DEVELOPMENT AREAS AND DISTRIBUTION OF INDUSTRY

HC Deb 25 February 1953 vol 511 cc2105-220

4.2 p.m.

Mr. Alfred Robens (Blyth)

The debate today will, I hope, be fairly wide. We shall wish to discuss the distribution of industry, the position of Development Areas and the employment situation generally. The Minister of Labour has been kind enough to advise me that he is unable to be present this afternoon, at least in the early part of our discussion on this matter, which concerns both him and the President of the Board of Trade, because he is attending a meeting of the National Joint Advisory Council, a very important meeting of employers and members of the trade unions. That is quite acceptable to us, and we thank the right hon. and learned Gentleman for his courtesy in so advising us.

In May of last year, in a debate upon the unemployment situation generally, I said that, unless vigorous action was taken by the Government, I thought, on the trends as I saw them, that there would be a million people unemployed by the end of the year. No one is more pleased than myself and my right hon. and hon. Friends that that is not the case, and that our unemployment figure—that is, of wholly unemployed is at the moment 452,490, which gives the national average of 2.2 per cent. At the same time it does not behove any of us in this Committee to be complacent, because we must remember that the number in civil employment today is 142,000 fewer than in 1951; and that has a very big effect upon our productive effort.

We are also seeing around us signs— and this is causing anxiety among hon. Members on both sides of the Committee —of mounting short-time working and redundancy. I think I am right in saying that at the last census, taken in November, more than 100,000 workers a week were working on short time. The position is, in my opinion, worse today; we shall see in a few weeks' time. We must also take into consideration the fact that industrial production is down by 3 per cent. compared with 1951, and that percentage fall in our total production is approximately equivalent to the work of 600,000 people.

Bearing all these facts in mind, we must approach this debate in a searching way. We shall desire to ask a lot of questions, and we are out to seek the Government's views and to learn what is their policy in this and other matters. We shall be critical of their policy which has already been announced in relation to the Development Areas, because when we look at the whole scene we see other very ominous trends.

The unemployment plus the concealed unemployment amounts to a very large figure indeed, and one which none of us can regard with other than grave anxiety. If I may put all these facts first so that we can move on from what are acceptable as facts, I would add another very bad feature. During the whole of 1951 there were always more vacancies than there were people unemployed, so that it was merely a question in that year of transferring people who were out of employment into places where there were known vacanies. That was deseribed as over-employment by a large number of people because we had not got all the workers necessary to fill all the vacancies.

Last year, 1952, showed a great change. The reverse has taken place, and today and during 1952 there are and were more unemployed than vacancies, so that even if all the unemployed could be transferred into places where there are vacancies we should still have a large number of people for whom no work can be found. Indeed, I believe I am correct in saying that there are today twice the number of unemployed to notified vacancies, so that I do not think anyone would disagree when I say that the pattern of employment at the moment is a very dangerous one.

Let us look at the distribution of labour at present. It cannot be a matter of joy to think and to know that there are 22,000 fewer people working in the basic industries than there were 12 months ago. It is not very pleasing to realise that there are 123,000 fewer people working in the manufacturing industries compared with 12 months ago. And although I am a trade union officer attached to the distributive workers' union, I take no pleasure from the fact that there are 23,000 more people in the distributive trades, because it is the wrong pattern, the wrong line. We want fewer people in distribution and more in the basic industries and in the manufacturing industries. Therefore, the Minister of Labour and his colleagues in the Board of Trade and other Departments have this serious pattern of our employment situation to consider in addition to the problem of unemployment and underemployment.

The Labour Party have always put full employment in the forefront of their policy, and the reason is not far to seek. Unless we have full employment in this country, the whole fabric of our social services and the opportunity of increasing the standard of life of the people of this country fall to the ground. We cannot maintain social services, we cannot possibly look forward to increased standards of living, if a large proportion of our people are unemployed, because we not only have the problem and the task of maintaining the unemployed and their dependants but we are also without the productive effort which they would be putting into industry if they were working. So we lose on two counts when we have large-scale unemployment.

That is the reason our party have always stood for full employment. We have taken the risks that go with full employment. We know great problems arise when there are more vacancies than there are people available, but we would rather face those problems than the terrible problems of social injury and misery, plus the lowering of the standard of living, which are occasioned by large-scale unemployment. Britain's economic survival depends on the fullest use being made of the manpower in this country.

Mr. William Shepherd (Cheadle)

Will the right hon. Gentleman tell the Committee what, in his view, is the percentage of unemployment which conforms with the views he is now expressing?

Mr. Robens

I have said that I would rather face the problem of having more vacancies than unemployed people.

Mr. Shepherd

That is not an answer.

Mr. Robens

I think it is a very good answer. I refuse to sit back complacently while there is one person out of work. I want to see everyone in a job and, therefore, I do not accept any percentage as the right percentage for unemployment.

What did we do in order to bring about full employment? My right hon. Friend the Minister for Bishop Auckland (Mr. Dalton), when a member of the Coalition Government, introduced the Distribution of Industry Act, which the Coalition Government sponsored and which came into effect under the Caretaker Government. When we came to power in 1945, we implemented that Act. What was the purpose of it? We had a situation in Britain in which there were very high spots of unemployment, and the purpose of that Act was to reduce those high spots. At the same time, we wanted to diversify industry for strategic and other reasons.

While I do not want to weary the Committee with details, let me say briefly that South Wales and the North-East Coast are two such areas where there were these very high spots of unemployment. No impression was being made on the unemployment situation there. And let me add that it does not matter how much trade there is done in this country by manufacturers, there cannot be full employment; there can be full order books, but unless the factories are in the places where there is the population, then there cannot be full employment.

Miss Irene Ward (Tynemouth)

Will the right hon. Gentleman not add to his history that the Distribution of Industry Act, which was brought into operation during the Coalition Government, was based on the Special Areas (Development and Improvement) Act which was passed during the time of the National Government before the war?

Mr. Robens

If the hon. Lady wants to take credit for all that has been done in the past, I do not object.

Miss Ward

It is making it fair.

Mr. Robens

I thought I was being more objective than perhaps I have ever been at this Box. If I am not, I am obviously a complete failure. I wanted to open this debate in such a way that we could have a sound and sensible discussion on a problem that is common to us all. Therefore, I do not mind if all the credit goes to anyone the hon. Lady wants, but I was giving the facts in favour of my argument.

Miss Ward

I come from the North-East Coast.

Mr. Robens

It was necessary to take the work to the people and it was also necessary to encourage the industrialists by different means, of which the Committee are fully aware, to go to those places. In 1945 the first factory was built under this scheme. The total number of factories built to date is 1,621 and the value of those factories is £103,217,000. Work went on steadily in the first three quarters of 1952 on completing factories which the last Administration had approved. In the first three quarters of 1952, therefore, 156 factories to the value of £18,535,000 were built.

In October and November, 1952, the number of factories dropped very considerably because there were not so many approvals in the first period of the present Administration. In those two months, only 42 factories had been erected with a value of £2,060,000. In July of 1952, we on this side were astounded, astonished and thoroughly disgusted because the President of the Board of Trade, acting presumably on the Government's budgetary policy—I am not blaming him personally for this—had to issue what I think is going to be regarded as the infamous circular on this matter. That circular virtually sounded the death knell of the Distribution of Industry Act, because the right hon. Gentleman said that under Section 3 of the Act no further grants were to be made.

What does that mean? Every local authority associated with one of these areas still desperately wants to attract industries and, if they are to do it, it now means that the burden that was previously borne nationally has to be borne locally. We are placing this burden in the main on the local authorities which are least able to bear it. They are in the areas which were depressed, areas which none of us want to see again. Those areas were beginning to enjoy a new life and to get on their feet, and just as they were getting on their feet, along comes this circular, which knocks them right back again.

These authorities will have to do all they can to continue to attract industrialists to their areas. It means that the rate burden is going to be very heavy. It is obvious, therefore, that we are reversing the tendency which the previous Administration established of accepting the burdens as national ones where it was right and proper to do so. The present Administration are pushing those burdens back on to the local authorities.

Unemployment has not been cured in those areas yet. The high spots have been rooted out, but when we look at the national average of unemployment of 2.2 per cent. we must remember that in the North-West it is 2.9 per cent., in the Northern region it is 3 per cent., in Scotland it is 3.9 per cent., and in Wales it is 3.6 per cent. Those areas all suffered badly in the pre-war years and they are still suffering today from a high percentage of unemployment. If we look within the regions to particular localities, we see a most amazing and startling trend. In 47 per cent, of the territory in Scotland the unemployment figure is over 9 per cent. and if we narrow that down and go to an area like the Western Isles, it is 36 per cent.

Mr. Anthony Fell (Yarmouth)

Do those figures apply now or over a period?

Mr. Robens

I am quoting the last figures that have been published. Within these regions, which already show a higher average than the national, we have these pockets which are alarming in the size by which they exceed the national average.

In South Wales, about which I have no doubt many of my hon. Friends will want to say something, there is grievous anxiety over redundancy in the tinplate works. We can quote the Home Secretary's figures. He has recently said that within the next two years 5,000 people will be redundant in that industry. I am told by people on the spot that they believe the figure will be more than 5,000.

