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7 Apr 2003 : Column 59—continued
David Burnside (South Antrim): How can the President of the United States—in Hillsborough, tonight or tomorrow; I believe that the discussion will last for about an hour and a half tomorrow morning—endorse a package that the House has not yet received and at which the Northern Ireland parties have only glanced without being told of the details? How can he do that in the next two days when the House and the parties involved are being asked to look at the package on Thursday, having not seen it previously?
Jane Kennedy: I said that I was sure that the President would encourage all parties to consider the package very carefully, and to endorse it. As the hon. Gentleman will no doubt agree when he has a chance to see the package, it offers the best opportunity for the final move towards the final and fullest implementation of the Belfast agreement. That, I believe, is no less than the people of Northern Ireland deserve.
Lords amendment No. 49A agreed to.
Industrial Development (Financial Assistance) Bill
Not amended in the Standing Committee, considered.
5.50 pm
Mr. Andrew Lansley (South Cambridgeshire): I beg to move amendment No. 1, in page 1, line 4 leave out
- 'The limit shall be £3,700 million'
- 'The said limit shall be £3,440 million'.
- 'six occasions and with no more than one occasion within any twelve-month period, by order made with the consent of the Treasury increase or further increase that limit by a sum specified in the order, being a sum not exceeding £200 million.'.
To avoid confusion, and to assist those who read our proceedings and save them having to look back at Second Reading and Standing Committee, let me explain that amendments Nos. 1 and 4 would provide that, instead of what is proposed in the Bill, section 8(5) of the Industrial Development Act 1982 would read:
- "The said limit shall be £3,440 million, but the Secretary of State may, on not more than six occasions and with no more than one occasion within any twelve-month period, by order made with the consent of the Treasury increase or further increase that limit by a sum specified in the order, being a sum not exceeding £200 million."
It is obvious that the amendments introduce three substantive changes. First, the limit to be specified on accumulated expenditure under section 8 would be £3,440 million. Secondly, instead of the four further tranches available under the affirmative resolution procedure, six such tranches would be available. Thirdly, instead of tranches of £600 million being able to be authorised in that way, the sum would be £200 million.
Let us recall the context of the Bill. The history of the provision goes back to the Industry Act 1972. On Second Reading, my hon. Friend the Member for Sevenoaks (Mr. Fallon) reminded us of the vexed political history of that Act. The 1972 Act provided for a sum of £150 million, with four further tranches of £100
million to be available. It is interesting, and it has not previously been mentioned, that those were not the original terms of the 1972 Bill. That Bill, as drafted, specified a sum of £250 million and four further tranches of £150 million, but in the course of consideration of the Bill, the sums were significantly reduced from those proposed by the then Government.The 1972 legislation was not intended to last for 30 years. The then Minister, Mr. Christopher Chataway, summing up the Second Reading debate on 22 May 1972, said:
- "In preparation for entry into Europe the Government have made it clear that they believe that there is a job of modernisation to be done in various sectors of industry. It is in recognition of this factor that the powers under Clause 8, which enable the Government to assist in the modernisation process, lapse at the end of the transitional period."—[Official Report, 22 May 1972; Vol. 837, c. 1130.]
All that changed in 1976, when the sums were changed and the caveat that no expenditure was to be undertaken after the end of 1977 was removed. The sum in question went up from £150 million plus four £100 million tranches—that is, a cumulative total of £550 million—to a limit of £600 million. In other words, the tranches were consolidated into that limit, and provision was made by order for four additional tranches of £250 million.
Mr. John Bercow (Buckingham): I am grateful to my hon. Friend, as is the entire House, no doubt, for the history lesson that he is helpfully providing. I, for one, am anxious to complete my education on this important subject. The subsequent ratcheting-up of the available funds in the course of the Wilson-Callaghan Government is no surprise, but would I be right in thinking that the original change downwards that was made from the time the Bill was first presented was the result of activity from the Conservative Back Benches, led by economic liberals including Mr. Enoch Powell?
Mr. Lansley: I am grateful to my hon. Friend. The latter point is correct. It was Mr. Jock Bruce-Gardyne who led the antagonism to the sums that were intended to be spent and the purposes for which they were to be spent. I do not recall any reference to Mr. Powell in the Second Reading debate. Mr. Bruce-Gardyne was instrumental in questioning the Bill.
Mr. Kelvin Hopkins (Luton, North): Has the hon. Gentleman calculated the effects of inflation during that time? Would not the sums mentioned in the 1972 Bill be much smaller in real terms and as a proportion of gross domestic product?
Mr. Lansley: As a proportion of GDP the sums would be smaller, and to a greater extent than would be the case if one were simply to calculate in real terms. It is true that a significant part of the uprating of the amounts specified in the legislation in 1976 and again in 1982, which we shall come to, was the result of substantial increases in inflation in the 1970s. As a
Labour Member, perhaps the hon. Gentleman should not dwell too long or too hard on the ravages of inflation during the 1970s. In addition to other factors, inflation cost his party dear in 1979. It has cost Parliament and the taxpayer dear as well.Rather than saying that the sums got out of control and the amounts were disproportionate to the purpose, I am trying to illustrate the mechanisms in question. In 1976 the mechanism was to consolidate the previous intended expenditure and to make provision for additional tranches subsequently. The intention at that time was that the subsequent tranches would be reached quite quickly. The implied total in 1976, of £600 million in the first instance and four tranches of £250 million by extension, meant a cumulative total of £1,600 million.
