I beg to move, That the Bill be now read the Third time.

The subject of the Bill is the closure of the regional development grant scheme, which was introduced under the Industrial Development Act 1982, as substituted by the Co-operative Development Agency and Industrial Development Act 1984. Hon. Members have extensively and, if I may say so, thoughtfully and usefully, debated aspects of the Bill in Committee. Nevertheless, it returns unamended to the Floor of the House.

The Bill is a short one. It has two substantive clauses. Clause 1 removes the power to make grants for projects, unless applications are received on or before 31 March 1988. Clause 2 establishes transitional arrangements concerning the availability of grants for projects in respect of which applications are received after 12 January 1988, except where applications are in respect of projects started on or before that date. As the House will recall, 12 January is the date upon which our intentions in that regard were announced to the House by my right hon. and learned Friend the Chancellor of the Duchy of Lancaster.

The ending of the regional development grant scheme is part of a group of measures by which the Government aim to strengthen regional policy and to make it more cost-effective. At present regional development grant is available for a wide range of projects in development areas. The scheme involves virtually automatic grant payments at standard rates. This mechanistic nature of the scheme make it unsatisfactory in a number of respects. The grant is available to companies of any size and there is no assessment made at the time of application of whether a project really needs to be grant-aided before it can proceed or whether it is based on a viable business plan. A large number of projects therefore receive aid which would have gone ahead in the same location in any case.

The waste of scarce public resources that arises cannot be justified. A less automatic approach to regional assistance is necessary. In this way we shall ensure that projects are properly evaluated in advance and that only those where need is demonstrated receive assistance. That is the basis on which regional assistance will be administered in future.

The Minister stressed the importance of flexibility in the payment of grant, yet the Government show no flexibility over boundaries. The Minister appears to be standing by the statement that the boundaries will remain for the duration of this Parliament. Will he give us an assurance that, if there were an industrial catastrophe, leading to massive unemployment in an area outside those boundaries, the Government would be flexible and would seek to bring forward changes if necessary?

The hon. Gentleman will be aware that there are a number of weapons in the Government's armoury which we can use to help particular areas, but there is no need to change the development area maps in the context of the changes that we are now debating. The assisted areas will remain, and there will still be advantages of one kind or another under the overall regional aid package that will continue to be enforced. Any regular review of the boundaries involving changes on a rapid, regular and repeated basis would undermine the stability that is an important underlying feature of regional assistance. It is the relative need of different areas that is important, rather than the absolute need.

Is the Minister refusing to recognise that the original decisions may have been wrong, or that the pattern may change, so that far greater need may exist outside an assisted area than inside it? If, as he now argues, the policy works even with a selective system, the effect would be to direct industry away from an area of great need to an area of lesser need.

None of these policies is absolutely set in concrete for all time, but my right hon. and learned Friend thought it appropriate to say that there would be no further changes before the end of the lifetime of this Parliament. It is important to give an underlying measure of stability, as I said earlier, and we have other weapons at our disposal to bring help where it is seen to be necessary.

The House has, of course, been concerned about the effects of the ending of RDG on spending on regional assistance, but I can say that planned spending on regional assistance is not being cut. Some hon. Members have persisted in raising the question of what will happen after 1991, but they know that it is impossible to give expenditure figures as far ahead as that. Indeed, it would be irresponsible to try to do so. The position is that, looking as far ahead as we can, our spending is being refined and redirected; it is not being cut. More funds are being made available for regional selective assistance. It is now up to companies to come forward with good quality projects to support.

When the Minister says that spending will not be cut, he includes in that spending the money still in the pipeline from regional development grant. That is a point that arose frequently in Committee. Will he guarantee that when that money has gone through the pipeline, regional spending will stay as high as it is now?

The hon Gentleman presses questions which have already been fully explored in Committee. As he knows, the expenditure budget for the Department of Trade and Industry is expected to rise from £700 million, as stated in last year's White Paper on public expenditure, to about £900 million, as stated in this year's White Paper. Over and above that, there is further substantial help under the consultancy services, totalling about £274 million over three years. I think that if the hon. Gentleman sets that against the declining input of RDG 1, which he rightly identifies, he will realise that there is no question of a cut and that in many areas there are substantial increases.

Hon. Members have also been concerned about the position of smaller companies following the ending of regional development grant, but I can assure the House that that concern is misplaced. The Government have done a great deal to stimulate the growth of small companies, because we recognise that the future prosperity of assisted areas depends to a considerable extent on the further spread of the enterprise culture into those parts of the country which historically depended on a few large employers, often in heavy industry. Our regional policy fits naturally into that wider policy framework.

Regional selective assistance is available to companies of all sizes. Making an application is not at all the bureaucratic of onerous procedure that some would suggest. A discretionary grants system that aims to direct assistance where it is needed will necessarily require more detailed financial information than would be the case with an automatic grant scheme. However, we are fully aware that, in order not to place undue burdens on industry and not to discourage companies from seeking assistance, such requirements must be kept to a minimum.

As far as RSA is concerned, we have been keen to ensure that small companies make full use of what is available and for that reason, we recently introduced significantly simplified procedures for those applying for a grant of under £25,000. Companies with fewer than 25 employees in development areas will, of course, also be able to benefit from the new investment and innovation grants that are being introduced from 1 April. I can assure hon. Members that in drawing up the guidelines for the operation of the new grants, we have been mindful of the need to keep procedures as simple as possible. For all schemes, officials are always ready to discuss applications and to give guidance to companies.

I am glad to see that the hon. Member for Fife, Central (Mr. McLeish) in his place. Most of us, if we are fortunate, have small parts of our speeches reported by the press in some newspapers the next day, but the hon. Gentleman has managed to achieve what some of us regard as impossible—extensive reporting of the speech to which he will treat the House later this afternoon. Perhaps I can help the hon. Gentleman and shorten the debate by answering in advance the remarks that he contemplates making.

Today's edition of The Scotsman tell us:

"A Labour MP will today use the last Commons debate on the scrapping of the Regional Development Grant to call for a broad-based campaign aimed at helping Scottish industry and business to take advantage of the Government's Enterprise Initiative."

I could not agree more with the hon. Gentleman, and I am happy to join him in that broad-based campaign.

According to The Scotsman, the hon. Gentleman

"said yesterday that the row over cuts in regional aid was now a bogus issue".

I entirely agree with him on that, too.

In the same article, the Scottish Council (Development and Industry) is quoted as having submitted to my right hon. and learned Friend the Secretary of State for Scotland

"a three-point programme, urging more flexibility in the new selective grant system, more emphasis on innovation, and a Scottish promotional campaign."

In this happy harmony that we appear to have struck this afternoon, I accept and commend all three points made by the Scottish Council (Development and Industry), whose support for our overall programme we warmly welcomed when the announcement was made.

At various stages of the progress of the Bill, a number of hon. Members have referred to inward investment and expressed concern about what might happen to it as a result of the proposals in the Bill. I do not believe that inward investment will be undermined by the changes that we are making. I wish to share with the House the experience that I enjoyed last Monday, and I think that hon. Members may well then agree with me. On that day I presided at a press conference in Edinburgh at which the Bankers Trust, the seventh largest bank in the United States, with assets of more than $50 billion, announced that it was setting up an international administration project in Edinburgh. When asked what financial assistance it had been offered, it replied, "None."

On the same day I attended a seminar promoted by the Compaq Computer Corporation, the fastest-growing personal computer manufacturer in the world, to mark the start of production, ahead of schedule, of its manufacturing plant at Erskine in Scotland. In its case regional assistance was offered and accepted, but the company, quoted in The Scotsman on 8 March, said that Compaq

"chose to locate in Scotland although other European countries had offered it more lucrative financial packages … the other major European countries, including France and Germany … had put forward financial packages which matched each other"

but

"those packages had not been the key factor in the decision to relocate in Renfrewshire … Mr. Francois said that the company had been given no special tax treatment to set up on the greenfield site. One element, however, which obviously had been important was corporate income tax."

I believe that regional assistance has a part to play in attracting inward investment — in some cases an important part — but regional assistance will still be available in selective form and can thus be tailored to the needs of specific projects—

I am sorry to interrupt my hon. Friend, but there are a number of English Members in the Chamber, as well as Scottish ones. It might be helpful if I pointed out that we are enjoying the same increased level of inward investment in the northeast without the need for regional development grant. As a result of the advertising by the Teesside development corporation, a great deal of interest has been shown in sites in the TDC area and in the whole north-east of England. We are now in a position to say that there will be a severe shortage of factory and office space throughout the northeast, as reported in the Financial Times only three days ago. We look forward to a time in the near future when the north-east will be building, with the help of regional selection assistance, on the strength of its small firms, but we will not need the same RDG as we have in the past.

I am sure that my hon. Friend is right. He brings to the debate a close knowledge of what is happening in the north-east. It is clear that there, as in other parts of the country, the economy is reviving—

The hon. Member for Stockton, South (Mr. Devlin) is wrong. The story on the front page of the Financial Times did not say that there was a shortage of sites in the north-east—there is not. There is a plethora of them. There is, however, a shortage of factory buildings. One of the main reasons for that is that the Government have wound up the Aycliffe and Peterlee development corporation and are not putting the money into English Estates to build new factory buildings.

English Estates' budget is being considerably increased. I take the view that most sensible people would take — that a shortage of factory space is a sign of success rather than of failure.

Will my hon. Friend remind the hon. Member for Sedgefield (Mr. Blair) that when he speaks of the north-east, he presumably means the north-east of England? I regard the north-east as Aberdeenshire.

My hon. and learned Friend is right. The north, the north-east and north-west are parts of the United Kingdom that we Scots go south to reach.

Will the Minister advise his hon. Friend the Member for Stockton. South (Mr. Devlin) that although he may have too much in his area, 100 miles down the A1 mining communities are being wiped out and given no assistance by the Bill? No factories are being encouraged to come in to replace miners' lost jobs. As recently as yesterday, three more major pits were wiped out in the area. What will the Government do for those mining communities?

The hon. Gentleman is tempting me to stray far from the confines of the Bill, to which we are giving a Third Reading. From his knowledge of the mining industry, he will know of the substantial financial resources that are being brought to bear on the problems of mining areas by British Coal Enterprise initiatives.

It is being bandied about by Ministers that British Coal Enterprise is providing jobs in coalfields where pits have closed. It has £30 million of taxpayers' money, but it is not providing such jobs. It is a front. It is laying claim to jobs that are being created in some cases by development areas and in others by regional grants, of which they will now be robbed. Merrik Spanton, who runs British Coal Enterprise, should be brought before an appropriate Committee of the House to explain where that £30 million of taxpayers' money has gone. If a Labour local authority had spent that money on gravy trains and junkets, it would have been surcharged. It is important that this matter be investigated.

Order. I hope the Minister will bear in mind, when dealing with these points, that we are now on Third Reading, and that it is in order to deal only with what is in the Bill.

I knew that it would be a mistake to give way to the hon. Gentleman. It is important to ensure that the transition from the present policy framework to the new one is fairly and equitably achieved. Clause 2 is designed to that end. Its purpose is to set out the restrictions that will apply on payment of grant to projects that were the subject of applications for approval received after 12 January 1988 and on or before 31 March 1988, and which commenced after 12 January 1988. The restrictions do not apply to any other projects. Projects that started on or before 12 January, provided that an application is submitted by 31 March, and applications that were received on or before 12 January, will be unaffected by the closure arrangements.

The Bill signifies no reduction in our commitment to an effective regional policy, contrary to what some hon. Members have suggested. In Committee they proposed that various parts of the country should be excluded from the provisions of the Bill, but that would be unworkable given the bewildering pattern of assistance across the country. More important, such suggestions exhibit a failure to understand our proposals. They appear to equate regional policy with regional development grant, which shows a lack of willingness to accept that policy must be adapted to the circumstances of today.

Our objective has not changed. It continues to be the reduction of disparities in job prospects between different parts of the country, and the encouragement of the development of local potential for self-generating growth. The means of achieving that objective must always be subject to critical examination. We believe that the time is now right for a change. The economy has been showing considerable improvement, and unemployment in the United Kingdom has fallen by almost 650,000 since July 1986 and is expected to continue to fall in 1988. Manufacturing productivity has improved markedly and business confidence is high.

We want to ensure that the improvements that have taken place throughout Great Britain continue. The best way to do that in the assisted areas is to ensure that our regional policy is as effective as possible. No longer can a case be made for handing out grant in a general and automatic fashion. That is neither necessary nor effective. The greatest progress will be achieved by all individuals and businesses taking responsibility for their own future.

That does not mean a simple sink-or-swim philosophy. It means that assistance is best given, not in an undirected manner or in such a way that dependence on assistance is created, but by relating patterns of assistance to need. Our general regional policy objectives continue to be those of stimulating local self-generating growth and reducing inequalities of employment opportunity.

My constituency has been a substantial recipient of RDG over the past years, to its great benefit. The single most important factor that has caused the remarkable industrial turn around in my constituency has been the provision of derelict land grant, which has enabled sites to be cleared and new businesses to come in.

My hon. Friend's constituency is a remarkable tribute to the development of enterprise in an area which previously depended on one major industry and in which employment opportunities had substantially diminished. Unemployment in my hon. Friend's constituency has fallen from about 25 per cent. to about 12 per cent., which is a remarkable achievement.

Does my hon. Friend agree that the structural problem of the north-east is heavy overdependence on large industries, with large employment probabilities? The need now is to restructure the local economy so that many more people can be employed, and encouraged to be employed, in small and medium-sized businesses and encouraged into self-employment. That will be the special value to the north-east of England of the enterprise initiative proposed in the Bill.

My hon. Friend is right. The general thrust of our policies in the Bill and alongside it emphasise the importance of assisting small companies, which are the more likely generators of future jobs, and of encouraging enterprise and the growth of self-employment.

The changes that we are making are positive. Regional selective assistance continues, and funding provision for it has increased. New grants to assist small firms in development areas to pursue investment and innovation projects will come into effect on 1 April. Firms in assisted areas now benefit from a higher rate of support under the new consultancy schemes, such as the business development initiative. These policies show our determination to use public funds wisely and effectively to strike at the root of the problem of regional disadvantage. No longer will money be thrown at companies in a wasteful and unnecessary attempt to ensure that they do what they had all along intended to do.

The proposals enshrined in the Bill and the other regional assistance policies that accompany it build on, and flow from, the changes that we introduced in 1984. They update our approach against the background of the continuing sustained growth of the economy, which is responding to the broad thrust of our economic policies. We intend that success to continue.

In 1984 we tightened the operation of RDG, notably with the introduction of job creation criteria. This achieved better value for money for the taxpayer and a more effective operation of regional policy, as the continuing revival of regional economies demonstrates. Now we perceive that it is right to go further. The changes that we propose will apply our resources—which are not being reduced—more cost-effectively, more flexibly and more selectively, the better to achieve our objective of helping the disadvantaged parts of Britain to rise above these historic disadvantages. This will enable us to stimulate in all parts of the country the self-sustaining spread of enterprise on which jobs and prosperity depend. I commend the Bill to the House.

If the Regional Development Grants (Termination) Bill sounds like an abortion, that is almost certainly because that is what it is. Although it is only a short, two-clause Bill, its malevolence is in inverse ratio to its size. It has all the hallmarks of the Government's new radical loony phase that began when Saatchi and Saatchi took over the Conservative party conference with the theme "The next move forward". That theme gave the Prime Minister her head, and the Bill is one of the consequences.

It is a vicious Bill because it hits hardest those areas that are most in need and favours the richest areas. It is a mean Bill and exhibits a further petty economy. It will lead to a reduction in spending on the regions—which is what we are talking about — by a Government who are already spending only £1 on regional assistance for every £4 that the Labour Government spent when they were in power.

It is a shabby Bill because it is justified with figures that the Minister is still fiddling. We cannot make this point frequently enough. The money that is in the pipeline for regional development grants is being counted in the Government's total for regional assistance. Also being counted are the consultancy grants and arrangements, 40 per cent. of which will go to the prosperous south-east. That is being counted as if it were going to the regions that are losing money.

The Bill is also cynical. It is typical of the new approach of the Department of Trade and Industry under Lord Young of Graffham, Saatchi and Thompson, which is advertising worse as being better. The Minister told us that the Government's approach is not to throw money at problems, but the approach is clearly to throw advertising agencies and advertising budgets at them. The advertising expenditure of the DTI is in exactly adverse ratio to its powers. As those powers contract, the advertising budget goes up. That budget is going up pari passu with the gaping trade deficit. The only benefit of the Department's policy is to the advertising industry.

When I say that the Bill is vicious, mean, shabby and cynical, I am saying that it is not exactly untypical of the Government and their approach to the regions. The Bill is based—the Minister repeated the point—on a hype, a distortion. He says that the economy is picking up, and for that reason we can seize this window of opportunity to abolish regional development grants that have been the mainstay of regional policy. That is what the Minister said, and if he wants to contradict it I shall be happy to sit down and let him do so.

The Minister said that the economy is picking up and this is the moment at which we can get rid of regional development grants. The economy is picking up largely because in 1986 the value of the pound fell and that encouraged exports. The dollar has been falling only slowly and exports to the United States have been helped enormously. That has caused an economic recovery. The Chancellor has since been attempting to kill the goose that has laid his golden eggs and the Prime Minister has now taken the axe from his hands and has rushed in to uncap sterling, which is now rising. It is now up 18 per cent. in real terms against the deutschmark on the February 1987 figure.

This is the speech that the hon. Gentleman made this morning.

My speech certainly has similarities to the speech that I made this morning, but that is because made such a good speech. I am glad that the Minister remembers it and enjoyed it.

The Prime Minister has seized power from the Chancellor of the Exchequer. She has uncapped sterling and the exchange rate has now risen in a way that will be directly harmful to the manufacturing industry that is so crucial to the areas of Britain that will be hit by the Bill.

What exchange rate would the hon. Gentleman like to see, bearing in mind that three and a half years ago, when the pound was nearly at parity with the dollar, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said that it was not high enough?

The pound should be slimmed down, and so should the hon. Gentleman.

Yesterday's editorial in The Sun was headed "Three cheers for rising pound". It said:

"Foreigners are squabbling to buy our currency. Investors want to set up factories here. The pound is proud again. And that is no cause for tears.

We should be cheering from the roof tops."

That is The Sun in its well-known capacity as the toilet paper of the Tory body politic praising Government policy. The exchange rate that The Sun praises so lavishly will be harmful to manufacturing industry which makes a major contribution to the areas that will be hit by the Bill.

The Government tell us that they are using the opportunity of a recovery to cut regional development grants. That is going up the well-known creek without a paddle. They cannot get interest rates down because they have unleashed such a credit explosion, and because interest rates are so high, the pound is kept high to strangle manufacturing industry.

What is happening to the exchange rate and to interest rates bodes ill for the manufacturing heartlands of Britain, and we shall again suffer job losses. When there is contraction, those are the areas that will be hit by the Bill and they will suffer worst.

It cannot be emphasised enough that a high exchange rate is a transfer of power from the north, the manufacturing area, to the south and to people who have money. Those who have much money are taking it away from those who have very little. The window of opportunity which the Government say is their justification for introducing the Bill is rapidly closing.

A point that we emphasise constantly in Committee but which we still have not got across to Ministers is that the great advantage of regional development grants is that they are automatic. They are given automatically to firms going to development areas. Firms know that the grant is there and can take it into account. Firms pay less tax because of the automatic nature of those grants than they would pay under regional selective assistance. Because the grants are automatic it is easier to attract foreign firms. My hon. Friend the Member for Sheffield, Central (Mr. Caborn) will deal with how competitive are many of the regional incentives given in other Common Market countries compared to ours. Surely it must be easier to attract footloose international industry if we can offer it the automatic guarantee of a regional development grant.

There is always a lot of pleasure in meeting officials from the DTI and even more pleasure in meeting Ministers from the DTI, but there is no money in it, like the automatic money that comes from regional development grants.

