Third Standing Committee on Delegated Legislation


Wednesday 4 December 1996



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The Committee consisted of the following Members:

Chairman: Sir Roger Sims

Adams, Mrs. Irene (Paisley, North)

Devlin, Mr. Tim (Stockton, South)

Donohoe, Mr. Brian H. (Cunninghame, South)

Dunnachie, Mr. Jimmy (Glasgow, Pollok)

Fyfe, Mrs. Maria (Glasgow, Maryhill)

Graham, Mr. Thomas (Renfrew, West and Inverclyde)

Jenkin, Mr. Bernard (Colchester, North)

Kynoch, Mr. George (Parliamentary Under-Secretary of State for Scotland)

Macdonald, Mr. Calum (Western Isles)

McFall, Mr. John (Dumbarton)

McLoughlin, Mr. Patrick (West Derbyshire)

Michie, Mrs. Ray (Argyll and Bute)

Patnick, Sir Irvine (Sheffield, Hallam)

Shepherd, Mr. Richard (Aldridge-Brownhills)

Squire, Ms Rachel (Dunfermline, West)

Taylor, Sir Teddy (Southend, East)

Townsend, Mr. Cyril D. (Bexleyheath)

Viggers, Mr. Peter (Gosport)

Wilkinson, Mr. John (Ruislip-Northwood)

Mr. T. W. P. Healey, Committee Clerk

3 Third Standing Committee on Delegated Legislation Wednesday 4 December 1996

[SIR ROGER SIMS in the Chair]

Draft Scottish Enterprise (Aggregate Amount Outstanding) Order 1996

4.30 pm

The Parliamentary Under-Secretary of State for Scotland (Mr. George Kynoch): I beg to move, "That the Committee has considered the draft Scottish Enterprise (Aggregate Amount Outstanding) Order 1996." The purpose of the order, under section 25 of the Enterprise and New Towns (Scotland) Act 1990, is to increase the financial limit for Scottish Enterprise from the present level of £2,000 million to £3,000 million. The £2,000 million limit was set on the basis that it would suffice for about five years, but it is estimated that the limit will be reached before the end of the current financial year. We estimate that an increase now to £3,000 million will take Scottish Enterprise into the millennium and allow the network's signal contribution to the economic well-being of Scotland to continue. Under section 25 of the Enterprise and New Towns (Scotland) Act 1990, a number of items count towards the financial limit of Scottish Enterprise. The first is made up of Scottish Enterprise's and its subsidiaries' borrowings; the second is the sums issued by the Secretary of State or the Treasury in fulfilment of guarantees, and the third is loans guaranteed by Scottish Enterprise or its subsidiaries. The final and largest item comprises payments from the Secretary of State consisting of grant in aid less administrative expenses, plus voted loans payments. By the end of the financial year, the £2,000 million that Scottish Enterprise has invested in the Scottish economy will have helped to create or safeguard an average o£25,000 net jobs a year, will have secured more than £5.5 billion of investment from the private sector, will have cleared more than 4,000 hectares of land and enabled more than 154,000 unemployed adults and more than 173,000 young people to take places on Government training programmes with the number of vocational qualifications achieved by participants on such programmes increasing by more than 35 per cent. since 1991. In order to build on the work done to date and to continue its delivery of the Government's economic policies, it is necessary to provide the statutory basis for the continued funding of Scottish Enterprise. That 4 is the purpose of the order. Although the order does not determine Scottish Enterprise's annual budget, which is established separately in the light of the Government's spending priorities, it is essential in order to provide a basis of funding from which that budget can be met. I commend the order to the Committee.

