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Regional Development

Volume 22: debated on Monday 26 April 1982

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asked the Secretary of State for Industry whether he will take fresh initiatives to aid the regional development of industry.


asked the Secretary of State for Industry whether he proposes to take any additional regional policy initiative in view of the serious and continuing unemployment figures in the United Kingdom; and if he will make a statement.

The most effective stimulus to regional industrial development will be for British industry to continue the improvements in performance which our economic policies are encouraging. Beyond that our regional industrial policy is intended to concentrate the available assistance on those areas that are worst affected.

Is it not about time that there was a reversal of the deplorable decision taken by the previous Secretary of State for Industry? He reduced the development area status of many areas, including the Stirling travel-to-work area. That area is now faced with the proposed closure of the Player's factory as well as with job losses at Stirling university as a direct result of the Government's policy. Will the Secretary of State now consider restoring Stirling's development area status and uprating Denny to special development area status, because unemployment there is now higher than 30 per cent.?

Although unemployment in Stirling is regrettably high, it is not as high as in the assisted areas as a whole. Therefore, I cannot see a strong case for restoring development area status. However, Stirling will remain an intermediate area after the changes that come into force next August.

With tens of thousands of school leavers footloose on the streets, and nearly 1 million long-term unemployed, does not the right hon. Gentleman's regional policy look hesitant and unconvincing? Does he know that the deprived regions have so little confidence in his policies that several of them are competing for the proposed Nissen car project? What can he tell us about that project?

I have a feeling that there would be a good deal of competition for the Nissan car project—if that company decided to come to Britain—whatever the level of unemployment. All the evidence suggests that the impact of regional policy on the creation of jobs is more effective if it is concentrated on the areas of greatest need. On the whole, regional policy was more effective in the 1960s, when it was fairly narrowly based, than in the 1970s, when it covered, towards the end, more than half the country and almost 40 per cent. of the working population. The decisions announced in July 1979 by my right hon. Friend the present Secretary of State for Education and Science were designed, once again, to concentrate help on the areas of greatest need.

Is my right hon. Friend aware that one way of helping the regions is to help enterprise agencies such as the one called "Make Lancaster Your Business", which is anxious to be granted approval so that contributions from companies will be granted tax relief? Is my right hon. Friend in a position to say when he will announce his Department's criteria for such approval?

Help for enterprise agencies is not confined to the regions. The decision to give tax relief was widely welcomed at the time of the Budget. My Department will be responsible for giving approval and it is working on the criteria. I hope to be able to give some information on that fairly soon.

How can the Secretary of State claim that regional policy has been more effective in the past two years during which it has been more accurately pinpointed, when more jobs have been lost in the past two years than were created in 10 to 15 years of positive regional development policy? Does he realise that unemployment now stands at 20 per cent. in the areas of the Sedgefield and Wear Valley district councils? If the closure of the British Rail works goes ahead unemployment will increase to 30 per cent.

I think that the hon. Gentleman has misquoted me. Of course unemployment has risen everywhere during the deepest recession for 50 years. Although it is notoriously difficult to ascribe any change in the level of employment to any particular measure, there is broad agreement that, on the whole, measures are more effective if they are concentrated on the areas of greatest need instead of regional help being spread too thinly across the whole country.

Although I accept that regional aid should be given to the areas of greatest need, is my right hon. Friend aware that in Grampian and in my constituency of East Aberdeenshire unemployment is rising very quickly because oil and gas constructional work and the indigenous industries are suffering as work has come to an end and there is no alternative employment? Will he take steps to alter what his predecessor did in removing the assisted area status of Grampian region, and particularly that of East Aberdeenshire?

My hon. Friend will know that we undertook to review areas in which there was a two-step change in the assisted area status. That review is in hand and I hope to announce the results later in the spring. We have also been looking—as I think the House knows—at some of the other areas in which circumstances have changed substantially and beyond the normal trends of the recession. I hope to announce those changes at the same time.

What are the industrial improvements of which the right hon. Gentleman spoke in his initial reply, and how have the Government's regional policies brought them about? Surely the most hard-hit regions in Britain have the highest unemployment of any regions in Western Europe. That is a direct result of Government policy.

Those industrial improvements consisted of last year's 10 per cent. increase in productivity, the reduction in the growth of unit labour costs from 25 per cent. a year ago to 2·5 per cent. according to the latest figures—a remarkable change—and our increased competitiveness, which is helping us to win substantial contracts overseas. That will restore the health of British industry.