Is there not also the important element that, if a grant is automatic, it keeps the civil servants at arm's length and all square with every applicant? Judging by our past experience, is there not a danger, with the exodus of civil servants from the Department of Trade and Industry to the boards of concerns as industrial advisers and the entry into the DTI of many business people, that there could be under this sort of legislation the invidious business of civil servants being able to hand out money on a somewhat arbitrary basis, which would lead to a form of corruption?

That is a further and important point which I am willing to acknowledge. On knowledge of trade and industry, I defer to my hon. Friend, who knows so much about it. It is a point which it is worth emphasising constantly. It is another advantage of the automatic grant, which is similar to a regional devaluation. An area of the country that is not competitive needs the opportunity to have some extra incentive, such as a regional devaluation and an automatic grant to industry going to the area.

The Government are cutting the grant without consultation—nobody was consulted about the Bill; the Government produce straws of evidence, but there has been no consultation—and all the evidence that we have is that industry resents this cut and does not like it and that all the regional authorities are strongly opposed to it. The Government are doing this against all the evidence of their own research documents, the "Regional Incentives" and the "Investment Decision of the Firm" studies, which showed the importance and effectiveness of regional development grants. They are contradicting their own evidence, and they are also doing it against the evidence from the National Audit Office report which came out on 26 February.

I am very interested in what the hon. Gentleman has to say about the advantages of the automatic system of grants. I wonder whether he can deal with the following point. The largest single recipient of automatic regional assistance in my constituency has been the British Steel Corporation, which has, of course, been the largest destroyer of jobs in my constituency.

The information is four years out of date, in the sense that we are talking about RGD 2, not the RGD system about which the hon. Member is complaining. If he has a complaint on that count, he should address it to Ministers.

The report from the National Audit Office is a commendation of the grants which are being abolished. It makes several important points. It says that failures in RDG projects, which the Ministers complained of in Committee, are

"no higher than for businesses generally."

It also says:

"studies by external consultants showed that a third of assisted firms that were interviewed considered that RDG II had been a critical factor in their investment decisions … Between 75 and 80 per cent. of respondents said the incentives had had some influence on their decisions."

It is working. It is attracting industry to the regions, which is what it is meant to do. Yet the Government are abolishing it.

It is also pointed out that a rather higher proportion of beneficiaries of regional selective assistance regard it as important and critical to their investment decisions. So is not regional selective assistance working rather better?

No, because the report gives the cost per job of employment attracted by regional selective assistance and by regional development grants and shows that, in the year 1986–87, the cost per job of regional selective assistance was £3,341, while the cost per job or regional development grants was only £3,155.

I am most grateful to the hon. Gentleman. He has quoted extensively from the Moore, Rhodes and Tyler report at various stages. That report and the Robinson, Wren and Goddard report, which have tried to assess the cost of net additional jobs created by regional incentives, have both confirmed what common sense would suggest, which is that selective schemes are more cost-effective per new job created than are automatic ones.

That is just not true. This report is more up to date, in any case.

I apologise for repeatedly intervening, but the report is not adducing any new evidence. It is using evidence that was published some considerable time ago.

It seems difficult to get over to the Minister the basic essence of the argument that if we are to attract industry to the regions we need a panoply of weapons, and both regional development grants which are automatic, and regional selective assistance, which is based on consultation, have a part to play. There cannot be a one-legged approach. There must be two legs to the strategy. That is why we are defending regional development grants.

Will the hon. Member accept that a certain number of businesses are going to move into regions for reasons totally unconnected with regional selective assistance or even regional development grants? A whole range of investment decisions are taken without any form of regional assistance in mind.

And there are others which are not.

Of course; the Minister is giving us a platitude there. They might even go to the north-east because they like the hon. Member's face, although I think that it is somewhat unlikely. But, among the reasons that firms give, regional development grants are cited as a major one. It stands to reason that if they can get a grant for going there they are more likely to go than if they cannot get a grant. It is chop logic to say that, because some firms go to regions without grants, they will all go to regions without grants. That just does not make any sense at all.

rose—

I am sorry, but I am going to pursue my argument. I have given way a number of times.

It is the automatic nature of these grants that is their strength, but it is also the reason why the Government object to these grants. They do not like the automatic nature. Specifically, the Treasury does not like anything that is demand-led, as this is, because, if a firm goes to a region, it gets the grant. That is what rankles with the Treasury. It wants the power to control those grants. it can cut regional selective assistance or impose cash limits on it. The Department's budget can be cut by decisions over which it has no control. That cannot happen with demand-led grants such as regional development grants.

If we take a very simple situation such as that in my constituency in Perthshire, a person can move along the road to Dundee and collect some of the grants under the old system. But that does not make new jobs. It just robs my constituency of the jobs and moves them along the road, where some of the sort of people of whom the hon. Gentleman disapproves will collect the grant. Perhaps the hon. Gentleman would answer this question: at what price does he think that the pound should be to get the Elysium that he wants?

I always enjoy the hon. and learned Gentleman's contributions, but there was as much cock in that as there was in his speech last night on clause 29, because that is an argument against regional assistance or designated areas altogether. The Government are retaining the regional assistance structure. Our argument is about the array of weapons that the Government need to have within that structure. His is a criticism of the structure altogether, which is irrelevant to this argument.

Would not the argument just advanced by the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) apply with equal force to the Government's enterprise zones, of which he is, one supposes, a fervent advocate? And is not the argument that we have always advanced against them that they just move people into another immediately adjacent area?

I am most grateful to my hon. Friend. With his usual perspicacity, he has picked on another important point which I should have included in my argument but did not.

One would have thought that any Ministers, given the strength that the grants give them against the Treasury, would have fought to save those grants. The fact that they have given way shows how little guts they have for fighting against the Treasury for the interests of industry, the regions and their Department.

Regional strategies, economic policies and incentives to attract industry to the regions are not only a matter of social justice and fairness between regions but make economic sense. This is a Government of the country by the south-east, for the south-east. The south-east is better off, yet it is the area that is producing the pressures and the inflation which the Government are using as an excuse to damp down economic expansion. Where does the pressure of skill shortages come? It comes in the southeast. Where is the pressure of rising house prices, which has an effect on inflation? It is in the south-east. Where are house prices being used as a lever to get more and more credit to spend more and more? It is in the south-east, not in the north.

In other words, all those pressures of inflation from London are being used as an excuse to damp down the economy in a way that hits the rest of the country quite disproportionately. It hits the areas of the country that are represented by Labour Members, and the Minister is compounding that with this legislation. It is no good telling people in the north that there will be a trickle-down effect from the prosperity of the south-east. I do not know whether we are supposed to buy their secondhand Porsches or Gucci shoes or whether we are supposed to have the wetback economy of people travelling down the M1 to obtain work in the building trade because no jobs are available in their own areas.

It makes sense to use the social capital and facilities of the north by attracting industry to the area. To do so we need weapons such as automatic regional development grants.

The position will be made worse by the introduction of the single market in 1992. The tendency in an open market is not for development to be focused on the peripheries—which is what Britain will become in a single market—but on the growing centre. The single market will pose a threat to the north, yet the Government are removing one of our ways to attract development. That poses the danger of turning the United Kingdom into the Northern Ireland of Europe. It will drain off development from this country.

The Minister has been unable to justify a decision that is irrational and which will harm economic and regional—policy. He did not—nor did any Ministers in Committee —have the decency to distance himself from the lunatic nostrums and the crank economics advanced by Conservative Members.

rose—

I have heard enough crank economics; I do not want to hear any more from the hon. Gentleman. He may be an expert on piggy banking, but he knows nothing about regional development.

Labour Members represent the north, Scotland, Wales and the areas that have been hard hit by the Government. That may be a political disadvantage, but it gives us a firmer grasp of economic realities and of the realities of manufacturing industry and of making things to sell to the world. We are talking about the real world, not the hypothetical money world about which Conservative Members talk.

We have a passionate concern to ensure that those vulnerable areas of the country are not done down by this measure, which will be opposed to the end.

I welcome this short Bill. I hope that the hon. Member for Great Grimsby (Mr. Mitchell) will forgive me if I do not follow him too closely, but he seemed to ramble out of order by talking about exchange rates and the cost to jobs. I always thought that a high exchange rate would make the cost of raw materials imported by our industry less expensive and that it would therefore have certain advantages. However, it would be out of order to talk further about that subject in this debate.

I should like to raise an important matter that has cropped up in my constituency during the past week. It involves a company in which 200 jobs are at stake. I shall give the House this specific example of the evils of the present regional development grant system.

At present, the RDG system is causing gross distortions. There is a company in Logan street in Market Harborough that makes a very sophisticated type of valve. It has been there for 100 years and some of the grandfathers of the workers, who are highly skilled, also worked there. They are anxious to stay in Market Harborough and redevelop the town. [Interruption.] I wish the that hon. Member for Great Grimsby would listen, because I am trying to point out a matter of which he may not be aware.

In many parts of the country, the RDG system is a gross waste of Government money. Crosby Valve has been tempted to go to the east of Corby, which is nine or ten miles away, despite the fact that in Corby — I am pleased to see my hon. Friend the Member for Corby (Mr. Powell) sitting beside me in the Chamber—there are no skilled engineering workers available.

We have the ludicrous position that the company—which has been in Market Harborough since the turn of the century and which is doing a skilled engineering job —and its workers desperately want to stay in Market Harborough, yet simply because of the RDG system, and because of a grant of about £3,000 per job, the company can redeploy in Corby at no cost whatsoever.

If the company is attracted to Corby by this distortion, the workers, who have remained loyal to the company for many years, will have to bus in and out every day. How stupid can outdated legislation become? The sooner the Bill is on the statute book, the better.

I have been in touch with my hon. Friend the Minister, who is always helpful in these matters. I pointed out that, although an alternative site was available in Market Harborough, with planning consent for engineering purposes, the difference to the company between relocating in Corby or to the new site that is available in Market Harborough would be over £500,000. In this competitive world, companies must do the right thing for their shareholders. Directors are responsible to shareholders for how they handle financial matters. There is no way in which an independent director, acting in the best interests of his shareholders, could do other than recommend that the company redeploy in Corby.

I wrote to my hon. Friend the Under-Secretary, the hon. Member for South Ribble (Mr. Atkins) and said that Crosby Valve has been in Market Harborough for three generations. I told him that the proposed move had been influenced by the availability of £600,000-worth of RDG in neighbouring Corby. He wrote hack very promptly — he always writes back very rapidly, although he sometimes writes rather unhelpful letters—saying that there was no money available, and adding:

"I would not wish to influence the company's consideration in any way."

The company has been influenced in its decision by the grant that operates at present. It is because of the damaging influence of regional development grants that this tragedy has come about, and what is by no means a dormitory town is likely to become more so in the near future.

My hon. Friend makes his point precisely and well, and I agree with him, even though it is the land in my constituency that may benefit if the company relocates and the land in his constituency that may lose. Many people have played a considerable part in the recovery of Corby, not least my hon. Friend the Minister, who, at a time when the town desperately needed friends wherever it could find them, played a notable part in the early stages of getting the regeneration going. The point that my hon. Friend makes on behalf of his constituents will be well received by mine.

I am grateful to my hon. Friend; he is a personal friend as well as being a friend in the House. His kind words do not disguise the fact that the loss of a thriving and enterprising company cannot be replaced by kind words.

I have tried to give the House a common-sense approach. I did not bring in the rate of exchange more than I had to. To my mind, the debate is all about the RDG. The sooner the Bill is passed the better.

I am glad that the hon. Member for Harborough (Sir J. Farr) raised that issue. It is a familiar story for many of us in other parts of the country. The Bill claims to be selective but it does not enable the Minister to be selective in such situations as the one described by the hon. Member for Harborough, and to bring assistance to companies so that they can stay in locations that are sensible for them—

rose—

I have not finished dealing with the hon. Member for Harborough. Like him, I receive many letters from the Under-Secretary of State who is coming to look at a similar situation in my constituency in a week or two. He has not yet been persuaded that the root of the problem is that the map is set in concrete and never modified to take account of changes that occur in places such as Corby and its neighbouring areas. The hon. Members for Corby (Mr. Powell), for Darlington (Mr. Fallon) and for Amber Valley (Mr. Oppenheim) tried to intervene a moment ago. I shall not give myself the difficult task of choosing between them, so instead I shall turn to the Bill.

I cannot avoid mentioning in passing the sequence of letters that I received from the Under-Secretary of State. Recently they have taken a strange turn. The last one, no doubt under instruction from the Secretary of State in another place, had had its royal arms removed and replaced by some republican hieroglyphic, which was meant to convey the new thrusting, enterprising spirit of the Department. I find that puzzling. The Secretary of State embarked on a political career that leads him to believe that he is heading for even dizzier heights than he thought when the chairmanship of the Conservative party was in question. When the royal arms disappears from the notepaper of a Department of State, I begin to worry where the authority lies in the Administration.

We should remind ourselves that regional development grants have been a successful part of regional policy and have led to the creation of a large number of jobs, although nothing like enough jobs to replace those that have been lost by major structural changes, but certainly more than 600,000 jobs have been created. In at least one report, the Government have endorsed and recognised that, despite the criticisms from some Conservative Back Benchers, the regional development grant has proved important. The automatic grants must have been a significant part of that.

The Government must take account of the real fears that the ending of automatic grants will reduce incentives. Those fears have been expressed by organisations and individuals with day-to-day experience of trying to persuade industry to move into regions. The Northern Development Company which has been commended by Ministers is a good example of a region trying to help itself. Dr. John Bridge expressed precisely that fear, and it has been expressed by other people in other regions about inward investment and investment from overseas.

In the north-east, we have made particular efforts, with some success, to attract Japanese investment into the region. That policy has had some notable success, and I believe that it should continue, as it brings not only specific companies but a great deal of fresh air to the region. It brings new approaches to industrial working methods into the region, it gives a new approach to tackling some of our industrial problems. It has at last forced the British motor industry to look at all of its working practices and methods. That inward investment is invaluable to our region and to the country.

There are real fears that it would be less feasible to carry out such operations against the competition of other countries with automatic and generous forms of grant aid. Throughout the regions which get assistance, there is the fear that the end result will be a reduction in the amount of grant available.

I noticed that the hon. Gentleman spoke about automatic or generous systems of grant. Is it not the case that generous systems of grant will continue after the Bill has passed?

How do we know that we will get generous assistance in future, given that there are many voices in the Conservative party which are hostile to the very idea of regional development grant, and given the many pressures for the reduction of that expenditure? It is very hard to imagine that there will be as high a level of grant expenditure in future. Indeed, we have seen the cuts in overall grant expenditure that have taken place so far. All the signs are that the level of grant expenditure will reduce, which will be severely to the detriment of the regions.

I would be happy to be proved wrong about that in a year or two. If I am shown the figures that show that, in real terms, the Government have given as much assistance to the regions as hitherto, and directed that investment more effectively, I shall be happy to congratulate them on that achievement. I shall be very surprised indeed if that happens. I fear that the new pattern will lead to a lower level of grant.

Another worry is what precisely will he the nature of ministerial involvement in those grants. There have been newspaper stories about what level of grant decision will involve Ministers personally. That gives rise to the question what considerations and what criteria will apply and to what extent political or other considerations will enter into decisions to give out grants. It would be helpful in today's debate if Ministers would reiterate very firmly that only industrial considerations will apply and that there will be no question of grants going to particular areas because they are thought to be marginal constituencies or areas in which the Government want to attract some political advantage.

Indeed, I thought that the Prime Minister's attitude to the inner cities was expressed in a depressingly vivid way on election night. When the results came in from some parts of the country, it suddenly dawned on her that there was a problem in the inner cities. I am glad that she discovered that. Indeed she has a problem in the inner cities.

That leads to the assumption that the policy was conceived in political terms. Selective assistance grants must not be given simply to parts of the country where the Government need to curry favour and gain success. Selective assistance grants must be given on industrial criteria or criteria related to industrial rejuvenation of the economy, and not on political criteria. The opportunities for ministerial intervention in the process that we are to have give rise to that particular worry.

Will the hon. Gentleman give way?

I have already given way to the hon. Member for Stockton, South (Mr Devlin). He has intervened in many hon. Member's speeches and he has reached a stage where he might formulate his thoughts into a useful if brief speech later in the debate.

Another reason why we should not support the legislation is that it is not part of any wider review. The measure does not form part of a wider review of regional policy or involve any commitment to give regions greater control over their own affairs. The Bill must be seen against a background in which local authorities are becoming less able to take any part in the affairs of their regions or make any decisions about the affairs of their regions. The Government have made no attempt to introduce any regional machinery that will enable decisions to be taken within the regions affected.

The Bill leads to the opposite of the Government's proclaimed objective of letting the regions help themselves. If the regions are to help themselves, decisions must be made within the regions. If everything ultimately goes to civil servants in London or in the supposedly regional centres who are ultimately responsible to other civil servants and Ministers in Lon don, that is not regional decision-making and is not a process by which self-help can be encouraged.

The legislation also must be seen against the background of the Government's refusal to review the map. It seems a natural part of a piece of legislation which will change the system that the map should be reconsidered. Over the years, many of my hon. Friends have drawn attention to the defects of the map. My hon. Friend the Member for Truro (Mr. Taylor) and his late predecessor, David Penhaligon, spoke of the anomolies that arose in his constituency in Cornwall becaue the map was not up to date. The matter was also raised by Conservative Members.

I have referred time and again to the anomaly in the Alnwick and Amble area in my constituency, where there is consistently higher unemployment than many assisted areas and which has been denied development aid. Not only has it lost the grants referred to in the Bill but it has also been denied European aid which also hinges on the assisted areas' maps.

Under the Bill, if it is passed, the same thing will happen. People who want to start new businesses or to expand their businesses will be advised, in the same way as the hon. Member for Harborough's constituents, that they would be better off if they moved into assisted areas.

People have come to my surgeries in the last fortnight saying that they went to Government officials for advice about grants and were told, "Yes, you can have grants if you move into the assisted area"—and that in an area with consistently high unemployment. Recorded unemployment in Amble is over 20 per cent., with over one adult in three out of work. Yet people are being told that if they move down the road they can receive either the current automatic grants or the selective grants under the Bill.

That also applies to firms that are experiencing success, and want to expand and build new factory accommodation. There are grant opportunities for them too, if they move down the road into an assisted area.

The hon. Gentleman makes an extremely powerful point. Sooner or later, Ministers will have to come to terms with it. At present, unemployment in my constituency is lower than in any other assisted area in the country by several percentage points, and it will become considerably lower, but, according to ministerial statements, we can expect no redrawing of the map until well into the next decade.

I could receive no better testimony or support than that—an hon. Member representing an assisted area saying, in effect, that the grant system has done its job, and it is time that the map was changed to reflect the facts as they now are.

Refusal to face the realities of change seems extraordinary from a Government who are trying to argue that the regional grant system needs change—that it must be more selective. The selectivity that the Bill confers does not enable the Minister to say, "A grant is not necessary here. I will therefore go outside the assisted area, find another black spot where unemployment is even higher and give a grant to a company there." Indeed, one route that he could have taken to obtain that power would have been a review of the map.

My constituency, which is in the north midlands, does not form part of an assisted area, although unemployment is still quite high in parts of it. In the past five years, I have seen jobs move out of my area into areas that have received regional assistance.

Is the hon. Gentleman aware that, under the rule changes that came into force in 1985, it is much harder for companies merely to shuffle jobs from one part of the country to another, because the Minister has discretion to ensure that, unless there is a substantial net increase in jobs, factories cannot be moved from non-assisted to assisted areas? I think that that has been of some assistance, although I accept many of the points that the hon. Gentleman has made.

It has not solved the problem that I face in my part of the world. My experience is not primarily of companies attempting that sort of thing, although I can think of one or two cases. It is of companies that genuinely wish to expand, want more space so that they can do so, need to spend a good deal of money to create that space and know that they could obtain grants if they moved into an assisted area. Under the Bill, they will not know with certainty, although no doubt they will be able to negotiate and make the decision to move on the basis that they will be offered a selective grant. The problem will still be there, and it also applies to those starting new businesses.