If we look at the Merseyside Development Area, we find that unemployment has doubled in a little more than 12 months. In October, 1951, it was 16,700, while today it is 26,000-odd.

Mr. Percy Collick (Birkenhead)

No. More than 30,000.

Mr. Robens

I beg my hon. Friend's pardon. It is 30,000-odd. The figure has doubled in the last 12 months. More than 4,000 of these people are dock workers who are not registered as unemployed, but they are turning up to work regularly on Merseyside and there is no work for them.

The Minister of Labour indicated to us some time ago that he was producing a temporary release scheme for the docks. If he were here, I think he would agree that the scheme has been a failure. It was to enable a chap in the docking industry who wanted to remain in it to leave the industry for a period and find other employment without losing his right to go back. The scheme has been a failure. Why? Not because the scheme was bad, but because alternative work was not available. I understand that only about 600 or 700 people have been so released. We have an average surplus of dockers each day and each week of about 12,000 throughout the country.

What is the precise policy in regard to Development Areas? Is the right hon. Gentleman, by taking the Development Areas out of the Schedule, winding up the Development Area scheme entirely? Does he feel that the stage has now been reached when there need not necessarily be anything specifically done for those areas? Is that circular the first blow at having no more special areas except in name? We find from our contacts that industrialists are finding it increasingly difficult to get approvals and money from the Government, and that credit restrictions are having a very serious effect, as are the higher interest rates.

The Parliamentary Secretary to the Board of Trade only recently—and I paraphrase what he said—admitted that there were limitations as a result of the capital investment programme and the steel shortage which made it impossible to carry out all sorts of attractive projects in the Development Areas and elsewhere. He himself saw that there were projects that were attractive, but because of Government policy projects attractive to him could not be put into- operation.

New factories and new machinery are indispensable if we are to meet the intense competition which faces us. A good many of our existing workshops should be closed down as being completely inefficient, having high overheads and no real efficiency in management or in the conditions in which men work. Therefore, we cannot afford not to build factories or to have new machinery.

Anxiety was expressed on this matter by the hon. Lady the Parliamentary Secretary to the Ministry of Health. She was very active in the Canterbury by-election and she delivered a speech in which she paid tribute to the level-headed leaders of the trade union movement—she probably was not thinking about me at the time—who knew that everything that they had striven for would go by the board unless Britain could sell her goods abroad. England, she was reported to have said, had just lost a £10 million contract with a Latin-American country to Germany. Although the margin of profit of British manufacture was less than the Germans', the price was too high because of the cost of production. She concluded: We must use every possible piece of labour-saving machinery or we shall lose our markets. The time for the argument that such machinery will cause unemployment has long gone by. That argument does not arise until we are ready to put up new factories and to put new machinery into the factories.

The statement which I have quoted caused very grave concern to the trade union movement. One of the most eminent trade union officials of one of the biggest trade unions in the world, the National Union of General and Municipal Workers, Mr. Matthews, a most efficient officer who has worked closely with the Ministry of Labour on all these matters, wrote to the Parliamentary Secretary, and said: Dear Miss Hornsby-Smith, I note in the 'Daily Telegraph' of Wednesday, February 4th, a report of your statement at Canterbury which made a reference that England had lost a £10 million contract from a Latin-American country to Germany, because the British price was much higher than that of the Germans, due to the high cost of production in this country. As I am the Officer responsible for the engineering industries within my Organisation, I am collecting specific instances where we have lost orders due to delay in delivery and high costs. I should, therefore, be very grateful if you could let me have the details of the instance to which you refer. He was anxious that if there were lost orders he might do something about it. He received this reply: Dear Mr. Matthews, Thank you for your letter of the 4th February. I am afraid I am not at liberty to disclose the details for which you ask. This is a very serious matter, because the trade union movement is anxious to play its part, and because this statement was made at a by-election where statements of this kind were presumably included in order to attract votes. I have consulted the A.E.U., which is the premier engineering union, and they have made many inquiries but have been unable to trace this specific case. I say to the President of the Board of Trade and to the Parliamentary Secretary of the Ministry of Health that they should know full well, if they contact the trade union movement on matters of this kind, that there is no body in this country more willing to assist in preventing orders from leaving this country.

The Parliamentary Secretary to the Ministry of Health (Miss Patricia Hornsby-Smith)

I am grateful to the right hon. Gentleman for giving me this opportunity to intervene. There was a report, in the "Daily Telegraph" only, of 4th February, of an extract from a general statement which I made during a speech at Canterbury on the evening of 3rd February. I was not speaking from notes and I accept entirely the reporter's version, which I will not repeat, as the right hon. Gentleman has just read it out.

The point I was making at the time was that it was essential that British industry should continue to improve its efficiency and increase its productivity if we were to face the increasing competition from countries such as Germany. I am sure that all responsible people would accept that argument.

On this particular example, however, subsequent inquiries have confirmed that the specific information and example about the £10 million contract which I was given shortly before I spoke, from what I thought to be a thoroughly reliable source and which, indeed, I accepted in good faith, was inaccurate and ill-founded. I entirely accept that I should not have used this information without first having been able to verify it, as normally I would do. I very much regret that I included a false example in my speech. May I apologise to anyone whom my statement may have offended?

Mr. Charles Pannell (Leeds, West)

There is one point with which the hon. Lady has not dealt. She could have sent something more than a rather terse reply to the trade union official concerned. We look on this as a mendacious invention on a political party platform.

Miss Hornsby-Smith

I have spent many days doing my utmost to verify the statement.

Mr. Pannell

The hon. Lady has had plenty of opportunity.

Mr. Robens

I am sure the House will gladly and willingly accept the statement made by the hon. Lady. I think we might leave that matter there, except to say that it is an indication that the trade union movement is anxious to help in every way it can. Only this afternoon the right hon. and learned Gentleman the Minister of Labour has been meeting the National Joint Advisory Council and I understand, from reports in the newspapers, that one of the matters to be discussed is the question of double-shift working.

There is no argument about that at all. If we are to put a large amount of capital into new machinery, we cannot afford to work that machinery eight hours a day. It must be worked 16 hours a day if we are to get under the competition and get the best use out of the capital that we are investing. But think now of the reaction of the workers. When there is full employment—or what some people want to term over-full employment—the workers feel secure and they are ready to turn to new methods, do double-shift work, try new machinery, and so on. When there is an atmosphere created which seems to indicate that unemployment is round the corner, and they see evidence of that on every hand, that is the time when they say, "We will talk about double-shift working some other time when employment is much more secure."

The Government, therefore, are making it more difficult even for themselves with the policy they are pursuing of not taking sufficient steps to prevent what is happening now—rising unemployment, concealed unemployment, under-employment, short time and the like. It is easy to exaggerate the anxiety and fear, but even the hon. Member for Kemptown (Mr. H. Johnson), only the other day at Question time in this House, drew the attention of the Minister to the fact that unemployment in Brighton was six times higher than the national average. [An HON. MEMBER: "Not true."] It may not have been true, but nevertheless the hon. Gentleman was so anxious about unemployment in Brighton that he felt strongly enough about it to come here, put a Question to the Minister and make that statement.

There is another strange thing which I mention only to prove the point that there is anxiety in places where one would least expect it. A telegram reached me yesterday. From where? Torquay. It said: Torbay now a distressed area. Unemployment figures Torquay 1,300, Paignton 480, Brixham 225. Immediate action essential to obtain light industries. Have informed Charles Williams. [An HON. MEMBER: "Where is he? "] Brighton and Torquay are places with which no one normally associates unemployment or a great deal of poverty. Nevertheless there is an indication that they are getting anxious.

I now come to the serious situation in the Midlands. The Midlands area has always been prosperous and redundancy was unheard of there until recently. In fact, young people who left school 15 years ago have never known what redundancy was and have always been sure that there was a job round the corner because there were always more jobs than workers. Today, however, in the cycle industry in Birmingham there are 2,000 workers on short time. Every Monday in the cycle industry benches are deserted except for the foremen and maintenance people. There has been a substantial increase of wholly unemployed from about 12,000 to nearly 16,000 from December to January.

When we look at the vacancies in the Midlands area, what do we find? We find that vacancies are mainly for skilled people and that there are few jobs available for the unskilled and semi-skilled except where special physical qualities are required for particularly arduous work, night work and so on. In the motor industry there are 8,500 on short time, losing a day or half a day, and over the five Midland counties unemployment has doubled in a year, while the vacancies have halved.

I do not say for a moment that the overall situation there is serious. Of course it is not. In fact, their average is only 1.3 per cent. as compared with 2.2 per cent. The serious fact, of which the Committee should not lose sight, is that in an area which for 15 years has been prosperous, where redundancy was almost unheard of, today that ugly word is being heard and short time is being worked.

Does not this upward trend in unemployment and under-employment suggest that there is something wrong with the economic policy of the Government? Does it mean that there is something wrong with the target given to O.E.E.C. of a £350 million balance of payments surplus for the United Kingdom? How are we to achieve that? How are our exports to be financed to build up that surplus and keep full employment? Unless we finance exports and make credit freely available to other countries, they will get into deficit and, if they do so, they themselves will have to cut down their imports which are our exports.

