Skip to main content

Aberdeen (Development Area Status)

Volume 24: debated on Thursday 20 May 1982

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Thompson.]

10.12 pm

I am grateful to you, Mr. Speaker, for affording me the opportunity to discuss the need for the Aberdeen travel-to-work area to be included in the review of areas eligible for financial assistance under regional industrial policy.

When I saw that I had been successful in obtaining this debate and the business which apparently preceded it, I was not sure whether I was happy or sad because the Adjournment would have been at about 5 o'clock in the morning. Now that the debate is at a reasonable hour, I am still not sure whether I am happy or sad as the events of the day might obliterate my speech from tomorrow's press. However, as I intend to have the debate so that I can influence the Minister, that does not matter.

The requirement for this debate and its urgency arise directly out of an exchange at Scottish Question Time on 28 April this year between me and the Secretary of S Late for Scotland and the Under-Secretary of State, the hon. Member for Edinburgh, North (Mr. Fletcher). During those exchanges, I persisted in seeking a clear answer and eventually succeeded in getting from the Under-Secretary a reply the effect that the Aberdeen travel-to-work area was excluded from the review currently nearing completion. For the accuracy of the record, I shall repeat those exchanges.

I asked the Secretary of State:
"Will the Secretary of State give a categorical assurance that the review of assisted area status will include the city of Aberdeen, as the Under-Secretary of State recently suggested that Aberdeen would be excluded?"
The Secretary of State replied:
"I assure the hon. Gentleman that we are including in the review all the authorities that we said that we would include—that is to say, those areas that have been downgraded by more than one degree. We shall stick to that undertaking and we shall, of course, be glad to receive representations from anyone who is affected."
I later asked:
"Will the Minister give a straight answer to a straight question? Is Aberdeen included in the review that is taking place? If not, why did he agree to meet representatives of the city council on 15 March?"
The Under Secretary replied:
"We meet various bodies and local authorities on this and other matters. The straight answer the hon. Gentleman wants is 'No'. In 1979 we said that in this review we would reconsider local authorities that had been downgraded by more than one step."—[Official Report, 28 April 1982; Vol. 22, c. 832–40
I can say with certainty that there was consternation in Aberdeen and the surrounding area as a result of these questions and answers.

It must be emphasised that the Aberdeen travel-to-work area comprises about half the geographical area of Grampian, but in terms of population much more. The Minister's Department was in some consternation as it was unable to answer the many phone calls that it had and it was unable even to put a gloss on the Minister's answer. One senior local Government official in the area told me that he believed that the local authorities in the area had been misled by Government Ministers. No doubt the Ministers will deny that and say that the position now is exactly the same as it was in 1979 and that nothing has changed. That is exactly what we are complaining about and I believe that we have a legitimate complaint.

While the need for this debate arise from the Scottish Question Time, the origins of the debate go back almost three years, to 17 July 1979. On that day there were two events of great significance. In the morning the Scottish Grand Committee met to discuss the Scottish Estimates on employment and industrial prospects. The Secretary of State made an announcement that was warmly welcomed in all political quarters in the House, by industry and commerce, by local government and throughout the whole of North and North-East Scotland.

The Secretary of State said:
"There is one other small matter which is important and to which I should like to refer. That is the concern which hon. Members have often expressed, and which I also feel, that there may be a particularly difficult effect on ordinary local indigenous industry in areas which are very much involved in the development of North Sea oil. It is not always the case that North Sea oil development is advantageous for everyone in the area. Oil-related industry boosts the local economy, but, at the same time, there can be adverse effects for indigenous firms."
He went on to say that we was setting up a special study into the effects of oil-related industry on indigenous industries.

Later, in the same debate, the hon. Member for Aberdeen, South (Mr. Sproat) said:
"I begin by saying to my right hon. Friend how much we welcome the report, of which he has given us news today, that he intends to look into the effect of oil on the indigenous industries, particularly in the north-east of Scotland. I know that this will be welcomed, particularly by my hon. Friends the Members for Aberdeenshire, East (Mr. McQuarrie), Banff (Mr. Myles) and Moray and Nairn (Mr. Pollock)."—[Official Report, Scottish Grand Committee, 17 July 1979, c. 20–27].
We were all pleased, although I had a sense of foreboding that, welcome though that statement was, it was a forerunner of bad news. So it proved to be. In the afternoon of the same day, that fateful 17 July 1979, the Secretary of State for Industry made his announcement about the review of industrial policy and assisted area gradings. As a result of that review, the Aberdeen travelto-work area was downgraded from intermediate area status to unassisted area status effective from 1 August 1982. The hopes raised in the morning by the Secretary of State were dashed in the afternoon by the Secretary of State for Industry.

