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24 Feb 2003 : Column 53—continued
Alan Johnson: As the hon. Gentleman will understand, I am not yet in a position to announce the outcome of the review, but I am sure that many of the schemes governed by section 8—after "year zero", when the schemes have been closed and then incorporated in a much simpler structure—will be there, although perhaps under different titles and accessed in a different way. But this is not a debate about the DTI review of business support; it is a debate about section 8 of the Act.
Mr. Lansley: Will the Minister give way?
Alan Johnson: I will give way to the hon. Gentleman one last time.
Mr. Lansley: Is it not surprising that the Minister should present us, in late February, with legislation designed to increase substantially the amount to be spent on these schemes, while proposing to tell us in early April what the product will look like? Is he not asking the House to pay for the product when he will not tell us what we are buying until a few weeks down the line?
Alan Johnson: No, I am not. We are not talking about the DTI review; we are talking about 15 schemes funded under section 8. As the hon. Gentleman said, there are a good many more schemes—about 160. That is part of the problem for people who are confused by the process of gaining access to DTI support. Moreover, if the Bill is not passed now we shall not be in a position to finance some very important schemes—some introduced by the last Administration—later this year.
Mr. John Bercow (Buckingham): Will the Minister give way?
Alan Johnson: I will give way just once, because the hon. Gentleman is so utterly charming.
Mr. Bercow: I thank the Minister, who is better able than most to make sound reasonable that which on closer inspection may prove not to be so.
The Bill's very title has a certain 1960s or 1970s ring. In what circumstances does the Minister think that it would be appropriate—in this century, or this decade—for the Government to expend resources to create
- "productive capacity in an industry"?
As I said, we are not cutting the funding that we spend on business, to draw a line under the DTI review of business support. I provide this information as background. This short Bill is not about the quality of the business support offered by successive Governments. It is before the House today because, before the Government can incur any expenditure on such schemes, there has to be an appropriate statutory power. Section 8 of the Industrial Development Act 1982 provides that power. The Bill allows for the continued use of section 8 as the enabling power for financial assistance to be given to business inside and outside the assisted areas. On that basis, I commend the Bill to the House.
5.21 pm
Mr. Henry Bellingham (North-West Norfolk): I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof:
- "this House declines to give a Second Reading to the Industrial Development (Financial Assistance) Bill because it amends section 8(5) of the Industrial Development Act 1982 in a way that diminishes accountability to Parliament on the levels of future financial assistance to industry."
Some of our concerns relate to parliamentary scrutiny and accountability as well as the lack of detail in the Bill. On scrutiny, as the Minister explained clearly, the Bill amends the cumulative limit in section 8(5) of the 1982 Act and sets a new higher figure of £3.7 billion as the initial ceiling. It then sets a new figure for the four tranches, which go up from £200 million to a pretty hefty £600 million each.
I understand from the Minister that the new limits were chosen by a 20-year roll-forward of the existing limit of £2.7 billion in real terms, using a 2.5 per cent. gross domestic product deflator. The Minister pointed out earlier that, based on current spending, and assuming that the rate remains constant, the new ceiling will last for six years before the first order is needed, with increases by order every four years after that.
To my surprise, I see that the Department of Trade and Industry's briefing note says that the DTI believes that the new regime will lead to more parliamentary scrutiny. It bases that conclusion on the premise that it was 14 years before the first order was needed in 1996, but the 1982 Act was a new initiative setting a new ceiling of £1.9 billion. The previous Government would have had to spend at a furious rate to reach the ceiling before 1996.
Three orders came hard on the heels of the one in 1996. There was one in 2000 and one in 2002. We were going to have a fourth one tomorrow but I gather that it has been postponed until next week. Since the first ceiling was reached, Parliament has had the chance to scrutinise the Act and the relevant section 8 schemes every 20 months. That compares favourably with the 4.5 years or 54 months anticipated by the new Bill's regime.
We are talking about much bigger sums, as my hon. Friend the Member for Sevenoaks (Mr. Fallon) made clear. The urban post office network reinvention scheme alone will take up a very large amount of money. Furthermore, the Secretary of State has made it clear that she wants significant consolidation of the plethora of section 8 schemes, which is why we welcome and support her business support review. However, that is surely a very good reason for initial scrutiny to take place well before 2009.
As my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) pointed out, it would surely have made much sense for the Secretary of State to complete her business support review before Second Reading. Either next week or the following week, the statutory instrument extending the original phase 1 will be introduced. That will give the Government considerable leeway, so Second Reading could easily have been postponed, thereby enabling the business support review to be launched at the same time. That surely would have constituted more joined-up, grown-up and sensible government.
On scrutiny, we will look at some constructive suggestions in Committee, and we shall certainly consider including in the Bill a requirement for the Minister to come to the House every two years. That is not unreasonable, given that, on average, Ministers have come to the House every 20 months for the past seven years, and that debates on delegated legislation in Committee are short and hardly onerous. In 1996, when my former colleague Phillip Oppenheim was taking such legislation through, the debate lasted 14 minutes. The then Opposition did not provide much scrutiny, but in 2000, scrutiny increased to 18 minutes, in 2002 to 55 minutes, and perhaps next week we can crack the one-hour mark. It is to enhance the scrutiny available to this House that we intend to table constructive amendments in Committee.
The different schemes can be found on the DTI website. Alternatively, one can refer to the annual reports relating to the Industrial Development Act 1982, the last of which was published on 27 June 2002—my hon. Friend the Member for South Cambridgeshire referred to it—and covers the year to the end of March 2002. It would have made good sense to advance this year's report to, say, 1 April—not a very difficult task—so that it could be combined with Second Reading. That way, at least we would have had more detail on what is happening with these different schemes. My hon. Friend and I have had a close look at last year's report. Much of it is already out of date, and new schemes are to be launched. We are being asked to vote for very significant extra resources for Her Majesty's Government without having up-to-date information before us.
I do not propose to go through all the schemes in detail. The Minister has already covered many of them—I am grateful to him for that—and in his inimitable, lucid way he explained exactly what they do. In the main, we are happy with how they are operated on the ground. They are efficiently managed and run, and I pay particular tribute to the tireless work of the Small Business Service in running the bulk of them. We support the enterprise grant scheme and, in particular, the small firms loan guarantee scheme, to which I shall return. However, we are cautious about the business incubation fund, which was announced to a terrific fanfare in 2001. Is it true that no loans have so far been agreed under its terms?
We are also concerned about a number of aspects of the Phoenix fund—the somewhat appropriately named initiative launched by the right hon. Member for Tyneside, North (Mr. Byers). We applaud attempts to encourage enterprise, small business and entrepreneurship in the most disadvantaged areas, and within disadvantaged groups. Such an initiative will undoubtedly appeal to my hon. Friend the Member for Buckingham (Mr. Bercow), and we must try to help these people. I am sceptical—as, I am sure, is he—about community loan funds or not-for-profit funds that focus on non-profit-making social enterprise. They may be laudable, but is it appropriate for the DTI to be involved? I want to see real evidence of success and achievement before we can support community development finance institutions.
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