So I ask the right hon. Gentleman what the Government have to say about that. Will he tell us why there are 29,000 fewer people in engineering today than there were 12 months ago? We are told time and time again—and I believe it to be true—that future exports depend upon our engineering industry. Yet we have 29,000 fewer people in engineering today than 12 months ago. Is this due to the complete muddle into which the Government have got themselves in regard to defence? Is this a transitional period in the switch-over in the defence programme? If it is, how long will it last? When are we likely to see an improvement? What plans have the Government to meet this alarming and dangerous situation? What, for example, is to happen about building licences? Are we going to clear them out of the way and will that mean that we are to return to a situation in which factories can be built anywhere without regard to the national interest?

I ask those questions because I want now, on behalf of all my colleagues on this side of the Committee, as well, I believe, as the vast number of working population outside the House of Commons, to express myself strongly on this matter now, before it is too late.

Full employment is essential on two grounds: economic and social. The first economic need of man in society is a job. He must have an opportunity to work and earn an income. Work is more than a means of securing a pay packet or of increasing production. It is an honourable participation in the life of the community. No provision of doles can compensate for the lack of a job. To withhold from anyone the opportunity to work is one of the greatest possible failures in the economic organisation of society. Therefore, jobs for all is not just an expedient aim to avoid a wastage of human resources. It is the minimum condition for decent social living. That is why we on this side not only believe in full employment, but, when a Government, ensured it

4.40 p.m.

The President of the Board of Trade (Mr. Peter Thorneycroft)

I welcome the opportunity this debate offers for a general discussion on distribution of industry, on Development Area policy and on the impact of those policies upon full employment. If I might be allowed so to put it to the right hon. Member for Blyth (Mr. Robens), I will continue in the spirit with which he introduced the debate, in a speech which covered a wide field and which dealt forcibly and fully with the points we shall have to consider in the course of this discussion.

There are many facets of domestic policy about which great party differences exist. But on the question of development policy and the distribution of industry there are, I believe, no fundamental party differences. If there are differences—and there are some on all sides—they are not confined to one party or another, and they are concerned with how best we can raise the level of employment, and what is the best way of helping these particular areas of the country which are most in need of our assistance.

As the right hon. Gentleman said—and I agree with him on this—both parties certainly share parenthood for these particular policies. The aim was set out in the Coalition White Paper on Employment Policy in 1944. I think it is worth re-quoting. It read: By so influencing the location of new enterprises as to diversify the industrial composition of areas which are particularly vulnerable to unemployment. The Bill was very largely prepared and was, in fact, introduced by the right hon. Member for Bishop Auckland (Mr. Dalton) in a Coalition Government in which the party opposite played a large and honourable part, and it was made into an Act by my right hon. Friend the present Secretary of State for the Colonies when he occupied my office in the Caretaker Government.

The fact that we share this Act does not mean that we cannot review it or should not look at its policy, and it certainly does not mean that we should not examine its administration at any particular time—because that is the object of the House of Commons and of this debate—or that we should not learn from experience. I hope it does not mean that we should not debate some of the new and rival theories that are developing and being discussed as to how development area policy should be pursued in the future. What it means is that this has been a national effort to try to cure what is a national problem. and I do not think it has been any the worse for that.

I want to put the subject of this debate into perspective. The distribution of industry is not a substitute for the expansion of industry. The real hope for employment does not lie in scheduling areas. It depends upon our ability to put our economy as a trading nation on a sound basis, on our competitiveness, on our will to work long and hard, and on enterprise and adventure. It depends, as the right hon. Gentleman very properly said, on the willingness—and there is willingness—of those in the trade unions and in the ranks of management to do all they can to bring costs and prices down and to put up production.

Those are the fundamentals of full employment in any country at any time. Nor, of course, is the Development Area policy and the distribution of industry the only means at the disposal of Government. The right hon. Gentleman himself referred to many others: fiscal policy, monetary techniques, commercial policy abroad, Government purchases—as there were in the textile industry during the recession last year. They are all various and different methods whereby Government, sometimes on a large scale, sometimes on a small, may influence the level of employment.

A large part of this debate will, by its nature be concerned with the Development Areas, with, as it were, the receptacles to be filled. But, in the course of our discussions, do not let us forget the important point about filling any receptacles, that is, to keep the tap running. I will turn to what we can and cannot do in this particular sphere of policy. There is one thing we cannot do. We cannot direct an industry to a particular area or site. We can refuse to give it an Industrial Development Certificate, but that does not mean that it will necessarily go to a Development Area or necessarily start anywhere. It may decide not to go forward at all.

I am very glad that that restriction is placed on this and all Governments. When one thinks of the number of factors which must influence an industry or a business in deciding where it ought to go and the choice of site, it is obvious that it has got to think of the nearness to its raw materials or its market, its transport arrangements, the availability of men and women to work, the special skills upon which it may be dependent—a whole mass of factors too complex and too varied, and, anyway, arising in too many cases, to be submitted to the judgment of any particular Government at any time.

If we want men and women to stake their own money in adventures of this sort, then we must pay some regard to their own judgment as to where those risks should be taken. For that reason all Governments have agreed to content themselves with a negative policy so far as the granting of Industrial Development Certificates is concerned. What we do through that negative control and other inducements, which I shall mention in a moment, is not to direct, but to seek to steer industry into those localities where, for a variety of reasons, it would seem to be most socially desirable to do so. I would say here that that is a task in which industry itself has most worthily cooperated.

I have spoken of what we cannot do, because I think that is important, but want now to say a word or two on what we can do. We can schedule certain areas as Development Areas under the Act, and such areas do have certain advantages. In the first place, they are spotlighted as areas which clearly should have a good share in any advantages which may be going at a particular time. Secondly, the Government have power to buy land and erect factories there. The Government also have power to make certain grants and loans.

The right hon. Gentleman asked about the Section 3 circular. It is perfectly true that in the economic circumstances we did issue a circular restricting the grants under Section 3. We look at them very carefully and are prepared to consider examined on their merits.

I would ask the Committee to note the factors which determine whether we schedule an area or not. They are set out in the Act itself. The terms are;

Mr. George Chetwynd (Stockton-on-Tees)

That was before the circular.

Mr. Thorneycroft

More has been spent, and we are still spending at a high rate. I do not ignore the economic situation, but any propositions put forward are examined on their merits.

I would ask the Committee to note the factors which determine whether we schedule an area or not. They are set out in the Act itself. The terms are: Where at any time it appears to the Board that the distribution of industry is such that in any area … there is likely to be a special danger of unemployment … Since the Act was put on the Statute Book, there has always been constant pressure on every President of the Board of Trade to extend the areas and the number of areas. If every President of the Board of Trade gave way to that pressure indiscriminately, it would be the end of this policy which we have so far pursued.

I will quote one other view supporting this, and I think it may carry some weight with hon. Members opposite. It is the view expressed by Sir Stafford Cripps on the subject. He said: The House will appreciate that it would be idle to try and extend the Development Areas over the whole country, as it would mean cutting down the value of the service which can be given to particular areas, if we made it too wide in its cover."—[OFFICIAL REPORT, 18th March, 1946; Vol. 420, c. 1574.] I think that was absolutely true when it was said and that it is absolutely true today.

Later tonight the Parliamentary Secretary will be asking the House to approve an Order relating to North-East Lancashire. That Order is restricted to Burnley, Nelson, Colne, Padiham and Barnolds-wick areas. It may be that some hon. Members in this debate may very properly take the opportunity of urging the claims of their own areas for scheduling. I believe that any boundary is bound to be imperfect, but I have taken great trouble to listen to the views of local authorities in Lancashire and hon. Members on both sides of the Committee representing Lancashire constituencies.

I have considered very fully the claims they have put forward for their areas. I am, however, satisfied that I am unable to extend that area without raising claims from many other places, inside and outside Lancashire, for comparable treatment. This area was chosen because it had experienced very severe unemployment. It was abnormally dependent on a single section of a single industry. It was particularly liable to suffer severe unemployment during recessions and, importantly I think, it was peculiarly remote.

I would add that there must be flexibility in these policies and that our policy of giving help and assistance is not really limited to Development Areas. Help can and has been given to many areas outside Development Areas, areas which are too small to schedule, areas of relatively high unemployment. They may vary from time to time. With the general good sense of the House. we have never provided a list of them. Otherwise, there would be pressure from all sides and every area would want to be included in the list.

Mr. James McInnes (Glasgow, Central)

Does the right hon. Gentleman mean, by assisting outside Development Areas, that factories have been provided on precisely the same basis as those within the Development Areas?

Mr. Thorneycroft

No, I am about to say what happens. In our attempt to steer industries to areas where it would be socially desirable, we are not necessarily limited to Development Areas. To give an example, Portsmouth has suffered since the end of the last war with a hard core of unemployment of 3,000 to 4,000 people. This has been a matter of concern to the right hon. Member for Blyth, just as it is to all of us, and we have made every effort to steer new industries there. Some important schemes have been approved already, and several are in prospect which should materially improve the employment position there in the next few years. I mention that merely as an example to show that we are not necessarily tied down and must not be quite inflexible in our attitude about Development Areas. Help can be and is given in the placing of Government contracts. Only recently, I announced some easing in the tests applied before building licences are issued in those areas where unemployment is likely to be peculiarly difficult.

