§ Mr. Ginsburgasked the Secretary of State for Industry whether he has considered the views expressed by the Wool Textile EDC following the review of the progress of the wool textile scheme under Section 8 of the Industry Act 1972; and if he will make a statement.
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§ Mr. BennI am pleased to announce a number of improvements in the Wool Textile Scheme which have been discussed and welcomed by the EDC. They give some additional financial stimulus to re-equipment and rebuilding and a stronger incentive to structural change within the industry so as to encourage concentration and the formation of stronger groupings. I hope that these changes will help efficient firms to compete more effectively in the worldwide markets in which they trade. The changes are:
First, for re-equipment projects, the grant is raised from the present 15 per cent. to 20 per cent. of eligible costs. This increase recognises the valuable part which such projects play in the modernisation of the industry.
Second, for projects combining re-equipment and rebuilding, the grant for new buildings will be raised from 20 per cent. to 30 per cent. The increased grant is designed to encourage a more vigorous attack on outdated premises in order to achieve better working conditions, improve the industry's image and so foster long-term labour recruitment.
Third, for more comprehensive projects, involving, in particular, structural change through mergers/take-overs or the concentration on a single site of production units which are now separate, more extensive concessionary loans, or interest relief grants in lieu will be provided. They will now be available for up to the difference between half the eligible project cost—instead of 40 per cent. as at present—and any grants under headings one and two above and by way of regional development grant. Project costs may also now include the net purchase cost of assets which are not eligible for grant, and working capital. The aim is to give a real incentive towards major restructuring in the industry leading to stronger and more efficient units.
In all three types of project firms are now permitted to include in the project costs their share of statutory redundancy payments, when redundancies arise from projects under the scheme.
Fourth, the rates of grant for uneconomic firms or production units which close down are increased. If calculated on turnover the grant is increased from 4 per cent. to 7 per cent. and if it is based 214W on key items of machinery it is increased by 50 per cent.
I am informed that the EDC has agreed on a revised code of practice for consultations on the manpower effects of projects and that the employers and unions have reached an agreement under which the statutory redundancy payments will be supplemented by employers for workers who are made redundant as a result of projects under the scheme. This supplementation will not count as an eligible cost for assistance under the scheme.
Since the scheme's introduction in July 1973, 94 projects have been submitted involving total grants of almost £7 million with a consequent investment in new plant and buildings of about £37 million. I am confident that the improvements I have announced will give a further impulse to an industry which makes an important contribution to employment and exports.
Details of the changes are being placed in the Library.