HC Deb 07 December 1951 vol 494 cc2798-808

3.58 p.m.

Mr. George Chetwynd (Stockton-on-Tees)

May I first express my thanks to you, Sir, for giving me the opportunity of raising this important question of the Government policy regarding Development Areas in this last Adjournment debate today; and also express my thanks to the House for seeing to it that the many debates today have kept to the time-table so that we can start this last half-hour completely on time.

I raise this subject in no hostile sense. Of course, the more successful is the Parliamentary Secretary in his task at the Board of Trade concerning Development Areas the more satisfied I shall be. It is, I think, of great importance to many hon. Members whose constituencies are in the Development Areas, and to their many thousands of constituents, that we should have some statement of policy from the new Government about their attitude towards the Distribution of Industry Act. There is a fear, and it may be completely unfounded, that this may be put into cold storage in the present economic difficulties.

My first duty is to stress the importance of the good work which has already been done in solving the unemployment problem in the Development Areas, in finding additional employment and in bringing about a greater diversity of industry. If I have to refer to a number of figures it is merely to give emphasis to this situation which has come about in the Development Areas. The figures show that, from 1932, at the worst of the unemployment period, when there were 932,000 people out of work, there has been a remarkable change, so that, in 1938 there were 553,000 people out of work in the Development Areas. After the war, in 1946—

It being Four o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, "That this House do now Adjourn."—[Mr. T. G. D. Galbraith.]

Mr. Chetwynd

In 1946, after the war, this figure stood at 200,000, and by February 1950, as a result of the combined efforts of the Government, private industrialists, local government authorities and so on, it had been reduced to 145,000. Today, or rather in October 1951, there were just under 100,000 people unemployed in the seven Development Areas in this country.

As well as finding employment for all these people and reducing those great figures, there has been an additional source of people brought into employment who never before thought of going into productive industry, and I am referring in the main here to many women who saw service in the war, in ordnance factories and so on, and who, with many others since the war have found regular places in the new factories in the development areas.

I would like to point out, as a tribute to what has been done in the North-Eastern Development Area, the excellent work of the North-Eastern Trading Estate Company, which, in the numerous factories under its control, now employs something like 44,000 people.

As well as bringing about a solution of the unemployment problem, we have also had a great contribution made to our economic situation in the Development Areas by making these areas less and less tied to one or two basic industries. There has been great progress made in bringing about a more diverse economy, and already, to date, in all the Development Areas, 1,342 factories have been completed, while, at the present time, 315 are still under construction.

In the North-Eastern Development Area, with which I am most familiar, there are 369 factories completed, and, I understand, 97 still under construction. These factories cater for a great variety of industries which were never before known in these Development Areas. We have a very flourishing woollen textile industry, which has now spread from Yorkshire into the North-East. We have a great variety of engineering industries and light industries of many kinds. The figures which I have given reveal the new life and hope which has come to these former distressed areas. Now, it is quite clear that the main part of the problem has been tackled successfully, and our thanks are due to all these people who have played their part in achieving it.

At this stage, however, in spite of the progress that has been made, I want to say that we must not feel any complacency with regard to this problem. In view of the present trends, which we can all see now, there is a growing danger that unemployment might recur in these areas, and there are slightly rising figures of unemployment in them. At the moment, they stand at something like 96,000.

The significant fact is that, of all the unemployed people in the country, 46 per cent. of the men and 40 per cent. of the women are unemployed in the Development Areas, and that means that, in those areas, with roughly one-seventh of the total population of the country, we have almost half of the unemployment, and that indicates the scale of the problem now facing us.

In the North-Eastern Development Area, there are 14,106 men out of work, and 9,791 women, but, again, the significant fact is that, of these figures, 43 per cent. of the men have been out of work for over six months and 20 per cent. of the women. That is the real hard core of this unemployment problem. Another important fact which needs attention is that, of those unemployed in the development Areas, over 70 per cent. are over 40 years of age and these people are now reaching the point at which they are beginning to look upon themselves as virtually unemployable.

There is a further aggravation at this time because of Government policy through the recent ban on factory building imposed over the whole country for a period of three months.

