one or two of us left. I hope that the noble Lord the Leader of the House will look on us with some sympathy and recognise that we have problems.

The concept of combining the Scottish Development Agency and the Training Agency has a great deal to commend it. However, there could be considerable problems when Scottish Enterprise sets up the 12 companies for southern Scotland and the 10 companies are set up for the Highlands. I do not know whether all those companies are already established but I know that a large number of them are and that plans have already been put forward to the Scottish Office.

I was amused to read in a well accepted Scottish weekly or monthly paper, the Scottish Business Insider, an article by Chris Baur, who I am sure the Minister will agree is a respected Scottish journalist. The article states that part of the problem is the allocation of money. We do not know how much money is available. An estimate of the money available to the existing Scottish Development Agency and the Training Agency is about £500 million, A fair amount of that will need to be retained by Scottish Enterprise because of ongoing commitments and the fact that it will have larger national schemes to put forward. For example, I believe that it is to retain Locate in Scotland. Therefore the money that will be given to the local enterprise companies will vary.

I believe that depending on their size they will have between £30 million and £100 million of short-term development funding to draw up their inaugural business plans. They will then require money for capital development or loans. The article states that: Sir David Nickson, chairman-designate of SE, knows how tough it is going to be to keep the lid on these local pressure-cookers". As the Minister said, the companies will be run by fairly tough businessmen who will not only want to make their own companies better than the others but will individually want to make a name for themselves. Sir David Nickson says: There's no doubt that when we add up all the LECs' operational bids we are liable to be confronted with a total that exceeds the SE budget several times. There's going to have to be a very clear steer about priorities. It may be the wrong time to ask the Minister for more information, but perhaps we can probe further at Committee stage. By that time there may be something more concrete to work on.

In respect of my other point I quote again from Chris Baur's article. He writes of: one senior gentleman who permits himself a brief moment to luxuriate in playful and private contemplation of the political power he is about to acquire". I wonder whether the Minister has heard any of the stories that are coming from the Scottish Grand Committee in Edinburgh. He will realise that the Secretary of State has his problems.

That respectable businessman, whose name is not given although I could guess it, said: I wonder — if Malcolm Rifkind really knows what he has created here. If people of the calibre he has recruited to run these shows throughout the country really dig their heels in about the way the job ought to be done and about the resources required to do it, what does he imagine he'll do if he disagrees with us? Sack us? Force us to resign? I doubt if he could risk the the public row of doing either, you know, with his party in its present predicament. I think that Scottish Enterprise and its local enterprise companies are going to be a formidable lobby in Scotland's affairs. Very powerful indeed. I simply do not see how they cannot get their way". I am sure that the Minister has seen that report.

That is part of the problem that we see. We want devolved power. I believe in devolution. However, this looks as if the Government are giving enormous power to people who at the end of the day are unrepresentative. Those are points that we shall go into in very great detail when we reach the Committee stage. I hope that there will be more support on this side of the House when we reach that point.

I had prepared some material on the new towns but the Minister has to some extent answered many of my points by, for instance, his close association with SLANT, which I am very glad to acknowledge, and also the fact that he suggested that it would take a very long time. I think that the Minister said that local authorities may be given the opportunity to be one of the factors for the houses. In other words, they could go to a private factor, to Scottish Homes, or, if I heard him correctly, to the local authority. That is a definite advance on what I interpreted from reading the debates in another place. I hope that the surveys carried out in new towns of Scotland, particularly the figures in East Kilbride, which is the oldest of our new towns, have helped to convince the Government that everyone does not think that local authorities are bad factors, as some people suggest.

I am pleased with what the Minister has said tonight. It may even help to speed the Committee stage of the Bill if what I think he said means all that I think it means. I hope that we can have a good and constructive Committee stage because there is no doubt, as he said several times, that it is an important Bill for Scotland.

9.9 p.m.

Lord Gray of Contin

My Lords, I welcome the Bill warmly for a number of reasons, not least because it recognises the need for legislation which was originally created for assisting the development of different parts of Scotland to be updated after its operation for a number of years. The Bill largely does that.