Throughout the whole of the north-east of Scotland, opinion was virtually unanimous that those propositions must be fought and opposed. Although people were pessimistic, everyone took some comfort, mistakenly as it now appears, in the special study to be set up by the Secretary of State to which I shall return later, known as the Begg-McDowall report when it was published.

Everyone believed in the result of that study, which confirmed that indigenous industry was affected by oil-related industry, that assisted area status was important and should be retained. Everyone believed that that report would have an effect on Government thinking and that its evidence would powerfully support the case that we had been advocating. However, such was the anxiety about the effects of the downgrading that immediately a strong coalition was put together, under the unbrella of the Grampian regional council, to put the needs of the area before the Government. It was agreed that representations could not await the results of the special study. I recall that there were three deputations to see Ministers. The first was made to the then Under-Secretary of State for Industry, the hon. Member for Basingstoke (Mr. Mitchell). The most recent of the deputations was made on 15 March, to the Under-Secretary of State for Scotland at New St. Andrew's house, who is to reply to tonight's debate. I cannot recall the Members of Parliament who attended each of the three meetings, but I know that at some time every Member of Parliament from the Grampian region was present. I cite them not as a rebuke, but as a tribute. They were the hon. Member for Aberdeen, South (Mr. Sproat)—Under-Secretary of State for Trade—the hon. Members for Aberdeenshire, East (Mr. McQuarrie) and Banff (Mr. Myles)—both of whom I am glad to see in the Chamber—the hon. Member for Aberdeenshire, West (Sir R. Fairgrieve) and the hon. Member for Moray and Nairn (Mr. Pollock). I do not blame those who have not attended the debate.

At all the meetings there was unanimity of view. The local authorities, the chamber of commerce, and the trades council all presented a common front: that the changes were bad for our economy and must be subject to review. The propositions put on the first occasion were clear and specific. In November 1979, a document was prepared by all the local authorities in the area, the chamber of commerce and the trades council, that recognised the dangers of the situation. Its first proposition was that the Aberdeen travel-to-work area should be included in any proposed review and in any special study associated with that review. The Government's reply on that occasion—as on every occasion—was courteous. Indeed, the Government have been courteous almost to the point of deception. Every Minister told us that a powerful case had been made and that it would be taken into account. At the later meetings, the importance of the Begg-McDowall report was emphasised.

The only sour part of the first meeting was that no Minister from the Scottish Office was present. In all the deputations and correspondence, the Government have never said "Thank you. Those interested in the Aberdeen travel-to-work area have made a good case, but we are sorry to say that it will not be included." At the early meetings I might have thought that reasonable, because we were arguing for a flexible Government approach. However, it was inexcusable to fail to point that out at the meeting on 15 March 1982. Even at that meeting, we were left with the impression that the case would be carefully considered and that the Government well understood the strength of feeling. It was only on 28 April that we received the specific answer that the area would not be included in the review.

Sadly, the united front has now broken down, because Grampian regional council—under the chairmanship of Councillor Mutch, who is no longer the convenor—voted by a majority against a Labour resolution to make urgent representations to include Aberdeen travel-to-work area in the review. I trust that the new regional council will have second thoughts and will take up the case again.

Some people, and some of the Government's friends in the area, are trying to pretend that the Begg-McDowall report could be considered independently, and in isolation of the review taking place on areas covered by regional industrial policy. That is arrant nonsense and anyone with any intelligence knows that. There can be no illusions about it. There is no possibility of the review being completed throughout the United Kingdom and of the Scottish Office later saying that notwithstanding the review just completed, it would make separate arrangements for the Aberdeen travel-to-work area. Unless the Government make a definite decision to include Aberdeen, all the work done by the various bodies will be a waste of time and money. The Begg-McDowall report will be seen as an expensive waste of time and as a con trick of the highest order from the beginning.

The report has supported all that we said and has upheld the concern expressed by the Secretary of State on 17 July, when he explained why the report should be produced. No one will be surprised that the report's major conclusion was that financial assistance was important. Page 17 states:
"We concluded from our examination of the evidence presented in Chapter 4 that regional financial assistance had a beneficial impact on the economies of all our Study areas during the 1970s. It has not been possible to quantify this conclusion in terms of aggregate jobs protected or created, especially in view of the large shock effects of oil developments on the one hand and a major recession on the other. We are, nevertheless, impressed by the evidence given by companies starting up in the areas over half of which reported that the availability of RDG, was important to their position. Indeed a significant proportion (almost one-quarter) of established firms said that regional aid had been crucial. We are persuaded that regional aid was not a negiligible factor in influencing the economic growth and structure of the areas."
After discussing the different prospects the final sentence of the report, on page 72, says:
"Our evidence strongly suggests that withdrawal of Assisted Area Status, where this is implemented, will make the creation of new jobs considerably more difficult."
It is often said that Aberdeen had done particularly well out of oil, and it has. Had we not had oil-related industries, the problem would be much worse. I should say by way of explanation, not as a point of criticism, that many of the jobs in the area are not held by residents of Aberdeen or Grampian although I am not complaining about that. Even in the Aberdeen travel-to-work areas unemployment is increasing. Although in general economic terms unemployment stands at the comparatively modest total of 6·7 per cent., this is an appalling figure. It is still too high and unacceptable.