It is extraordinary to invite the House to carry through legislation that makes one change—possibly damaging—in the whole structure of regional grants, without tackling other fundamental problems that affect the grant system, and without ensuring that the system can meet the needs of areas where unemployment is very high.

The area in my constituency to which I have referred has the third highest unemployment of the non-assisted areas without development status. There are a number of such places around the country, which ought to have received attention before these measures were put into the Bill. The northern region and a number of others are working hard to help themselves, but time and again they come up against barriers created for them by Government. Those barriers have not been removed in the legislation, and fresh difficulties have been created. I therefore do not believe that the legislation should be given a Third Reading.

In welcoming the Bill, let me say first that the abolition of regional development grant and the subsequent changes in regional policy are long overdue. I say that not only because I come from the west midlands, which had to undergo its industrial restructuring without any benefit of regional development grant, but because regional development grants generally have not managed—in the words of the hon. Member for Fife, Central (Mr. McLeish) in Committee—to

"equalise opportunities for our firms and businesses so that some day they can take part in the great enterprise culture which seems to be sweeping the nation".—[Official Report, Standing Committee D, 16 February 1988; c. 25.]

Too often in the past, they have been inefficient and wasteful, and have distorted the regional economies and damaged the job prospects of precisely the people they were designed to help.

That the grants have been costly is beyond doubt. Over the past 20 years, the 600,000 jobs have been bought at the cost of some £35,000 per job. Even the Labour-controlled city council in Birmingham, through its job creation scheme, spends a maximum of £10,000 per job. An average enterprise agency would not consider spending more than £5,000 per job, and the French system of regional assistance mentioned by the hon. Member for Great Grimsby (Mr. Mitchell) in Committee spends about £5,000 per job.

The costliness of our sort of regional policy is evident for all to see. It is small wonder that the Public Accounts Committee said in 1987 that there were serious questions about the cost-effectiveness of this kind of assistance.

It is not only a matter of the cost per job. On Teesside, we have had a negative cost per job, in that, the more that millions of pounds have been poured into ICI and British Steel, the more tens of thousands of jobs have been lost.

That is a very good point. I am coming on to that. The costs have been higher not only in financial but in economic terms. That is basically unsurprising, given that regional policy is based on the false premise that the extent of wealth depends on its distribution.

Not only has regional policy too often raised company costs artificially by artificial relocations on a very footloose basis, which has damaged certain regions where they have relocated, but it has raised costs by making links with the original suppliers more difficult, taking them further away from their original pools of skilled labour and making their management more diffuse. There is also the ridiculous position that the midlands, which lost 200,000 jobs over 10 years in the motor industry and related industries, had no regional development grant to help it with its restructuring. Under the Labour Government before 1979, it was actually prevented by the industrial development certificates from the restructuring that was so vital to its future.

Too often in the past, as recent research for the Regional Studies Association has shown, new firms that receive regional development grants have been condemned to marginalisation. By definition, they accept lower rates of return than normal, because of the grant that they are receiving. Too often they go into capital-intensive rather than labour-intensive projects, and too often they go into areas without an adequate prior analysis of the kind of market, the potential local excess capacity and the effect of existing local firms that they may have. Because the grant has been open-ended, automatic and not subject to viability, it has too often been ineffective and wasteful. In many instances, it has not even been effective in determining investment decisions.

Can the hon. Gentleman give us any evidence from any independent, or, indeed, Government, report to substantiate his argument?

As the hon. Member for Sheffield, Central (Mr. Caborn) said in Committee, according to the PIEDA consultants' report, only one third of firms receiving RDG said that the grants were critical for their investment decisions. One third said that they had no effect whatever on those decisions, and 71 per cent. said that they had no effect on their location decisions.

The second problem that regional policy has caused is that at least until 1984 it affected the larger traditional industries, which were less dynamic, less entrepreneurial and more monopolistic.

In Committee, the hon. Member for Great Grimsby supported that policy. He said:

"We want giants. It is a battle of the big battalions." —[Official Report, Standing Committee D, 18 February 1988; c. 54.]

But that ignores the fact that in Japan—to which the hon. Gentleman referred as part of his argument—three quarters of the jobs created in manufacturing industry are in firms with fewer than 300 employees, and in the United States, 75 per cent. of the 14 million jobs that have been created over the past 10 years are in smaller firms.

It may he impossible to enlighten the hon. Gentleman's economic ignorance, but it is possible to correct his quotations. I did say that the battle of international trade was a battle of the giants. It is a fact that 94 per cent. of small firms in Britain do not export. In the Japanese economy, the ones that do export are the big corporations — the Sonys, Yamahas, Nissans and Datsuns—not the small suppliers about which he is talking.

That may or may not be so, but we are talking about the regeneration of employment in the regions and the smaller firms have been at the forefront in creating employment, wherever they be. Too often, regional development policy not only encouraged the effective colonisation of many regions, but, in doing so, suppressed the talents of local entrepreneurs which most needed to be harnessed to create local jobs.

The third problem with regional development aid and grants is that, even if they sought to create capital investment where it was most needed, they went in the wrong direction. Between 1979 and 1986, the north-west increased its proportion of gross domestic fixed capital formations by 9 to 10 per cent. and it received 19·7 per cent. of regional development grant. The northern area had 6 per cent. of gross domestic fixed capital formations, and that was rising. It also received 19·7 per cent. of regional development grant. Yet the midlands, which had 7 per cent. of capital formations — and that was declining—received no regional development grant.

In practice, the regional development grant damaged local enterprise by subsidising imported competition. It ensured that industry in the regions was footloose. Indeed, it has been shown that in the northern region 80 per cent. of manufacturing firms are owned from outside. Most important, it ignored the basic fact that company formations and employment depend not on the region but on the sector of the economy in which they act. Indeed, according to "Business Trends", between 1980 and 1985 and the growth and contraction rates of employment in different industries, company formations are uniform, irrespective of the area, showing exactly what I have just been describing.

The new policy will, rightly, concentrate principally on market opportunities, and, by increasing the design, marketing and production skills, it will enable entrepreneurial firms to take advantage of those opportunities. That is the correct policy. It is little wonder, as the Minister said in Committee, that there have already been 30,000 inquiries on the enterprise initiative.

I suspect that, just as we saw with business improvement grants, 70 per cent. of the inquiries on the enterprise initiative, when it gets up and running, will come from the north and the regions where there is the enterprise and initiative waiting to be channelled in an entrepreneurial way in order to create the jobs that they so badly need and to make them, as they were at one time, the engine room of the economy.

I want to make four further short points. First, if a market economy is working efficiently, regional policy should be redundant. Complementary to the reforms of regional policy in the Bill are the reforms of the rating system, the housing market — which will make the labour supply more mobile—and, most important of all, the reforms that will make sure that wages in the regions reflect local labour markets.

It is crazy that East Anglia has an unemployment rate of only 8 per cent. and the northern region has an unemployment rate, on average, of 15 per cent., yet between the two there is a difference of only £3 per week in weekly earnings. Until bargaining is done at a genuine regional and plant level, irrespective of whether it is through councils, the Government or nationalised industries, or even large private industries, our regional policy will be less effective than it should be.

Secondly, the enterprise document which has been released by the Department of Trade and Industry talks about the difficulties of attracting private investment to improve the industrial infrastructure. It mentions that it was to rely on English Estates, particularly for its managed workshops. That really is not necessary. If taxation allowances are given for industrial buildings which are kept in active management, the private sector will come in and do that in addition to the English Estates. That is a course of action that I shall urge on the Government.

Is my hon. Friend contending that regional development grants have exhausted industry in his area, the black country, Birmingham and surrounding places, and that, because of that, the private enterprise culture has not been able to do its proper job, and that by ending regional development grants those reverse incentives will also be ended and the private sector economy will be able to re-establish itself?

Indeed I am.

The third argument which I think has some substance is that recent changes in the operation of the European regional development fund, which mean that 80 per cent. of it will go to poorer regions, will mean that, if the United Kingdom is to keep its 70 per cent. proportion, it must have somewhere in the region of 75 per cent. of the remaining 20 per cent. allocated to it.

A large portion of that will come through integrated operations of the kind that has recently given Birmingham, where I come from, £113 million from the European regional development fund over the next five years. Applications are presently in from Manchester, Strathclyde and Leeds, and the Government should give those their maximum support.

Fourthly, the enterprise initiative and grant system need to be made more accessible. I am sure that that is one objective that my hon. Friend the Minister has in mind. I found it slightly sobering recently to visit a major engineering firm in my constituency, which has doubled its productivity since 1979 but which did not have a clear idea of either the engineering initiative or the youth training scheme. I appreciate that the number of Department of Trade and Industry offices will be increased to carry the message to industry, but enterprise agencies and chambers of commerce have an excellent opportunity to play their role, through their local contacts and sponsorships, by spreading the message and acting as conduits for the enterprise initiative. In that way, the thrust of the policy, making Government aid more focused, accessible arid effective, especially for smaller firms, will be carried out.

In my experience business people do not expect Government loans for loss makers on an open-ended basis, as the regional development grant allowed. They are perfectly happy to prove the viability of their projects, despite the fact that the Opposition would say that that increased uncertainty. They do not expect Government help just because they are Mancunians, Geordies or Brummies, but because they have the drive and ideas to make a success of their particular industries. That is the thrust of the Government's policy and that is why I support it.

I congratulate the Government on the consistency of their policies for regional development and for the health of citizens in the northern regions. Nobody would argue that grants are the only effective system. Development grants are very important for my region, which in 1979 had 7·1 per cent. unemployment and in 1986 had 15·7 per cent. unemployment. It has had the highest drift of population and has lost 500,000 manufacturing jobs. Bolton received marginally more than it will lose from the package, but it is dependent upon the health of the north-west. If the north-west region loses, my town loses with it, because we are a part of the region.

We face a difficulty in attracting people, and also a communications difficulty. The Government established the third London airport in the south, not in the north, and British Rail is cutting off the night sleepers to Manchester, which will affect business men and the attraction of new investment. The regional grant is important to firms wishing to come to the area, so that they can plan according to how much grant they will receive. That certainty has been taken away by the legislation. Where will the firms go? This is part of the cheque-book approach of the Government. The firms will no longer come to the north, the midlands or the north-east, but will concentrate in the south, so we will lose the opportunity to attract investment.

Does the hon. Gentleman accept that when business men make decisions on where to locate their premises or factories they have more regard for commercial considerations, such as the proximity of their markets, the availability of labour, the cheapness of premises and the land on which they are built, than for the bribes that they have had in the past?

The hon. Gentleman has made my case for me, because that is why the north has been disadvantaged. The Government have placed all their eggs in the south. The Government represent, not the north-west, but the south. We want to attract industry to the north. We would not have a problem in attracting industry if we did not have a Conservative Government, because Labour would see to it that we had a communications system, a health system and the ability to attract investment.

The grant system should be reformed, first by reelecting the Labour Government. I am not saying that we cannot reform the present grants system. I am saying that the Government are taking away items that would attract industry to the north and putting nothing in their place. The tendency is to pool everything in the south and to leave the north as an industrial deserted village. If the Government believe in the north, they should transfer some Government Departments from the south, as Labour did when it was in power. That would be an indication of good will.

The Government are not helping unemployment in the north or helping to attract firms. In many areas of economic and social policy, the Government are making an all-out attack on the people of the north.

The Bill deserves a warm welcome from Conservative Members and from industry, and I was amazed to hear the hon. Member for Great Grimsby (Mr. Mitchell) say that industry has not welcomed the change. Obviously he has not read last week's CBI News, which said:

"The new rules will ensure that money spent on industrial investment projects, in all but the very smallest firms, will go to where there is a demonstrable need of public assistance. Both of these aspects make for prudent managment of the public purse and have resulted in generally favourable reactions to the new proposals. It would seem, therefore, that the era of automatic handouts is behind us forever."

The proposals have been warmly welcomed in the northeast region. I have not had a single letter from a company in the north-east opposing the abolition of regional development grants.

I am listening with incredulity to what the hon. Member is saying about the reaction to the measure in the north-east, because I have here a copy of the minutes of the Northern Development Company, of which the CBI is an important part. The company's head of overseas operations has reported that the

"likely effects of RDG termination on inward investment … would make the task of attracting Japanese investment more difficult in the face of strong European competition … In Hong Kong the Far East Liaison Office felt that companies from Taiwan and Korea etc. who have not yet invested in Europe may be inclined to go the easy route and accept automatic grants from European competitors. In the United States RSA was considered complicated and time-consuming."

I shall be interested to hear the hon. Gentleman put that case when he captures your eye, Mr. Deputy Speaker. The Northern Development Company has not made those points to me, and I have no reason to belive that the task of attracting investment to the region will be any more difficult because of the changes that are being made, with the additional emphasis that will be placed on selective investment.

Does my hon. Friend not find it astonishing that Labour Members are keen to attract footloose and fancyfree multinationals, when only yesterday during Question Time on trade and industry we heard those companies referred to in the most insulting terms? Is it not far better that local, indigenous manufacturing industries should grow up, rather than that they should attract multinational companies which may decide to move out of the area after four or five years?

In some parts of the north-east the local culture is known in business terms as being so hopeless that we have to help it by trying to attract companies from the far east to provide jobs.

No region has suffered more than the north-east from the straitjacket of regional development grant and its limitations, because it is indiscriminate and automatic.

During my first two or three years in the House, I received the quarterly list of grants from the Department of Trade and Industry for the northern region. Time and again I found that those grants went to the same companies. On Teesside, as my hon. Friend the Member for Langbaurgh (Mr. Holt) is well aware, the grants went to ICI and the British Steel Corporation. They did not simply go to the two largest companies; they went to the two companies that were shedding labour instead of creating new jobs.

I want to know where the money really went. It seems to me that the area as a whole received the grant, but the equipment that was purchased often came from overseas and there was no economic gain to the region. There were simply improved profits for ICI, based on handouts from central Government and fewer jobs in the region.

I do not know whether my hon. Friend can confirm this, but I have received no communications from ICI or BSC about the effects of this legislation.

I have heard from the British Steel Corporation, urging me to get on with the denationalisation of that industry.

My hon. Friend has made his point.

It is no accident that the region that has enjoyed the largest share of regional development grants over the past 10 years is also the region with the smallest and poorest development of small businesses. There must be a relationship between our over-dependence on that kind of automatic, indiscriminate, non-job effective assistance and the stunted growth of the small business sector in the north-east. Small businesses will cheer the Third Reading of the Bill.

Does my hon. Friend accept that one of the major reasons for the lack of investment in the north-east has been the twin enemies of industry and commerce and enterprise—local authorities and trade unions? Is it not a fact that in his constituency there is a private enterprise plan which does not require any grant and which would create 10,000 jobs in Darlington, but it has been refused by Durham county council?

That is typical of Durham county council's attitude to enterprise and business ever since the council was formed.

Small businesses will cheer the ending of the huge automatic grants to large companies. They will also welcome the changes in selective assistance. Where small businesses have reasonable projects, with reasonable prospects of job expansion, for the first time they will be eligible for selective assistance under the changes being made to the scheme. There will be a broad welcome in the north-east for the Bill.

I have two very small reservations which I want to address to my hon. Friend the Minister. The first relates to the remaining distinction in our regional aid structure between development areas and intermediate areas. By removing regional development grants, my right hon. and learned Friend the Chancellor of the Duchy of Lancaster has reduced that element of discrimination. The intermediate areas are in a less disadvantaged position in relation to the development areas. However, the disadvantage will remain, because there will be differing rates of grant and new proposals for selective assistance.

When my right hon. and learned Friend next reviews regional policy, will he look again at the necessity, especially in regions such as the north-east, for different types of financial assistance between, for example, Aycliffe and Darlington, or between Darlington and Teesside? Such a distinction is not sensible and is not consistent with the removal of discrimination embodied in these major proposals.

My second reservation was admirably made by the hon. Member for Berwick-upon-Tweed (Mr. Beith). The map is set a little too much in concrete. We are told that it is impossible to review the map other than through primary legislation, yet there is no doubt that events move on in the development world. That is why we are abolishing Aycliffe and Peterlee development corporation and Washington development corporation, and setting up Teesside and Tyneside development corporations. The emphasis changes.

I remember that the hon. Member for Berwick-upon-Tweed and I had intermediate areas prior to the 1984 review, and that we had the same rates of unemployment in our travel-to-work areas, of about 16 per cent. The Darlington area was kept on the map, but the Alnwick and Amble area was not. Four years later, unemployment in Darlington has dropped from 16 to 12 per cent., but the unemployment rate has remained unchanged in Alnwick and Amble.

When we next consider regional policy, we should make the various instruments by which the map is set up a little more flexible, so that where circumstances change the Minister can come to the House and make variations in the difference between assisted and non-assisted areas, and between development and intermediate areas.

Those two reservations aside, I welcome the Bill. I deplore the Opposition's attitude to the measure. Throughout the proceedings on the Bill, Opposition Members have confused spending on the regions with spending in the regions. Of course it is true that there has been a substantial increase in regional spending that is not part of the Department of Trade and Industry budget. There has been a dramatic growth in spending on training and retraining, and a dramatic increase in spending on environmental work in the region in clearing away the old industrial landscape and providing the new estates and factories necessary for new investments. It is wrong to consider regional aid simply in terms of regional assistance from the Department of Trade and Industry.

I am pleased to participate in this evening's debate after spending fruitless hours debating the issue with the Government. Tonight's debate has been characterised by the same arrogance, complacency and contempt for the regions that we see most evenings when we discuss anything that is unrelated to the financial economy which the Government so enjoy discussing.

This Bill is bad. It is also very simple, in that it terminates regional development grants. In doing that, it removes an area of certainty in terms of investment in a world that is very uncertain about attracting jobs, industries and companies to create wealth on which the country must depend in future. More importantly, the Government tend to forget that much of the manufacturing base is located in the regions.

The future of the United Kingdom's economy depends on that, despite discussions in Committee, when there was no positive suggestion that that was the case. Tonight's speeches have been characterised by the simple notion that what is good for the paper economy, the financial economy of the south-east and of the City, will in some way solve all the problems of the depressed regions that are still depressed after nine years of the Government badly beating manufacturing.

Apart from the fact that the Bill removes regional development grant, it is symbolic for many other significant reasons. It must be seen in the context of the Government's industrial strategy. I use the word "strategy" knowing full well that, with regard to the present Government, the term is used rather loosely.

We are considering the language of enterprise. In Committee we referred to the DTI paper which is the language of enterprise and the rhetoric of the market. It also reflects the Government's complacency as they are not in touch with ordinary people north of Watford or in touch with industrial concerns or needs.

Crocodile tears are shed over small businesses. The Government claim that they must help. After eight or nine years of this Government, it is obvious that small business have not benefited in the north or in the north of Scotland. Once again, the White Paper rhetoric only mirrors what we have seen over the past eight or nine years.

In the context of industrial strategy, it is no good for Ministers to stand up and claim that the economy is on the right lines and therefore the benefits will spill over. Countries such as Japan, the United States, France, Germany and Scandinavia have a civilised view of the wealth-creating, job-creating, manufacturing base. Not this Government; they are obsessed by what I have described as the money economy. Obviously, the Opposition must at least put on the record the concerns of those whom we represent. We still have high unemployment and shaky investment levels.

The Government talk about their policies being embraced by the CBI. I remind them that the CBI in most of its comments has embraced out of sheer relief the decision to scrap regional development grant. The CBI had thought that the whole of industrial policy would be abandoned. [Interruption.] If the hon. Members for Darlington (Mr. Fallon) and for Amber Valley (Mr. Oppenheim) would like to see my information, I shall send it to them; I hope that they will read it with interest.