Mr. Malcolm MacMillan (Western Isles)

We are all interested in many areas. Would the right hon. Gentleman give some indication apart from the willingness of firms themselves to go into those areas—of the trade incentives which are offered by the Government? For example, what did it cost the Government in any form to induce these industries to go into these areas?

Mr. Thorneycroft

I am going to deal rather fully with the general question of how far we should give direct Government assistance inside and outside the areas and, if I may, I will leave the answer to that question until I come to that part of my speech.

The most I would claim for these various devices about which I have been talking is that they have played a part in helping to preserve employment in the Development Areas. If one looks at the figures of unemployment they appear to bear that out. In the recession which has taken place over the last year, the Development Area employment situation on the whole has stood up to the difficulties rather better than outside areas For example, in July, 1951, the Development Areas accounted for nearly 45 per cent. of the total unemployment—not 45 per cent. unemployed, but 45 per cent. of the total unemployment. In 1953 the figure was 30 per cent., which is an indication that these areas which, the Committee will remember, were peculiarly vulnerable, have to some extent been strengthened to stand up to the difficulties which beset us. Details of employment figures will be dealt with rather more fully by the Parliamentary Secretary to the Ministry of Labour, who will wind up the debate.

The right hon. Member for Blyth said that there had been a time when many knowledgeable people had anticipated a worse slide than in fact took place. I am not taking him to task for mentioning the figure of one million. I read his statement, which was couched in cautious terms. As he said, no one could be more glad than he and his hon. Friends were that that figure was not reached. My Tight hon. and learned Friend the Minister of Labour had a better guess, but he is the Minister of Labour and should have had a better guess. He said,,on 10th November, 1952: I shall be both disappointed and surprised if by the end of this year the figure reaches 500.000."—[OFFICIAL REPORT, 10th November, 1952; Vol. 507, c. 617.] Of course, it has not reached that figure. The total today is 2.2 per cent., the same as in May, 1952. and rather more than in midsummer, 1951.

Within that picture, which is twice as good as some people expected, there are parts which must cause all of us concern. There are the Development Areas as a whole, which have 3.7 per cent. unemployment, which is a good indication that one should not relax one's efforts to do what one can to help. I am not going round them area by area, but I want to mention two examples. I will not take Torbay or Brighton, but I will say a word about Scotland, where unemployment is 3.9 per cent. I know that Scottish Members are aware both of the needs and the very considerable difficulties in the Development areas there.

Let us take the Highland Development Area, which was designed to be the focal centre for employment for the whole of the Highlands, a vast area almost entirely dependent on forestry, agriculture and fishing. The total number of unemployed in the Highland Development Area is 900 men and women. It is particularly difficult to attract industry to that area. I will not mention names, but I can assure hon. Members that there was one firm which we tried to get into that area. They wanted to come, and we would have built a factory for them could we have succeeded in getting people there. But there was no one spot in that area where 200 people could be got together to work in the factory. That is the kind of difficulty we are up against in an area of that kind.

We are continuing to do our best about it. We are looking a little further afield and trying a new approach in the Buckie-Peterhead area. That is a rural area where one or two small units of employment may do a great deal of good. We have asked the Development Commission, in co-operation with Scottish Industrial Estates, to see if they can attract industry. I would make a special appeal to Scottish industry in this matter. We will do what we can, and 1 am not ruling out the bringing up of branches of industry from England. But in some areas where small branches would do a great deal of good we ask for the maximum co-operation from industries actually located in Scotland. We wish to give the maximum publicity to the interests of areas such as this. As for the Scottish Development Area as a whole I shall, in consultation with the Secretary of State and the Scottish Council, go on seeking to bring industry to it.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

Will the right hon. Gentleman keep in mind that at present a good deal of unemployment is prevented by the development of the Hydro-Electric Board, and that when that development finishes there may be a large number of people who will fill up the unemployed lists?

Mr. Thorneycroft

I will certainly bear that in mind. I was about to mention that one of the attractions to which we draw the attention of industry is the hydro-electric power and those natural resources which are being developed in the Scottish areas.

I do not think we should ignore the efforts made by all Governments in those areas. Apart from the West Cumberland Area, the proportion of Government building to all factory building is higher in Scotland than anywhere else, and amounts to 58 per cent. A further large new Government factory was begun last year, despite restrictions on building. The total of new Government factory buildings and extensions approved for Scotland to date in the present financial year is £1.6 million, which compares very favourably with what was done previously.

If we are to encourage at one end we should try to remove restrictions at the other. In 1949 the previous Government imposed a restriction on new industrial development in Dundee, for reasons which were, no doubt, perfectly good at that time. But I believe some further diversification would help in that area, and I propose to remove the ban.

I want now to turn to another area, very different, but equally difficult, that of Merseyside. It is concentrated, very largely dependent on a great port, and therefore also very largely dependent upon the ebb and flow of world trade, which brings in factors far wider than Development Area policy. Merseyside suffered from particularly heavy unemployment between the wars. The figure ran to something like 28 per cent., and, as the right hon. Gentleman and Member for Huyton (Mr. H. Wilson) said, when scheduling the area: The process is likely to be a hard and a slow one."—[OFFICIAL REPORT, 30th March, 1949: Vol. 463, c. 1351.] Considerable development has taken place since the war. Some 35,000 men and women are employed in premises which are new since 1939. Since the war 4 million square feet were completed. Incidentally, since 1st October, 1951, over 1 million square feet have been started, and I can assure the right hon. Gentleman that this is not being neglected. It would appear—I offer these figures with some sense of caution, because I think forecasts of new jobs are always uncertain—on the estimated run of employment that there will be something like 6.000 to 7,000 new jobs in 1953. That does not cure the problem, but it is a contribution.

Mrs. E. M. Braddock (Liverpool. Exchange)

Can the Minister say how many applications have been received in the Merseyside Development Area, how many inquiries for new factories?

Mr. Thorneycroft

I cannot answer the hon. Lady without obtaining the figures, but I will see that she receives them in the course of the debate.

I have spoken about what can be done and what is being done with reference to particular areas. I should like to consider for a moment the position of the country as a whole. I have tried not to give too many figures, but I want to give a few at this point. From 1st January, 1945, to 30th September, 1951, 4,700 new factories were completed, representing 100 million square feet. At the end of that period 1,450 factories and extensions, representing 45 million square feet, were under construction. That is the contribution made by right hon. and hon. Gentlemen opposite during their period of office.

By the end of 1952, 6.000 factories and extensions had been completed of an area of 140 million square feet, and 1,100 projects of 50 million square feet are at present under construction. I am most anxious not to over-state what is happening. I am always very suspicious of statistics, which I find are available in large numbers, and which can prove almost anything. But what the figures show to me is that the rate of completions speeded up between October, 1951, and December, 1952, and that at the end of that period a larger area was under construction than at the beginning. I do not want to over-paint the picture, but I think those figures provide an absolute answer to anyone who says we have brought factory building to a standstill. We are building them faster, and at the moment there is a larger area under construction than when we started.

Those figures were for the country as a whole. How do the Development Areas benefit from it? Of the 6,000 factories built since the war, 1,600 were in Development Areas. If we take the matter by area and value, the Development Areas, which contain about one-sixth of the insured population, have had about 40 per cent. of the building. I think the Committee will agree that, with the difficulties which confronted those areas, they deserved some assistance of that character New jobs have been provided since the war in the Development Areas to the tune of something like 300,000.

I wish to say a word about the future policy, an issue in this debate to which I hope hon. Members on both sides of the Committee will direct some of their remarks. I should like to hear from them whether they think the general policy for Development Areas, pursued by this Government and by the previous Government, is on the right lines. The view has been expressed in some quarters that this policy should be dropped and that an alternative policy should be put in its place. It has been said that the Government should concentrate not on scheduled areas where there is unemployment but in any place throughout the country where in their view development could usefully be encouraged.

Professor Cairncross, in an interesting and illuminating Report, summed up the essence of this line of thought in the conclusions of his Report to the Scottish Council. He said: The Government should have power to contribute the whole or part of the cost of the erection of factories in any part of the country where conditions warrant this step. It is clear to those who have studied the Report that Professor Cairncross was prepared to assist industrial growth in promising locations ahead even of the need to reduce unemployment in other areas.

I do not say that there are not powerful arguments that can be adduced for a policy of that kind, but we must face the fact that if it were adopted it would entail not only the repeal of the essential Sections of the Act under which this and previous Governments have been operating, but a reversal of the basic policy which has been pursued. Hon. Gentlemen can develop the argument for it if they wish: I am merely trying to put the position clearly before the Committee. We cannot pursue a policy which has scheduled areas and given special advantages, and at the same time expect the Government to extend help everywhere. Those two are mutually contradictory. My right hon. Friend the Secretary of State for Scotland and I have been considering this Report. I hope that hon. Members on both sides will give us the benefit of any views they wish to express upon it, for this is indeed no party issue whatever.

For my own part, I would say that as at present advised I do not believe that the time has yet come for some fundamental change in development area policy. I see much force in continuing to pursue it on the lines so far followed and attempting to go on getting the results which I hope that I, and to some extent the right hon. Gentleman opposite, have managed to persuade the Committee have been achieved since the war.