Another difficulty is the fact that many factories, particularly those engaged in the consumer good industries are now having to work short time. On the very fine trading estate in my constituency, one factory is working every alternate week and another only four days a week instead of five. That may be due to the general conditions of trade, or, again, it may be due to the fact that these particular industrialists are not able to obtain sufficient raw materials.

There is a further problem which may be more long-term in its effect—the possible changes in the shipbuilding industry which may bring about a structural change in employment in the Development Areas. With that background in mind, I want to put the following questions to the Parliamentary Secretary. What is the position in the Development Areas with regard to new building? I ask that for the reason that the present building programme is almost at an end. There are only a few factories in the construction stage at the moment and a number which have been licensed, but where work has not started.

What standards will be applied in judging whether new factories can be licensed in this three-months' period? Will the matter be judged solely on the contribution which the proposed factory can make to exports or defence, or will there be a wider concept, such as has prevailed hitherto, that some factories should be built in the Development Areas not only on economic grounds, but also on social grounds in order to redress the balance regarding the old unemployment problem to which I referred earlier. Up to now a preference has been given to factories built in Development Areas. This has been a great success from the viewpoint of the industrialists who have seen fit to migrate to those areas.

How many factories are there under construction, and how many have been postponed? From the figures it would seem that there are something like 97 factories at present under construction in the North-East. Forty-one of these were already licensed and are being proceeded with at the present time. As regards the country as a whole, I gather that some 400 factories have fallen under this ban. Has the preferential treatment hitherto extended to the Development Areas come to an end?

Another major point which needs the attention not only of the Minister but of his colleagues in the Ministry of Labour is the over-riding necessity to bring all the people who can make a useful contribution to our economic life into production. It seems to me a tragic waste that something like 100,000 people cannot be employed in production today when we know that there are about 400,000 jobs waiting to be filled.

The Minister of Labour is naturally worried about the completion of the defence programme and is looking round for various expedients in order to get the maximum labour force engaged on that programme. In the Development Areas we have the only remaining pool of labour in the country. It is undesirable on social grounds, and also impossible owing to the shortage of houses, to ex- pect the unemployed in the Development Areas to migrate once again to the London area or to the Midlands. It is obviously more sensible and more practical to take the defence work to those areas which have workers available.

What has been done to steer defence orders into the development areas? The previous Government gave an undertaking that where possible defence orders would be steered to firms in the Development Areas. I should like an assurance from the hon. Gentleman that his Government will continue along those lines.

It is quite clear on examination of the unemployment figures that we have the right type of labour available to undertake these jobs. I have recently obtained figures for the north-east from the Ministry of Labour. They show that among the engineering and electrical industry there are some 1,579 out of work. Among shipyard workers, repair workers and so on there are 1,420 unemployed. There are 2,741 building and contracting workers unemployed. Then in the peculiar classification, "public administration and defence workers," whatever that embraces, there are 1,559 unemployed.

Some of these may be only out of work for a few days, but it seems to me that where there is labour of that kind out of work and we have defence orders not being completed for lack of labour elsewhere there is an overriding pressure upon the Government to see that the work should be transferred to a place where those men can be brought to useful production. I think it would be possible to find adequate factory space to employ them. Some factories today are not fully employed. Space is left vacant in certain cases and in others space could be easily re-deployed for defence orders. Any information the hon. and learned Gentleman could give me on this subject will be appreciated.

I come now to another problem which is causing great concern in the Development Areas and which may be due to reasons over which we have little or no control. It is the problem of firms engaged in the consumer goods industries, such as clothing. When appeals first went out for firms to remove to Development Areas it was this kind of firm which responded first and left the over-populated areas round London and in the Midlands and settled down in such places as the north-east.

Today, it is these firms that are finding it most difficult to carry on. We know there is a falling off in trade which may be responsible for that, but in the past the Government have been able to see that where scarce raw materials were available priority was given to firms who had come to the Development Areas. I want to know what help the Government can give to these firms which are experiencing short time, to weather this storm. Some priority is needed in view of the fact that these firms readily responded to the appeal of the Government to settle in Development Areas.

