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(a) in the opinion of Scottish Enterprise contributes or will contribute to the economic and social development of a particular area of Scotland ;

(b) by its written constitution admits to membership only-- (

(i) persons resident in, or employed in, that area (or both so resident and so employed) ; or

(ii) persons nominated by such persons as are mentioned in sub-paragraph (i) above ; and

(c) by that constitution prohibits distribution of profits amongst its members ; and

"co-operative enterprise means a body which fulfills the criteria specified in paragraphs (a) and (b) of section 2(2) of the Industrial Common Ownership Act 1976 (whether or not it has been certified by the Secretary of State under that section).'.-- [Mr. Lang.]

Clause 4

Further provision as regards functions of Highlands and Islands Enterprise

Amendments made : No. 7, in page 5, line 1, leave out

Subject to subsection (3) below,'.

No. 8, in page 5, line 4, leave out subsection (3).

No. 9, in page 5, line 19, leave out from of' to second the' in line 20 and insert


(a) the natural beauty of the countryside in ;

(b) the flora and fauna of ; and

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(c) the geological and geomorphological features of special interest of,'.-- [Mr. Lang.]

Clause 5

Development and improvement of the environment

Amendment made : No. 10, in page 5, line 44, leave out subsections (4) to (6).-- [Mr. Lang.]

Clause 7

General and specific powers

Amendments made : No. 11, in page 7, line 29, after first agent', insert

(who, without prejudice to the generality of this paragraph, may be the Secretary of State)'.

No. 12, in page 7, line 33, at end insert--

(ll) forming and registering societies, or joining with any other person in forming and registering societies, under the Industrial and Provident Societies Act 1965 ;'.-- [Mr. Lang.]

Clause 8

Powers of entry

Amendment made : No. 13, in page 10, line 25, leave out from least' to fourteen' in line 26.-- [Mr. Lang.]

Clause 12

Restrictions on exercise of certain powers

Amendment made : No. 14, in page 15, line 14, leave out and (l)' and insert (l) and (ll)'.-- [Mr. Lang.]

Clause 13

Power of Secretary of State to give direction

Mr. Archy Kirkwood (Roxburgh and Berwickshire) : I beg to move amendment No. 28, in page 15, line 43, after to', insert--

(i) any additional subsidiary functions as he deems necessary for it to meet any needs which may emerge in the future ; and (ii)'.

I am conscious of the constraints of time and I assure the hon. Member for Dunfries (Sir H. Monro) with whom I am sharing a sleeper later this evening --[ Hon. Members :-- "Oh."]--in the same coach, but in different compartments--that I shall not take too long dealing with this issue.

The purpose of my amendment is to make a belated and brief attempt to persuade the Government to look again at the possibility of creating some additional functions when the new local enterprise companies are set up. It will come as no surprise to the Minister of State to hear that one new function which I believe will be worthy of consideration for Scottish Enterprise is a social function. The Standing Committee, on which I was not privileged to serve, considered at some length the possibility of creating a social function for Scottish Enterprise, and I pay tribute to the way in which the arguments on that were adduced by my hon. Friend the Member for Argyll and Bute (Mrs. Michie). I do not wish to rehearse those arguments again, but the Minister will know that the Highlands and Islands development board has been strengthened in the recent past by having an explicit legal and social function, which it has used to great effect.

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10.15 pm

The Government's rebuttal of the arguments of my hon. Friend the Member for Argyll and Bute was based on the assumption that, because the Highlands and Islands development board previously had certain powers, Highlands and Islands Enterprise should have those powers for that reason if for no other, but that the Scottish Development Agency did not have the social function previously, Scottish Enterprise should not have it in the future. That does not seem to be a positive argument.

The Minister must address his mind to why he is seeking to exercise blatant discrimination against the areas that I represent in the Borders and those represented by the Minister and his hon. Friend the Member for Dumfries. The provision of the social obligation on the HIDB has been a success. No one denies that. Geographical factors are more of a problem in the highlands than in the south-east or the south-west of Scotland. If the experiment has been successful in the highlands, and if there is now an opportunity to create a social function in Scottish Enterprise, it is incumbent on the Government to say why they will not countenance extending the social function now, never mind in the future.

My amendment seeks to address the need at some future date. It is a probing amendment, intended to draw the Government's attention to the existence of the social obligation. The Minister still has time in the remaining stages of the Bill in the other place to examine the positive arguments for creating a social oligation, and a legal right and title for Scottish Enterprise and the subsidiary local enterprise companies to have a social function.