I have sought to present a fair and balanced account. I have certainly not sought to disguise my anxiety and the anxiety of the Government at some of the problems which confront us in certain areas. There is no disguising the fact that the impetus towards industrial building is not as high today as it was in the post-war boom conditions. The trend can be seen in the applications for industrial development certificates They have fallen in the last 15 months. I am giving all the facts to the Committee. Hon. Members must judge. They have fallen to £75 million from £113 million in the corresponding period. The value of the building licences has averaged £8,200,000 a month compared with £8,900,000.

Let us face all these facts squarely. Let us try to see the whole picture, not just the part which happens to suit our argument. All Governments tread a narrow path between two abysses. If they fall down either of them they will find disaster at the bottom. On the one hand, is the precipice of inflation, an investment boom in factory building and a first-class balance of payments crisis. There is no doubt that the nation was falling down that precipice 15 months ago. We caught the nation by the coattails just in time. Let no one be under any illusion as to what happens if we follow that line. At the end of it there is mass unemployment, because we cease to be competitive and can no longer hold our place as a first-class trading nation.

It is equally true to say that there is a precipice upon the other side, a precipice of savage deflation, of neglected re-equipment and of men and women denied the opportunity of useful work. We are equally determined to avoid that. Only those who have walked this path know just how narrow and how slippery it is and how the wind and the weather, which are not within the control of any Government whatever their persuasion, buffets one in the process.

We have regained that path. We intend to stay on it and, while continuing to administer our distribution and development policy with full sympathy for the needs of these areas, we shall not forget the wider need of building a sound and enduring economy.

5.15 p.m.

Mr. Ernest Thornton (Farnworth)

I ask the Committee for the indulgence which is so generously shown to hon. Members undertaking the ordeal of speaking in this Chamber for the first time. It would be remiss of me if I failed to make reference to my distinguished predecessor, the late George Tomlinson. He was respected and loved by hon. Members on both sides of the House. His simplicity, humanity, sincerity and delicious humour endeared him to people in all walks of life. To strike a personal note, I would say that there is one thing which I can claim in common with George Tomlinson. It is that, like him, I was pitchforked into the weaving sheds of Lancashire at an all too tender age, with a six o'clock start, a 10-hour day and a 55-hour working week.

My parents and grandparents were Lancashire weavers before me. I have a family experience of over 100 years of practical work in the Lancashire cotton textile industry. What I have to say is not based on an academic interest but on practical experience of the trials and tribulations of an industry which has known prosperity and the depth of depression. In Lancashire last year we had a serious slump. It was the first slump in the 100-year period to which I have referred which was not attributable to losses of export trade. It was mainly attributable to the failure of the home market.

In the slump of 1921 exports fell by 1,700 million yards. In the slump of 1930 exports fell by 1,300 million yards. I experienced both those slumps. But in the slump of last year exports fell by only 150 million yards which, compared with the average of the two previous slumps, represented approximately one-tenth of the fall in volume. The figures I have quoted referred only to cotton cloths, but if allowance is made for the contraction in the size of the industry in the last 30 years and for the increase in the production of rayon and synthetic cloths, the figures still provide without any question the point I wish to make, which is that it was the failure of the home market and not the loss of export trade which was responsible for the slump last year.

The slump went deeper and wider than informed opinion expected. I know that we have had a number of people, experts and others, who attempted to be wise after the event, but informed opinion did not expect it to go so deep or to be so wide. If I may be pardoned for saying this in a maiden speech, in my opinion the financial and economic policy of the Government was partly responsible for that slump going so deep and being so wide. Cotton textiles in times of contracted purchasing power are marginal purchases, and a further tightening of the screw could retard recovery in Lancashire and precipitate another recession, if not another slump. I believe the Government are entitled to take credit for the benefits which they think have emerged from the policies they have pursued, but they cannot escape responsibility for other consequential results of those policies which they have undertaken.

If we had another slump or recession, then I believe that the plans of the Government under the Distribution of Industry Act will only touch the fringe of the problem in the County Palatine. The slump last year destroyed the operatives' confidence in the future of our industry. Fear and apprehension are apparent now throughout the cotton textile industry. There is a deep and uneasy feeling in Lancashire today that the Government have written off the cotton textile industry as an important part of the national economy. All too many people are adopting that viewpoint, in my judgment, and today it is of vital importance that the Government should, not only by declaration but also by action, remove this very dangerous attitude of mind.

The most serious single aspect of what happened in Lancashire last year was the steep fall in juvenile recruitment to our industry. In the post-war years, juvenile recruitment had been painfully built up, and last year, in consequence of the slump, we reached a position in which juvenile recruitment was approximately halved. That is a very disturbing factor, so far as the future and the long-term interests of the industry are concerned. Recovery in the textile industry, which unquestionably has taken place, is less in cotton than in any other textile industry.

Some of my friends who are connected with the University of Manchester have been undertaking researches on unemployment in Lancashire, with particular reference to the cotton textile industry, and they have revealed that the chances of redundant textile operatives getting other jobs are less in Lancashire than in other textile areas. Another point that emerges from their studies is that, in the North-Western area, the ratio of notified vacancies to the number of wholly unemployed continued to decline even between May, 1952, which was at the depth of the slump, and November, 1952, when recovery was well under way. The figures, which I have not time to quote, are illuminating, because they indicate that in Lancashire, not withstanding the major industry's partial recovery, jobs were harder to secure. That is a most disturbing fact.

Given the right policies and the right decisions by industry and by the Government, I am not pessimistic myself as to the future of the cotton textile industry. The pattern of our trade has been reversed in the last 30 years. As compared with 75 per cent. for export and 25 per cent. for home trade, the position is now reversed, and, roughly, 75 per cent. of production is for home use and only 25 per cent, for exports. Therefore, the present size and structure of our cotton textile industry fits fairly well into the pattern of industry as a whole. There are reasons to believe that the trend of the last 40 years, which has been a downward trend, in world trade in textiles, might level off, and might for a short period, even take a slight upward movement.

There are one or two topical points with which I should like to deal. The first one refers to the question of raw cotton. A steady supply of raw cotton at stable prices is fundamental to the policy of full employment in the cotton textile industry, and I should like to ask the Government if every avenue has been explored to see if it is possible to establish an international cotton agreement along the lines of the International Wheat Agreement. The cotton textile trade unions put this proposition to the Minister early last year. What has been done for wheat we feel could be done for cotton, if there is the will, but I am not unmindful of the very great difficulties. I realise that this calls for international agreement, but my information is that American opinion at the present time is not unsympathetic to such a project.

The present position in regard to the methods of buying raw cotton for Lancashire is most alarming. May I most respectfully strike a warning that, unless the position is handled with the greatest care, there will be a danger of mills stopping in 1954 because they are without raw cotton? This never happened when the Raw Cotton Commission had full control, even in the period when raw cotton in the world was desperately short, or even in the more acute stages of the dollar crisis.

In June of this year, spinners of American types of cotton have to decide whether they will contract out or continue with the Raw Cotton Commission for the rest of the 12 months, and it is expected that spinners will contract out to the extent of 60 per cent. of cotton purchases but—and this is the important consideration—only on the condition that the Raw Cotton Commission is expected to continue to provide cover against the financial risks involved.

Is it reasonable to expect that the Commission, when it is responsible for purchasing only a minor portion of cotton imports, should carry the risk of the whole? I feel quite sure that public opinion will not stand for public funds carrying the risks while private enterprise takes the profits. I have not time, without trespassing unduly on the generosity of the Committee, to develop this argument further, but, in my opinion, it was a mistake to interfere so fundamentally, as was done last year, with the Raw Cotton Commission, which had served the industry so well. If Her Majesty's Government had concentrated, as the trade unions recommended at that time, on improving the operational efficiency of the Raw Cotton Commission the present potentially dangerous conditions could have been averted.

The President of the Board of Trade, in the course of his speech, to which I listened with great interest, referred to the necessity for keeping costs and prices down and increasing production. I quite agree, but I should like to call the attention of the right hon. Gentleman to one aspect of conditions in Lancashire which is worrying a number of us; I refer to the Yarn Spinners' Association price maintenance scheme. The right hon. Gentleman should look at the scheme so that he may allay public anxiety about the matter. I do not approach this in any carpingly critical sense.

On balance. I do not object to the scheme. We had experience during the inter-war period of unrestricted cut-throat competition and all that it means, and, probably, in the last 12 months the scheme has given some semblance of stability when stability was needed. But there is need to allay doubts on two points in particular, first, that the consumer is getting a fair deal, and, secondly, that the operatives' participation in higher productivity, whether by re-deployment or double shift working, is not negatived by some price control system which prevents the savings and the cost reduction being passed on to the consumer and thereby enlarging the potential market.

I repeat that I am not approaching the matter in a critical mood. I merely ask that the right hon. Gentleman should look into this in order to allay public anxiety, and if there be anything wrong, then let it be corrected. I could make similar comments about the finishers' fixed price scheme. These matters are important if operatives' wholehearted co-operation in reducing the cost of production, lowering prices and expanding the market is to be obtained.

I also want to refer to the need for standard cloths and bulk contracts. Our merchanting system and the sectionalisation of the industry are against it. I wish to compliment the Parliamentary Secretary to the Board of Trade upon at least standing up to the sectional interests which seem to be evading their responsibility in co-operating in the establishment through the British Standards Institution of standard cloths for the industry. I also want to call attention to the fact that at the present time Japan is considering schemes of buffer stocks of standard cloths for exports.