4.32 pm

Mr. John McFall (Dumbarton): The Opposition welcome the order increasing Scottish Enterprise's financial limit from £2 billion to £3 billion. The Minister said that the order does not determine Scottish Enterprise's annual budget but provides a basis for expenditure. We well remember the infamous meal held last year at the Horseguards hotel where the chairman of Scottish Enterprise rolled over, had his tummy tickled by the Secretary of State and gave up 7.5 per cent. of Scottish Enterprise's budget. Scottish Enterprise has suffered ever since. On 17 November, an article inScotland on Sundayreported the fears of what even a small cut in the agency's£432 million budget would do to "our still fragile economy". The article added: "There are still some in Scottish Enterprise's Glasgow headquarters who worry that a cut, on top of last year's 7.5 per cent. drop, would put at risk inward investment, the shining star of the Government's economic policy. If it is to be ring-fenced then other support services would have to go." Those are important issues. The Minister glibly referred to training and unemployment among adults. He spoke of the 154 unemployed adults—

Mr. Kynoch: It is 154,000.

Mr. McFall: I am sorry; he referred to 154,000 unemployed adults and 173,000 places for young people on training programmes. The Minister knows that the training scheme for unemployed adults is not working well, and Scottish Enterprise would admit that in its frank moments. The scheme is not working well, and is surrounded by a lot of hype. We need sustained investment to get unemployed people back to work. The unemployment figures in many areas are unacceptably high, and it is important that the finance that was taken away last year be reinstated. I hope that the board of Scottish Enterprise gives its chairman some more muscle, so that when he meets the Secretary of State for Scotland and the Minister he can make them realise that they cannot cut the budget in the cavalier fashion of last year. The Scottish economy is still fragile. I support Scottish Enterprise in many of its activities. It has done well, but some elements can be improved. That is a common agenda between the 5 parties, but Scotland's economic progress cannot be improved at the same time as Scottish Enterprise's budget is cut. I hope that the Minister will pay attention to the specific areas of weakness in Scottish Enterprise, such as training for unemployed adults. We need an agreed agenda to ensure that Scottish Enterprise gets the resources that it needs this year so that it can carry out its work as well as it has in the past.

4.36 pm

Sir Teddy Taylor (Southend, East): It is a great pleasure, as a former Scottish Member of Parliament, to be on this Committee and to witness the developments being made in Scottish business and employment. I had the pleasure of being in Glasgow on Sunday to address the synagogue in Garnock hill. I was encouraged to see how well industry and commerce were doing. I have one simple question. It is relevant to the Committee and the discussion of the order. Yesterday, the Government made it clear that they were retaining an open mind on the question of joining the European single currency. If Britain were to join that currency, borrowing would be subject to legal restraints imposed by a bureaucratic body in Europe. Will borrowing by Scottish Enterprise or "sums of money issued by the Secretary of State or the Treasury in fulfilment of guarantees of the borrowings of Scottish Enterprise" be considered relevant borrowing as defined by the requirements of the European bureaucrats? We must bear that problem in mind. There is no point in Committees such as this agreeing to extra borrowing if in a few months' time that has a catastrophic effect on borrowing elsewhere. In no sense do I want to cut the money being made available to Scotland or Scottish business or enterprise—that has my full support—but in a few months we may be involved in the European currency business. It is therefore desperately important, before we approve the order, that we know whether the sums are relevant and whether borrowings by organisations that are part of Government—they are sometimes inappropriately called quangos—would be relevant for the borrowing required by European authorities.

4.38 pm

Mr. Thomas Graham (Renfrew, West and Inverclyde): I support what was said by my hon. Friend the Member for Dumbarton (Mr. McFall). I am delighted that the Minister has recognised the difficulties that the previous cut caused Scottish Enterprise. We are now on the right road; Scottish Enterprise should be allowed to do the job it was meant to do, which is to get Scotland back to work and our young folk trained. 6 I hope that this opportunity for Renfrew—[HON. MEMBERS: "Renfrew?"]—The opportunity is for Scottish Enterprise, but I mentioned Renfrew deliberately because unemployment there is far too high. Too many young people are trained for the dole rather than for the new information superhighway. I want young folk to be more aware of the opportunities that exist for them. This money should be used in a sensible way to ensure that young people in Scotland are trained so that they can use the new information superhighway. Without that opportunity, young people in Scotland will feel miserable. They will be fodder for the gamekeepers and the stalkers and for the folk from Italy and Germany with plenty of money who come to Scotland to go out shooting deer and a few partridges. Our kids will be carrying their baggage—that is not what we want.