If the hon. Member for Dumfries were here, I am sure that he would agree with me that the Scottish Development Agency did some splendid work in the Borders and in Dumfries. It was clearly moving in the direction of rural initiatives, which were achieving considerable success in the Borders. It was doing that by stretching its economic development powers to the limit. It would have been easier for the SDA to achieve even more success, and to carry out its village and rural projects with greater flexibility, if it had had explicit powers.

I have the highest respect for those involved in setting up the local enterprise company in the Borders. I am sure that they will do their best for the area, subject to the constraints of the legislation, but the company would be better able to serve the needs of local people if the two words in my amendment were added to its remit. When the Minister devolves power to local enterprise companies in the Borders and to those in south- west Scotland, will there be no social element in the contract? It makes sense to consider the special circumstances which surround local enterprise companies. The market forces in the Borders are completely different from those which apply in Strathclyde.

The Government ought to consider all the arguments again. The discretionary power could be used sparingly. It would not lead to the expenditure of a great deal of additional money. It would be pig-headed and bureau-cratic of the Minister not to accept that argument. The Government's answer--they have used this argument before--will no doubt be that the Borders do not merit special treatment. The people in the Borders do not accept that argument ; nor do those who are running local

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enterprise companies. The Minister should at least give the House an undertaking that he will consider again carefully the arguments for creating a new social obligation.

Mr. Lang : The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) was not a member of the Standing Committee which considered the Bill, so he was unable to take part in the debates on this issue.

The amendment would give the Secretary of State sweeping new powers and enable him to bypass Parliament. The reason that the hon. Gentleman gave for seeking to amend the Bill is unacceptable. A social function used to exist in the Highlands and Islands development board area. We gave a commitment that the HIDB powers would be incorporated in the new legislation. The social function is therefore maintained in the highlands and islands area. That reflects the difference between the highlands and islands area and the rest of Scotland, which in turn reflects the reason for having a separate board for the highlands and islands and a separate board for the south of Scotland.

It would not be in the interests of the effective delivery of what we plan through Scottish Enterprise or the Highlands and Islands development board for that social function to come through in the dominant way that the hon. Gentleman suggests. The delivery of employment and of the economic and training measures in the Scottish Enterprise area must not be diluted or vitiated by the inclusion of a social function. That would damage rather than improve its capacity to deliver successful schemes in the Borders and elsewhere. The new bodies are economically driven and they will inherit the functions and powers of the previous bodies. A social function should not be added to the list of those activities. Worded as it is, therefore, I must resist such a sweeping amendment.

Amendment negatived.

Clause 16

Prohibition on discrimination in provision of certain facilities or services

Amendment made : No. 15, in page 16, line 37, leave out subsections (1) and (2) and insert--

in sections 16 of the Sex Discrimination Act 1975 and 15 of the Race Relations Act 1976 (prohibitions on discrimination in provision of facilities or services under section 2 of the Employment and Training Act 1973), there shall in each case after subsection (1) be inserted the following subsection--

"(1A) It is unlawful for Scottish Enterprise or Highlands and Islands Enterprise to discriminate in the provision of facilities or services under such arrangements as are mentioned in section 2(3) of the Enterprise and New Towns (Scotland) Act 1990 (arrangements analogous to arrangements in pursuance of section 2 of the said Act of 1973).".'-- [Mr. Lang.]

Clause 17

Delegation of certain functions and powers

Amendments made : No. 16, in page 17, line 10, after below', insert

and to section (Monitoring of training for employment) of this Act'.

No. 17, in page 17, line 11, leave out of this Act' and insert thereof'.-- [Mr. Lange.]

Mr. Kirkwood : I beg to move amendment No. 29, in page 17, line 13, leave out

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may be agreed between it and that person' and insert the Secretary of State may by order made by Statutory instrument provide'.

Mr. Speaker : With this it will be convenient to consider Government amendments Nos. 18 and 30.

Mr. Kirkwood : I wish to detain the House further, essentially on a constituency basis. I did not have the opportunity earlier to make a contribution to the Bill, which will have a significant effect in my constituency and in the borders of Scotland. The amendment is intended to set out the delegation powers that would be subject to parliamentary approval through a statutory instrument, which would have to pass both Houses. Clause 17, as unamended, would allow Scottish Enterprise and Highlands and Islands Enterprise to delegate functions and powers to others, except powers such as the compulsory acquisition of and entry to land, and the power to obtain information.

