HC Deb 07 December 1984 vol 69 cc314-5W
Mrs. Renée Short

asked the Secretary of State for Trade and Industry what level of funding has been allocated for the purpose of supporting capital intensive projects during 1984; and how many new jobs have been created as a result.

Mr. Trippier

The concept of capital-intensity is not specifically employed in the allocation of funds. However, in the Government's view the old scheme of regional development grants had, in practice, too great a bias in favour of capital. The changes announced on 28 November by my hon. Friend, the Minister of State, Department of Trade and Industry, are intended to reduce this bias.

Mrs. Renée Short

asked the Secretary of State for Trade and Industry upon what assumptions he has based his statement that introducing the new regional aid policy will cost nearly £300 million per year less than continuing the present one.

Mr. Trippier

On the basis of the previous policy and expected investment intentions it is estimated that nearly £700 million would have been spent on regional industrial policy in 1987–88. The expected savings of nearly £300 million in that year are mainly attributable to the introduction of the new RDG scheme. That will enable savings to be made by the exclusion of replacement investment from grant, by the application of the grant per job ceiling in relation to large undertakings and as a result of the abolition of special development areas and their higher rate of capital grant. These savings will be partly offset by the job grant alternative to capital grant, the extension of the regional development grant scheme to some service activities, the increase in the total coverage of the assisted area map, and the increase in regional selective assistance for modernisation projects.

Mrs. Renée Short

asked the Secretary of State for Trade and Industry what level of costs will be incurred arising from the proposed replacement of the former system of regional aid by the new system.

Mr. Trippier

The changes in regional industrial incentives will involve extra costs as the transitional provisions meant that, in effect, the new and old RDG schemes and the new and old assisted area maps will overlap. We expect expenditure on the old RDG scheme to be nearly £700 million over the next three financial years.