I take my hat off to the Government for their progressive outlook in this matter. It is glaringly obvious to those of us who live in the area that the Highlands and Islands do not have a government representative in any of their seats. The whole area covered by the Highlands and Islands Development Board is therefore represented in Parliament by forces apposed to government policy. It says a great deal for the Government that they have not said, "Well, this might be a suitable opportunity to wind up the Highlands and Islands Development Board altogether". An unprincipled government might well have taken that decision, but this Government have acted in the true terms of democracy, extending to those who did not vote for them the same attention and privileges as those who did.

The Secretary of State, who comes under so much pressure from a variety of sources in Scotland, is due a hearty vote of thanks, not only from the people of the Highlands, who will see the Highlands and Islands Development Board modernised and encouraged to adopt a spirit of enterprise, but in the rest of Scotland where the Scottish Development Agency will be subjected to the same treatment. I therefore readily acknowledge what my right honourable friend the Secretary of State has done. I should like to couple with that a thank you to the Minister of State because I know only too well the amount of hard work which he has done behind the scenes and I know how well thought of he is in the Highland area.

I hope that noble Lords will forgive me for concentrating my remarks principally on the area covered by the Highlands and Islands Development Board, but I do so because I know that area particularly well. For 13 years I represented a seat within that area in Parliament and I therefore feel that what I have to say may perhaps be of some interest in that regard.

The 1965 Act was the brainchild of the late Willie Ross, or Lord Ross of Marnock as we came to know him towards the end of his political career. As one of those who crossed swords with him on more than one occasion, I have to admit that in this brainchild of his he created something which was of enormous value to the Highlands and Islands. The fact that so much of the present legislation re-enacts what was contained in the 1965 Act is probably as great a tribute to Willie Ross as he would have wished.

I understand—I was not in the House in 1965—that, although the Government gave a rather lukewarm welcome to the 1965 Act, they inherited it in 1970 and, like most converts, became more enthusiastic about the cause than even the Labour Party itself had been. That enthusiasm continued throughout the 1970s when there were changes of government and from 1979 onward the present Government have given the Highlands and Islands Development Board enormous support, both in good will and money, which was even more important.

However, the situation in the Highlands of Scotland between 1965 and the present day has totally changed. Happily the days of poverty, which I remember only too well, have all but vanished. The aspirations of the people who live in the Highlands have changed entirely. The Highlands and Islands Development Board undoubtedly can take credit for a great deal of that prosperity. But that prosperity cannot be divorced from government policies. It is to the Government that the real thanks should be given for the prosperity which now exists in the Highlands and indeed in Scotland generally. If one listens to the Scottish media or reads the Scottish press one would imagine that poverty was rampant throughout Scotland and that Scotland was at the bottom of the league in just about every way. Yet the truth of the matter is that that is not so and conditions in Scotland are vastly improved compared with those that existed in 1965.

I want to say a few words about the Bill itself. I do not wish to encroach on areas that will be dealt with in more detail in Committee but I should like to say something about certain clauses. I was delighted to see that Clause 1(a)(iv) deals with improvement to the environment. I trust that protection of the existing environment is also highlighted in that clause.

There was a time in Scotland and in the Highlands of Scotland when the desperate need for jobs became so much a fixation with members of both parties in government that the environment tended to be put to one side. Those days are no longer with us. Jobs are vitally important but not jobs at any price. I hope that the new Scottish Enterprise and the local enterprise companies which have been set up—again I pay tribute to the Minister of State for the efforts that he made in order to ensure that they were set up to the best advantage of those who live in the areas—will not overlook the environment.

I am glad also that Highlands and Islands Enterprise will not be allowed to apply directly for planning permission to the Secretary of State. It is right and proper that its planning application should go through the local procedure. I note that that was originally in the Bill but I understand that with all party support it was deleted in the Commons.

I am glad too that the powers of compulsory purchase which were given to the Highlands and Islands Development Board and which have continued with Highlands and Islands Enterprise have not been strengthened. There was a suggestion that those powers were not strong enough. I believe that they are perfectly strong enough. I do not believe that the Highlands and Islands Development Board itself would have wished the powers to be increased. The number of occasions on which compulsory purchase powers have had to be used is tiny in any event.

Clauses 10, 11 and 12 gave me just a little concern. They deal with obtaining information. My plea is that there will be no temptation to resort to a form-filling bonanza in order to acquire that information. There is nothing that small companies, small businesses and the self-employed in general resent more than the constant requirement to provide information by filling in forms. I hope therefore that any information that is required will be reduced to absolute essentials and kept to a minimum. I wonder whether Clause 17 is in fact necessary. It seems to me that Clause 2(4) would appear to cover adequately what Clause 17 is expected to do.

