§ Mr. Michael Forsythasked the Secretary of State for Trade and Industry (1) what is his policy regarding the giving of grants to overseas companies wishing to operate in a development area, if as a likely consequence, the resultant competition would reduce job opportunities in a United Kingdom-based business of a similar nature;
(2) what consultations are undertaken to determine the effects on existing United Kingdom-based businesses of overseas companies establishing competing businesses in the United Kingdom within special development areas or development areas when applications are received from such companies for grants for such purposes;
(3) what technical advice is available to his Department on the products and services of businesses from overseas applying for grants in relation to operations in a special development area or a development area;
(4) what assurances are sought from overseas businesses applying for grants in relation to operations in a special development area or in a development area as to matters such as job creation, local sourcing of raw materials, re-patriation of profits and export potential; and what action is taken when any assurances given prove later to be inaccurate;
(5) what criteria are applied when examining applications for grants from overseas businesses in relation to operations in a special development area or a development area.
Mr. TripplerRegional assistance under the Industrial Development Act 1982 is available to companies regardless of the nationality of their ownership: the applicable rules and criteria are applied to United Kingdom and overseas owned companies without discrimination.
There are two main categories of regional assistance. Regional selective assistance is available in special development, development and intermediate areas. These 22W grants, which are administered by my Department in England and in Scotland and Wales by the Scottish arid Welsh offices, are discretionary. Applications are subject to detailed appraisal.
To qualify for assistance a project must either create or maintain employment and must, with the assistance, be commercially viable. It must also be demonstrated that assistance is necessary for the project to go ahead as proposed and that it is likely to benefit both the national and regional economy. In deciding whether this last criterion is satisfied careful consideration is given to the potential impact of the project concerned on the activities of other companies both locally and nationally.
Where a project is internationally mobile, i.e. when it might go ahead either in the United Kingdom or in another country, this consideration is taken into account in the appraisal, in order to ensure that desirable investment is secured for the United Kingdom.
Appraisal of applications for regional selective assistance requires detailed and often commercially sensitive information from the applicant. For this reason cases are handled under conditions of strict confidentiality and there is normally no consultation with outside bodies. But the Secretaries of State for Trade and Industry, Scotland and Wales receive independent advice on individual cases from the industrial development advisory boards and from regional development boards. all of which consist mainly of business men. In addition, the advice of professional accountants, economists, scientists and technologists is available within the Departments.
When an offer of RSA is made and accepted, this constitutes a contractual agreement between the Secretary of State and the firm. The details of these agreements are confidential. They sometimes contain undertakings by the firm on job creation, exports and sourcing of raw materials and components. There are provisions for withholding RSA grants, in whole or in parts, in the event or provisions in the contractual agreement not being fulfilled.
The second category of assistance consists of regional development grants. In the special development areas and development areas in England, Scotland and Wales, firms engaged mainly in manufacturing are eligible to receive regional development grants on the cost of capital assets provided at qualifying premises. Conditions of grant ensure that the assets are used for four years. They are administered on an automatic basis without appraisal.