Sir Teddy Taylor: The hon. Gentleman must appreciate that there will not be as many Italians and Germans coming to Scotland. Figures published this morning show that over the past five years the number of unemployed people in the other member states of the European Union has increased by, believe it or not, 5 million while in Britain unemployment has fallen. Far fewer people will come from Italy, Germany and France because they will not have any jobs or any money.

Mr. Graham: I reside in Scotland almost permanently, except for my visits to London, and have a holiday home in the north of Scotland, so I can assure the hon. Member for Southend, East (Sir T. Taylor) that many folk from Italy and Germany come to shoot—they have plenty of money to spend.

Mr. McFall: In the light of the remarks of the hon. Member for Southend, East, does not my hon. Friend think that we will be competing for Europeans with their ecu, given the Prime Minister's statement the other day? We shall have a little bit of a problem then. There will be good competition in Scotland and I am sure that the hon. Gentleman will welcome that.

Mr. Graham: Obviously, I agree with every word that my hon. Friend said, but I do not agree with the Prime Minister much. The measure could provide opportunity. As the Opposition have stressed, we were appalled by the cuts at Scottish Enterprise. We argued at the time that the Secretary of State was taking the wrong road and should have been increasing, not cutting, the money. Thankfully—lo and behold—the Government have decided, even at this late stage, to reverse that and allow Scottish Enterprise to develop further. The Government have sat on their backsides and not allowed the young folk of Scotland to take part in the 7 information superhighway of the Internet and all the technological accoutrements that go with the new computer world. Scottish folk want to avail themselves of that technology. My constituency probably exports more than any other part of Scotland—I have IBM, Compaq, the lot. However, those companies are in my constituency because its people are intelligent and prepared to avail themselves of the technology if the Government provide the wherewithal to allow them to get their education and to get into the network. I welcome the opportunity for Scottish Enterprise to get additional money. A wee bit of it should come to Renfrewshire. We will play our part in making Scotland a good place to live. I can tell the hon. Member for Southend, East that Scotland contributes considerably to the rest of the United Kingdom and to the quality of life in Europe. I am not anti-European or anti-anybody—I am pro-Scotland. I wish that the stone that came back to Scotland from down here had been a million stones for building decent housing rather than one for someone to sit his bum on.

4.42 pm

Mr. Peter Viggers (Gosport): I represent a constituency in the south of England and support the order, even though the limit is being increased from £2,000 million to £3,000 million. That is a considerable sum. I know from my experience as Minister responsible for industrial development in Northern Ireland that Northern Ireland, Wales and Scotland receive very large sums as subvention from the United Kingdom. I sometimes wonder whether the people of Northern Ireland, Wales and Scotland realise how fortunate they are that the people of England are prepared to subsidise them to the extent that they do. My constituents will be happy for further money to go to Scottish development and the subsidy of industry. They regard the United Kingdom as being one and regard the subsidy for another part of the United Kingdom as appropriate. But the more that the United Kingdom is subject to devolution and separation, the less happy my constituents will be about such subsidy—the more the people of Scotland have their own government and taxation, the less minded my constituents will be to subsidise them. I stress that point to Scottish Members of Parliament: enthusiastic though they may be about this further support for Scotland, they might find that people in England may prefer to take their rightful place and become equally as prosperous as people in other areas of Europe such as Sweden and Germany, should the Labour party take the devolution road—the statistics reveal that they could be equally prosperous if they were not subsidising the other parts of the United Kingdom.


Mr. Graham: Is the hon. Gentleman aware that it is not only the Labour party that is calling for the increase in funds or for Scottish devolution, but the people of Scotland? If the Government want to challenge that, I am sure that the Minister could probably facilitate a referendum, which would show that Scottish people want their own Parliament in Scotland. I would be delighted if the Minister accepted the challenge. There is a good, clear example of a remedy—not an opinion poll, but an election. The Government should grant us that now and we will prove that the people of Scotland want a devolved Parliament.