I want to say a few words about the membership of the new Highlands and Islands Enterprise company. The number has been fixed at 12, including the chief executive. However, the most important aspect is the removal of the provision in the 1965 Act requiring more than half the number to be full time. There is no doubt that there were some excellent members of the Highlands and Islands Development Board but it was extremely difficult to persuade a number of good people to make themselves available. After all, one wanted them as members at the prime of their lives and at the peak of their business careers. It was not easy to persuade them to take a five-year appointment and give up their prospects in industry. I am glad that the requirement has been removed. There never was a problem in persuading good people to take part-time appointments because they are prepared to give a limited amount of time, but it was always difficult to obtain good people for the longer term.

The Highlands and Islands Development Board is particularly fortunate in its present chairman, Sir Robert Cowan. He has done a marvellous job and has given splendid leadership. I am delighted that he will continue in the new Highlands and Islands Enterprise. That should see it off to a good start.

The local enterprise companies are in the process of being set up and I believe that they will be a great success. I know many of the people involved. They will grasp the challenge of their involvement in the companies and we look for great success from them.

I wish the Bill well. It is not particularly controversial and a great deal has already been done to improve it. I hope that it will have a speedy passage through the House so that it can be implemented as soon as possible.

9.22 p.m.

Baroness Carnegy of Lour

My Lords, I too warmly welcome the Bill. I wish to concentrate my comments on Part I. Its general thrust—that is the bringing together of the functions of the three predecessor bodies to form two new bodies and the delegation by those bodies of much of the work to local bodies attuned to local needs—is eminently sensible. It will create a system much better suited to the needs of the 1990s. I was not surprised that the Bill was widely welcomed in Scotland, not least by the Scottish Trades Union Congress and the Scottish Council for the Development of Trade and Industry.

My experience as a commissioner representing Scottish local government interests and as chairman of the Scottish committee on the old Manpower Services Commission was that the MSC was a good instrument for developing national schemes for young and older people at a time of high unemployment. It helped them to train when employers could not do so. However, the MSC was not, and its successor Training Agency is not, the right instrument for remedying the continued undervaluing of training by employers, for the development of tailor-made training for Scotland or for the special needs of local labour markets in Scotland.

The problem in Scotland today is not high unemployment and the incapacity of employers to carry out training for unemployed people. The problem is skill shortage and the reduction in the number of young people entering work, which is even greater than the average reduction over the United Kingdom as a whole. There is no question that an essential ingredient in encouraging Scotland's industry and commerce, its workforce, its young people and their parents and its schools and colleges to become enthusiastic about training is to have the maximum amount of decision-making Scottish based and locally based. That has not been possible in the past. For example, the Scottish committee of the MSC was purely advisory and the MSC and the Training Agency were largely centrally-based organisations. What is now proposed is true devolution for Scotland to its local areas and that is much needed.

It is good too that Scottish Enterprise and Highlands and Islands Enterprise will be able to build on two existing bodies of such proven success and that they will be able to foster training in the context of other aspects of the economy and business life of Scotland. It seems to me that the responsibilities fit very well together.

In the 1990s it is very wise to put employers in the lead role. I remember well in the early 1980s attending a conference of top level employers in West Germany. Youth unemployment in Germany was rising fast and there was need to find ways of training young German people at a time when employers did not have enough apprenticeships to offer. I was asked about our youth training scheme. It became clear that the employers had control of training and wanted to keep it. Indeed they were willing to pay for most of it simply to ensure that it was realistic and relevant to the needs of their workforce. If the government paid, the employers would lose control. They wanted to keep control of training, even of those who were unemployed.

We have not yet fully taken that on board in Britain. The majority of Scottish employers still leave most of the training effort to others. They believe that if they train people and pay for it, they waste the time and money of their firms because many of the people trained will go to work for other firms. Now at last we are taking a leaf out of the Germans' training notebook by inviting employers to take the driving seat. They are clearly responding with enthusiasm. That is the first move towards what the Government's White Paper described as getting employers to develop a sense of ownership of training. It is only when employers take responsibility for training that it can be made properly relevant to the needs of their workforce and the workforce of others in the locality. Therefore, I am very pleased with the thrust of Part III.