Of even more crucial significance is the severe downturn in what we might describe as the traditional or indigenous industries, of which I give three examples. In fishing there has been a continuing decline, not only in the catching side but also the onshore processing side. We have had the closure of a paper mill, and no one can say, with his hand on his heart, that paper making prospects are buoyant. We have had the closure of Consolidated Pneumatic Tool, an engineering factory that had existed in Aberdeen from about 1947. The withdrawal of assisted area status has repercussions beyond simply regional government assistance. We shall also lose assistance under section 7 of the Industry Act 1972 Act, and:
"unless there is a change in policy, the Scottish Tourist Board grants for tourist developments will not be obtainable—and certain forms of EEC assistance, notably European Regional Development Fund aid, will be withdrawn. "
That is a quote from the Begg-McDowall report, from page 5.

The position is serious, I could continue to put the case for the retention of assisted area status, but I believe that what I have said so far leads at least to the compelling conclusion that the case should be examined under the review.

All that I shall say this evening is that in February 1982 a joint submission of all the bodies that I have previously mentioned, and all the local authorities, was the basis of the deputation to the Scottish Office Ministers on 15 March. This included a statement that Aberdeen's manufacturing employment, in cases of firms of more than 10 employees, declined at a rate faster than any other Scottish industry.

Among the proposals of that document that we took to the Scottish Office on 15 March was the one that Aberdeen should retain its intermediate or assisted status, albeit that the travel-to-work area should be redrawn to include Aberdeen and roughly 12 miles round it. I do not ask the Minister to pass judgment on these proposals tonight. That is not the purpose of the Adjournment debate. However, we are entitled to have from the Minister a clear explanation as to why he has rejected the case for at least including the area in the review that is taking place, and preferably an undertaking that he has changed his mind and will now include the area in the review. It is not much to ask for and the case is compelling.

There is a definite feeling among all political persuasions in north-east of Scotland that the Ministers have not properly studied the case. This can be dispelled only by a change of course this evening and a clear undertaking that the Aberdeen travel-to-work area will be included in the review of development area status that is taking place.

10.29 pm

The hon. Member for Aberdeen, North (Mr. Hughes) has made a case for Aberdeen which I fully appreciate. It is recognised that Aberdeen is one of the most prosperous cities in Britain because of the development of North Sea oil and gas, but the hon. Gentleman is right to point out that within the overall picture there are clear differences and difficulties not least because of the impact of oil and gas operations on the traditional industries.

The hon. Gentleman suggested that there is some consternation in Aberdeen because the Aberdeen travel-to-work area has been excluded from the review that my right hon. Friend the Secretary of State for Industry announced in 1979. I am not sure how that misunderstanding has arisen, because it was perfectly clear at the time, and it has been said since, that areas that have been downgraded by more than one step will be included in the review.

We have been asked to include many areas in the review. The cause of the misunderstanding is that, although we are dealing essentially with areas downgraded by more than one step, we have always made it clear that we are happy to consider other areas where a strong argument has been made. We are not being rigid or dogmatic about the matter, but it would be unfair to the hon. Gentleman and to other interested parties in Aberdeen to suggest that because there is some flexibility in the Government's thinking—bearing in mind that three years will have passed since the pronouncement of my right hon. Friend—every argument presented to us for areas that are not being downgraded by more than one step should be included automatically in the review. I assume that the misunderstanding has arisen because of the willingness of myself or my right hon. and hon. Friends to be flexible, but we are not so flexible as to defeat the original purpose, which is to consider those areas being downgraded by more than one step.

My hon. Friend will be aware of the letter sent to the chief executive of Grampian regional council on 11 May 1982, which states:

"The study area extended to the whole of the Grampian Region, including Aberdeen, and the report provides valuable background for policy and planning decisions—for example, on matters such as infrastructure needs—which affect the Aberdeen TTWA in common with the rest of the region."
From that, I take it that any revision of the travel-to-work area within the boundaries of Grampian region will be considered along with the points raised since the report was published.