Clearly, we are witnessing not just the termination of regional development grant but the abandonment of any serious semblance of regional industrial strategy. This is a step-by-step process. The Government know from experience and, as my hon. Friends appreciate, they do not do things overnight. Step by step, we are seeing the abandonment of any policy for effective regional aid. It is a "steady as the ship sinks" policy. We are used to that in the regions in Scotland and in Wales.

The Government's policy can best be summed up by describing it as a "let them eat cake" policy, a phrase coined by Marie Antoinette. Those of us from the regions interpret Ministers and Conservative Back Benchers as saying that the regions can eat cake. After the election, referring to the inner cities, the Prime Minister said, "We want to win them next time." Clearly, it is a matter of no votes, no help. As with the inner cities, in the regions the Government's policies do not match the genuine industrial employment needs in the areas that my hon. Friends and I represent.

I should like to highlight what surrounds the debate and what obviously must be the context within which anyone assesses the effectiveness, or otherwise, of abandoning regional development grants. Despite what the Minister of State said, there has been a significant cut in the Government's regional industrial assistance, especially for the period after 1991. Parliamentary questions on this matter have been tabled, but the Government are not willing to speculate on the financial assistance that will be provided when RDG disappears off the face of the industrial map. [Interruption.] The Minister need not shake his head, because his Department is the very one that will not provide the figures. Until we can find out what will happen post-1991, clearly the Government's measure must be interpreted as a massive cut in regional assistance.

Rubbish.

Rubbish? We shall await 1991, when the figures come before us in public expenditure statements and another Department of Trade and Industry paper.

As was mentioned in Committee, there has been a massive redistribution of regional development aid within the regional industrial strategy. Scotland will lose £100 million-worth of aid from the 1986–87 figures. At the same time, the Government, with their friends in marketing consultancy firms, have decided — [Interruption.] The Minister may laugh, but this is a fact and I do not mind laughter when the facts are on our side. I may be obsessed, but, if the truth hurts, let it hurt a little more. Over the next three years, £274 million will be invested in what the Government call the business development initiative.

What is wrong with that?

The Government are proud of that, and I hope that that is on the record.

At the same time as the hard, direct cash for each region has been cut, the support for marketing consultants has mushroomed on a United Kingdomwide basis. It is not even a matter of the £274 million being injected into assisted areas. It is a United Kingdomwide initiative. As was conceded in Committee, 40 per cent. will go to the south-east.

That is not true.

When that was conceded in Committee, the Minister justified it by saying that the area had 40 per cent. of the population and 40 per cent. of the economic activity. It is bad enough for the regions to have cuts, but there is a double difficulty when the money is transferred to areas where, we feel, it is not entirely necessary on the basis of simple industrial and employment needs.

The subject of the taxation of regional selective assistance has not been addressed. The Opposition asked whether that would continue, because RDG is not taxed. Clearly, if RSA is to be the only investment that we can expect in the regions, there will be another difficulty if it is taxed.

The Government constantly urge flexibility —"flexibility" being the buzz word for the market. Everything is flexible because the market is about supply and demand. Clearly, the Department of Trade and Industry paper and the scrapping of RDG put the regions in a straitjacket. An amount of £274 million is earmarked for a United Kingdomwide initiative. How much will go to Scotland? The general thrust of the Government's thinking is away from the regions and on the United Kingdom. We do not believe that there is flexibility. The flexibility that surrounds RSA worries us, because, instead of automaticity in grants, civil servants will be allowed to tackle applications. I am afraid that the proper decisions will not be taken and that this is a way of hiding further Treasury cuts in regional assistance in the run-up to 1991.

The discussions in Committee and in the House have been about disinvestment, disengagement, deskilling of our manufacturing base and, most appalling of all, lack of interest in anything that cannot be measured in terms of stocks and shares, the value of the pound and the amount of investment going out of the country.

Will the hon. Gentleman give way?

I shall not give way. I want to finish. There have been some truly hopeless interventions in this very short debate, and I should like to speak.

The Minister of State was charitable enough to refer to some comments that I made to the press. It is an appalling indictment of the fact that the Scottish Office has surrendered Scotland's industrial interests to the Department of Trade and Industry that organisations such as the Scottish Council (Development and Industry), the Scottish CBI, the Scottish TUC and local authorities are concerned about the future.

I made a point about any debate on the cuts being academic, because the Government smash all the legislation through the House regardless of facts, emotions and needs. In Scotland, as in the north-east, the northwest, Yorkshire and Humberside, people will want to get together because of their concern that the changes will not be distributed fairly. The south-east and East Anglia will cream off a large amount of the new investment which is going to business consultancy services.

The Scots — either the industrial or the political community — will not sit idly by without a fight. We need much more from the Scottish Office than we are getting. Scotland needs industrial leadership. In view of the appalling debacle over the South of Scotland electricity board and British Coal, the need for industrial leadership from the Scottish Office has become more acute. Such leadership has not been forthcoming. If we enter into this new phase of regional industrial policy without firm guidelines and assurances that Scotland will get its fair share, the Bill will have added significance in the years ahead.

This Bill is a classic case of missed opportunity. It is more significant for what it leaves out than for what it includes. While I should be the first to acknowledge that the present system of regional aid is anything but perfect and would welcome meaningful proposals to amend and extend the system, I believe that the proposals before us are entirely negative. The Bill does nothing to allay the fears of many of us in the regions that the termination of regional development grant will be followed not by an improvement but by a deterioration in regional assistance.

In Committee, we tried to introduce some constructive amendments to improve the Bill and the system of regional aid. Our proposals would also have complied with many of the Government's stated objectives outlined in the Department of Trade and Industry White Paper "DTI—Department for Enterprise". The proposals in that White Paper, which preceded the Bill and of which the Bill is an integral part, make much of helping people to help themselves, cutting red tape and encouraging inward investment. Yet the Government have refused to take the opportunity in this Bill to give effect to those objectives. Indeed, some of the provisions will have the opposite effect.

Not surprisingly, I made a special plea in Committee for the northern region to be excluded from the Bill and for more local autonomy in the distribution of regional development grant. I would not paint as bleak a picture of the northern region as the Government have done, but it has to be recognised that the region still has its problems and that it is the duty of national Government to represent the interests of all parts of the country and not just of those where that Government have or hope to win support.

The policies adopted by the Government give little room for optimism. Contrary to the comments of the hon. Member for Darlington (Mr. Fallon), total regional assistance to the northern region has been falling steadily under this Government and the proportion of Government regional assistance is now just half what it was before the Government came to office. Regional development grant in particular was £75 million less in real terms in the last financial year than in 1979–80 and a massive £135 million less than in 1978–79, the last year of the Labour Government.

Our suspicion that the Bill has more to do with saving money than with assisting the regions was to some degree confirmed by the Chancellor of the Duchy of Lancaster on Second Reading. He said:

"We are replacing automatic grants because they are becoming steadily more expensive and wasteful".—[Official Report, 25 January 1988; Vol. 126, c. 43–44.]

Our suspicions were further confirmed yesterday when the Under-Secretary responded to a question that I had tabled:

"My Department's planned level of expenditure on the main regional assistance measures in the years 1988–89 to 1990–91 is £330 million, £304 million and £265 million respectively."

The House will note that the figure is decreasing. Total regional assistance in the last year for which figures are available—1986–87—was £409 million.

Therefore, even according to the Government's own figures, the amount of regional assistance is declining. Furthermore, the figures given are all at present-day prices, so that when one takes into account inflation over the next few years matters are even worse. The end of the Minister's reply confirmed the fears of my hon. Friend the Member for Fife, Central (Mr. McLeish). He said:

"In accordance with normal practice, plans for 1991–92 have not been made."—[Official Report, 9 March 1988.] We do not yet know what the fate of regional development grant will be after 1991.

Ministers may argue that regional development grant has fallen off in the north not because of reductions by the Government but because firms were not taking up the grant. I have already pointed out that total regional assistance has been falling and, according to the Government's figures, will continue to fall. However, the northern region faces one major problem that does, indeed, affect the take-up of grant, which is the shortage of larger industrial units, to which my hon. Friend the Member for Sedgefield (Mr. Blair) referred. That shortage has already cost the region jobs and it must be corrected as a matter of urgency.

I look forward to hearing from the Minister that his right hon. and noble Friend the Secretary of State for Trade and Industry will be able to accept the invitation that he has recently received to meet the northern group of Labour MPs to discuss this problem. After all, it is the Government's abolition of Tyne and Wear county council and the winding-up of the new towns in the region that have led to the strains being put on the budget of English Estates. That has led to the use of the increased allocation to make up for the deterioration and to fill the gap.

All this has resulted in an inability to provide the sought-after accommodation. Opposition Members believe that there is an urgent need to discuss regional arid industrial policy and attempted in Committee to open up the debate on the Bill to the wider issues to which it gives rise.

The termination of regional development grant will mean the ending of the automatic system that applied to assisted areas, and therefore the special status of assisted areas is also threatened by its abolition. Indeed, that prospect has been welcomed by some Conservative Members. The fact is that the ending of automatic grant will also mean the ending of the certainty of help, which has attracted new business to the north and elsewhere. The total reliance on regional selective assistance with its form filling, question answering, and uncertainty — the very red tape that the DTI White Paper says it wants to cut through — is sure to place the assisted areas at a disadvantage in relation to areas in the European countries that retain an automatic grant system. I pointed out to Ministers in Committee that the north's job-hunting agencies had already said as much, and remained concerned that the new system will be less attractive.

As I said, the existing system is not perfect and sometimes grant moneys have not been used as effectively as they might. However, the majority of anomalies in this regard concerned grants to existing business; one of the main benefits of the system was looked upon as its tendency to be attractive to prospective investors. Why could the automatic system not be retained for new business? Such an amendment to the Bill would have removed many of the anomalies while retaining the advantages. Ministers could not bring themselves to accept even that point.

The Bill and the White Paper are only part of the Government's wider regional strategy. On Monday we saw the launching of yet another glossy brochure promising action in the cities — many of which are located in assisted areas. In that brochure, as in all the Government's pronouncements on this subject, there is much talk of "the people".

In the foreword, the Prime Minister herself refers to giving the people "more opportunities", "greater freedom and choice"

"a bigger stake in their communities"

and even goes so far as to say that the Government are resolved to work

"in partnership with the people".

Yet when the reader moves on from the foreword and through the 32 pages of the document, he finds not one reference to, or suggestion of, consulting the people in the cities about what they want.

There is not even a reference to making those who will impose their ideas on the areas accountable to the people. Everything is to be in the hands of Government appointees—those who will not be so much interested in what is good for the people as in what is good for business or what is in line with Tory dogma. As with regional development grant, accountability is to be terminated and replaced by a system in which Ministers or their agents will decide who gets what and what goes where. So much for partnership with the people.

If the Government want an example of partnership, they need only look to the work being done by local authorities up and down the country—in partnership with business and sometimes with the Government—but with those authorities always accountable for their actions, either through the ballot box or by virtue of the consultation processes that accompany development proposals — consultation processes which the Government see as obstacles to enterprise, barriers to be removed.

If the termination of regional development grant was to make way for a new system in which those partnerships could be encouraged and helped, it might have been more welcome. If the northern region was to be given its own development agency, on the Scottish model, accountable to an elected regional assembly, we would be talking imaginative action. Although the northern group of Labour Members have drafted a bill to provide just such a structure, that is not exclusively a Labour party view.

As I pointed out in Committee, the Tory Reform Group, of which the Chancellor of the Duchy of Lancaster is a patron, has recently produced a paper that argues strongly and unequivocally for a development agency for the northern region. In the recent article in The Guardian, the right hon. Member for Henley (Mr. Heseltine) gave some positive views about regional government.

The Northern Regional Assembly Bill, which the northern Labour group has introduced, is a positive and progressive proposal, whereas the abolition of RDG is negative and regressive. What will the abolition of regional development grant do to promote a shift in development from the overcrowded south to the attractive regions of opportunity in the north? I read in the Financial Times the other day that there is an acute shortage of engineering skills in the south-east. It is surely nonsense that we cannot organise our affairs better, when the north is bristling with skills and labour that is not being used, and is suffering all the financial and other hardships of unemployment, while at the other end of the same land people are working so much overtime that they are exhausted at the end of the week. Nothing in the Bill addresses that situation.

The Government's policies have been disastrous for the regions. In Committee, the Minister spoke with pride of the fall of unemployment in the Newcastle travel-to-work area to 14·7 per cent. I had to remind him that that is still double the rate that applied prior to his Government coming to office and more than twice the rate in the southeast of England. There will be no room for self-congratulation until the rate falls below the 1979 level. What confidence can we in the north have that the region will be better off when Ministers who have presided over such a catastrophic situation will allocate grant based on their wisdom, rather than the automatic system currently operating?

Regional policy is of vital importance. The separate and distinct identities of local communities must be preserved and local people must be allowed to develop their own economies and cultures and not have solutions imposed upon them from above. That means a degree of local autonomy, directly influenced by the people themselves. Everything that this Government do is against that principle and more and more centralist.

By refusing to accept our arguments, which would have given the power to distribute grants to regional agencies rather than abolishing them, by merely terminating the system but not looking to improve it, the Government have yet again increased the powers of Ministers and reduced the attractiveness of the assisted areas.

The grants that came automatically to the assisted areas will no longer exist, but the problems faced by those areas will not go away quite so easily. If the Government run true to form, more emphasis will be placed on the free market—"Let private enterprise decide".

That philosophy will not help the regions, which are in need of help, and it will not help the people who live in the developing south either. It is they who will suffer, and are suffering already, the overcrowding and congestion which result from the uncontrolled free market development which this Government are so attached and which this Bill will further encourage.

Much of the Opposition's case is founded on what I regard as a misconception—that Governments create jobs. In truth, Governments alone cannot possibly create jobs—not real, lasting jobs. Jobs are created by entrepreneurs who recognise a market, set out to satisfy that market, and do so at a profit which enables them to reinvest in the business and employ people. The other misconception of Opposition Members is that they delink wealth creation from people's prosperity. The two go absolutely hand in glove.

In effect, regional policy has moved many of this country's jobs around the country. Much regional policy has not created new jobs. If one looks at the west midlands and especially the black country, one sees the dereliction and depression that have resulted from jobs being exported from what was once the workshop of the world to other areas where grants have been available, such as the development areas and the enterprise zones. Our jobs have been exported. I feel that keenly as someone who prides himself on having been born and bred a Wulfrunian and having run a business in the black country.

I now represent a rural constituency and can see the effects of regional policy on Shropshire. Why on earth should people running a business—or attempting to run a business—in the remote parts of west Shropshire be disadvantaged simply because people at the other end of the road—across the border in Wales—have been able to get grants which mean that they have an unfair advantage?

I leave the House with one thought for the day. As a result of regional policy, we have in Britain some of the longest production lines in Europe in terms of time. Hon. Members need only consider the motor industry to know that I am right.

It is complete nonsense for the hon. Member for Ludlow (Mr. Gill) to talk about an unfair advantage in Wales. What we in Wales seek is not an unfair advantage, but merely a fair balance between the regions. If there is an unfairness anywhere in the system, an improvement in the system of regional development grants is called for — not the provisions in the Bill, which is a narrow measure proposing the abandonment of regional development grants.

The one thing I welcome in the debate is the presence of a lone Conservative Member representing Wales— the hon. Member for Cardiff, Central (Mr. Grist) who is the Under-Secretary of State for Wales. I hope that he will join the debate and not demonstrate his membership of the Trappist tendency in the Tory party. In the long hours in Committee, we asked many questions about the effect that the Bill would have in Wales. We provided detailed argument and evidence and took apart the sham figures with which the Secretary of State for Wales has sought to mislead the Welsh public. It is a pity that during that extended debate, no Welsh Office Minister and not a single Conservative Member representing a Welsh constituency was present to face up to the examination and debate.

The hon. Gentleman knows perfectly well that I was, and indeed still am, serving in Committee on the community charge Bill and therefore was unavailable for this Committee. My hon. Friend the Minister of State, Welsh Office, has been serving in the Committee on the Education Reform Bill. Therefore, neither of us was available, as the hon. Gentleman knows perfectly well.

The Minister has not explained where the Secretary of State for Wales has been. This is a matter of regional development and is important to Wales so perhaps the right hon. Gentleman might have been persuaded to help out his colleagues. The Under-Secretary's remarks do not explain the absence of every single Conservative Member representing Wales from those discussions. To be blunt, the Secretary of State for Wales has been exposed as a visiting salesman, with no goods in his carpet bag. Experience in Committee proved that his London and Scottish colleagues are no better.

The one plus is that the lack of Welsh Office representation in the Committee has created a new unity between the regions. We thought that the right hon. Member for Worcester (Mr. Walker) was the only Minister whose tactics were to use aggressive public relations and hyperbole to sell a so-called bag of goodies that is attractive on the outside, but empty on the inside. We now know that that is a deliberate policy adopted by the Government, including the English and Scottish Ministers who joined the Committee. Indeed, this week the Prime Minister has given that squalid technique her personal blessing.

In opening the debate, the Minister claimed that we had misunderstood the Government's policies and confused regional policy with regional development grants He is wrong. We would welcome a new look at regional development policy and any real improvement in regional development schemes. However, the Government has not come up with new policies or resources. The Government has come up with a PR package on the one hand, but on the other has taken away the certainty of regional development grants, without putting anything in their place. I should be grateful if the Hansard writers would note that I used the singular there, because the Government is operating as a mindless singular entity and I should like my grammar kept right.

The Government is trying to pretend that nothing will be lost as a result of the Bill. However, I challenge the Minister to deny that the Welsh Office expects a major reduction in regional expenditure as a result of the changes being introduced. Due to the greater difficulties in obtaining the regional selective assistance grant, it is expected that a lower percentage of expenditure will be made. Perhaps a £100 million spend on regional development grants will become a £40 million spend on RSA. I imagine that I shall hear from the Minister if what I have said is wrong.

A quotation was given earlier from the journal of the Confederation of British Industry, I think by the hon. Member for Darlington (Mr. Fallon). I should point out that the hon. Gentleman was not reading from a policy statement made by the CBI, but from the briefing included in its journal. The briefing also included the sentence that the end of regional development grant will

"give the Government complete discretion over its purse strings."

That is what this mean little Bill is about. It legalises the theft of resources from the hardest-hit areas of Wales, and other regions. It legalises such theft from the oldest industrial areas on which Britain's prosperity depended; from the valleys and industrial areas where massive unemployment continues to bear witness that those areas and communities are paying the price for the restructuring of British industry, which was and is vital for all of us.

The Bill, in common with so many other items of Government legislation that are being steamrollered through, is about squeezing expenditure without regard to need or the opportunity costs of introducing changes. In Committee we were accused of painting a bleak picture. We did not paint such a picture of our regions, about which each of us spoke with pride and care. We have painted a black, bleak uncaring picture of the Government, and it is true.

In Committee we made a number of positive suggestions to lessen the impact of the Bill in the worst-off areas of Britain, to meet the criticisms of the existing system and to target our attention on small firms in development areas. We had no positive response to those suggestions. Conservative Members on the Committee had obviously been told, "Put your heads down and bash on, boys. Don't listen to any sensible argument." The Conservative party ceased long ago to be a democratic party. In Committee it refused to listen to the Labour party. We can continue to claim the positive role as the party of enterprise in both the public and the private sector. Debates in Committee and on the Floor of the House have exposed the Conservative party as more concerned about the packaging than the contents of regional policy.

Despite any faults, the RDG system has proved to be simple and effective. Industrialists know where they are, know where they can start up in order to qualify for the grant and exactly how much the Government will contribute. That element of certainty has helped to bring jobs to the development areas and that help has been directed at the worst-off areas of the country, including the valleys and the rural areas of Wales. As a result of the Bill those areas will lose out.

What have the Government put in place of RDG? Nothing. The valleys initiative introduced by the Secretary of State is about to enter the "Guinness Book of Records" as the Government initiative that has been launched on a record number of occasions without any real information being given. However, we are aware that no extra money will be available for Wales and the Minister is doing no more than moving the money around in the hope that no one will notice.