Three aspects of the new arrangements need careful thought. I want to ask my noble friend Lord Sanderson two questions. I wonder whether the framework for delegation in the Bill is sufficiently clear. My noble friend says that the Bill is designed to provide an appropriate structure. Is the framework for deciding what can be delegated and how it can be delegated, first by the Scottish Office to Scottish Enterprise and Highlands and Islands Enterprise, and even more importantly by them to the local enterprise companies, sufficiently clear?

If the framework is not sufficiently clear, it will leave room for the Scottish Office, when something is delegated, to come back and, as some might say, interfere with what the local enterprise companies are doing. I wonder if Ministers realise the importance of clear criteria for what can and cannot be delegated both in the Bill and in what is required of the local enterprise companies' contracts granted next spring.

I have good reason to appreciate the high quality and skill of civil servants in the Scottish Office and, indeed, in the Department of Employment. However, wittingly or unwittingly, the Scottish Office and the Department of Employment—and they are by no means the only departments of state to which this applies—enjoy making great play of the freedom which is being granted to the so-called arm's length bodies and then forever querying and negotiating about the details of those bodies' activities whenever a chink in the arrangement allows it.

The Scottish Office will wish to retain overall powers and resources for that which has to be done at the centre—national strategic functions, the monitoring of training, fallback arrangements if the local enterprise companies fail, and so forth. There is considerable scope for niggling, time-wasting interference by the Scottish Office or by the Department of Employment in Scottish Enterprise or Highlands and Islands Enterprise or directly in the affairs of local enterprise companies.

There is also room for interference, in the area dealt with in Clause 2(2) regarding the relationship of the two new bodies with the Secretary of State for Scotland, taken in conjunction with Clause 19, which deals with the delegation of powers to the local enterprise companies. Many bodies put up with constant querying and being called to account on matters supposedly delegated to them. However, the people who have agreed to run the local enterprise companies will not stand for it. They are business people accustomed to taking decisions and responsibility for efficiency and cost-effectiveness. If they prove incompetent they will expect to go. They have experience of proper delegation. They will recognise the special responsibility of using taxpayers' money and the fact that some powers must clearly stay at the centre. They have been invited to run the local enterprise companies in a businesslike manner and will want to do so. If they find themselves required to spend time and energy on unnecessary niggling with the centre, they simply will not stay. They will find better, more useful things to do. That is a serious point. The way to avoid that is to ensure that it is absolutely clear on the face of the Bill what delegation to local enterprise companies means—what is delegated; and what can and cannot be queried. I should like to ask my noble friend whether he is happy with that situation or whether it needs to be examined again.

It is essential so far as possible to avoid people contributing to the running of local enterprise companies in a representative capacity. Local government, because of its overlapping functions, feels that it should have representation. Voluntary groups and others continue to press for the statutory right to be consulted. Of course there will be times when consultation is the order of the day. But the kind of political ding-dong that goes on—with a small or a large "p"—when people feel that they have a statutory duty to fight the corner of those they represent, needs to be avoided if possible.

Such activity can hold up a youth training scheme for months. It got between the TVEI and young people in Scottish schools for months; even now, as my noble friend indicated, it is holding up the establishment of the local enterprise companies in Tayside. Those who suffer are the customers of training—young people, older people, local industry and commerce. I hope the House will resist any suggestion that people should have a statutory representative role in relation to local enterprise companies.

The other side of that coin is the importance of clarifying the relationship of local enterprise companies with local government. Virtually nothing is said about that in the Bill. My noble friend Lord Gray mentioned that normal planning permission will be required, and that is one clarification of the relationship. But local councils are not only the planning authorities; they are also the education authorities. They have to deliver a great deal of the training that employers ask for.

We do not want the disadvantage of representational roles for local governments. Perhaps the Bill should state more clearly how the local enterprise companies and local government relate. I shall be interested to hear my noble friend's comments.

There is one final point. Clause 1 states that Scottish Enterprise shall have the general functions of, furthering the development of Scotland's economy … enhancing skills … in Scotland and assisting persons to establish themselves as self-employed persons there … promoting Scotland's industrial efficiency … further improvement of the environment of Scotland". Does that mean that in some respects Scottish Enterprise will be functioning in the Highlands and Islands Enterprise area? For example, will that not be confusing when Scottish Enterprise seeks under Clause 1(a)(ii) to help people establish themselves as self-employed in, say, Dingwall or Stornaway when just such help is a function also of Highlands and Islands Enterprise under Clause 1(b)(ii)? Is that overlap sensible? Will it perhaps cause problems? I shall be interested to hear what my noble friend has to say.