The amendment is a probing amendment. I want to see whether there is any scope for persuading the Government, before the companies take effect, to publish the set-up contracts between the Government and the local enterprise companies and to put them into the form of an Order in Council or a statutory instrument, which would be subject to the affirmative resolution procedure in both Houses. That would have the effect of allowing the House to consider in some detail the set-up terms for the local enterprise companies. A number of issues should be addressed in that procedure and in the statutory instruments, if the Government accept the amendment.

I do not ask--I hope that the drafting of the amendment is not defective in this respect--that every working contract entered into by local enterprise companies be subject to parliamentary scrutiny. That would take us back to a position far worse than the old nationalisation days. I seek to set out a procedure that would allow Parliament to scrutinise the original terms of reference within which the local enterprise companies operate as they are individually created.

There are compelling reasons for considering that proposal. The contracts should set out the terms under which the local enterprise companies will be accountable to the House of Commons and to the communities they seek to serve. The statutory instrument procedure, which I advocate in the amendment, would allow Members of Parliament to raise issues relating to particular local enterprise companies. In the debate on amendment No. 28, I adverted to some important aspects of the provisions affecting the Borders local enterprise company. I am also concerned with specific training functions. It might be possible, for example, to investigate the lack of a tourist remit for some of the other important local enterprise companies that may be set up.

I say that with more force in light of a recent survey into tourism training. It examined the position throughout Scotland and came to the conclusion that neither the quantity nor the quality of training in the tourism industry achieved a high standard of performance because of a combination of low demand from employers, a poor perception of tourism careers and the supply-driven nature of the existing provision of training. That is an example of

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an issue that we could examine through the statutory instrument setting up the individual local enterprise companies.

I should very much like to be able to scrutinise any provisions made in my local Borders LEC for rural areas. We heard the arguments about the possibility of a social obligation when we discussed amendment No. 28 and that is an important consideration, although that argument is now over. We should also want to consider the small business provision, for example, to ensure that the local enterprise companies embrace the needs of small businesses. Although I make no complaint about it, there is a feeling in my area that small businesses will not be properly represented in the constitution of the prospective board for the company that will run the Borders local enterprise company. We cannot ignore the proper concerns of small businesses, especially in rural areas. Scrutiny of such issues would be possible if we had the statutory instrument procedure.

10.30 pm

There is also the question of the amount of finance that is available to local enterprise companies. As far as I am aware, the amount of taxpayers' money in the pot is not subject to any direct or explicit questioning under the Bill as it stands. That is lamentable. I am not saying that that money will not be properly applied, but the House deserves the statutory right of scrutiny over the financial arrangements that are made by and the finances that are deployed by the local enterprise companies in the future.

The question focuses on how individual LECs are to be made accountable to their local communities. When the Bill is enacted, the Lowland LECs will have between£5 million and £70 million of taxpayers' money to deploy ; and the highlands and islands area will have between £1 million and £5 million. We are talking about substantial sums of money. The House has the right to demand some machinery to scrutinise the details of how the money is spent. That could be achieved by the statutory instrument procedure.

We had an interesting debate earlier about the quality of training, which could be dealt with by setting up a system of parliamentary scrutiny. We require guarantees about a proper quality of training before the LECs have any chance of succeeding in performing the tasks for which they are being set up.

The statutory instruments that I am advocating could also relate to details of how LECs will be given the opportunity to earn additional funding. I was not a member of the Standing Committee and some of these matters may have been discussed in detail then, but I am worried about the prospect of the operation of performance bonuses. I have heard of a civil service discussion document suggesting that almost £6 million--nearly 2 per cent. of the current budget of the Training Agency's programmes in Scotland --should be spent on performance bonuses for LECs that exceed the stipulated minimum training targets. That was reported in Scotland on Sunday on 25 March 1990.

I apologise for repeating this point if the Minister dealt with it in Committee, but the House will want to know about it, because it is a basic point. As I understand it, the basis for some of the performance targets will be competition between LECs based on their efficiency to process people through YTS and ET schemes. The performance measures that are being talked about are

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based on percentages of, for example, leavers of YTS and ET schemes who find jobs, go on to further education or become self-employed, or who achieve certain qualifications and credits towards those schemes. Some of those matters deserve further consideration and are the sort of thing that can be dealt with in a statutory instrument procedure. Performance monitoring is a desirable concept, and I wonder why the Government did not look more closely at the scheme that was suggested by Community Business Scotland, which suggested in its original submission on the White Paper that monitoring could cover more broadly based factors such as the overall impact of the LEC ; the quality of the board of directors ; the LEC's breadth of coverage--especially in poorer areas--the extent to which there is a genuine partnership among the public, private and community sectors ; the quality of the training provision ; and the management of innovation.

