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House of Lords

Wednesday, 1st July 1998.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Manchester.

The Lord Chancellor: Leave of Absence

The Lord Chancellor (Lord Irvine of Lairg): My Lords, before business begins, I take the opportunity to inform the House that I will be hosting a luncheon on behalf of Her Majesty's Government for the President of Peru on Wednesday 8th July. Accordingly, I trust that the House will grant me leave of absence.

Development Grants and Unemployment

Lord Steel of Aikwood asked Her Majesty's Government:

    Whether, following the payment of industrial development grants to the American firm of Viasystems Ltd. for a new factory in north east England, they are aware of the redundancies created in the same firm's factories at Galashiels and Selkirk, and whether they will review the effects of their present policy on unemployment.

The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, I am aware of the redundancies which have been announced at Galashiels and Selkirk. I regret hearing of any job losses. It is not the Government's policy to offer grants to businesses merely to transfer jobs from one part of the country to another.

Lord Steel of Aikwood: My Lords, I am very pleased to hear the last part of the Minister's Answer. However, he will be aware that Viasystems Ltd. was acquired a few months ago by a US venture capital organisation which has been promised £15 million worth of land and premises in north Tyneside to make printed circuits. Naturally, unit costs will be cheaper in those circumstances. It is subsidising the 210 redundancies which have, as a consequence, been created in the Scottish Borders. Does the Minister agree that there is something wrong with the transfer of this publicly subsidised unemployment?

Lord Clinton-Davis: My Lords, a full assessment is made of the situation before RSA is applied. The situation in this particular instance is not, in my judgment, attributable to the causes to which the noble Lord referred. However, I am aware of the deep concerns in Scotland, especially in this area. My honourable friend, one of the Ministers of State for Scotland, will in fact be visiting the area tomorrow.

Lord Evans of Parkside: My Lords, is my noble friend the Minister aware that the noble Lord, Lord Steel

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of Aikwood, has raised an issue which has caused considerable concern in Merseyside? For example, I refer to the ability of the well-funded Scottish and Welsh development agencies to attract industry to their areas, often to the detriment of Merseyside and other English regions. Therefore, does my noble friend agree with me that, in view of the advent of English regional development agencies, it is imperative for Her Majesty's Government to put in place regulations which will ensure that the Scottish, Welsh and English development agencies do not involve themselves in an auction at public expense to try to attract industries to their area at the expense of other areas?

Lord Clinton-Davis: My Lords, that is certainly not the Government's intention. We do not want to see such an auction develop. We shall use our endeavours and our influence to prevent that from happening.

Lord Monro of Langholm: My Lords, does the Minister realise the seriousness of the unemployment situation in the Scottish Borders and in the south of Scotland due to serious problems in the textile industry enhanced, unfortunately, by the value of the green pound? I appreciate that a Minister is, somewhat belatedly, visiting the area tomorrow, but how soon can we expect some action to deal with that and indeed with the situation in agriculture, which is also undergoing a particularly rough time and is one of the two stable industries for the south of Scotland?

Lord Clinton-Davis: My Lords, I appreciate that there are sectoral problems in the area. However, it is fair to point out that unemployment overall stands at 4 per cent. in the area, which is among the lowest percentages in Scotland. Only yesterday I met a deputation from the GMB union regarding the textile industry. I am aware of the situation and shall be replying to those concerns in due course.

Lord Fraser of Carmyllie: My Lords, the Minister referred to 4 per cent. unemployment. Can he tell us whether that includes the 720 people whose job losses were announced yesterday by Dawsons as a consequence of the strong pound? More generally, on the question that has been raised, does the Minister and his right honourable friend the President of the Board of Trade appreciate that the issue of regional aid is one of the rawest issues to be encountered outside London? Does the Minister consider that the Government have given sufficient thought to how this is to be handled once we have a Scottish parliament and a Welsh assembly in place?

Clearly those bodies concerned feel very strongly about the matter, both in Wales and in Scotland. They have lost jobs and they need every possible support. Does the Minister also recognise the fact that many of his noble friends from the regions of England feel equally strongly that Scotland and Wales have been securing an unfair advantage? As has been suggested,

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some mechanism needs to be established to ensure that there is not unfair competition between different parts of the United Kingdom.

Lord Clinton-Davis: My Lords, with the greatest respect, I find it a little thick for someone who was a Minister in the previous government to charge us with neglecting our responsibilities in terms of regional policy. The fact is that they totally neglected that responsibility. The noble and learned Lord referred to the strong pound as the source of all the problems. Of course, that merely over-simplifies the issue. It is a problem and one which, incidentally, we inherited from the previous government in very substantial measure. The pound had been accelerating in value very considerably under the noble and learned Lord's government.

On the question of Dawsons, that matter is being raised this afternoon in another place by way of a Private Notice Question. I am aware of the problem. I am sure that my colleagues in the Scottish Office are giving the matter the attention that it properly deserves.

Lord Fraser of Carmyllie: My Lords--

Lord Steel of Aikwood: My Lords, I return to my original Question. I quite agree with the noble Lord, Lord Evans of Parkside, but what we are talking about here is not public subsidy to encourage new employment but the risk that we are simply paying for employment to be transferred from one area to another. It does not matter on which side of the Border the employment is being transferred, it is equally bad. Does the Minister also recognise that Viasystems Ltd. was a company which developed and expanded to provide employment other than in textiles in the late 1960s under the policies of the then Labour government? It is most unfortunate that that firm is being run down now just at a time when Dawson International is experiencing difficulties in the textile trade.

Lord Clinton-Davis: My Lords, it is not the responsibility of the Government that the firm is being run down. Commercial decisions are being taken. I cannot, on behalf of the Government, carry out a full investigation into those. I have tried to assert that regional selective assistance is not designed to promote the consequences to which the noble Lord has referred; the opposite is the case. I do not think that the running down of this company and the unemployment which has resulted can fairly be attributed to the way in which regional selective assistance was given to the Tyneside companies. I believe that the noble and learned Lord, Lord Fraser, is dissatisfied with my previous answer. I am amazed at that.

Lord Fraser of Carmyllie: My Lords, will the noble Lord answer the central question which I put to him? Even if he will not listen to me, he might listen to the noble Lord, Lord Steel, or some of his noble friends who have indicated that there are real concerns and rivalries in different parts of the United Kingdom with

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regard to the way in which this regional aid is distributed. There are real suspicions that some people are securing an unfair advantage. I asked the noble Lord to consider whether, with the establishment of the Scottish parliament and the Welsh assembly, he is satisfied that the risk of such jealousies and such suspicions will be increased or diminished. My concern, judging from the questions which have been asked, is that the risk will increase rather than decrease.

Lord Clinton-Davis: My Lords, the noble and learned Lord is entitled to his opinions. I think he has overstated the case here. What he wants now is a debate on devolution, which I shall not enter into. I am aware that these concerns exist but I think that they are somewhat misplaced. The value of RSA has been considerable. I believe that the noble and learned Lord is exacerbating the suspicions that he has mentioned. They are suspicions but, interestingly enough, there is no firm evidence behind them.

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