Another important point concerns the natural wish of engineering and other firms in the Development Areas to expand. There is the physical limitation of building licences, except in certain cases of firms engaged on re-armament work, but there is also the question of credit. Up to now the Development Areas Treasury Advisory Committee has given great help to those firms in Development Areas and I wish to pay tribute to the work that has been done. In view of changes in Government interest rates and the restriction of credit, I wonder whether this Treasury Committee will be affected to some extent and that in turn this will have an adverse effect on firms wishing to expand in the Development Areas.

A matter of very great importance and one which has assisted in maintaining employment in Development Areas in the past has been the policy of the previous Government of placing Government contracts and orders with firms in the Development Areas. That has also been true of the nationalised industries. Where other things were equal preference has been given, rightly in my view, to firms in Development Areas. I should like to know whether the present Government intend to continue that practice.

I do not know whether the hon. and learned Gentleman can answer this now, because it may be a little premature, but I should like to know also whether it is intended to remove any areas from the Schedule of the Distribution of Industry Act. In my view it would be premature to consider that until we can see the future more clearly. We do not know quite what will happen to basic industries, and, although we have shown a great record of progress in the Development Areas, it would be wrong, if we were to remove any area from the provisions of the Act.

I want the Board of Trade to repose their fullest confidence in the trading estate companies. They have done a magnificent job so far in inducing industrialists to settle in the development areas. They have done a great job in seeing the factories constructed. If we can get some simplification of the administration of the chain of responsibility between the trading estate companies and the Board of Trade itself I think that will be all to the good.

My appeal to the Government, to private industrialists and local authorities who are very interested in this problem is that they will continue to cooperate in the future as they have done in the past, to carry on the good work and to prevent the present Development Areas from falling back into distressed areas. I hope the Parliamentary Secretary will be able to give me an assurance today that the Distribution of Industry Act will not become a dead letter.

As we are now going into Recess, Mr. Speaker, may I from the back benches wish you a very happy Christmas, and, when we resume in the near future, a very peaceful New Year?

Mr. Speaker

Thank you.

4.17 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Henry Strauss)

The hon. Member for Stockton-on-Tees (Mr. Chetwynd) has shown over a considerable period a great and informed interest in this important question of Development Areas and, in particular, the North-Eastern Development Area. When he gave notice of his wish to raise this matter on the Adjournment he was good enough to indicate to me in a message some of the points on which he would like me to give information if I could, and I hope that on some, if not all, I shall be able to give him some of the information he wants.

The general principle was well stated on behalf of His Majesty's Government by my right hon. Friend the President of the Board of Trade yesterday in answer to a Question by the hon. Member for Workington (Mr. Peart). Perhaps I might remind the House of that answer. My right hon. Friend said: I am anxious that the Development Areas should make their maximum contribution to the urgent needs of production for defence and exports, and we shall continue existing arrangements whenever they will assist the Areas to attain this objective."—[OFFICIAL REPORT, 6th December, 1951; Vol. 494, c. 2544.] I think there will be unanimity in the House on the importance of those two objectives.

The hon. Gentleman wanted me to give some figures about the new construction that was going on in the North-Eastern Development Area. It is a little difficult, in fact impossible, for me to give him exact figures for, as he will appreciate, the Board of Trade is not the only Department concerned, and there has not been a great deal of time to obtain figures. Nevertheless, I can give him this figure, in which I think he will be interested. At the latest date for which I have particulars, over 100 factories and extensions to factories were under construction, covering an area of about 5 million square feet.

He asked me also whether I could give him any information about any postponements that had been made as a result of the policy announced by my right hon. Friend the Chancellor of the Exchequer. Here again I would point out to him that we are more readily able to obtain figures in the case of extensions of over 5,000 sq. ft. on account of the necessity for issuing industrial development certificates under the provisions of Section 14 (4) of the Town and Country Planning Act, 1947. Taking the class of factories and extensions which I have just mentioned, we are aware of two cases of postponement of work which would have started in the present month.