Will the hon. Gentleman give way?

No.

The Government are simply spreading the money around in even thinner layers. It is obvious that the worst-off areas of the country will be hit hardest.

Wales, in common with other regions, needs a coherent regional strategy. The Government have given us glossy pamphlets, an effective publicity campaign, but that is all. We welcome steps to bring jobs to Wales, but until the Secretary of State for Wales can produce a viable alternative we are adamant that RDG should continue.

During this debate I have been surprised by Conservative Members' lack of knowledge of industrial development. Over the years the Opposition have been working to redevelop our local economies in partnership with industrialists, investors, local authorities, foreign investors and local people who want to start up in business. We know what we are doing, but Conservative Members have demonstrated tonight an appalling mixture of impracticality and prejudice. Their support must have embarrassed even the Minister.

Play has been made about the support for the Bill from various Tory front organisations, such as chambers of commerce and the CBI. I should like to quote from Library research note No. 382, page 6, which contains a quote from the Association of British Chambers of Commerce—an association that I suspect has rather more Conservative members than Labour party members. It said about the Bill:

"We will press for adequate transitional provisions and assurances about the increased availability of selective assistance in the regions. Also, the new policy does not represent a coherent response to the wider problem of overheating in the South and spare resources in the North. We will look for a clearer response from all Government Departments on regional policy."

Therefore, the Bill is condemned by the very organisation that normally pays fulsome tribute to the Government.

The Bill removes automatic regional aid and I wonder whether the Minister has been applying the Bill already. In my constituency a firm, the National Breakdown Club of Low Moor, made an application for regional grant but was refused on the basis that the firm was already successful and would go ahead and build its extension anyhow. That is a peculiar approach to adopt, especially when organisations such as Shell and ICI have also been receiving assistance. The criteria to judge whether they should receive such assistance appear to be somewhat different from those used for that firm.

The Minister should bear in mind that he does not have the legal authority to act in such a manner. I am aware that, these days, the Government regard this place as little more than a rubber stamp, but Ministers are not supposed to do things without the authority of Parliament. It is called "illegality". It may well be that the Minister acted in a perfectly proper manner, but I seek an assurance that he has in no way anticipated the legislation that we are discussing. The Minister should note that my constituents made representations to me concerning their bitter disappointment at failing to receive regional assistance.

Since 1979, under this Tory Government, 2 million jobs in manufacturing have been lost. They have not been replaced in the service sector and almost 3 million people are still on the dole. Some 130,000 of those jobs have been lost in Yorkshire and Humberside. Several thousand jobs in textiles and engineering have been lost in Bradford.

The automatic grant was an assured and positive contribution from central Government. Repeatedly industrial representatives have said that they prefer security and certainty in the pattern of regional assistance rather than variation. However, the Government have certainly introduced a number of variations.

In an intervention during the speech of my hon. Friend the Member for Great Grimsby (Mr. Mitchell) I said that the Bill will place a greater onus on civil servants to make judgments. I am not talking about most civil servants, who do a decent job. However, it is a fact that permanent secretaries and deputy secretaries at the Department of Trade and industry move swiftly out of their jobs to boards of companies. [AN HON. MEMBER: "It is a conspiracy."] It is not a conspiracy; it is a fact of life. Very few of those senior civil servants join charities when they retire on luxurious pensions or become advisers to the trade union movement. How many of those civil servants are lining up jobs when they are negotiating with companies and while they are employed on behalf of the public, supposedly keeping such firms at arm's length?

I was at the Department of Industry for two years and I know what went on. Consider what happened when the industrial development advisory board was considering GEC. When Sir Kenneth Bond left that board for five minutes, it granted GEC, of which he was vice-chairman, £1·2 million in grants. John Lippitt disappeared to GEC. He was not supposed to have any dealings with that company, but he had been having secret meetings with it.

On occasion relationships between senior civil servants — I emphasise that category — and companies become too intimate. The removal of the automatic grant status means that something that is dealt with by civil servants in a routine manner has diminished. Therefore, the opportunity for wining and dining, with promises of inducements and membership of the boards of companies, is enhanced. I am concerned about that, especially as the Government are so keen to draw the Civil Service and industry closer together. To maintain a scrupulous relationship, they should be at arm's length to ensure that every firm is dealt with on a fair basis.

The Bill sabotages industrial and service developments —it covers the service sector—in the north in towns and cities such as Bradford. The burden of unemployment in Bradford has massively increased under the Tory Government. Indeed, an inner-city project across the Bradford rail link has been sabotaged by the Property Services Agency. A Mr. D. Jones has said that the Courthouse proposal for the Bradford Exchange station site and the rail link cannot be accommodated. The man in Whitehall has told the passenger transport authority that he knows best.

It is the same with the Bill. Whitehall is telling the regions that Whitehall knows best, whereas the regions are saying, "We still need jobs; we still need development." Factories are still empty, and anyone travelling through Yorkshire, Humberside, Wales and the north-east will still see the deserts where once there were scores of productive factories where thousands of people were employed in a productive capacity. That situation has not been remedied by the Government.

The Minister said that automatic grant was a waste of public resources, but it gave security of application to firms moving to the regions in the knowledge that they would receive the money and they could calculate their investment on that basis. The Government are spending almost £2 billion on Sizewell B. Last night, we passed an order to make it easier to give planning approval for nuclear power stations so as to get Hinkley B into construction. There is a political will for nuclear power generation and the lack of safety and the nation's technological inability to deal with nuclear waste are cast to one side.

There is a political will to spend billions of pounds of public money on nuclear power stations, yet a relatively small amount of money is spent on providing proper jobs in the manufacturing and service industries in the regions. This pettifogging little Bill will remove even that degree of support and certainty from the regions. The Government are once more attacking ordinary men and women and the manufacturing industries which have already been so badly cut by the vicious attitudes of the Tory Government.

It is always a pleasure to follow my hon. Friend the Member for Bradford, South (Mr. Cryer). I believe that he would have made a good auditor. I want to refer to the National Audit Office and its report on the regional development grant and regional selective assistance system.

Auditors are often described, sometimes unfairly, as people who go round the battlefield when the battle is over bayoneting all the wounded, with a particular predilection for bayoneting those on their own side. The auditors who work for the National Audit Office have produced a comprehensive report, published recently in an up-to-date manner, on the RDG and RSA scheme. Paragraph 4.13 of the report states:

"The study by consultants of industry's early reaction to the revised regional incentive scheme was confined to RDG2"—

that is what is being abolished tonight, although we are also dealing with the tail end of RDG I , going back to 1984—

"and was completed in August 1986. I found that, overall, the new scheme was being well received by the business community and was an important factor in the investment decision making process. However, although less than one quarter of the companies surveyed said that RDG2 had no influence on their investment decisions only one-third considered that it had been a critical factor."

The report also stated that RDG2 influenced the qualitative aspects of projects. Paragraph 4.14 stated:

"While the Department of Trade and Industry did not cover the revised RSA in the 1986 evaluation, they had commissioned a similar study on the original RSA and RDG schemes which was published in 1986. The findings of both schemes were remarkably similar and about 20 per cent. of the companies rated the two forms of grant as having no influence on their decision to invest in the project under consideration and a little over half rated them as important or crucial to the decision."

We must ask ourselves whether regional development grant is being abolished because it was a bad scheme or because it was too successful. Let us consider the figures published in last year's White Paper on public expenditure, and let us take Wales as a typical example. Next year, the Government expected to spend £27·6 million on regional development grant. Their more up-to-date figure given for next year's expenditure on RDG is £63 million, so the scheme will cost the Government 130 per cent. more than they had estimated. Does that make it a bad scheme or a successful scheme? Opposition Members contend that that is the sign of a successful scheme. Although there have been peripheral problems of fraud in the service industries, which are extremely difficult to monitor, they could have been tackled by tighter monitoring and a minor amendment.

However, the Government are terminating the scheme because, in Wales, it is costing them 130 per cent. more than they had estimated and evidently, the Treasury does not like that. There are therefore two reasons for scrapping the scheme — first, the minor aspect of fraud in the service industries, and, secondly, the excessive costs in Treasury terms. RSA can be made cash-limited, but RDG1 and RDG2 cannot. That is the key to the issue. The scheme is being scrapped because it is too successful, but we who represent assisted areas in the outlying regions will fight for the scheme, as we have fought for it from the beginning. We still consider it an act of hypocrisy on the Government's part to terminate RDG and to pretend that they will make so much more money available under RSA that it will make up the difference. We know that that is not true.

In the absence of any Government estimates, I have attempted to produce my own estimates as to how much RDG and RSA would have cost the Treasury in Wales. Hon. Members can attempt to make their own estimates by converting the figures for other assisted areas. I have calculated that the scrapping of RDG will save the Government in Wales about £8 million in the next financial year. It will build up to £19 million in 1990–91 and to £26 million in 1991–92. In all, it will save the Government £53 million in Wales. I cannot provide an equally accurate estimate for assisted areas throughout the United Kingdom, but I estimate that the Government will save about £300 million in all.

We are finally obtaining a large amount of investment in manufacturing, almost back up to 1979 levels, which would be entitled to regional development grant. The faster the pace of investment, the greater would be the number of firms likely to move into the region from the overcrowded regions of the south-east. There is also evidence of considerable inflation, at least in building costs, due to the lack of skilled labour. As 20 per cent. of the costs of investment are usually associated with buildings, that will add substantially to costs. That would have been another concern for the Treasury if the scheme had not been scrapped.

Let the Government come clean with the House and say that they could not monitor or amend the scheme because it was so prone to fraud, especially among the service industries. I estimate that, by scrapping the scheme, they will save over £300 million for the whole country over the next three years. I hope that they will not try to tell the country that less regional assistance really means more regional assistance.

The debate clearly outlines the fears of many Opposition Members for the deprived regions of our nation. It is unfortunate that the debate relates to a single part of the Government's White Paper, presented to the House a few weeks ago, and to the White Paper on the inner cities, about which we had to force the Government to make a statement earlier this week. We are dealing with the problems of our regions and of urban regeneration in a piecemeal fashion. Unfortunately, we are now dealing with the major part of the issue in isolation from the full debate.

I wish to place on record our dissatisfaction with the contemptible and offhand way in which the Government have treated the House, the regions, Scotland and Wales with regard to the issue. Hon. Members could have guessed the Government's position on the White Paper only by listening to the debate in the House of Lords or reading Hansard of 19 February, when Lord Young opened the debate on the Department of Trade and Industry's White Paper. Alternatively, they could have listened to the evidence submitted by the noble Lord to the Select Committee on Trade and Industry.

The Bill clearly shows the Government's attitude to the regions and the major changes of direction upon which they have now embarked. This directed policy has no support from independent assessment or analyses or from the Government's own reports. Conservative Members have shown complete ignorance of the problems of the regions and of our manufacturing industries. I shall submit two pieces of evidence to enlighten the Minister.

First, I refer to the independent assessment report, which said in conclusion:

"The conclusion that regional policy generated some 450,000 manufacturing jobs in the Development Areas which were still in existence in 1981 leaves out of account any secondary or multiplier effects on employment in service industries".

The Secretary of State made great play of that in another place. "This project has not been directly concerned with these multiplier effects but, using a conventional medium term regional multiplier of 1·4, the 450,000 manufacturing jobs would generate a further 180,000 … making a grand total of … 630,000".

Even more devastating was the Government's own report on regional incentives and the investment decisions of the firm. It said in conclusion, answering the point made by the Minister today:

"In short, our evidence shows that a mixture of automatic and selective assistance, taken together, provides a powerful package. It appears that the regular receipt of RDG encourages firms to become 'regional incentive conscious' and there is an increased likelihood that they will examine the range of other possible assistance available to them, including RSA. It is important to emphasise again in this context that a successful application for RSA forms an important part of a learning process for the company. The importance of the `automatic' nature of RDG as applied during our Study period suggests that any changes in the scheme should retain, as far as possible, clear and predictable eligibility criteria."

That is the evidence.

A previous Secretary of State for Trade and Industry, the right hon. and learned Member for Richmond, Yorkshire (Mr. Brittan) said when the White Paper was introduced on 12 January:

"Will my right hon. and learned Friend also accept that, although there is nothing sacrosanct about previous methods of assistance, there were real advantages in a system whereby a business man was aware that, if he satisfied a published criterion, he was entitled as of right to regional assistance instead of having to go cap in hand to civil servants or Ministers asking for discretion to be exercised?"—[Official Report, 12 January 1988; Vol. 125, c. 151.]

So much for what has happened inside the United Kingdom. Internationally, almost all our major industrial competitors support their poor and deprived regions, many of them automatically — for example, Italy, the Federal Republic of Germany and Denmark. Every Minister seems to have been off to look at Boston in the United States, but the one thing that never emerges clearly when they return, although they bring back a number of examples of it, is that the major regeneration of that city has been public sector-led, and the rate of success has been proportionate to that development.

We cannot ignore the example of France. In Committee, we discussed what was happening in northern France, and I single it out because the development around Pas de Calais has serious implications for the United Kingdom. When the Channel tunnel comes on stream, which is likely in the early 1990s, the type of development in that area of France, which was spelt out to the House several times during the passage of the Channel Tunnel Bill, shows the tremendous advantage of the new investment there.

The argument will not be about whether to go into the northern regions or the south-east of the United Kingdom — it will be between northern France and the United Kingdom. The removal of regional development grant will have a profound effect on the attitude of those who would have invested in the north, and the Channel tunnel development could be a major drain on the resources that should be invested in the north of England.

I want to answer some of the criticisms that have been levelled and show the Government's hypocrisy. In Committee we accepted that there might be a need for some revision of RDG and we challenged the Government by tabling an amendment saying that RDG should be applied only to companies employing fewer than 250 people. The argument about BSC and ICI does not really apply, because those companies do not come under the second phase of RDG. But what if the Government agreed to give automatic grant to small and medium-sized businesses which do not have the financial structure to be able to carry out the sort of investigation and form filling that is necessary for RSA? The Government gave us no answer when we tried to ensure that RDG should discriminate in favour of small and medium-sized businesses. That shows the Government's hypocrisy about such businesses.

When we last discussed the changes to be made in RDG, the Government at least had the courtesy to go out and consult industries in the regions. More than 500 representations were made about alterations to RDG. On this occasion, however, it is being abolished with no consultation with the regions, industries or local authorities. So what is the Government's regional policy? The booklet accompanying the White Paper contains 25 pages, of which only two or three deal with regional policies. Twenty pages adopt the blanket approach and extol the virtues of the consultancies. They have been dealt with adequately in the debate already. Over the next three years, £370 million will be spent on those consultancies, an amount equal to the annual pay-out of regional selective assistance during 1986–87. Most of that money will go to the south-east

This is not regional policy; it is making business more efficient and effective. We are not against that or against the consultancies in the south, but the regions should not be robbed to pay for it. If consultancies are needed, that is fine—we want to ensure that businesses are more efficient and productive. Ministers have told us that the extension of regional selective assistance is to be streamlined. But when challenged, Ministers from the DTI could not tell us how they would move a fivefold increase of capital from RDG into regional selective assistance, or what mechanism they would use to do that. Much has been said this evening about certain aspects of the efficiency of the DTI team in administering RSA, which is now to increase fivefold—if the Government are on target. I do not think Ministers have even convinced their Back Benchers. They have certainly not convinced us.

This is a cynical move by the Government, to ensure that RSA now comes under the diktat of the DTI. The Treasury will now dictate when to turn on and off the financial tap. I challenge the Government to tell us whether they will maintain the same sort of expenditure on the regions under RSA as they have under the two grants that have operated hitherto. We do not believe that they will, and we shall say, "We told you so," in three years' time, when the regions will be so much the poorer.

The Opposition have to look at the real situation in the regions, and we did that in Committee. We must encourage and not discourage the partnerships that have developed in the major urban conurbations and in the major cities. We need to look seriously at the areas of high unemployment and target RDG to them. That was rejected by the Department of Trade and Industry team in the Committee. In a speech only yesterday, the right hon. Member for Henley (Mr. Heseltine) challenged the Government on that very point. I hope that if the right hon. Gentleman is in the House he will vote with us, because the removal of RDG goes to the centre of the very points that he made in that speech.

There is no doubt that the Bill will have an adverse effect on inward investment. The hon. Member for Pudsey (Sir. G. Shaw) has much experience of this subject. He said:

"The speed and clarity of decision and the commitment which the United Kingdom Government can show in providing international investment will be seriously damaged by the current proposals." — [Official Report, 25 January 1988; Vol. 126, c. 71.]

That was said by an hon. Member who was in the Department of Trade and Industry. Will the Government say to him, "Come hack, all is forgiven"? The need to move Government Departments out of London was also suggested. At least such a development has started, but its slowness shows the national and multinational companies that they do not have to move their headquarters in that direction.

We asked for a positive Government approach to the regions, but that was dismissed in every single amendment that we tabled about it. We challenged the Government, on all the reasons that they advanced for the abolition of the regional development grant, and they entirely rejected our arguments. The Committee has been a sham. We put an alternative strategy and tried to develop a new policy. The Government should at least have looked at that.

My hon. Friend the Member for Bassetlaw M r. Ashton) asked a question about manufacturing. He said that a manufacturing trade surplus of £5 billion in 1978 was reduced to a deficit of £7 billion last year. He asked the Minister how the Government proposed to improve that situation. The startling reply by the Secretary of State for Trade and Industry which I gather has been carried (extensively) on radio was: "Because I am not concerned with manufacturing industry as such." That was what the Secretary of State for Trade and Industry told the Select Committee.

The regions and manufacturing industry have a bleak future. The Government have no policies for the regions. They are bankrupt and have no vision for the future. The Bill should be decisively defeated.

We have heard an uncharacteristic and churlish attack by the hon. Member for Sheffield, Central (Mr. Caborn) on many Conservative Members. He suggested that only the Labour party speaks for the regions. That attack was particularly unfortunate, as the debate was opened by my hon. Friend the Minister of State, Scottish Office, who is clearly a Scottish Member. I am a Lancashire Member. We have had contributions from my hon. Friends the Members for Langbaurgh (Mr. Holt), for Stockton, South (Mr. Devlin) and for Darlington (Mr. Fallon), to name but three. That is surely an indication that there is a good Conservative representation in the debate from the north-east of England.

We heard from the hon. Member for Great Grimsby (Mr. Mitchell) who his hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael) said in Committee was the man who put "grim" into Grimsby. [Interruption.] I did at least do the hon. Gentleman the credit of telling him that he invented it. The hon. Member for Great Grimsby rehearsed tired old canards and I shall deal with them only briefly because I am conscious of the pressure of time.

The first matter is consultation. Consultation was exhaustive in 1984 when the map was considered. That point was made clear in Committee. Some hon. Members referred to the map. I reiterate that it is not set in concrete. There is a need for an element of stability for the purposes of future investment, and we have said that we are not prepared to consider changes during this Parliament. There are always matters to be considered and my hon. Friend the Member for Darlington spoke about one such matter in relation to development areas and intermediate areas. I give the undertaking that we shall consider those when the map is reviewed.

Hon. Members also spoke about the funding for regional development grants. There is an increase in funding from £694 million to £900 million over the period up to 1990–91. In addition, there is a further £274 million over the whole of the country for consultancies. By definition, the contribution of two thirds rather than 50 per cent. in assisted areas and urban improvement areas will mean that the regions will get a higher proportion than could perhaps be expected in normal circumstances. I emphasise again that this funding is additional and not a substitute for action.

rose—

I shall not give way, because, as the hon. Gentleman knows, I am under some pressure of time.

Some hon. Members spoke about the published criteria. I spoke about that in Committee to the hon. Member for Gordon (Mr. Bruce), who I notice is not in his place.

rose—

I do not seek to provoke hon. Members. I merely record the fact that the hon. Member for Gordon raised the matter in Committee. The criteria have been published and have been available for many years, and business men know that.