The labour force in our industry is about 50,000 less than it was during the peak year, 1951, and that is, perhaps, just about right. If the right decisions are taken and the right policies are pursued by both the Government and the industry, whether it be through the distribution of industry or the scheduling of Development Areas, I believe we have opportunities for creating in Lancashire a stability which has not been known for a long time.

The time is short and the opportunities may be missed. I hope that the Government will at least do what they can to help create stability for an area which has suffered throughout the 100 years to which I have referred and for people who, with their forebears, have probably done more than any others during the last 150 years in building up Britain's commercial greatness.

I thank the Committee for having listened so generously and patiently to my first speech in this Chamber.

5.35 p.m.

Sir David Robertson (Caithness and Sutherland)

I am very glad indeed to have the privilege of following the successor to George Tomlinson, the hon. Member for Farnworth (Mr. Thornton). On behalf of the Committee, I thank the hon. Member for the very just tribute which he paid to that very great and well-beloved man.

My mind goes back 13 to 14 years almost to the day when I endured the ordeal of making a maiden speech in the House. The hon. Member has acquitted himself very well. He has spoken, with a pleasant Lancashire voice, of the trade that he has been in since his boyhood. The House of Commons always enjoys listening to an hon. Member who knows what he is talking about, and it is apparent that the hon. Member knows this very great British industry extremely well. I would add that the British people, whether they are in the House of Commons or outside it, have a very great affection for Lancashire and its people, whether they are musicians, weavers, footballers, or anything else.

When I made my maiden speech, the late George Tomlinson also spoke in the debate. I can almost recall the whole theme of his speech. It was one of the most outstanding speeches that I ever heard from a back bencher in the House of Commons. That speech and a few others soon brought him to the Ministerial rank which he adorned so well for so long.

The debate is an important one. I remember the birth of this very fine Act. I should be sorry to see it tampered with in any way, because it seems to me to meet the difficulties which developed through unemployment between the two wars. It is a fine machine which was conceived and introduced during the lifetime of the Coalition Government, although I know it became operative a little later on. When I hear of other schemes, such as the Buckie-Peterhead Scheme, I wonder if they are necessary. My right hon. Friend the President of the Board of Trade invited hon. Members to make observations on the point, and I propose to do so immediately. I have looked again at the Act, and it seems to me to put all the power into the hands of the Government of the day to take whatever steps may be necessary to cure unemployment in places where it becomes constant and notorious.

The right hon. Gentleman the Member for Blyth (Mr. Robens), who opened the debate so ably, referred to the drop in the number in employment and to the drop in productivity. I wonder what the right hon. Gentleman or any other hon. Member expects. We have had a period of great industrial prosperity, of full employment, since 1939, and in the postwar period we had to repair the ravages of the war and to meet the hunger of all nations for capital and consumer goods of all kinds. There was a tremendous demand. As the right hon. Gentleman said, there were more vacancies than there were people available. That position had to come to an end some time. There is nothing that any Government can do to maintain a war-time demand and an immediate post-war demand. One can study history or anything else, but it stands to reason that an abnormal demand for goods, built up during a period of six years of war, must eventually come to an end. That was the situation that we ran into.

I do not say that steps cannot be taken to help to increase productivity, but I remind hon. Members opposite—I say this from a long experience of industry— that manufacturers can only make goods against orders. They cannot make goods on speculation. If productivity is falling, it is not because there is no will to make the goods but because there are no orders. That is true of any industry. The manufacturer who begins to make goods for stock is on the short route to Carey Street.

My sole purpose today is to speak about the Highlands. I am very pleased that my right hon. Friend referred to this matter early in his speech, because the intention of the Act was, as the right hon. Member for Blyth said, to bring work to the people. When we talk of the Highlands, we are talking of one-half of Scotland—not just an area like Cumberland, but one-half of a country, stretching from Kintyre to Shetland.

We have been the greatest depressed area for a very long period, perhaps a century and a half. One hundred and fifty years ago, the Highlands carried one-third of the people of Scotland. Now, they carry less than one-twentieth, and this is not good enough. About 19 out of every 20 children who attend school in my constituency have no chance of remaining at home. If a farmer has six children, only one, of course, can inherit the farm, and there cannot be sufficiently rapid expansion of land to embrace the other five.

History records that no country, and no large area of any country, can ever hold its population on a purely agricultural economy. The placid, kindly, tolerant Englishmen have been much better at staying at home than Scotsmen. The English have worked out their salvation in a most remarkable manner. From Cumberland down to Plymouth, from Southampton up to York, and from Dover to Blyth, can be seen together the twins —agriculture and industry.

The Highland area, which is capable of a massive agricultural development— and Britain may well need it—will never fulfil its destiny in that regard unless there are alternative industries to take up some of the younger people. There have been many hundreds of instances when farmers and their wives and families have uprooted themselves and gone overseas because the parents were unwilling to see their children go into exile. We have had too much of that. While the world have been good to us and has welcomed us wherever we have gone, and in return Scotsmen and Scotswomen have made a valuable contribution to the well-being of many countries overseas, I demand the right for the people who are born in the Highland area that if they want to stay at home in reasonable comfort and security they should be able to do so.

I do not demand a Black Country. My right hon. Friend almost indicated that the Board of Trade regard the Highland area as a place where someone could at once put up a large industry employing many people. That could not be done today, but it could be done at one time when King Gustavus Adolphus was waging the Swedish wars in the 18th century. The de-populated county of Sutherland, which now has a population less than that of an average English village, gave 6,000 picked fighting men for the Swedish wars; and when the 93rd Highland Regiment was raised at Syre in 1805—its prowess in the British Army became legendary—1,400 picked men were selected in six days. I wonder where we could find even 14 men today.

Mr. H. Hynd (Accrington)

Is not the hon. Member drawing a rather incomplete picture? Surely, he is trying to get the Committee to believe that it is a question of industry coming in to supplement agriculture. Is it not rather that we might to a large extent restore Scottish agriculture to something like what it was before the hon. Member's political friends ruined it to make deer forests?

Sir D. Robertson

I am sorry that the hon. Member made that partisan interjection. The debate has been constructive, on both sides of the Committee, and I am following the same line. If the hon. Member wants to throw stones and gives me notice of it, I shall be ready to throw them back, but what I have to say is too important for me to accept his diversion as more than a joke.

The Highland Development Area was created in 1949 by the right hon. Member for East Stirling (Mr. Woodburn), with the best of intentions and with the approval of the House. I always doubted whether the scheme was correct. I expressed my views during the debate at the time, and I indicated that what has, in fact, come about would happen. No one is more sorry about it than I. I wonder whether the Board of Trade have really put their backs into the scheme. I am sorry to say that I doubt it. It may be that they began full of hope, although one hears that the Board of Trade never wanted a Highland Development Area. That makes me wonder whether they really tried to make it succeed.

The area stretches from the Highland capital of Inverness up to Cromarty, including 36 Highland parishes. My right hon. Friend the President of the Board of Trade, in answer to a Question a few days ago, told me that only three very small firms had entered the area. They went there, I believe, of their own volition, and I doubt whether the Board of Trade did anything to bring them there. Even if I am wrong, the Department did nothing more. The firms built their own buildings, or adapted existing buildings, but there are only three very small firms, and this is making a joke of the whole thing. We want 300 firms there, and in an area of that size we are entitled to have them. It is with my knowledge that when industrialists who were prepared to go anywhere approached the Board of Trade, they were not told of the Highland area. They were told of Lancashire and of Northern Ireland, and I do not find fault with that, but they were told nothing about the Highlands.

I recall making a journey to Canada and the United States in April, 1951, during the Parliamentary Recess, plus a few extra days. I wanted to talk to Americans and Canadians about coming to lend us a hand by opening branch plants. The news of my mission leaked out and a reporter took a statement from me on the boat. few days later—I was not seeking this, but it just happened this way—a report appeared in American and Canadian newspapers that the head official of the Board of Trade in Scotland had called a Press conference to say that Scotland did not want any more industries from the United States or from Canada and that no more factory space was available. When I went as the guest of the Scottish Council in New York, I was shown the Press report and was asked what I was trying to do.

Mr. A. C. Manuel (Central Ayrshire)

The hon. Member has dealt with a very important point. He has just told the Committee that during that visit, as I understand it, a high official of the Board of Trade called a Press conference and stated quite categorically that no further industry was needed in Scotland. The hon. Member ought to go a little further. We ought to stop this thing conclusively. We ought to pin-point it and find where the blame lies. I do not care where it is. We know that there are areas in Scotland which still need employment facilities. The hon. Member ought to tell us where that conference was held and who said these things.

Sir D. Robertson

The people who should have stopped it were the Government of the day. I drew their attention to it. I had to do so, and I had an explanation, which was not quite convincing. I am stating the facts because they have a bearing upon this appalling failure to use the machinery which the House of Commons gave to the Government of the day to deal with unemployment and depopulation in the Highlands.

Mr. Manuel

But who said these things?

Sir D. Robertson

The name of the official does not matter. This conference took place in Glasgow. I should not like to start a heresy hunt. The official concerned has retired, and it may be that he said these things for reasons unconnected with what I was told was the case.

