HC Deb 17 February 1987 vol 110 cc526-7W
Mr. Robert Atkins

asked the Secretary of State for Trade and Industry if he will make a statement on the outcome of the administrative review of regional policy.

Mr. Giles Shaw

As my predecessor informed the House, we have been reviewing the operation of our regional industrial policy instruments. The terms of reference were to review the administrative aspects of regional development grants and regional selective assistance with a view to ensuring that the schemes operate with maximum ease, economy and effectiveness from the standpoint both of Departments and applicants. The review was not concerned with the fundamentals of regional policy, nor with the assisted areas map. In the interests of maintaining stability in regional incentives, we have concluded despite a number of representations that it is too early for changes to be made in the map.

We have been particularly concerned to look at the operation of RDG II which replaced RDG I in November 1984. The new scheme is radically different from the old in that it provides for grant to be calculated by reference either to capital expenditure or to new jobs created and is now available to various service activities as well as manufacturing. Other changes were introduced to improve the cost-effectiveness of RDG in assisting job creation in the development areas. We therefore commissioned a survey by consultants PIEDA into industry's early reactions to the new scheme. This found that RDG II has been generally well received by the business community. Despite its inevitably increased complexity compared with RDG I, the main concepts and rules appear to be understood and the scheme is an important factor in companies' investment decisions. Since November 1984, 12,000 projects have been approved which, if carried out as planned, would qualify for £60 million of grant. £30 million has been paid to date for projects creating 45,000 jobs. It is particularly encouraging that a high proportion of these projects are being carried out by firms with fewer than 200 employees: over 80 per cent. of the total grant has been paid to firms in this category. The grant offices have played a critical role in helping companies understand the new grant and most companies were very complimentary of the help received. A copy of PIEDA's report is being placed in the Library.

It is clear that the decision to administer the RDG 11 scheme from the same offices dealing with RSA has helped in responding to local needs. These arrangements enable the offices to coordinate their delivery of the assistance schemes to applicants and, in England, to liaise effectively with the regional organisations of the Department of the Environment and the Department of Employment, which have their own schemes of financial assistance in pursuit of separate but related policy objectives.

Experience has shown that there is scope for action to ease the administration of the scheme and this will be done, consistent with safeguarding the proper expenditure of taxpayers' money. But, given the encouraging progress to date and the need for stability in regional incentives, we have concluded that no change is called for in the main elements of RDG 11.

Relatively few changes were made in regional selective assistance in 1984. The scheme continues to be an effective and flexible instrument for aiding the creation and safeguarding of jobs throughout the assisted areas. Nevertheless, it is clear that the procedures and information requirements can be daunting to small firms. For grants of up to £25,000 a simplified application form will therefore be introduced and there will also be some simplification of the procedures involved in the determination of eligibility for assistance and the amount of grant.

The Government will continue to look for ways of improving the operation of the incentive schemes so as to maintain a vigorous regional industrial policy which brings good value for money to the taxpayer.