I emphasise again that only decisions involving £500,000 or more will be referred to Ministers, and that is nothing new. The vast majority of the decisions involve amounts of under £500,000. Indeed, most of them are under £100,000 and those matters will be considered by the regional industrial development boards whose members include active and retired business men as well as a fair sprinkling of active trade unionists in the regions. All those people are involved in industry on a daily basis.

The other consideration mentioned was the speed at which applications should be considered. That is a fair point and some hon. Members will recall that I mentioned it in Committee. It is improving radically, but it is always in need of further improvement and I reiterate a commitment to improvement.

The fifth point was about inward investment. It is our understanding from countries throughout the world that are interested in investing in Britain, that it is not just regional development grants such as those that we are discussing that matter. Other factors such as infrastructure, a low rate of corporation tax, good communications, and a successful and booming economy. Not least, our culture and, above all, our English language are important.

The hon. Member for Tyne Bridge (Mr. Clelland) spoke about a letter that he had written to the Secretary of State. I have checked on that and I understand that the letter arrived this morning. Perhaps he knows that the Secretary of State is presently in Japan, but I undertake to draw it to his attention and to make sure that the hon. Gentleman receives a reply as soon as my right hon. Friend returns.

My hon. Friend the Member for Harborough (Sir J. Farr) spoke about a constituency matter. I am grateful to him for his comments, because he was kind enough to say that the DTI had dealt with it as quickly as possible, although I know that it was not dealt with to his entire satisfaction. My hon. Friend's point adds weight to the Government's case.

My hon. Friend the Member for Wyre Forest (Mr. Coombs) spoke knowledgeably and eloquently on matters about which he knows a great deal. I am grateful to him for his comments and I think that the House will appreciate that he speaks with knowledge, as does my hon. Friend the Member for Ludlow (Mr. Gill), who spoke in a similar vein.

The hon. Member for Cardiff, South and Penarth made an uncharacteristic attack on Welsh Ministers. It was answered in part by my hon. Friend the Member for Cardiff, Central (Mr. Grist). I repeat that the Secretary of State for Wales is committed to the regions and, as my hon. Friends from Welsh constituencies know, he is committed to the valleys initiative that is shortly to be announced. That is evidence of his commitment to the Principality.

The hon. Member for Bolton, South-East (Mr. Young), who has probably rushed to catch a train, spoke about the problems as he perceived them in Bolton. I am to visit Bolton tomorrow, and I can tell him that my hon. Friends the Members for Bolton, North-East (Mr. Thurnham) and for Bolton, West (Mr. Sackville) have made an entirely different case about the success of Bolton. A similar success is to be seen in Preston. They are both now boom towns in the north-west and the hon. Member for Bolton, South-East does his town and his region a disservice by suggesting that somehow things are bad in Bolton. Of course there is always room for improvement, but both towns are doing well at the moment.

I emphasise again that under the Bill spending in the regions will continue to be as it has been in the past. Good projects coming forward from the north, the west or any other part of the country will get attention as they have before. The emphasis must be on viability, cost-effectiveness and whether the project merits approval.

I conclude by suggesting to Opposition Members that they do what their own campaign has suggested, which is to listen. Only recently, the TUC, in its statement on regional development and planning, spelled out that, to make regional and local planning bodies effective,

"The amount of selective assistance … would be progressively increased until all assistance became selective."

Opposition Members should hear what the TUC says and vote with us for the Bill

I am grateful for this opportunity to debate the national dock labour scheme. I am particularly glad to see so many of my right hon. and hon. Friends present in the Chamber, because over 200 of them, as the Patronage Secretary will have observed, have signed early-day motion 275.

In initiating the debate, I have three purposes. First, I want to put forward the case for abolishing this scheme in its entirety. Secondly, I want to argue the potential that will flow from abolition for job creation, urban regeneration and fairer competition between all the ports of the United Kingdom. Thirdly, I want to explore the position of my hon. Friend the Minister and his Department with regard to the development of Government policy on the national dock labour scheme.

The case for abolition should hardly require a speech from me in the ninth year of a Conservative Government. Since 1946, the dock labour scheme has been widely criticised. First, it is monopolistic—I thought that we were against monopolies. Registered dock work, once classified, must be done by registered dock workers. It is a criminal offence to employ any other person to do it.

Secondly, the dock labour scheme, which was drawn up in 1946, dates from an era when there were not the measures of employment protection that we have today, and when there were problems with casual labour and instant dismissal.

Thirdly, it is discriminatory. It distinguishes between different classes of workers in an invidious way. How many of my hon. Friends realise that in many ports there are more people employed by the ports who are not registered dock workers than who are? Yet the minority enjoy special privileges with regard to discipline, job security and employment protection, thus causing resentment and envy. It is an entirely invidious distinction between different classes of workers.

Fourthly, and fundamentally, the dock labour scheme is anti-business. It prevents ports from deploying their manpower in the most economic and efficient way. It prevents ports from diversifying into other activities, which means that management cannot manage. The ultimate decisions about the allocation of resources are left to the local joint dock labour boards.

I should like to give an example of the problems involved from the port of Leith in Scotland, where the Transport and General Workers Union is claiming that the positioning and manoeuvring of certain grain conveyors, troughs and ramps should be dock work. One might say that it is entitled to bid for that work, but it is other people's work. The dispute arises from the folding of a previous firm of stevedores. That union is trying to take work for itself away from other people. The stevedores who previously did that work will no longer be able to do so if that claim succeeds. The average age of a registered dock worker in the port of Leith is 53 and his average wage is £12,000 a year.

If that example does not impress my hon. Friends, I shall quote the events of last weekend in Boston, Lincolnshire, where registered dock workers — a registered dock worker in Boston earns £25,000 per year—refused an offer of £450 per man for a two-day cargo unloading job, a subsequent offer of £600 and a final offer from the owner of the wharf of £1,200. The trade union official in Boston explained why they did not want to earn £1,200 for two days work. He said, "We wanted a proper hourly rate." We know what that means — he wanted the ship tied up for three, four or five weeks so that they could earn as much money as possible.

On Sunday, that ship left that port and was unloaded at Dover, which is a non-scheme port. That is absurd, and one of the principal reasons why we should abolish this scheme is the potential that abolition has for creating new jobs. The ports say that, once they are freed of this scheme, they will he recruiting again. Tees and Hartlepool port authority, which is not in an area of high employment growth, would recruit 20 men a year for the next 10 years without the restrictions of a registered dock labour scheme.

The dock labour scheme is not only destroying jobs—my goodness, it has destroyed jobs—but is preventing new jobs being created. We are entitled to ask the Labour party whether it thinks it is morally right for a scheme to pay a man £350 or £400 a week for not unloading nonexistent ships, thereby destroying other jobs that might be created? If that argument is not accepted by the Opposition, they should look at the non-scheme ports and see how their share of the market has risen from some 8 per cent. in 1965 to some 30 per cent. in 1986 and that they now employ some 4,000 men in dock work.

The second great benefit of abolishing the scheme would be the potential growth in areas of very high unemployment and the urban regeneration that would result. Some two thirds of the scheme ports are in assisted areas in Scotland, the north-east, the north-west and Wales. They are riverside areas, areas of urban decay and areas into which we are trying to attract new businesses.

If scheme ports receive inquiries from companies that want to set up some manufacturing, assembly or warehouse activities on a renewed quayside inside the port, the companies suddenly learn that such activities could well be classified as registered dock work and they instantly go away. There are some 20,000 acres of prime industrial land inside scheme port areas that are crying out for regeneration and business renewal.

Is my hon. Friend aware of the paradox that in some of those areas where there is urban devastation, we have one set of laws which removes all restrictions from enterprises setting up within them because they are enterprise zones, yet at the same time, cheek by jowl with that, enterprise is being snuffed out in zones under the dock labour scheme?

That is a very powerful reinforcement of my argument. There are some 20,000 acres of prime industrial land in the scheme ports. That is a huge amount of land waiting for development. It is equivalent to some 300 Canary wharves—if I can put it in those terms—waiting for development, trying to attract new businesses and hoping to create new jobs.

The final effect of abolishing the scheme would be to establish much fairer competition between our ports. How can it be right for those ports involved in the scheme in the north of England to be expected to compete with ports such as Dover and Felixstowe in the south which are not in the scheme? How can the scheme ports possibly hope to compete on an equal basis with ports in the south and along the south-east coast?

Taking the hon. Gentleman back to the point he made about the extension of registration in the ports, when other industries take over, is he not aware that a free port has been developed in Liverpool and none of that work is registered work? As for the registered dock workers, in the port of Liverpool, from the mid-1960s to the present day, the reduction in RDWs has been from around 12,000 to 15,000 at that time, clown to less than 2,000 at present. That makes a complete nonsense of his argument about protectionism in the national dock labour scheme.

That proves my point—that not only is the scheme non-job creating, but it has not been efficient in protecting the jobs which have been lost anyway. Those jobs have not been replaced by the new jobs that we should be attracting to those riverside and port areas. I hope that I have made my case for the potential that should arise from abolishing the scheme.

I turn with some reluctance to the position of Ministers in this matter. The case for abolishing the dock labour scheme is so overwhelming that the inertia of my hon. and right hon. Friends is all the more puzzling. In all fairness, I should exempt my hon. Friend the Under-Secretary of State for Employment from that criticism. I know that he at least understands the case against monopolies, even if he is not prepared to do anything about it. At least he is aware that he is running a scheme that discriminates between different classes of workers, even if he is not prepared to end that discrimination.

I know that my hon. Friend understands how the dock labour scheme restricts job creation, even though he works for a Department that is supposed to be stimulating job creation. I know that he understands the extent to which business in the riverside areas of the north is being blighted, although he and his Department are supposed to be playing their part in the inner-city initiative.

I also know that my hon. Friend is a student of history and that he is aware that some of his Conservative predecessors failed to remove this blight from our ports. I know that he has no wish to see his silence interpreted as some kind of conspiratorial agreement so that, after Aldington-Jones, we are not going to have Connolly-Nicholls enshrined in our history as some conspiracy of inaction to rid us of that scheme.

I have to say to my hon. Friend that there could be two explanations for the inertia of his Department It is possible that the Minister thinks that this is a minor matter and that, as there are now only 10,000 dock workers, it is not the problem that it once was. I hope that I have argued that, not only is it a very serious problem, a major restriction on those scheme ports, but it is blighting the future development of our ports.

Secondly, it is possible that my hon. Friend thinks that the problem will disappear because the registered dock workers are aging. The average age of a registered dock worker is 47, but that does not mean that the problem will disappear. Sooner or later, the scheme ports will have to start recruiting. They will have no option but to start recruiting younger registered dock workers and to continue all the monopolistic practices of the dock labour scheme to which I have referred.

I must urge my hon. Friend to re-table the future of the scheme with his right hon. Friend the Secretary of State and to go back to his ministerial colleagues in other Departments such as the Department of Transport, which is trying to promote fairer competition among our ports and to ensure that all ports are free fairly to compete against each other. He should go back to the Department of Trade and Industry, which is trying to stimulate urban regeneration and attract fresh industry to our urban areas and which is committed to lifting such burdens on business as the dock labour scheme represents.

I hope that my hon. Friend will be able to convince all his ministerial colleagues of the potential for stimulating fresh employment in those ports if the scheme were finally lifted.

First, I should refer the hon. Member for Darlington (Mr. Fallon) to the reasons why the National Dock Labour Board was introduced in the first place. That happened long before the hon. Gentleman came to the House, and probably long before he knew anything about the docks industry.

The hon. Gentleman knows the history of the docks and he will be aware that the docks used to be a labour-intensive industry. It employed casual labour, indeed sweated labour. There was no organisation and there was exploition of the highest level. Dock workers and their families lived in abject poverty in every port in the United Kingdom.

It was not until Ernie Bevin examined the whole question of the dock workers and the port industry in general that some order was brought to the chaos that existed in the docks industry. The docks have gone through several transitions and changes in the way in which ships are loaded and unloaded and there has been a dramatic change in the system of loading ships. All those changes took place in negotiations and modernisation committees in every port and have been accepted by dock workers. That is why there are fewer than 2,000 registered dock workers in the Liverpool docks today, compared to 10,000 to 12,000 in the late 1960s.

There has been co-operation from registered dock workers. It is a fallacy to suggest that the development of the non-scheme ports has been responsible for the decline in the scheme ports. The development of the non-scheme ports in natural deep-water berths was a consequence of the changes in trade with Europe, as opposed to the rest of the world. Those ports were seized on as an opportunity to move trade away.

The hon. Member for Darlington paid no regard, apart from a passing comment, to areas of decline such as the north and north-west. In my area, the entire local economy was port-orientated. Nearly all the industries were adjacent to and related to the docks. Now those jobs have gone, and we have suffered from mass unemployment ever since. Although there has been no restriction on the movement of new industries into those areas, and enterprise zones and free ports have been developed in Liverpool, employment in the port transport industry is still in decline.

It is typical of Conservative Members to argue purely on the basis of competition, and to ignore the social consequences of what has been happening. We should be grateful to those who had the vision to bring in the National Dock Labour Board. They brought order where there was chaos; humanity where it was lacking; dignity where it did not exist. They brought a decent life to men who worked hard to make their contribution to the wealth of the nation. Many Conservative Members had nothing to do with that.

When Conservative Members condemn schemes such as this, they do so on a single basis: they hate them and want them removed because they gave protection, for the first time, to workers. For the first time in history, the working class of this country was protected by law, and that really galls Conservative Members. They approve of protection for the City and for big business, but it is another matter when it comes to protecting working-class men against the hyper-exploitation that was a centre of their casual labour, and ending a system of hiring that treated them worse than animals. Men were herded into a pen like Cattle, and threw their books in, hoping that they would get them back along with work. That is the system that ended with the National Dock Labour Board.

I am not arguing that there will be a requirement for such a board for ever and a day, but I can see no reason for dismantling it at this stage. If it is to be ended, it should be ended after negotiation with the trade unions involved. I hope that the Minister can assure us that, whatever the future of the board, a decision will be made not in the House, but in full consultation with the industry.

We have seen a blatant example of the nausea of Conservative Members when they see protection for workers. Tonight, the hon. Member for Darlington has been clearly seen as an example of Toryism at its worst. I am sure that dock workers throughout the country will recognise the consideration of the Conservative party for the mass of working people in this country.

We have just been treated by the hon. Member for Liverpool, Garston (Mr. Loyden) to a highly emotional history lesson on the national dock labour scheme. In my view, this historic House should be concerned not with preserving men in history books, but with the employment of those who now work in the docks, and who will do so in the future.

I was the hon. Member who tabled early-day motion 275. I did so because of my concern over the wharves and riverside in my constituency. I was somewhat surprised at the rapid upswell of support in the House: 209 of my colleagues supported the motion, which amounts to the highest support among Conservative Members that an early-day motion has received in this Parliament.

That upswell of support is no accident. We in the Conservative party are concerned with developing the assisted areas, and it is no coincidence that the scheme ports by and large fall within those areas. There is an odd combination at present: the dock scheme, which is killing jobs and stunting development, is slap bang in the areas about which we are most concerned.

I come from a borough that is not an assisted area. It is in the so-called plush south-east. Thirty years ago, Gravesham had a maritime and shipping tradition in Gravesend and Northfleet, but today our waterfront is known for inactive wharves, dereliction and unemployment that was until recently the highest in Kent. I have visited the wharves up and down the River Thames in my constituency, and time and again it was the same old story: they move only their own goods to avoid the conditions of the dock labour scheme. A large amount of business could come through if only that did not involve the application of the scheme in all its worst aspects.

Those wharves have done their sums. They know that they cannot do the business because of the cost, the inflexibility and the lack of control over the direct work force that would arise—and that is not to mention the levy payable on the scheme. They know that business is not viable under such conditions, so they do not bid for it, so new jobs do not come to my borough of Gravesham.

Who exactly are the beneficiaries of the national dock labour scheme? They are the non-scheme ports, and, far worse, Rotterdam, Antwerp and other major continental ports. The dock labour scheme is a killer of British jobs, and a developer of jobs on the continent. A company that used to unload bulk goods at a local wharf in my constituency found that, by unloading the very same goods at a continental port and then bringing them over to the south-east of England, it could exactly halve its costs. Moreover, the speed at which the ships could be turned round meant savings of thousands of pounds—or francs, or guilders—which made a major impact on business.

What was the consequence? Yet another wharf in my constituency went to the wall. What happened to the people who worked there? The 55 registered dockers all marched to Tilbury to go on the payroll there—thus compounding the problems of Tilbury, which is itself closing docks because it cannot compete for business. Twenty-seven of my local people who were the second-class workers of that wharf went straight on the dole.

The result of the scheme is a tragedy. We know that there is more business, but we cannot get it, yet that is at the very time that Kent county council is opening up our waterfronts with brand new roads through the Thames-side industrial route. We could have thriving wharves, with much heavy goods traffic coming off the major roads through the south-east of England.

The scheme is iniquitous. It has already cost British industry more than £450 million. It has done for dockers' jobs. In 1947, in the golden years of which the hon. Member for Garston spoke, Britain had 73,000 dockers. This magnificent scheme has worked its will and there are fewer than 10,000 registered dockers today—quite a success. Elderly men, who will be gone in 10 or 20 years, are left in the industry. Nothing of our dock industry will be left if it is allowed to continue to wither.

The consequence for those who work in the docks is a class structure. The upper class consists of those members of the Transport and General Workers Union docks section, who get all the best conditions and arrangements. The second-class citizens in the docks are also members of the TGWU. They resent what the docks section gets away with.

Let me give an example of another wharf in my constituency which considered starting up. It held discussions with the TGWU clocks section, but it was told that if it went ahead the workers would have to be sacked and cleared away. The workers who would be slung on the dole are fellow members of the TGWU who do not happen to be the princes of that particular section.

We must set our docks free. We need to deal fairly with the 10,000 dockers remaining in the scheme, either by making a settlement that guarantees them a job for the remainder of their working lives—I mean a job, not a skive — or a one-off compensation payment to individuals after which they can compete for jobs like anybody else, in my borough, Liverpool or anywhere else.

The Government should have the courage of their convictions and tell the port employers and the union that it is now time to negotiate the abolition of the scheme. I hope that my hon. Friend the Minister will he earning the title of St. Patrick of Teignbridge by slaying this particular dinosaur.

I hope that the Minister will continue to resist the pressures that are being brought upon him by whatever number of hon. Members. The hon. Member for Darlington (Mr. Fallon) said that he was backed by 200 Conservative Members. I am glad to see that quite a number of them have evaporated and I hope that all the rest of them will lose their enthusiasm for the proposition as time goes on.

It is interesting when Tories come before the House and say that we should forget the history of the subject. It is natural that they should do so. With some honourable exceptions, most Tories resisted any attempt to introduce any form of proper control over the docks and industrial relations and to establish a proper system for working the docks.

In the old days, the fight was against casual employment in its most scandalous form. It was, as my hon. Friend the Member for Liverpool, Garston (Mr. Loyden) said, Ernest Bevin and some others in the TGWU who led the campaign to establish a dock labour scheme to overcome that in the first place.

Later on, we were faced with a serious problem in the rundown of the docks. Everybody knew that there would be a pretty big reduction in the number of people employed in the docks because of the technological changes. The problem was whether that could be done in an orderly manner or whether a series of industrial actions and strikes would accompany that serious change that had to be undertaken.

Faced with that problem, what happened? In those days, some Conservative Members had a slightly better approach, certainly than Conservative Back Benchers today. Lord Aldington was the spokesman for the employers and the Aldington-Jones agreement was an honourable agreement whereby the rundown was enabled to take place in an orderly way with consultations between employers and trade unions throughout. That was a proper form of industrial democracy for dealing with the problem. [Interruption.] It is all very well for Conservative members to sneer. They are sneering not only at Jack Jones, who made the agreement on behalf of the TGWU and the trade union movement, but at Lord Aldington, who saw the wisdom of trying to make an agreement which would be held to.