With those comments and queries I believe that Part I is an enormous move forward. The people of Scotland will appreciate it very much. I hope the House will back the Bill and give it a Second Reading.

9.36 p.m.

Lord Glenarthur

My Lords, I rise only briefly strongly to support this Bill and, in doing so, I apologise to my noble friend and to your Lordships for not having put my name on the list of speakers. I had my name down earlier but thought that I should not be back in time to take part in the debate, so took it off. In the event, the earlier business went on rather longer than expected.

In common with my noble friend Lord Gray of Contin, I have had some exposure particularly to the Part I aspects of the Bill—the present Highlands and Islands Development Board—having taken over from my noble friend the responsibility for that successful and important enterprise. I live outside that area, just to the south-east, in Aberdeenshire, but over the past few years there has been some pressure from those who operate in that area to bring within the ambit of the HIDB certain elements of Aberdeenshire.

I very much agree with my noble friend that that part of the world has unique characteristics in a number of ways. The enthusiasm with which many people in a whole variety of different industries and different ways of life pursue the activities in which they are involved is wholly encouraging for anyone who has the opportunity to become involved with it. I was lucky enough to have that responsibility for a few months. The entrepreneurial flair of those people, the nature of the countryside, its characteristics and its geography, make it an area in which it is not easy to encompass all the objectives that an organisation such as the Highlands and Islands Development Board seeks to achieve.

My noble friend Lord Gray referred to the role that Lord Ross of Marnock played when he set up the HIDB in 1965. Those were days when 1992 had not even been dreamt of; when, again, the demographic trough stemming from activities round about the late 1950s and early 1960s had not been. thought of. Therefore, it is only right that we should see the sort of development that we see now and Highlands and Islands Enterprise seems to me a worthy and exciting successor to all that has gone before; bringing training and development together for the first time in a way that must bring up to date the concepts which have been developed and which led to the establishment of the HIDB to carry us forward through to the latter part of the 20th century.

We have, therefore, a strategic approach and coupled with it the strength which will come from the local flexibility given by the local enterprise companies. To that extent, I very much agree with my noble friend Lady Carnegy that we have a true devolution of that aspect within Scotland which is wholly to be encouraged. Therefore, I congratulate the Government on bringing forward this Bill. I am delighted to see it, as one who has had a small responsibility for an element of it in the past. It will bring the old HIDB up to date not just for the benefit of that particular region but, more importantly, by virtue of what will be its parallel association with Scottish Enterprise. It will allow a crossfeed of innovative ideas from the HIDB region, as it is now, to permeate the rest of Scotland and vice versa. That is wholly worth while. I strongly support the Bill.

9.40 p.m.

Lord Sanderson of Bowden

My Lords, I should like to thank all noble Lords who have taken part in this short but extremely important Second Reading. As the noble Lord, Lord Carmichael, said, this is probably one of the most important Bills to come before your Lordships' House in relation to industrial development in Scotland. There is more that we have had to consider.

I was grateful to the noble Lord, Lord Carmichael, for his general welcome for the Bill. I look forward to the Committee stage when I have no doubt we shall go into considerable detail on certain aspects of the Bill. I was amused by his description of the local enterprise companies as pressure cookers. That is certainly a new description to me. He may well be right. As a businessman, I know only too well that pressure exists and that when a few businessmen get together the pressure cooker syndrome can be very relevant.

First, I shall answer some of the points made by the noble Lord, Lord Carmichael, on enterprise, but, more particularly, about the new towns, which I shall come to in a moment. He asked about funding. He will be aware that the published budget for 1990–91 for the SDA at £180 million, the HIDB at £48 million and the Training Agency in Scotland at £267 million amounts to just short of £500 million. That is not a small amount of money.

We have already published provisional figures for the SDA and HIDB at £180 million and £51 million respectively for the current year. In due course we shall be coming to the figures relating to the Training Agency in Scotland. The noble Lord, Lord Carmichael, asked what finance may be devolved to the local enterprise companies. It is too early yet to give other than the broadest indications about individual consortia. The figures are likely to range from over £70 million for Glasgow at one extreme to £1 million or so for Shetland at the other.