The House needs further to consider the ability of the LECs to render themselves accountable to the communities that they serve. Some of the quotations that I have seen from Mr. Bill Hughes and Mr. Lex Gold are simply not good enough. They suggest that, as long as they are as accountable as the best private companies, that is good enough. I do not agree. I hope that the Minister will assure us that the House will have an opportunity to consider that before LECs are set up.

People in my area are worried that parts of the Bill will subvert the democratic planning permission process, as LECs will effectively be able to submit directly to the Secretary of State for approval proposals for development, redevelopment or improvement anywhere within their jurisdiction. I should be grateful if the Minister could bring me up to date on any development in that regard, if there have been any, since the matter was discussed in Committee.

The machinery that I have described may not be the best, but the House is entitled to better guidance from the Government about the legal terms in which powers devolved to LECs are couched. If none is forthcoming before LECs come into effect, the Government will be doing the House a great disservice and short-changing it in an important area of public policy that will have a dramatic effect in every constituency.

Mr. John Home Robertson (East Lothian) : The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) said that the objective of the amendment is greater local accountability for LECs. I am sure that we all applaud that aim, but requiring guidelines for the work of LECs to be put to a Committee on Statutory Instruments is a funny way in which to achieve it.

I realise that this is a probing amendment, but what the hon. Member for Roxburgh and Berwickshire said about it and in the previous debate was entirely fair. There is a clear need for local considerations to be the driving force behind decisions on the development of training and enterprise in local areas. That is especially true of rural areas such as those that the hon. Gentleman and I represent.

One of the things that has been wrong with the work of the Scottish Development Agency recently is that so many decisions that would once have been devolved through the SDA seem to have been required to go across the Minister's desk. I have had some local cause for concern on that count recently in regard to the painful amount of

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time it has taken to process applications for assistance from the SDA for the valuable work of the Dunbar initiative, which is a joint operation involving private enterprise, local authorities and the whole local community, which want to redevelop a rural part of my constituency that has suffered considerably from a range of problems that I shall not go into.

I take this opportunity to thank the Minister in advance. I am advised that the SDA is likely to make a fairly substantial contribution to the project, but we could do without central decision-making. We want to get such decisions off Minister's desks and into the forum of local decision-making. I think that that is what the hon. Member for Roxburgh and Berwickshire wants. We want LECs to be genuinely locally accountable.

Mr. Lang : I shall have to disappoint the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), because I cannot accept his amendment. I hope that he will forgive me for being brief, because of the hour, in my explanation of the thrust behind what we are seeking to do. We want to decentralise power, through Scottish Enterprise and Highlands and Islands Enterprise, to the local enterprise bodies. The hon. Member for East Lothian (Mr. Home Robertson) put his finger on it when he said that the amendment runs counter to such an aim, as it would bring to the House, on the annual scrutiny basis, detailed accountability of the expenditure and budgets of LECs. There is also the practical point that it would be difficult to debate 22 different affirmative orders each year. Each would have to be debated separately, because each contract would be different. Whether he acknowledges this or not, that is what the hon. Member for Roxburgh and Berwickshire is calling for. The provisions of the amendment would be counter to our philosophy of decentralisation.

I accept that the scrutiny of expenditure is important. The structure that we are setting up, in which LECs contract with Scottish Enterprise, and have their contracts carefully monitored, will create greater accountability than exists through the SDA. It is important to have performance targets and to reward the successful delivery of performance, but it is important to go for quality, not just quantity, and for that reason, the performance targets will embody a recognition of qualifications gained and of jobs secured. It will reward success.

It is our purpose that LECs should be answerable to the community. I shall send the hon. Gentleman copies of chapters 6 and 7 of the handbook for LECs, which sets out clearly the accountability procedures that we envisage operating. I think that that will answer his point.

I shall write to the hon. Member for East Lothian about the Dunbar initiative, to bring him up to date, and I am grateful to him for raising the subject.

For the reasons that I have given, I hope that the hon. Member for Roxburgh and Berwickshire will not press the amendment.