Agreements are not there to be torn up at the convenience of one party. Apparently, Conservative Members are asking that all the undertakings made by Lord Aldington on behalf of the employers and the employers section on the board should be abandoned now that the rundown has taken place.

In many of the ports the number of dockers has been considerably run down. I do not say that there have not been any disputes. There have been a few, but there would have been far greater industrial trouble and disturbance in the docks if it had not been for the existence of the scheme and the determination of people on both sides to keep their word and to abide by their undertakings. Having agreed that procedure, they carried it through. If changes are required, there are appropriate methods by which questions can be raised on the board running the scheme. That was all agreed.

For anybody to come before the House and say that the scheme should be torn up unilaterally is a recipe for industrial trouble of the first order. Quite apart from that, it is a most dishonourable proposal. I imagine that one reason for the alleged inertia of the Department of Employment may be that it retains some remnant of a sense of honour in these matters and feels that it should be helping to protect the scheme which has made a considerable contribution to industrial peace in Britain in a place where, for many years, there were great dangers. Without it, changes in the way in which dock work was done would have been highly disorganised and accompanied by appalling strikes and industrial action of one kind or another, which would have wrecked our commerce at critical moments in the past 10 or 20 years. Therefore, I hope that the Government will stand by the agreement.

If change is required, the proper way, as my hon. Friend the Member for Garston said, is to discuss how amendments or alterations can be made. No doubt the TGWU and others involved will, in turn, put forward other propositions. I know that that is contrary to the way in which the Government try to deal with matters. They think that the way to deal with industrial relations is to say, "This is what we want. This is what workers must take and this is the way in which the whole change should be carried through." That is the way in which they try to run industrial relations in Britain, but they are gradually discovering that they come up against bigger obstacles.

I was glad to see that the Government were taught a lesson in the Ford dispute the other day, and there have been other instances. Other cases may arise in other areas too. [Interruption.] It is all very well for hon. Members to laugh. The agreement was very different from the one the Government expected in the first place, and that is very healthy for our industrial relations.

I hope that the Government will take no notice of the plea of the hon. Member for Darlington. I hope that the Minister will tell his hon. Friends—in private, if it is too difficult to do so in public—that it would be utterly dishonourable to have a unilateral breach of the scheme which has benefited Britain's dock industry for many years. It would be especially dishonourable because that scheme, among its many assets, gave people guarantees of employment.

I know that guarantees of employment stick in the throats of modern Tories. It did not stick so much in the throat of Lord Aldington and some of the other Tories of 20 or 30 years ago who made the agreement. They did not object on such grounds. A major part of the scheme was to ensure that dock workers should have guarantees of employment over a long period. If the Government were to yield to pressure from Back Benchers, one consequence would be that the jobs of many dock workers would be under threat, and once dock workers knew that, there would be industrial trouble.

Does the right hon. Gentleman accept that if dockers in the scheme have guarantees of employment and other benefits as a result of the protection, they enjoy those benefits only as a result of guarantees of unemployment to others who would otherwise secure employment in the docks and enjoy the benefit of being in work?

The hon. Gentleman is talking absolute nonsense, particularly given the unemployment that we have had to endure over the past five or six years. Under the scheme, the dockers have a better guarantee of their employment than many other sections of the community, so it is a very good scheme. A similar industrial democracy system should have operated in many other trades, occupations and industries, so that better industrial relations would have been preserved. Many industries have not had that protection over the past seven or eight years.

I hope that the Government will resist any pressure in this respect and will recognise that if they are to seek change they should raise the matter under the provisions of the scheme. They cannot make changes arbitrarily and unilaterally without bringing dishonour on themselves and perhaps much greater industrial trouble. I urge the Government to reject—although they may have to do it politely—the nonsense from their Back Benchers.

I congratulate my hon. Friend the Member for Darlington (Mr. Fallon) on selecting this topic, as it is a subject which many Conservative Members are keen to debate and on which they would like to see the Government take some action.

The hon. Member for Liverpool, Garston (Mr. Loyden) spoke about history. I have a family interest in the docks, as my maternal great-grandfather, Tom Mann, was one of the three leaders of the 1889 dock strike and led the fight to get rid of the casual system, which was abolished as a result of the 1946 agreement. We have moved on 100 years since then.

Not all of us.

My hon. Friend is quite right; many Opposition Members are stuck in the 19th century. The more progressive of them are in the 1930s, but the rest of us have had to move on to consider the effects of the scheme today, not 100 years ago, 1946 or even 1976, when the right hon. Member for Blaenau Gwent (Mr. Foot) introduced the Dock Work Regulation Bill.

The Aldington-Jones agreement was referred to by the right hon. Member. What agreement took place with the people in the cold store warehouses in Tilbury, who were told that their jobs would be handed over to the dockers? The people who worked in the container places were not consulted by Jones or Aldington, or by the right hon. Gentleman, before the proposals were made. It was proposed that the definition of "port" in the Dock Work Regulation Act 1976 should be extended to cover a radius of five miles, but that never came to fruition because of opposition from the workers in those stores.

We are entitled to ask the right hon. Member for Blaenau Gwent what we should learn from his experience. In the Jones-Aldington report one sees the corporate state mentality which underlay all their recommendations. I quote from page 8, headed Container Groupage:

"It can thus be said with fair assurance that a good proportion of groupage containers are now being dealt with either by registered dockworkers or by other workers under acceptable conditions. But some container groupage work is still being done, sometimes close to the ports, under bad conditions."

The committee recommended that if other workers were carrying out the work, apart from registered workers, it should only be under proper conditions, and all the undertakings which handled groupage containers should satisfy themselves that the requirements were being met.

The Aldington-Jones agreement wanted to hand over to the dock workers the container work. The report went on to say—this is a lovely sentence which is worth savouring:

"In making this agreed recommendation the Committee feel it right to record that the trade union members of the Committee firmly believe that the Dock Labour Scheme should be extended to all ports and wharves."

You bet your bottom dollar they did. They would like to have a monopoly control over what happens in the docks.

I am delighted to say that common sense has prevailed and since then the number of registered port workers has declined, but the number working outside the scheme has increased because employers have seen, as have employees, that there are benefits to be gained from not being a registered port worker.

I should mention the working practices in the dock labour scheme. The first is ghosting. If an employer needs to bring a specialist worker on to the dock, such as a crane driver, he must be paired with a docker, who in theory stands and watches but in practice goes home or goes to the pub at 10 o'clock in the morning. Then there is bobbing. A set number of dock workers are assigned to the job—half of them do the work and the others bob off.

Moonlighting means that clockers are guaranteed fallback pay when there is no work for them to do, earn extra work driving minicabs or running market stalls. Then there is disappointment money. Employers pay compensation in return for lost bonuses when a ship fails to dock or a cargo is cancelled. There is not much disappointment for the workers, but there certainly is for the employers. The Spanish customs have meant, according to page 82 of the National Dock Labour Board annual report of 1986, that unemployment of dockers in the scheme is 21 per cent.

With regard to discipline under the scheme, I refer to an answer given to my hon. Friend the Member for York (Mr. Gregory) on 19 February. In every year since 1981, every employee who has been summarily dismissed under the dock labour scheme has been immediately re-employed —some discipline! If workers know that they will be reemployed immediately, they might as well be undisciplined in the first place.

As for the administrative costs of the board, a parliamentary answer on 14 January showed that a levy of some £4 million per year is imposed on employers, which has meant that the profit and loss of the scheme for the five major ports has varied between a loss of £1·5 million in London and profits of £2·4 million in Medway ports, £2·4 million on the Mersey and £2 million in the Manchester ship canal. There is a discrepancy between the best and worst ports in the scheme.

In order to find out the costs of the hoards, I asked my hon. Friend the Under-Secretary whether he would tell me what the administrative costs of local dock labour scheme boards were. The answer was that the information was not made public. I then asked why it was not made public, and the answer was:

"I regret that the information is not held centrally and could only be obtained at disproportionate cost."—[Official Report, 3 February 1988; Vol. 126, c. 644.]

That does not tell me why it is not made public, just that it would cost a lot of money, so we do not know how much the boards are charging their clients for the use of the scheme.

My hon. Friend the Member for Gravesham (Mr. Arnold) referred to costs to the users of ports and mentioned Rotterdam and Antwerp. It is interesting to note that the average cost per tonne in Rotterdam and Antwerp is between £2·50 and £3·50. In the United Kingdom, the average cost per tonne is between £7 and £15. Only a very patriotic cargo vessel owner would choose the United Kingdom if he had a choice between unloading in Europe or in the United Kingdom.

I want to examine the costs that the scheme imposes on users in the United Kingdom and I take as my example the unloading of fish. In Aberdeen, which is a scheme port, the cost is £3 a box of fish. In the non-scheme port of Grimsby, the cost is £1·44 a box. That means that the trade in Aberdeen is gradually declining, while trade in Grimsby is beginning to increase.

I want also to consider dockers' pay. We have come a long way since 1889 when Mr. H. H. Champion said:

"The Dock Labourer has no; unaptly been described as 'a man who always lives with only half-a-crown between him and starvation'."

That starvation is a long way away today. The average pay of a dock worker in the dock scheme today is £309·78 a week. However, that is only an average. In Port Talbot in south Wales—and south Wales has the second lowest wage rates in the United Kingdom—the gross wage of a dock worker is £472 a week. That is almost £300 a week more than the average wage in Port Talbot. People must be queueing all the way to Swansea to get a job in the Port Talbot docks. However, the number of people wanting to send their ships there is another matter.

According to the National Dock Labour Board the maximum severance pay in 1986 was £25,000. I could continue to cite the costs of the scheme to employers and the people who use the ports. However, I want to consider the scheme's effects. I have received a letter from Mrs. Eleanor Laing, who stood at the last general election for the Conservative cause in the constituency of Paisley, North. She has had discussions with business men who want to operate a new dock in Port Glasgow. She states:

"They are required to apply to the Clyde Port Authority for an Operations Licence, which they have duly done. The Clyde Port Authority has stated that one of the conditions of the granting of an Operations Licence is that they 'shall employ Registered Dock Labour at the said location on all activities falling under the definition of "Dock Work" and shall further adhere to the decisions laid down from time to time by the Clyde Port Authority and the National Dock Labour Board.' Negotiations have taken place with the Clyde Port Authority and it appears that the Company who intend to operate the Dock would be obliged to employ Registered Dock Labour which they calculate would add to their operating costs by approximately £4,200 per week. Such an added expense would make their business unviable and consequently they would be unable to put the Dock into operation and to provide the employment opportunities which they had hoped would result from their venture."

That is an example of the effect of the scheme on a company which wants to move into the dock labour scheme.

I suggest that the scheme is a restraint on trade. It prevents the creation of jobs in the inner cities. As my hon. Friend the Member for Darlingtion said, the derelict land in the port areas is equivalent to 300 new Canary wharves. That is five times the area of Paris and that land is lying vacant and waiting for an inner city initiative. That initiative will work if the scheme were abolished.

I now want to consider the attitude of mind operating in the National Dock Labour Board that underlies all its operations. Paragraph 19 of the National Dock Labour Board annual report is entitled "Definition of Dock Work." It states:

"Definition of dock work issues continued to be a problem and 12 cases were dealt with during 1986. There is growing concern over the increasing number of non-Scheme projects which have been and are being developed, often in close proximity to existing Scheme ports. This has been particularly noticeable on the Ouse and Trent rivers, and in the vicinity of the Wash. In some cases, the National Board took the unusual step of expressing its concern to the local authorities which were involved in the planning applications. In one case, Sutton Bridge, the matter was referred to an Industrial Tribunal. Unfortunately the Tribunal's decision went against the Board and in consequence, the development of this new facility, with its potential for adversely affecting the traffic and employment of registered dock workers at the nearby Scheme ports is the cause of anxiety both locally and to the National Board."

I could not give a better example of the corporate state monopoly attitudes embodied in the whole idea of the dock work scheme and the workings of the National Dock Labour Board.

What effect has the dock work scheme had on the ports in this country? My hon. Friend the Member for Darlington told us that in 1970 nearly 40,000 people were employed as registered dock workers. There are now fewer than 10,000. In 1967, 92 per cent. of the total non-fuel traffic entering the ports went to registered docks. Today only 70 per cent. goes to registered docks. That clearly shows the effect of the scheme on the employees within the scheme and on their livelihoods.

We should be taking action. We should not simply let the scheme wither away. My hon. Friend the Member for Darlington mentioned the average age of dock workers in the scheme—only 46·3 years. There would be dockers in the scheme for nearly another 20 years even if not one more docker was recruited; and we are aware that new dockers are being recruited to the scheme.

Some 22 per cent. of registered dock workers are under 40, about 40 per cent. are between 40 and 50 years old and 36 per cent. are between 50 and 60 years of age. The scheme will not wither away. It will go away only if Government action is taken to end the scheme. A policy based simply on allowing the decline to continue cannot create the conditions in which the industry can flourish and in which we can provide new jobs.

I believe, therefore, that we should take the advice provided by my right hon. learned Friend the Member for Richmond, Yorks (Mr. Brittan). We should give employers and the unions six months to get together to reach an agreement to get rid of the scheme. If at the end of that time they cannot agree, the Government must act to end the scheme. There would be sensible severance arrangements and retirement with dignity. I accept the promise made by the employers that they have no wish to return to casual employment. They recognise that the only way forward for the scheme is through the provision of fair competition.

We know that Labour Members have doubts. Only 44 Labour Members backed an amendment to the early-day motion tabled by my hon. Friend the Member for Gravesham. Most Labour Members did not sign the amendment. Many people who work in the ports that are not registered want to see an end to the "jobs for life" provided by the Aldington-Jones agreement. They believe that the significant amounts of idle time, high earnings and high severance payments enjoyed by employees in the scheme cannot be allowed to continue.

Deregulation of Britain's ports would do more than anything else to help increase the prosperity of the areas and provide the vital regeneration that they need. I urge the Government to have the courage to grasp the nettle and end one of the last Socialist legacies of the .Attlee Government.

The hon. Member for Pembroke (Mr. Bennett) is mistaken if he believes that the number of Labour Members' names to the amendment to the early-day motion to which he referred is an accurate reflection of the views of Opposition Members on these matters. He is well aware of the rather casual way in which people approach most early-day motions.

The hon. Member for Darlington (Mr. Fallon), who opened the debate, is well known for his opposition to the scheme, and he rehearsed the arguments that we have heard before in his usual articulate way. We do not accept his arguments, and I hope that the Government will take this opportunity to reaffirm their support—support that has existed under successive Governments — for the continuation of the scheme.

It was right that my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) and my hon. Friend the Member for Liverpool, Garston (Mr. Loyden) should remind us briefly of the origin and history of these arrangements. There was enormous exploitation in the docks, and the casual labour system involved enormous hardship and poverty, not only for those who worked in the docks, but for their communities. There can be no doubt, not only that the scheme has dramatically changed that situation, but that major elements of it still provide benefits for dockers and the communities in which they live.

We believe in job security and in the dignity at work that the scheme has given dockers. Those important benefits should not be thrown away. If the scheme were abandoned or repealed, as Conservative Members suggest it should be, there would be a risk of deterioration in the conditions in which dockers work.

It is true that employers have expressed reservations about, and opposition to, the scheme. Undoubtedly, employers often wish to have complete control over their labour force and resent the role of the trade union. We believe that the arrangements have provided a well-trained, skilled labour force for the ports and docks. Conservative Members seem to think that the reduction in the number of dockers shows a weakness in the scheme. Conservative Members know better than I do that there has been an important change in the pattern of Britain's trade. Entry into the European Community involved a major shift in the relative importance of various ports. A reduction in the labour force is often a consequence of investment and the increased productivity associated with greate efficiency.

Can the hon. Gentleman tell me which of the ports are in decline and which are growing? Can he see any distinction between the two, based on whether they are in the scheme or out of it?

I am making the point that we recognise that there has been a change in the pattern of trade. It is true that the proportion of our trade that goes through scheme ports is lower than that through non-scheme ports, but a very substantial amount of our trade goes through scheme ports. Conservative Members would make a great mistake if they thought that that trade could easily be diverted elsewhere or that we should not be concerned about the enormous disruption that would occur if there were a breakdown in the relationship between the dockers' trade union and their employers. I hope that no hon. Member would want such a breakdown. Nothing in this world is sacrosanct. Of course there must be changes and developments, but surely we all want them to be reached on a proper, sensible and agreed basis.

This Government, like previous Governments, have provided valuable financial assistance in recent years in helping to meet the severance costs for registered dock workers. This scheme, which, as the Minister would be the first to point out, is separate from the dock labour scheme, is due to be extended because it ends this month. The Government are considering this matter. I assume that agreement will be reached on the continuation of some financial assistance from the Government. These severance arrangements are viable factors in the scheme's operation and are important for the employers. I do not believe that they contravene the EEC's provisions.

I want to encourage the Government to maintain a responsible approach to these matters. It must not be forgotten that the scheme is of great benefit to many people and that it should not be terminated, but must be adjusted and developed. All the aspects can be negotiated. I hope that the Government will make it clear that the position is as the Prime Minister reiterated only a couple of months ago in the House—that the Government have no plans to scrap the scheme.

I should like to sound a slightly different note in the debate. Conservative Members have put well a solid case on the harm that the dock labour scheme does. The Opposition have expressed solid support for the dockers who are trying to preserve their jobs. Conservative Members do not believe that the scheme is appropriate in today's climate to preserve jobs.

One need only look at my port as an example. When I was selected as a candidate to fight Dorset, South, there were 25 dock workers in my port. By the time I became a Member, there were 19. The last time that I spoke on this matter I thought that there were 16 but, apparently, there were only 15. I have not checked to find out how many there are now, but one can see that there is a terminal decline. I do not have a dock employer in my constituency —the dock employers are outside it—and there are 15 dock worker votes, a number which is rapidly decreasing. I am interested in preserving those dock worker jobs.

I know what my hon. Friend the Minister may be thinking about the scheme—that perhaps one day there will be sufficient legislative time for the Government to get around to scrapping it — but we must do something before we talk about scrapping the scheme. We must look at our docks and consider how to go forward. We had legislation 15 years ago, and we can argue about whether it was good or bad. There were 50,000 dockers then. There are fewer than 10,000 now, and the number is constantly decreasing.

We need to consider what we do in our ports and how we organise our docks for the future. It would be right for my hon. Friend the Minister to say clearly that the Government are not satisfied with the status quo and that they wish to hear from the port employers and the dock workers their proposals for the docks' future.

Not long ago, I had a meeting with my dockers. They said that, although they wanted to preserve the scheme —to me it may be a sacred cow—they were willing to negotiate. The Government go about all these matters sensibly. We have built up industrial relations. The jibe about Conservative industrial relations not working in the Ford dispute could not be further from the truth. Clearly the Ford dispute was solved by using Conservative industrial relations.

We should send to the dock workers and dock employers the message that we want to hear their proposals, that we shall find time in our legislative programme next Session to get the scheme changed — perhaps abolished, but certainly changed—and that that is our commitment.

I should like first to summon up all my sincerity and say how grateful I am to my hon. Friend the Member for Darlington (Mr. Fallon) for giving us the opportunity to debate this issue. I praise him for his good fortune in ensuring that we can discuss these matters at a reasonable hour instead of early in the morning. I should perhaps be even more enthusiastic about having the first debate this evening if I were not fairly certain of having the last as well.

May I also say to those of my hon. Friends who have spoken — all of them with considerable force and eloquence and with a fair degree of knowledge about the issues involved—how much I have appreciated their contributions. I have in mind particularly my hon. Friends the Members for Gravesham (Mr. Arnold), for Pembroke (Mr. Bennett) and for Dorset, South (Mr. Bruce). Even if I may not entirely agree with their conclusions, I can certainly appreciate the way in which they have put their argument.