I can assure the noble Lord that all the embryo local enterprise companies bar one are in being now. They are working at their prospective business plans. Clearly, local enterprise companies will have high aspirations. The Government are not afraid of that, though resources cannot be infinite. I say to the noble Lord that businessmen understand—as I know only too well from speaking with those who are involved—that the funding of Highlands and Islands Enterprise and Scottish Enterprise is pump-priming for the very big task of getting as much private sector cash as possible into those areas and into businesses.

Lord Carmichael of Kelvingrove

My Lords, I am grateful to the Minister for giving way. Can he give some indication, by the time we reach Committee stage, of the kind of figures that the chairman of the companies are looking for? I understand that they are looking for anything between 30 per cent. and 60 per cent. more than the Government have given them. Can the Minister give any idea of what the Government believe they will need?

Lord Sanderson of Bowden

My Lords, the chairmen of the local enterprise companies do not yet knew what amount Scottish Enterprise will be devolving to them. Ongoing discussions are taking place as to the split between what is devolved to those local enterprise companies and what is held by Scottish Enterprise and Highlands and Islands Enterprise at the centre. I may be able to give more indication of that in Committee, although, as the noble Lord will understand, everyone will want to ensure that budgets are as large as possible to enable them to do as much as they can for the area.

I was grateful to my noble friend Lord Gray of Contin for his stout remark that the Government will not run away from their responsibilities in Scotland, and particularly in the Highlands and Islands, an area for which I have responsibility, even though the representation of the Government is negligible in the area. We very much believe in proper devolution. That is why we are so keen to see this form of devolution for the industry of Scotland. As my noble friend said, prosperity in Scotland and in his own area of Inverness is so obvious that it cannot be ignored. What he said about the Scottish press may indeed be true but I also believe that truth will out in the end.

My noble friend asked about protecting the existing environment. In Clause 5(3) Highlands and Islands Enterprise is required to have regard to the desirability of safeguarding the natural beauty, flora, fauna and special physical features of the Highlands and Islands. That is implicit in the Bill. I understand what he says and it is something which the Government take very seriously. My noble friend also asked about Clauses 10, 11 and 12. He thought that the acquisition of information might be somewhat onerous for small businesses. I can assure him that these clauses go no further than re-enacting the powers in the 1965 and 1975 Acts in relation to the Highlands and Islands Development Board and the Scottish Development Agency respectively.

My noble friend Lady Carnegy was concerned about the framework for delegation and asked whether it was clear enough. We believe that it is. It will be set out in a clear management statement which the Secretary of State for Scotland will issue to Scottish Enterprise and Highlands and Islands Enterprise later in the year. That is the position as concerns the central bodies. As regards the LECs, it will be set out in detailed contracts between Scottish Enterprise and Highlands and Islands Enterprise and the local enterprise companies. These contracts will be awarded once the parent bodies are satisfied that the contract arrangements are satisfactory.

There was general welcome for the way in which we have dealt with the boards. My noble friend Lord Gray mentioned the Highlands and Islands Development Board. We wish to see the private sector playing a leading role in the boards of Highlands and Islands Enterprise and Scottish Enterprise. I am glad, however, that the existing full-time members of the Highlands and Islands Development Board have agreed to complete their terms of office with Highlands and Islands Enterprise. We propose to decide in the light of the circumstances at the time whether or not to appoint full-time members thereafter. I can assure my noble friend Lady Carnegy that in general board members have been appointed on the basis of their individual abilities, rather than on a representative basis, for the personal contribution that they can make, and that a two-thirds private sector majority reflects our belief that employers must be firmly in the lead in training and enterprise development.

I know that the noble Lord, Lord Carmichael, may be approached from some quarters to argue for the local authorities. If he looks at the membership of Scottish Enterprise and Highlands and Islands Enterprise he will see that eminent members of local authorities are on those boards. If it is any comfort to him he should know that in the embryo local enterprise companies—in Highlands and Islands Enterprise and Scottish Enterprise—the number of officials and councillors from the local authority quarter is 39 already. That is no small number and reflects the importance of that part of Scottish life in these new arrangements.

My noble friend Lady Carnegy of Lour asked about skill shortages. The Government have demonstrated their commitments to training in hard cash. Whereas under the last Administration the Labour Government spent £½billion in 1978–79, we are spending £3 billion this year. That is more than three times as much in real terms. Moreover, if I may say so, the United Kingdom now spends more as a percentage of gross domestic product on training than Germany, the United States or Japan. That is the measure of the increased priority we are giving to training.