If the hon. Member for Central Ayrshire (Mr. Manuel) wants examples, I can tell him of another incident. Friends of mine, who wanted to open a new factory, went to the Board of Trade, who sent them to Lancashire and Northern Ireland. I appeared on the scene and asked, "Why do you not go to the Highlands?" It was only then, and at the request of the head of the firm, that anything at all was said about the Highlands. I feel that I am justified in giving illustrations to prove what I am saying—that the will required is not there.

It may be that it is thought it would be a waste of time for these firms to go to the Highlands. That is not so. The legend that Highlanders are only good for the Army, the Air Force and the Navy or as ghillies on the hills and rivers will not do. The belief that the Highland area is only good for wild life will not do either. Those days are past for ever. The people there no longer tolerate that idea. They demand relief from the economic compulsion which drives them to leave their homes. It is very hard for those born in the Highlands to be forced away to live in places where they spend their days looking at bricks and mortar. They are used to having the hills and the sea around them. It was the fate of my father's generation to be driven from home. That is the lot of the ordinary people there and Britain can no longer afford it.

Britain must begin using the Highlands. The area is going to be important as a beef producer. I am going up to my constituency in a few days' time with a gentleman who is prepared to reclaim 20,000 acres of moorland, not for grouse, but for breeding the kind of beef cattle my hon. Friend for East Aberdeenshire (Mr. Boothby) admires and tells us about.

Mr. Boothby (Aberdeenshire, East)

I should be very sorry to see the grouse entirely disappear from Scotland. If they went we would be very much poorer. There is a lot of nonsense talked about the grouse. It is an admirable bird and a very lucrative one.

Sir D. Robertson

That is a characteristic interruption on the part of my hon. Friend. I did not refer to grouse specifically, but merely included them in my allusion to wild life. We have so much heather and so much grouse potential that all that we are likely to lose in my hon. Friend's life and mine will not matter very much.

But so much for the past. Let us look to the future. I should like to say to my right hon. Friend that we should tackle the situation with imagination and vigour and if we have lost heart in the past, regain it. Every year there is a limited number of children born who have creative ability. Some of those turn out to be creative industrialists and commercial men. They can be found in this country, and I am certain we could get a little team together to reinforce the Board of Trade. They should be men experienced in industry, men who know what it is to take a chance, men not reared in our magnificent Civil Service but fellows who have taken risks and have been proved successful. I believe that if we could do that we should do a great deal to overcome the menace of unemployment both nationally and in the Highlands.

We have commodities which are lying unused. In 1952 we imported 11 million bricks from Belgium into Glasgow. They cost £13 10s. a ton. They were brought to Grangemouth over the North Sea and sent in trucks to Glasgow. Yet in my own constituency we have the finest clay in Scotland lying idle and unused. That situation, fortunately, is coming to an end. A company will be formed very shortly and Scotland and England will have the opportunity of putting up the money. That is a private enterprise job.

But it is not the money or the Government that can save industry. It is the people themselves. There is a whole host of things which can be done in the Highland counties. We were self-supporting once and we can become self-supporting now. We send cattle and sheep away on the hoof to people in much less need of work and wages than ourselves. We have nobody more to blame than ourselves. We could keep these industries at home.

If these Highland parishes were originally intended to be regarded as black country when the scheme to help the Highlands was brought in, let us now abandon that idea and do what I asked should be done in the debate four years ago and in Questions a few days ago. Let us take two towns in each county from the five mainland counties, and one each from Orkney and Shetland and schedule them as small Development Areas. Profits can be made in the area. I have some knowledge of it. I have taken up many difficult propositions and helped many lame ducks—I will not say anything about horticulture. It is easier to start an industry of one's own conception on a site of one's own choosing than to rehabilitate an industry which has been a failure.

All these things to help the Highlands can be done. We have the machine at our hand to do it. I hope that now that he is becoming gradually restored to health my right hon. Friend will be seized of the necessity. He will find my colleagues and myself and everyone in my area anxious and willing to help him.

5.59 p.m.

Mr. George Chetwynd (Stockton-on-Tees)

I cannot be expected to follow the hon. Member for Caithness and Sutherland (Sir D. Robertson) into Scottish history, but I am sure that he has impressed the Committee with the sincerity and faith with which he has spoken. I hope that success will reward his efforts for the area which he represents. I wish to make a brief speech because I know that many of my hon. Friends who represent Development Areas wish to take part in this debate. I think it would be wise if the President of the Board of Trade could get as wide a picture as possible of what is taking place in different Development Areas.

What I wish to say about the North-Eastern Development Area should encourage him to persevere in his efforts to carry on with the distribution of industry policy so energetically carried out by his predecessor. The general picture of the North-Eastern Development Area was wonderfully well described in the booklet produced by the North-Eastern Trading Estates Company, "Industrial Estates." I am sure the right hon. Gentleman would wish to pay a tribute to the people who brought out that booklet. It is going to sell the North-East far more than any speeches of ours can do, and it is a remarkable record of achievement.

It describes how over 44,000 people are employed in factories built and managed by the North-Eastern Trading Estates Company, and we have a picture of a successful area at work. There has been excellent progress in finding additional employment and in bringing about a greater diversity of industry in that area. I am sure we owe a great debt to all those concerned for their co-operation—Government Departments, private industrialists, local authorities and so on —which has led to the success in that region.

There has been the most energetic application of the Distribution of Industry Act to the North-East. However, I do not want the President of the Board of Trade to get the idea that he can start playing around with the Northern-Eastern Development Area and de-schedule it. It would be a great tragedy if he were to think along those lines, because there are some significant trends to which my right hon. Friend the Member for Blyth (Mr. Robens) referred, which should urge us to have no complacency about this question, but to remember that for our continued success we must be vigilant the whole time.

It is a significant fact that of all the unemployed people in the country, 46 per cent, of the men and 40 per cent. of the women are in the Development Areas. I believe the latest figures of the right hon. Gentleman showed some improvement, but for a long time those figures represented the position. Almost half of the unemployed people reside in one-seventh of the area of the country. That is significant. But even more significant is that of those unemployed the bulk have been unemployed for a period of six months or over.

We have, therefore, a hard core of unemployed men and women in the Development Areas and little has been done to reduce it in the past five years. At a time when we need every pair of hands that we can get, it is a continued tragedy that there should be this pool of unemployment in the Development Areas. We have made no real impression on that hard core so far. The signs are that it may become more and more difficult to deal with as time goes on and as alternative employment in other industries becomes more and more difficult.

We have no excuse for complacency. In my view, and in the view of the authorities in the North-East—the industrialists and others—the time is not yet ripe for any de-scheduling of this Development Area. The worst thing that could happen at this stage to a Development Area would be for it to be deprived of the advantages of the Distribution of Industry Act by virtue of the fact that it has been successful so far. We have been successful in the North-East, but there is still a long way, to go, and I am sure the President of the Board of Trade will attach due significance to the opinions of the authorities in the North-East.

I wish to come to the main point at issue with regard to the Distribution of Industry Act, 1945. That is the effect of the Government Circular 54/52. There is deep concern among all authorities on Tees-side that no grants under Section 3 of the Distribution of Industry Act are to be given in future where authorities have not entered into contracts or commitments on the strength of undertakings by the Ministry of Housing and Local Government that grants would be made in respect of approved expenditure. The real culprit here is not the President of the Board of Trade but the Minister of Housing and Local Government. I am surprised that no representative of that Department is present on the Government Front Bench to deal with these points.

Under this Section of the Act, which was designed to improve the basic amenities and services of the Development Areas, so far only about £527,000 has been spent in the North-East. There is a reason for that. In the first few years we were so anxious and willing to get the factories there that that was the first priority. The factories are now there; they are well established and ready to expand, and we are in a position to go ahead with improving the basic services to feed those factories; but we now find that as from July last year there is this cutting off of help under Section 3 of the Act.

The President of the Board of Trade said that specific cases could still be considered; I hope he will consider the position of the Tees Valley Water Board, with which I am primarily concerned at the moment, which is trying to meet the huge demand for water created by the great industrial developments in this area. This work is now placed in jeopardy by the Government's economy drive, and in my view it is a false economy to insist upon this cut, as I hope the following facts will show.

In this area of Tees-side we now have new capital development and investment at a low estimate of over £50 million. There are the great new chemical works of I.C.I. at Wilton, the huge development at Billingham and the large and costly extension to Dorman Long's iron and steel works. Three trading estates and numerous other large factories are all making a tremendous contribution to our economic survival. Chemicals and steel are the linch pins of our economy today, and great activity is taking place in a small area where at the present time we have these thriving industries.

But our very success has brought in its train large problems and the fact that we are increasing production of chemicals and steel means that these expanding industries now need twice as much water as they did previously. It is significant that on Tees-side the water supplies are used in the proportion of two-thirds for industry and one-third for domestic purposes. That is the reverse of the picture in other parts of the country where domestic purposes take two-thirds and industry takes one-third.

To meet the anticipated demands of industry before 1960, the Water Board have in hand development proposals estimated to cost in the region of £7½ million. That is purely to deal with the increases planned and expected for our industry before 1960. It leaves no margin of safety for further advances after 1960. We have received notice that about £1 million of this expenditure already ranks for grant under Section 3.

