Select Committee on Delegated Powers and Regulatory Reform Eighteenth Report



Memorandum by the Department for Trade and Industry

219.  The Industrial Development (Financial Assistance) Bill was brought from the House of Commons on 8 April 2003.

220.  The Bill provides for a continued, rather than a new, power to make delegated legislation by statutory instrument. The Bill contains two clauses and its purpose is to amend the financial ceiling in section 8(5) of the Industrial Development Act 1982. Section 8 contains the principal power of Ministers to give financial assistance to industry outside areas which have been granted Assisted Area status. The Bill enables financial assistance to continue to be given by Government Departments and the devolved administrations.

221.  Section 8(5) of the 1982 Act contains a limit of £1,900 million on the amount of assistance which can be granted, and this may be increased by order made with the consent of the Treasury on not more than four occasions by a sum not exceeding £200 million. The Bill retains the structure of four additional tranches in the existing legislation but replaces the numerical ceilings with new, higher ones. The Bill replaces subsection 5 of section 8 of the 1982 Act by substituting higher figures of £3,700 million as the initial ceiling and £600 million as the maximum amount by which the ceiling can be raised by each order.

222.  The other provisions of section 8 remain unaltered, including subsection 10 which provides that an order under subsection 5 shall be contained in a statutory instrument, and shall not be made unless a draft of the order has been approved by a resolution of the Commons. The Bill does not, therefore, introduce new delegated powers but provides for continuing Parliamentary control over section 8 expenditure through the existing secondary legislation mechanism, which allows the initial ceiling to be raised by affirmative order of the Commons on up to four occasions. Under existing legislation, the financial ceiling has been raised three times and, on each occasion, the orders were considered in standing committee, not on the floor of the Commons. A fourth and final order under existing legislation is planned for January/February 2003.

223.  Based on current levels of spend and assuming that rate of spend remains constant, the new ceiling of £3,700 million is expected to last for about 5 years before the first order is needed, with increases by affirmative order required every 3-4 years after that. These new limits are intended to even out the Parliamentary process and to provide for more regular Parliamentary consideration of the section 8 power than previously.

November 2002

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