The hon. Gentleman asked me whether the exceptions mentioned by my right hon. Friend the Chancellor of the Exchequer during what I may call the period of postponement would be limited to the cases of export and defence. Perhaps I might quote the exact words of my right hon. Friend the Chancellor the Exchequer: no new starting dates for building work will be granted for operation during the next three months, except for special schemes approved as exceptionally urgent in the national interest."—[OFFICIAL REPORT, 7th November, 1951; Vol. 493, c. 200.] I think that would not necessarily be confined to those two objectives which I have mentioned, but I have no doubt that they will be the main categories of cases in which an exception would be made.

Turning to the principle which will apply after the period of postponement, I assume the House is aware that, as the Chancellor of the Exchequer said, a general review of capital investment is now taking place, and until that review is completed it is impossible to annnounce any decisions on the general level of new factory building.

Mr. Chetwynd

If a firm wishes to expand after this period, is there anything to prevent it putting its case to the Department now so that it can prepare to make an immediate start once the decision is given, because it is the time-lag which is important?

Mr. Strauss

I speak subject to correction of which, if necessary, I will notify the hon. Gentleman later. I think there would be no objection to the firm putting their case, but perhaps he will permit me to add that note of caution, because I have not informed myself on the matter. My impression is that there is nothing to prevent anyone putting his case.

The hon. Gentleman next wished to know what was being done to help the Development Areas. I can reassure him a little on that point. For many years, Government contracting Departments, when placing orders by competition, have given preference to firms in Development Areas, other things being equal; and production authorities, when allocating orders without competition, have given first consideration to the capacity and needs of Development Areas.

I think the success which has attended that policy can be illustrated by two figures. In the short time at my disposal I do not wish to weary the House with many figures. But I thought the hon. Gentleman would be interested to know that during the period of six months from April to September, 1951, the grand total of orders placed by the Ministry of Supply was £467.5 million. That is the grand total for all areas. Of that, the amount placed in Development Areas was £49.8 million—more than 10 per cent.

The next question that the hon. Member put to me was on what would be the policy regarding Treasury loans on the advice of the Development Areas Treasury Advisory Committee. As the hon. Member is aware, the principle on which these advances are made is governed by Section 4 of the Distribution of Industry Act, 1945. In effect three conditions have to be satisfied: first, that the Board of Trade approves the undertaking as complying with the requirements of the proper distribution of industry; secondly, that the Treasury is satisfied, in accordance with the recommendation of the Development Areas Treasury Advisory Committee, that the undertaking has good prospects of ultimately being able to carry on without further Government finance; and thirdly, that the undertaking cannot, for the time being, obtain capital on reasonable terms commercially.

Those, as the hon. Member will agree, are the three conditions. So I think that his question to me is how is that now going to work? Well, the policy continues unchanged. With the policy remaining unchanged he may ask, how far will the number of eligible allocations increase or decrease? I can only tell him this, that so far there is no significant change noticeable in either direction.

I think that the next point put to me by the hon. Member concerned possible changes in the areas scheduled to the Act. I can tell him this, that, before any changes were made, clearly 'the most careful consideration would be necessary, and I would remind him—and, indeed, remind the House—of this fact, that no change could be made without an affirmative Resolution by each House of Parliament.

Lastly, I think he asked me whether I could give him an assurance that the Distribution of Industry Act would not be treated as a dead letter. I can without hesitation give him that assurance. The relevant statutes were passed with the good will of the whole House, and I think I can give the assurance for which he asks.

Mr. Chetwynd

Could the hon. and learned Gentleman say anything about the switching of defence orders from the Midlands to the Development Areas?

Mr. Strauss

No, I do not think I can give any information on that subject. The particulars I have given the hon. Member of the contracts placed by the Ministry of Supply will, I think, reassure him that the interests of the Development Areas are being kept in mind by every contracting Department, but I know he will also bear in mind the paramount needs of the defence programme, and I do not think it would be right to go beyond what I have already told him.

Question put, and agreed to.

Adjourned accordingly at Twenty-nine Minutes past Four o'Clock till Tuesday, 29th January, pursuant to the Resolution of the House yesterday.