Mr. Viggers: The hon. Gentleman has rather proved my case in the sense that he has shown the strength of his convictions and, perhaps, those of his party, but he has not weakened my point that my constituents might feel less enthusiastic about supporting other parts of the United Kingdom if there were to be a measure of devolution.

Sir Irvine Patnick (Sheffield, Hallam): Will my hon. Friend give way?

Mr. Viggers: No, because I have finished.

4.45 pm

Mr. Kynoch: It has been an interesting, short debate and it has been interesting to hear the comments of hon. Members on both sides of the Committee. I commend my hon. Friend the Member for Southend, East on his ingenious way of introducing Europe into the equation. I stress that the order will raise the limit on public funding. The figure is not for one year but will take us beyond the millennium. The figure of £2 billion has taken us thus far and it is expected that that limit will be overcome at the beginning of next year. It is not only for borrowing, but for spending. The budget that Opposition Members have been at great pains to argue about is not the subject of debate today. The hon. Member for Dumbarton has highlighted the difference between Conservative and Opposition Members: Opposition Members are intent on ploughing more and more money into public expenditure, whereas Conservative Members welcome the approach of Scottish Enterprise in the past year—

Mr. Graham: Will the Minister give way?

Mr. Kynoch: The hon. Gentleman has had his fill of interventions. Scottish Enterprise said this year that it would maintain and, indeed, improve output with less funding. It is in the business of getting better value for money for the taxpayer, and that is the difference 9 between us and the Opposition. We recognise that the funds that we are giving to such bodies are not magical money that appears from nowhere, but money that belongs to the taxpayer. The people who fund public expenditure have a right to expect value for money and that is what Scottish Enterprise has given this year. I commend Donald Mackay, his board and all the local enterprise companies for their work, and I suspect that the hon. Member for Dumbarton would want to join me in doing so. I strongly argue that if they are to continue their good work, we must agree to the order.

Mr. McFall: This is not about public expenditure and the divide between us, but about supporting economic development and organisation. I am sure that the Minister will give me as much credit as himself for visiting an organisation and understanding the issues and problems. I have spoken to the chairman and senior management at Scottish Enterprise and met members of the board and the chief executives of all the enterprise companies. They told me that last year's cut was detrimental to their budget. In that genuine spirit of negotiation and consultation, I ask the Minister to listen to the comments of the enterprise network. I will join him in commending the good work at Scottish Enterprise and at local level.

Mr. Graham: I, too, want to respond to the 10 Minister. The Minister talks as if the money will not generate income.

Mr. Tim Devlin (Stockton, South): On a point of order, Sir Roger. Is it in order for an hon. Member to speak twice in Committee without the permission of the Chair?

The Chairman: Of course.

Mr. Graham: I was about to tell the Minister that the money generates income in Scotland and creates a trained work force who earn a wage and contribute to the economy. It is not being wastedit creates finance in Scotland.

Sir Teddy Taylor: I must express my disappointment at the Minister for not even trying to answer a serious question. If borrowing by an agency or the Government is relevant, we should know whether it is included in the figures. I appreciate that this may be a complex issue on which the Minister's clever civil servants do not have a precise opinion, but I hope that the Minister will write to me or someone else to say whether such borrowing is relevant.

Question put and agreed to.

Resolved. That the Committee has considered the draft Scottish Enterprise (Aggregate Amount Outstanding) Order 1996.

Committee rose at ten minutes to Five o'clock.


Sims, Sir Roger (Chairman)

Devlin, Mr.

Graham, Mr.

Kynoch, Mr.

Macdonald, Mr.

McFall, Mr.

McLoughlin, Mr.

Michie, Mrs. Ray

Patnick, Sir Irvine

Taylor, Sir Teddy

Townsend, Mr. Cyril D.

Viggers, Mr.

Wilkinson. Mr.