In 1982, not least because of the impact of inflation, and because of the impact of substantial expenditure under the section 8 provisions, which were continuing, the then Government, in a consolidation measure which does not afford us much opportunity to see what was intended at the time, consolidated the previous Industry Acts and uprated the sums in question. The original limit—the said limit under section 8—was raised to £1,900 million, which is a very big increase over the previous £600 million, but was only a small increase—little more than one tranche— in excess of the £1,600 million, which was the cumulative total implied by the 1976 amendments. However, not only were those provisions consolidated, but further provision was made to make further tranches available—£1,900 million in the first instance, along with four further tranches of £200 million.
6 pm
It is interesting that the size of the tranches was not further increased. The £200 million tranches were smaller amounts of additional funding than the £250 million that had been provided beforehand. That makes the position slightly different from what the Minister told us on Second Reading:
- "While maintaining the four tranches, we want to increase the ceiling on those tranches—as, indeed, did the previous Government in 1982".—[Official Report, 24 February 2003; Vol. 400, c. 49.]
That took us to £2,700 million, which is, of course, the figure that has applied until now. Interestingly, given the sums that were spent in the late 1970s and early 1980s, it is astonishing that the sums provided in 1982 lasted as long as they did and applied until 1996, before the additional four tranches of £200 million were called upon. Of course, as the Minister will no doubt tell us, at or before the end of this year, having passed the final of the four tranches, the Government will take us to that £2,700 million level, but the question is this: how much further should they be allowed to go?
There is an argument that the Government should not be allowed to go any further at all, as when the money was introduced it was transitional restructuring money
for industry. I do not propose to advance that argument, however, and my Front-Bench colleagues have not sought to do so either. Whether or not that was the intention when the original powers were introduced, we have seen events move on and a range of schemes have been introduced under section 8 that are clearly not geared to the transitional restructuring of industry to meet the requirements of a competitive marketplace, but are intended to provide for specific measures to deal with perceived market failures that would otherwise inhibit industry's competitive abilities. Examples include the smart scheme, which relates to the promotion of research and development, and the small firms loan guarantee scheme, which deals with the availability of unsecured capital for small businesses. I understand the rationale for those schemes, and although they must be examined carefully, I shall not argue that they can be entirely dispensed with.We need to think long and hard about the sums involved and the accountability that applies. The purposes of my amendments are therefore as follows. First, they seek to constrain the amount that is to be provided for under the Bill and which will be available to the Government without further substantive debate in this House. Secondly, they seek to constrain the rate of spend, as it seems clear that, since the Government came to office in 1997, that rate has increased. I do not recall the Minister previously informing us of the level of expenditure in relation to section 8 schemes on an annual basis since 1997, as compared with preceding years. It is clear, however, that the level must have increased, as we have reached the next tranches so quickly since 1996. Thirdly, through the mechanism of limiting the additional tranches of money and ensuring that not more than one can be introduced in any 12-month period, the amendments seek to increase accountability. In effect, in the later stages of the expenditure that the Bill would authorise, the Government would either have to constrain their rate of spend or come to Parliament at least once a year in order to secure through the affirmative resolution procedure the necessary ability to continue the expenditure.
In case it is not obvious—I am sure that the Minister will have worked it out—I should explain how I arrived at the figures. The cumulative total of £3,440 million is the product of consolidating the existing approved expenditure of £2,700 million and providing for four years' worth of additional expenditure at the rate at which the Government themselves say that expenditure under section 8 is forecast—£185 million a year. Amendment No. 1 would therefore ensure that, if this Government or a succeeding one continued at the current rate of spend, they would probably have to secure parliamentary approval for additional tranches of expenditure in between four and five years' time. That seems a reasonable period, especially when one considers that, in the first 10 years after which the powers were conferred, the Government came to Parliament three times to introduce primary legislation to maintain the expenditure. It is only because of the constraint and limited recourse to section 8 expenditure in the 1980s that such a long period passed—from 1982 until now—before primary legislation was required.
The provisions relating to additional tranches of £200 million are proposed simply because I see no justification for the assumption that as much as three years should pass in each case before the Government must have further recourse to Parliament. I did not have the privilege of being a member of the Standing Committee, but I know that it carefully discussed accountability and sought to introduce some sort of debate about annual reports. However, instead of a purposeless debate about an annual report, a purposeful debate about the extension of the power to spend section 8 moneys would be far more effective and would concentrate the minds of Parliament and Ministers more. Such a debate would probably be informed by the annual report, but would not relate only to that report. Such a debate would happen pretty much annually and, because of the provision referring to six occasions rather than four, the arrangement would take us about 10 years hence.
These are all matters of judgment. The Government's assumption is that, because the last consolidation measure, which was introduced in 1982, lasted 20 years, the new power should also last that long. There is no rationale or logic behind that position, which is based merely on an assumption that, because it was good enough to last 20 years last time, it should last 20 years again. My contention is that, if anything, there is a strong rationale for requiring Ministers to consult the House more frequently as time passes where they are simply extending powers without any fundamental revision of the legislative framework.
The provisions were basically devised in 1972, but 30 years later, Ministers are contemplating the idea that they should simply be left in place and that the funds should be made available so that they can do what they like with them for another 20 years. Accordingly, in 20 years' time, we will be considering legislation that was framed on a temporary basis and intended to last four and a half to five years, but will have been around for 50 years—and Ministers will be continuing to spend the money. Why are Ministers so happy to extend the power and for it not to be subject to more regular scrutiny? The answer is that the legislation was phrased in such a way as to be virtually an enabling power allowing them to spend whatever they like for whatever reasons they like, subject nowadays to the agreement of the European Commission.
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