Amendment negatived.

Amendment made : No. 18, in page 17, line 15, at end insert and may (under section 7(1) of this Act) transfer to the person such of its property as it considers appropriate on such terms as may be so agreed.'.-- [Mr. Lang.]

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Clause 33


Amendments made : No. 19, in page 26, line 45, leave out has the meaning' and insert

and wholly owned subsidiary' have the meanings'.

No. 20, in page 27, line 4, at end insert and'.

No. 21, in page 27, line 6, leave out from Act' to end of line 8.-- [Mr. Lang.]

Schedule 1

Constitution and Proceedings etc. of Scottish Enterprise and Highlands and Islands Enterprise

Amendments made : No. 22, in page 29, line 24, after State', insert

(regard being had to the principle that equality of opportunity should be promoted as between men and women)'.

No. 23, in page 29, line 30, after State' insert

(regard being had to the principle mentioned in paragraph 5(a) above)'.-- [Mr. Lang.]

Schedule 3

Transitional provisions and savings

Amendments made : No. 24, in page 37, line 45, leave out subsection (2)(c)' and insert

paragraph (c) of subsection (2)'.

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No. 25, in page 37, line 48, after land)', insert

and that paragraph (a) of the said subsection (2) shall be disregarded'.

No. 26, in page 38, line 4, leave out paragraph' and insert paragraphs (a) and'.

Schedule 4

Minor and consequential amendments

Amendment made : No. 27, in page 43, line 26, at end insert-- Employment Act 1989 (c. 38.)

18. In Section 8(1) of the Employment Act 1989 (power to exempt discrimination in favour of lone parents in connection with training)--

((a) in paragraph (a), after the word training)' there shall be inserted the words "or under section 2(3) of the Enterprise and New Towns (Scotland) Act 1990 (arrangements by Scottish Enterprise and Highlands and Islands Enterprise in connection with training etc.) ;" and

(b) in paragraph (b), for the words "that section" there shall be substituted the words "either of those sections".'.-- [Mr. Lang.] Motion made , That the Bill be now read the Third time. [Queen's Consent, on behalf of the Crown, signified.]

Question put forthwith and agreed to .

Bill accordingly read the Third time, and passed .

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Automobile Industry

10.42 pm

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. John Redwood) : I beg to move

That this House takes note of European Community Document No. 10971/89, relating to the Community motor vehicle market ; and supports the Government's view that it provides a useful framework for considering the detailed measures which will have to be implemented in the Community to bring about a Single Market in the vehicle sector.

The document before us says that the principle of free trade is at the heart of EC policy on motor vehicles. I hope that the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) will welcome that, along with the other points that he welcomes about which I have already read in his press release. We seem to be in some agreement on the need to stand up for those Japanese motor manufacturers which have come to Britain to invest and are now European motor manufacturers. Some member states are unfairly biased against Japanese car manufacturers. The British Government strongly welcome them into the United Kingdom. They are Community-based assemblers, and should enjoy all the benefits of access to the open market of the 12 member states. Indeed, they are entitled to such access under the treaty of Rome.

There is no difference between a Japanese motor car company in the United Kingdom, a United States company in Germany or a Swedish company in France. We do not call Peugeot in the United Kingdom a transplant, and nor should we call Toyota a transplant ; it would be pejorative. They are good European-based motor manufacturers. We must ensure that European Community policy is based upon competition and not upon Euro-champions. There is plenty of evidence that the most successful export industries around the world have been based on strong domestic competition. The Japanese motor industry, for example, which has been most successful, has five major companies with many other smaller competitive businesses as suppliers. The same is true of the British pharmaceutical industry and the German chemical industry, which are major exporters which also thrive with a multiplicity of companies.

The Community document expresses some worries about some aspects of competition and seems to be worried about the superiority of the Japanese motor assemblers in some respects. That is why Britain is keen to welcome them into the United Kingdom so that there can be cross-fertilisation between the domestic industry and Japanese investors, because both parties have things to offer and we can learn from each other.

Japanese design times, for example, for new models are up to a third shorter than for some European manufacturers. I saw that for myself when cutting the ground for the new Nissan design centre at Cranfield earlier this week. Such investments expose how dangerous were the errors of those critics--some of whom were Opposition Members, but I notice that they are not present tonight--who said that Japanese investors here would only set up screwdriver operations. I think that has been well and truly knocked on the head by the commitment of the Japanese manufacturers to research and development and to design in this country.

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