Since the beginning of this new Parliament, the future of the dock labour scheme and the question whether it should be abolished have assumed some prominence. A number of hon. Members have asked questions about the scheme and I understand that early-day motion 275, which seeks Government action towards abolition, has attracted 210 signatures rather than the 209 claimed for it this evening. Ministers can therefore be in no doubt as to the significance of the scheme to Conservative Members as well as to the ports industry at large, and we are well aware that the issues raised by it are highly emotive.

However, the more one studies the issues involved, the more one becomes aware of the complexities. It is one thing to allege that the scheme is completely outmoded and a hindrance to flexible development of ports but quite another to assess the true weight of the impediment. It is yet another thing to conclude that repeal would solve all the industry's problems or that no progress can be made while it still exists.

The Government's position has been made clear throughout the various exchanges. It is only right for me to repeat that that position remains unchanged. There are no present plans to abolish or amend the scheme, although, as with other important statutory arrangements, its workings are kept under review.

As critics and supporters alike point out, the scheme derives from early post-war legislation designed to remedy the ill effects of the old-style casual working and the chaotic conditions of employment that existed in the docks before world war 2. The concept of joint regulation of relations between port employers and registered dock workers was held to be in the interests of both. Rightly or wrongly, that has led to a large body of legislation down the years.

So it was that the first national dock labour scheme was established in 1947 under the Dockworkers (Regulation of Employment) Act 1946. There followed the 1967 dock labour scheme, reflecting the 1965 Devlin inquiry into industrial relations, which essentially continues in operation to this day. Devlin marked an important turning point in the history of manpower arrangements in the docks. Before then, dockers were employed by the National Dock Labour Board and allocated to employers on a daily or half-daily basis. As a result of the 1967 scheme, dockers for the first time became permanently employed by specific employers, thus finally putting an end to casualism.

A system of licensing, to reduce port employer numbers, was embodied in the Docks and Harbours Act 1966. Finally, the Dock Work Regulation Act 1976 was an attempt by the last Labour Government to introduce a new and even wider scheme, but Parliament, in its wisdom, refused to approve their 1978 draft.

A statutory employment scheme necessarily entails some administrative on-cost. Hence we have the statutory National Dock Labour Board which runs the scheme, supported by a network of local boards, all consisting of an equal number of employer and union members.

The board maintains registers of dock works and employers which have a statutory monopoly over dock work as defined by the scheme as it applies at each individual port. It also regulates recruitment and discharge from registers and the allocation of registered dock workers to individual employers on a permanent basis. It administers the RDW severance and pension scheme on behalf of the industry, as well as medical, training and welfare facilities.

I have tried to describe the history of the scheme in the least emotive way possible. That history has been referred to not only by my hon. Friend the Member for Pembroke, who, through his family, has a direct knowledge of how the scheme first came about, but by the right hon. Member for Blaenau Gwent (Mr. Foot) and the hon. Member for Liverpool, Garston (Mr. Loyden). As I have said to the hon. Member for Garston on previous occasions, I do not for one moment doubt the sincerity with which he speaks about these matters. However, when he refers to the forties, it is difficult to know whether he is talking about the 1940s or the 1840s. Time moves on, and as politicians we try to derive the ability to learn from history and develop our ideas from it.

I do not know what I have done to deserve it, but I have had to listen to the right hon. Member for Blaenau Gwent making speeches on many occasions. I always envy him the style of his speeches. He has a Celtic eloquence which, as someone who is at least half Celt, I can wholly admire. However, once I have got behind the undoubted skill of the right hon. Member's delivery and can concentrate on his approach to the history of these matters. I find that he makes the ancient mariner look like the epitome of yuppy modernity.

Again, one can never doubt the sincerity with which the right hon. Gentleman speaks, but he sems to be completely unable to realise that times move on, decade succeeds decade and century succeeds century—[Interruption.] Does the right hon. Gentleman wish to intervene?

I am very gratified, because at the beginning of his speech the Minister said that he was going to keep the scheme in being. Anything that he says about me after that I can easily take.

I have tried to say the nicest things that I can about the right hon. Gentleman. I had hoped that I might be able to embarass him, as he may have been able to embarrass me, but perhaps he has been at the trade we both pursue for so long that he is unembarrassable. We shall see.

Let me deal with some of the most frequent criticisms levelled against the scheme. Perhaps the main criticism is that it gives registered dock workers the unnatural privilege of a job for life. Events have shown that there is rather more to it than that. Job security really owes more to the industry's own Jones-Aldington agreement than to the scheme itself.

The ports industry cannot be immune from today's competitive pressures and technological changes. The 1960s container revolution, the advent of roll-on/roll-off traffic and other advances precipitated a truly drastic rundown in labour requirements. The switch of trade from west coast ports to those on the east and south coasts, stimulated by our membership of the European Community, also affects the distribution of manpower to a considerable extent.

Adaptations have taken place, the dock labour scheme notwithstanding. Overall, from a peak of 81,000 in 1955, the number of RDWs declined to 27,000 in 1979 and to under 10,000 today. As my hon. Friend the Member for Dorset, South suggested, it may even be declining at this very moment.

Admittedly, because of the way in which the scheme and the associated Jones-Aldington agreement work together, severances of RDWs from scheme ports are effectively made voluntarily. In these circumstances, some large financial inducements have been needed to ease the industry's transition to proper manning levels.

Currently, the normal severance offer amounts to a maximum of £25,000 per man, after 15 years' service, of which the Government and the port employer concerned each pay 50 per cent. This is undoubtedly generous, but the fact remains that the industry has gone a long way towards eliminating its manpower surpluses in most ports. Manning is now much tighter and everyone involved can take much credit for that.

Questions have been asked about what arrangements will apply after the end of this month when the Government's present agreement with the port employers comes to an end—a particular concern of the hon. Member for Edinburgh, East (Mr. Strang). The employers are of course responsible for setting the severance terms offered to registered dock workers. They have said that they cannot determine future arrangements until they know what Government financial assistance will be available.

For the moment, however, the Government cannot make any specific pledge, as any further assistance has to be cleared in principle with the European Commission under its state aids regulations. That process is likely to take a few weeks yet, but of course that in itself has no implications for the future of the dock labour scheme.

A related criticism of the scheme is that it weakens management's ability to manage and reinforces union attitudes that make for inefficiency—a point made by a number of my hon. Friends. Certainly, there is no shortage of reports of disreputable working practices. Scheme or non-scheme, these can only lead to a loss of trade to overseas competitors and must indeed have contributed to the loss of jobs over the years. That must be bad for all whose work and future are bound up with the industry.

However, it has to be said that local managements seem to vary considerably in their ability to run successful cargo-handling operations. Despite the constraints, many scheme ports are profitable and, as I have already suggested, the industry has adjusted and responded successfully to enormous technological changes over the years, and that could not have been achieved without effective management.

The same arguments present themselves when considering the related position that the scheme militates against enterprise, competitiveness and development of the ports. Those were some of the concerns mentioned by my hon. Friend the Member for Darlington and echoed by my hon. Friend the Member for Gravesham.

The history of the past 20 years has shown that the ports have, in fact, worked through a profound revolution in their methods and operations, which has required enormous investment and a readiness to adapt. Some may say that that has been achieved in spite of the scheme, rather than because of it, but clearly some managements have been able to succeed better than others.

None of this is to deny, however, the perennial need to remain competitive, and to the extent that dock workers and their unions abuse the scheme, rather than use it constructively, they do, indeed, hamper their own prospects.

On that point, recent press articles have highlighted some of the so-called 'Spanish customs'. My hon. Friend the Member for Pembroke has referred to 'ghosting' `bobbing' and 'moonlighting'. Obviously, such practices ultimately have the effect of undermining the employment prospects of those who indulge in them. Hon. Members can probably think of similar practices. Such practices are far cry from the maxim, "A fair day's work for a fair day's pay," to which trade unionists have traditionally subscribed.

Finally, it is said that the scheme is anachronistic and no longer necessary for its original purpose. I suppose that it would be true to say that, starting from now, nobody with the industry's well-being at heart would design something so rigid and bureaucratic. However, that is not the same as pressing ahead at once with repeal. In my view, all those who wish to preserve the scheme, including Opposition Members, have a duty to show how it can be made to assist the industry and how abuses can be stopped.

I repeat that it is remarkable that we hear tales about how the dock labour scheme came into practice and the undoubted miseries under which dockers were made to work in the previous century from Opposition Members, when the leader of the Labour party was able to make a joke at his own party conference about dock workers, saying that it was not entirely realistic to say to a man who has a villa in Marbella, "Come on, brother, let me take you out of your misery." Perhaps to that extent, the leader of the Labour party is slightly in advance of some of his hon. Friends to whom we have listened tonight.

If the speeches of my hon. Friends tonight are taken at their face value, mere abolition of the scheme would mean that all the problems of the employers could be removed at a stroke. It is heartening to think that that could be so, but, despite the considerable eloquence and enthusiasm that my hon. Friends have shown tonight, I cannot believe that the mere abolition of the scheme would have all the desirable effects that they seem to believe.

I apologise to the Minister, to Conservative Members and to my right hon. and hon. Friends for the fact that I have not heard much of the debate. Therefore, out of courtesy to the Minister, because I know that he would not seek to come back on what I say, I shall not take any great issue with the points that he has made.

However, from the debate that I have heard, and from all my experience of the dock industry — not as an employee, but as a Member of Parliament representing the port of Grangemouth over a fairly large number of years — my experience is that the National Association of Port Employers has sought for several years to have the national dock labour scheme terminated.

I do not accept that the future of our ports depends on whether that scheme continues. My hon. Friends may he surprised at my saying that. I do not believe that the future of the ports in the United Kingdom — especially in Scotland, and even more especially on the east coast of Scotland — depends primarily on the attitude of the National Association of Port Employers, or even on the attitude of the Transport and General Workers Union. It depends primarily on the owners of the vessels. From the debate that I was able to hear, I noticed that there was little or no reference to the shipowners.

For the benefit of my Scottish colleagues who are present, I shall relate the stark reality of what is happening in the Scottish ports at the moment and has been happening for a considerable number of years under a scheme called the grid scheme.

Simply explained, if one takes as an example the whisky industry in Scotland, one could put a load of whisky on to a lorry in the city of Perth, where much of our whisky is made, and have it transported free of charge down to the non-scheme port of Felixstowe. The road haulage costs would be paid for by the shipowner, on the basis that it is much cheaper to pay those costs than to have the vessel steam the additional distance to Grangemouth or Neath, which is near the constituency of my hon. Friend the Member for Edinburgh, East (Mr. Strang), or to any of the east coast ports of Scotland.

That grid scheme has had interesting results in Scotland during the past 10 years. Ten or 12 years ago, 75 per cent. of all goods manufactured in Scotland for export were exported from ports in Scotland. That is a significant figure, but that 75 per cent. has now been reduced to 25 per cent. I agree that in a sense that is because Scotland is exporting less, but it is primarily because of the grid system, whereby the shipowners pay the road haulage costs from the point of departure to the non-scheme port of Felixstowe. The scheme is having a devastating effect on the port industry in Scotland, both east and west. The port of Glasgow has closed down almost completely. It was a busy, thriving port until about 10 years ago.

When I first went to Grangemouth to represent that constituency, there were 800 dockers. On hearing the Minister talk about technological change, I was reminded that Grangemouth was the first port in Scotland to be containerised. Our dockers in Grangemouth did not put up any opposition to the advent of mechanisation and, as a result, we are left with the most obsolete equipment. By that I mean that, if one wants to load a vessel eight containers across in the port of Grangemouth, despite its deep water for 24 hours a day, one can load the vessel only four across. One must then take the vessel out, turn it and bring it back in so that it is then possible to load the other four containers from the other side of the vessel. That is because the arm of the gantry that loads the containers on to the vessel is 17, 18 or even 20 years old and is now out of date.

Because of the lack of investment in the port, we in Grangemouth, having accepted containerisation in its early days, have been left behind in terms of mechanisation. As a result, the work force in Grangemouth has declined from about 800 dockers when I first went there to under 300 dockers now. In all honesty, I should point out that many of those 300 dockers are, as we say, "sent up the road" almost every day of the week because there are not sufficient vessels coming into Grangemouth to employ them full-time.

I urge the Minister to take on board my comments about the future of the port industry in Britain. If he thinks that there is anything to answer in what I am saying, perhaps he could drop me a note. The future of the port industry in Britain is not really tied up with the national dock labour scheme. I could advise the National Association of Port Employers that the national dock labour scheme will be broken over my dead body. I do not want to go into history, but I can remember what happened in the days of casual labour. I do not want to recite the incidents that took place then, because that would not do any of us any good. We all have our own memories of what happened in the days of casual labour. The National Association of Port Employers has got it completely wrong.

The future of Great Britain's port industry will not he decided by that association or—I hesitate to say it, but it must be said—by the Transport and General Workers Union and the national dock labour scheme. The future will be decided almost entirely by the attitude of shipowners. If the grid system, which has prevailed in Scotland to our serious disadvantage, is allowed to continue, the net effect will be the continuing closure of Scottish ports. Once the ports have been closed, the national grid system will be abolished and the road haulage costs will be added to the costs incurred by the company that is exporting goods. The company will have to pay for the transport of goods from cities such as Perth, Glasgow or Edinburgh down to Felixstowe or any other port from which the goods will be exported.

I hope that the Minister and his hon. Friends will give some thought to the part that will be played by the shipowners in deciding the future of our port industry. I believe that the role of the shipowners will, in the months and years ahead, become central to the issue that we have had the good fortune to debate tonight.

I am grateful for this opportunity to open this debate on the inner cities. As recently as Monday, the House heard a statement by the Chancellor of the Duchy of Lancaster, who is also a Minister at the Department of Trade and Industry, on the Government's project for the inner cities. That statement was made on behalf of "She who must be obeyed". We understand that, as a result of that remark, a previous Leader of the House found himself in disgrace and ultimately departed from this House. Nowadays, he is to be found in the other place.

Monday's statement and the Minister's response to questions is best illustrated by the observation of my hon. Friend the Member for Newham, North-West (Mr. Banks):

"Why does the Minister not just come clean and tell us that the statement is part of the process of dismantling Labour-controlled local authorities in the inner cities…and turning them over to Tory business men to take decisions behind closed doors?"—[Official Report, 7 March 1988; Vol. 129, c. 43.]

My hon. Friend should know about the inner cities because he is a former distinguished member of the Greater London council. We still have bitter memories of the abolition of the GLC. It was a major planner of London's affairs and it faced the difficulties encountered by Londoners in a progressive manner. Its work was appreciated by Londoners on the western fringes, such as those in the London boroughs of Ealing and Hillingdon, and those living in the inner city which is the substance of this debate.

My constituency is in the borough of Ealing. In a recent speech during the debate on rate capping, I said that my borough had the characteristics of an inner-city area. Those characteristics are especially apparent in the Southall end of the borough—the west end if one likes —as well as in other parts of the borough, including the area represented by the hon. Member for Ealing, Acton (Sir G. Young). I am glad to note his presence this evening, and perhaps he will explain how his right hon. and learned Friend's statement will substantially benefit Acton, an area which he zealously represents.

It is well known that Southall has the country's biggest community from the Indian sub-continent. I am not claiming that everyone is poor—far from it—but the area is overcrowded. There is a desperate housing shortage, largely due to the fact that the area has a low-average-age population. It also has a high level of youth unemployment. There is grave traffic congestion in the streets. The area is in desperate need of Government financial assistance channelled through the local authority.

That local authority, as the elected representative of the people, knows more than anyone where that money is needed. The Labour-controlled authority has struggled to meet the problems, but all that the Government have offered is rate capping. Such action has been taken instead of making money available to offset the need to increase the rates that raise the money to pay for the much-needed improvements throughout the borough.

The ruling Labour party of the authority, which had such a handsome victory at the last municipal elections, was elected on a manifesto to carry out progressive work, and it proceeded apace. Since 1979, the Government have reduced the total grants to local authorities from 61 per cent. of total spending to 46·4 per cent. in 1987–88. The effects in Ealing have been even greater. In 1980–81, the last year of the old rate support grant system, 52·4 per cent. of council spending was met by the rate support grant. In 1987–88 only 25·5 per cent. of its spending will be met by block grant. Those are significant figures. They demonstrate how central Government have pulled out of the borough and, in particular, their attitude towards a Labour-controlled local authority.

Ealing leapt from being the lowest rated area in west London to the highest because the local authority was intent on carrying out progressive change. In cash terms, the council is receiving less this year than it did in 1980–81. In 1987–88 Ealing has lost £48·5 million in rate support grant from the Government. That money could have been invested in providing essential services for the borough.

The particular social needs of the borough were outlined in a submission made by Ealing to have its rate-capped limit raised. The Government have consistently refused to accept that Ealing has inner-city characteristics. That is our major complaint. For example, using the Z score to measure urban deprivation, Ealing, as at 10 December 1986, ranked tenth out of the 23 authorities granted programme status. Ealing has repeatedly been refused that status. In other words, it has been victimised because it is under Labour control.

Since its election in May 1986, Ealing council has attempted to meet the area's needs. It has housed 1,000 homeless families, appointed 140 teachers, and negotiated with the private sector to provide more than 600 new homes for letting to families in priority need. It has started making improvements at the Acton end of the borough that had been held back for many years. Plans are well advanced for the development of Southall town centre and much-needed car parking space has been introduced. The Fenner Brockway centre, an imaginative leisure centre in a disused superstore, has been built. Lord Fenner Brockway was born in India and was a distinguished Member of this House for many years. He has been in the forefront of the struggle for racial harmony in this country.

Labour was elected to provide the services that the people need and to tackle the problems, characteristic of inner cities, of the London borough of Ealing. Those needs were not addressed by the Government. The Government's action in rate-capping the council was specifically designed to force the current administration to adopt the spending policies of the previous council. That was a backward administration and that was why it was soundly defeated and turfed out at the municipal election.

Ealing council has been faced with the dilemma of how to reconcile the needs of the area and the wishes of the electorate for better services with the Government's spending limit with which, as a responsible authority, it felt it had to comply. In very difficult circumstances, the council has managed to set a proper and legal budget while minimising the reduction in the level of service to the community.

The council has stated that there will he no compulsory redundancies. It is determined that no one will be sacked, although those who leave voluntarily are a different matter. None of the measures taken are affected by the recent announcements of the Secretary of State for the Environment. Ealing's budget remains totally lawful, even after the later statement aimed at further limiting the options of those authorities which are trying to tackle inner-city needs, but are being prevented from doing so by the Government's rate-capping and grant-reducing measures.

If the Government are serious about improving the quality of life in the inner cities, they will work with local authorities instead of taking away millions of pounds which they should be spending on maintaining essential services. The Under-Secretary of State's responsibilities include planning matters. I do not know what will be the outcome of the proposals in the "Action for Cities" document, or what it proposes to do by giving powers to urban development corporations. I do not know whether the Minister will be made redundant as a result of that, because it bypasses local authorities and the time-honoured traditional duties imposed upon them in the realm of planning.

That document is a hotch-potch and does not have the characteristics of a White Paper. It is simply a propaganda statement made down the road at the Queen Elizabeth II conference centre, which is a very agreeable place. I recently went there in connection with matters relating to Cyprus. It is astonishing that the architect of the document was not present when it was launched in the House of Commons, and complaints were made about that.

Let us imagine a conversation that might have occurred between the Prime Minister and her husband, who said, "Now, look here Margaret. You made specific promises after your election success about tackling the problems of the inner cities. Six months have passed and it is about time that you did something about them. If we retire to the home that we have lined up in Dulwich, you could say that you did your best to carry out your promise in the flush of electoral success."

The document has all the hallmarks of such a scenario. It is unspecific and, for such a major matter, that is not good enough. There was a good deal of substance in the complaint of the Leader of the Opposition, my right hon. Friend the Member for Islwyn (Mr. Kinnock), about the absence of the Prime Minister at that important launch.