My noble friend also asked about the relationship of local government with the local enterprise companies. I have told her about the individuals concerned, but undoubtedly local enterprise companies will want to work in partnership with local authorities, just as the SDA and its counterpart does so successfully at present in the Highlands.

My noble friend also referred to statutory consultations and said that they are onerous and should be avoided. The Bill enacts existing duties on the SDA and the Highlands and Islands Development Board to consult but proposes no new ones for precisely the reasons put forward by my noble friend.

My noble friend also asked about the overriding power of Scottish Enteprise throughout the whole of Scotland. She referred to Clause 1(1)(a)(i). I think that she ought to read that clause alongside Clause 21. She will then see that the remit is indeed correct but that there are provisions therein to safeguard the position in the Highlands and Islands so that the powers of Highlands and Islands Enterprise in that area are firmly published.

I turn now to deal with the question of the new towns. I should like to reiterate what I said in my opening speech for the avoidance of doubt in the mind of the noble Lord, Lord Carmichael. The White Paper committed the Government to consultation towards the end of the winding-up period with all interested parties, including representative tenant groups, on the transfer of housing remaining in development corporation ownership at that time. No one knows now how much housing that will involve in each town. Transfers, which may include transfer to the district council depending upon the outcome of consultations, will then be effected.

I should like to mention the fact that I was somewhat disappointed by the reaction of CoSLA when it referred to, the deliberate exclusion of district councils from the transfer options available to new town tenants despite the Government's stated commitment to giving tenants choice". I find those words difficult to reconcile with the clear statement contained in paragraph 5.10 of the 1989 White Paper on Scottish new towns, which states: At wind-up, the development corporations' role as landlords will cease to exist. Choices therefore have to be made at that time. The position in each town will be carefully considered once an order for dissolution has been made, and formal consultations will be held with the development corporations, district councils and representative tenant groups to review the position and to determine to what extent transfers might take place, be it to housing associations, co-operatives, district councils, private or other landlords. Those tenants who have not transferred to other landlords will be transferred to Scottish Homes at wind-up, with a view to pursuing further diversification with the small residual number of houses". The Government have not changed their mind since publication of the White Paper. We remain committed to formal consultation with all the interested parties. We remain committed to the same list of potential recipients of development corporation housing as set out in the White Paper. For the sake of clarity, I will spell out again that list; it includes, housing associations, co-operatives, district councils and private or other landlords. I hope that the noble Lord will forgive me, but it is such an important area and it is most important that we get it right before we reach the next stage of the Bill's proceedings. I wanted to make the position absolutely clear.

I am most encouraged by the way in which the sale of stock of housing in the new town corporations is proceeding. I think that I can say with all honesty that the home ownership situation in the new towns is looking extremely good. A target of 50 per cent. of stock sold is by no means far away now.

I shall refer once more to SLANT and its interesting survey which was published last week and one or two of its findings. It said that the clear majority believes that the right time to make decisions is at wind-up, as the Government said in their White Paper that I have already mentioned. I point also to the important fact that the SLANT survey confirms the 1989 survey findings which give added support to the Government's view that wind-up is the most appropriate time for decisions on transfers.

I cavil slightly at the figures produced by SLANT in its polls. It has misrepresented one figure. The methodology makes it plain that the 75 per cent. figure is 75 per cent. of the 37 per cent. who now wish to choose a new landlord. That is in response to its assumption that three-quarters of residents would choose a district council now. We must get that matter right. Those figures were again confirmed by my officials with Miss Stedward of East Kilbride District Council on Friday and so it is correct to say that only 28 per cent. of tenants, or over just one in four, wish to choose now and that their choice would be the district council. The majority of tenants agree with the Government's view set out in the White Paper that the best time for decisions on transfer to be made is at wind-up.

I hope that I have covered the major points that have been raised in our short but interesting debate. We are moving forward to a new framework for Scotland. Scottish Enterprise and Highlands and Islands Enterprise will help to underpin the creation of a buoyant, self-confident Scottish economy for the 1990s and beyond. Our proposals for new towns will complement that framework by bringing the Scottish new towns to full maturity so that they can make a maximum contribution to Scotland's future prosperity. I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.