I am not sure to which letter my hon. Friend refers, but it seems that the reference is to the Begg-McDowall report, which was a separate study undertaken by the Scottish Office and which was referred to by the hon. Member for Aberdeen, North. The purpose of that report is to provide some background information about oil-related areas in Scotland, not just the Aberdeen travel-to-work area, but the Orkneys, Shetlands, all of the Grampian region and other areas in the North-East of Scotland that have been affected by North Sea oil and gas operations but which are subject to the conditions of the regional policy review.

While I am on the subject of travel-to-work areas, may I tell the hon. Gentleman that of course they are unsatisfactory because, with the best will in the world, they are rather a crude measure of employment and unemployment statistics. Nevertheless, they have for many years been the basis of Government reviews of unemployment and regional policy and they will continue to be for the reasons that I have given. There can be no question of altering, adjusting or making allowances for travel-to-work areas, even one as elongated as the Aberdeen travel-to-work area, which extends into the Grampians. There are other travel-to-work areas in Scotland—Inverness, for example—which are as large if not larger and which present difficulties.

All the local authority representatives who have seen me have complained about the travel-to-work area concept. I have had to observe that, crude measures as they are, they have been the basis for many years of regional policy and are likely so to continue, at least for the existing review.

The hon. Member for Aberdeen, North prompts me to consider the basis of regional policy generally in the United Kingdom and not only in Scotland. I remind him that the purpose of regional policy is to help areas that are in greatest need of assistance. With the best will in the world, and bearing in mind the legitimate arguments that he has raised, I do not believe that he would care to say that Aberdeen has the most serious economic problems of any part of Scotland.

The hon. Gentleman has acknowledged that unemployment in the Aberdeen travel-to-work area on 15 April was 6·7 per cent., which was equal to the lowest figure in Scotland and was less than half the Scottish average. Employment prospects for the area, in contrast to many other parts of the country, are by no means unpromising.

The recent Begg-McDowall report on oil-affected areas found that oil-related employment in Aberdeen, both direct and indirect, would continue to grow and that that would ensure the overall prosperity of the city for the foreseeable future.

If regional policy means anything, it means that we are anxious to give aid and assistance to the areas of the United Kingdom that have the most serious unemployment problems. The hon. Gentleman made his case cogently and dutifully as an Aberdeen Member, but I do not believe that he would wish to argue that Aberdeen is a part of the United Kingdom that is suffering more than the average.

It is important that we should bear in mind the difficulties of areas that have reasonable levels of employment in present circumstances. They are not reasonable by the standards that we used to apply. That is why we commissioned the Begg-McDowall report, which we are finding useful in considering employment in the entire Grampian region and in the Orkneys as well as in the Aberdeen travel-to-work area and other areas that are affected directly by North Sea oil. I imagine that it is the consideration of these matters and those in other parts of the North-East of Scotland that have brought my hon. Friends the Members for Aberdeenshire, East (Mr. McQuarrie) and Moray and Nairn (Mr. Pollock) into the Chamber. They, too, are deeply concerned about the development status of their areas. They have made representations to me on numerous occasions. I have said to them, as I say to the hon. Gentleman, that we shall take these considerations into account before any final decisions are made about the new development area status.

If development area status is removed, the hon. Gentleman may bear in mind the major new initiatives that the Government have taken in promoting new businesses and giving incentives to industry, which have not been confined to geographical areas.

For example, the business start-up scheme and the loan guarantee scheme are very important initiatives for small businesses. They are not restricted to areas that enjoy assisted area status. The same applies to the grants related to new products and processes for innovation in industry and also in Scotland to the work of the Scottish Development Agency.

On the specific question of tourism, I can say that, although no final decision has been made, it is hoped that we shall be able shortly to announce that tourism projects in non-development areas will be considered for a certain element of grant.

I wish to make it clear that, if there has been any misunderstanding about the position of the Aberdeen travel-to-work area, it rests with the hon. Gentleman and Ministers who have never replied to or rejected the initial proposition that Aberdeen should be included. That is where people feel that they have been misled.

I have already stated that I am sorry if there has been any misunderstanding in this respect. I know that the initial announcement was clear. I can recollect repeating at this Dispatch Box the announcement that those areas being downgraded by more than one step would be considered in the review. In case there is any danger of misleading the hon. Gentleman further as a result of my remarks this evening, I would say that, with the best will in the world, I see no case whatever for the Aberdeen travel-to-work area being made an exception in the studies that are taking place.

I do not wish any misunderstanding to persist in the hon. Gentleman's mind or in the minds of other people in the Aberdeen travel-to-work area. I leave him with the point that I have already made about the expansion of new schemes that are not restricted by development areas—the ones that I have mentioned and others. Indeed, on Sunday, I opened a business exhibition in Aberdeen where there were throngs of people and many stands showing the vigour of the economy of Aberdeen and the willingness of people to take an interest in new businesses, to start up new businesses—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at eighteen minutes to Eleven o'clock.