Negotiations are in progress with the large industrial users to cover the proportion that is due to their demands, and we reckon that some £1¾ million will be left uncovered either by grant or by industry to fall as a charge upon the local authorities. No grant will be made to the Board for this sum of £1¾ million, and the financial liability will fall upon the consumers, other than the large industrial users. That means that it will fall upon the ratepayers, and it is a substantial burden to be borne.

The Water Board has made it clear, without wishing to create any scares, that they are placed in the position of having to adopt one of the two following alternatives: first, they could proceed with the whole scheme of developing new reservoirs and so on in the upper reaches of Teesdale, which will cost something like £6½ million, and face the full adverse financial position which will arise. If they did that without grant, it would impose a penal rate upon the constituent authorities. This is a rate which could not possibly be borne by areas which are just emerging from their former distressed state. We had an experience of this in the 1930s, when the three constituent authorities, Middlesbrough, Thornaby and Stockton-on-Tees, had to bear a huge rate for water works development. Such a burden could not be borne again; it would mean an addition of 3s. or 4s. to the rates and that is a financial impossibility.

The other alternative, equally distasteful, would be to defer any further development of the undertaking. This would mean wrecking the industrial achievement which has been brought about and ruining any further prospects of expansion, with very grave results to the national economy both in chemicals and iron and steel. This is a prospect which no responsible Member of Parliament can contemplate for one moment. No responsible Government, whether economic planning is considered to be "boloney" or anything else, can ignore the consequences of this act.

It is my belief—and I am supported in this by other hon. Members representing constituencies in the area, and not only in my party—that, unless the decision contained in Government Circular 54/52 is reversed, there is the gravest possible danger that the Board will be unable to proceed with this extension. That means that the existing works cannot continue. It means that our economy is threatened and unemployment in the area is bound to increase. There will be a clear loss of something like £50 million worth of industrial investment and development.

There is no sense in the Government issuing a blanket curtailment of capital expenditure which operates indiscriminately, as does this present circular. It is essential to national survival that these developments take place and it is being penny wise and pound foolish to make an economy cut of a few hundred thousand pounds which will jeopardise the whole livelihood of the area and our national survival. The essential large-scale iron, steel and chemical outputs here may be made sterile without additional water supplies.

This is a matter of urgent priority and discussions have been going on between Government Departments. I do not minimise the complexity of the case but these discussions have been going on for too long, and it is time that the Board and industrialists in the area knew where they were. A decision in regard to this area is absolutely essential. I cannot exaggerate the danger which would follow a refusal of grant, or the disaster which would overtake this area. It would be criminal folly if the development of Tees-side, which is the pride of the area and a permanent memorial to the policy of the distribution of industry, were to be checked, and we were thrust back into the despair of a distressed area.

Just as in the case of a doctor who has spent years and years building up the health of a patient until he is ready to take his place, with full vigour, in the hurly-burly of life and then, when he has done his job, a surgeon slips in behind and severs one of the main arteries in that patient's body, so this area has been built into a worthwhile flourishing entity and now the Ministry of Housing and Local Government are cutting one of the main arteries which is feeding it.

I appeal to the Minister not to let Section 3 of the Distribution of Industry Act become a dead letter. If he does so he will be ruining not only Section 3 but the whole of that Act.

6.14 p.m.

Mr. R. Brooman-White (Rutherglen)

The points I want to raise primarily concern Scotland, but in general terms I hope they may touch upon issues which are of interest to Members representing other areas. In his opening remarks the President of the Board of Trade asked for our views about the Cairncross Report, relating to Scotland, and the balance maintained between the existing distribution of industry policy and what he described as new and rival theories.

I do not go as far as to advocate that we should abandon the existing policy, but I do suggest that the Board of Trade should go much further in their present review of the situation. They should really move back to "Square One" and think the whole thing out again from first principles to see what conclusion they reach. We all know that when a policy has been in operation for some time, the precedents build up; the matter acquires a velocity of its own. I am not an engineer and I do not know the correct term; I think it is kinetic energy—anyway, whatever makes something go on rolling of its own weight after it has been running for a bit.

In such cases as this, policy may start rolling away and deviating from the march of current events almost imperceptibly, without people noticing it. The right hon. Member who opened the debate made the point about 1931 and the issues which arose then, which necessitated dealing with great groups of unemployment and trying to build up a secondary defence of light industry in heavy industrial areas. But are those the correct priorities now? If they are, are they the only priorities? They are certainly not in Scotland. How far are we balancing them properly with the other and new priorities?

The hon. Member for Caithness and Sutherland (Sir D. Robertson) has spoken most eloquently about development in the Highlands, although that is not a new priority—and the hon. Member for Fife, West (Mr. Hamilton) has on a number of occasions raised the question of the new coalfield areas. Some hon. Members have new towns in their divisions and they are not altogether happy about the progress of industry in them. The old development policy is probably still very necessary; but how are these things being weighed up? Lord Bilsland of the Scottish Development Council, pointed out that the total of possible new industrial building is not going to match up to our requirements in the immediately foreseeable future.

What is our level of priorities? Should not the whole thing be thought out again on the basis of deciding precisely what we should like to do and what methods are available for achieving it, and then measure that against the existing policy to see how the two things fit together? If they are not fitting properly, let us take the necessary steps to adjust them.

I want to put one or two other considerations before the Committee, although I am not suggesting them dogmatically as alternative policies. I know the limitations of armchair strategy and that decisions and sound views on these matters are extremely difficult to formulate without the facilities of the Department behind one. With regard to the Cairncross Report, I am a little hesitant about the idea of any overall, ready-made, "off-the-peg" solution which would fit all the circumstances. But in the reconsideration of this matter we might move a good deal more in the direction of more flexibility and adapt the policy rather more to the special needs of different areas.

In Scotland we have the heavy industrial belt with its special problems; we have the new areas which are expanding and prospering nearby; we have more outlying depressed or declining areas, and we have the crofter counties. They all differ in their needs and I am not at all sure that any simple or overall solution can match up to their respective problems. In the case of the crofter counties, the hon. Member for Caithness and Sutherland has suggested one solution, but there is an alternative or supplementary policy which might be considered.

A very small but successful recent experiment has been the establishment in the Highlands of an engineering factory, whose parent firm is in the industrial belt. It was established with aid provided by the local authority, which, in the outlying areas, is perhaps a more flexible procedure than the normal procedure of the Board of Trade. It has been running for only a year, but it has made a profit. As my hon. Friend the Member for Caithness and Sutherland said, profits can be made. The problem is to persuade firms to undertake the great effort and to accept the dislocation and administrative complications of moving up to those areas.

This is a very small firm which employs about five men. It therefore makes no very great contribution to industrial output nor to the immediate solution of the unemployment problem in the area. The point I want to emphasise is this: if hon. Members consider the preliminary calculations which have been made of the wage bill of the firm, they will realise that this tiny unit brings in about £1,500 a year to that area. Perhaps half of that goes into the local shops, £200 or £300 to developing the crofts and another £200 or so to savings. If hon. Members look at this injection of capital into this small outlying area, they will see that even a tiny concern may make the difference between a declining community and a growing community.

These units are so small that a review might be carried out and suitable firms could be approached to see how far such small units of production could be hived off. The Government might then try to discover what inducement will make firms undertake the effort of moving into these Highland areas, instead of expanding more conveniently by opening branches next door to their main works. There are various possibilities—taxation reliefs, for instance, such as have been used in Northern Ireland, as well as the various experiments tried in America or the simple method of a direct subsidy.

If it is administratively practicable, it might be better if this problem were made the responsibility of the Ministry of Agriculture rather than the Board of Trade. I would put the emphasis in the right place It is not primarily a problem of production or of unemployment, but of an injection of capital to try to stimulate the growth of agriculture. That must be the real basis of any lasting recovery in the Highlands. The question might be considered not so much as a development of industry policy but as development of agriculture policy.

Suggestions have been made in various quarters that the Ministry of Agriculture have the expertise in featherbedding. I am suggesting the deliberate featherbedding of small industries scattered through the Highlands, so small that the total sum involved to the Treasury in this connection is almost negligible, whereas the total return in stimulation of agriculture by the tonic effect of spreading a small amount of capital might be very great.

I will deal briefly with the problem of other outlying and declining areas and the difficulties involved. The President himself mentioned the Buckie-Peterhead area. I do not believe that the same sort of treatment is required here as in the crofting counties, because the units we need in this case are bigger. When dealing with very small units we can be certain that the Government can carry them on their backs over any rough going they may meet.

The point I want to make about the Buckie-Peterhead and the Campbelltown and South-West Coast areas, as well as other parts of the country, is this: whatever the natural temptation to take urgent steps to meet the great difficulties, with which everybody sympathises, we must be very chary about coaxing industry into such areas. If an industry is on an absolutely sound basis, let us have it; but it would be disastrous to introduce an industry which, having moved to an area as a result of Government persuasion, is on a rather precarious footing and collapses or pulls out at the first sign of economic difficulty.

If people have to move away from such areas now, that is very unfortunate, but it is far better that they should move when facilities and scope for their employment exist in other areas than that they should be kept clinging around one local industry and then see it collapse, leaving them stranded at a time of general difficulty. If we can find sound industries for these areas, by all means let us find them; but if they are not readily forthcoming, then I suggest that even greater efforts should be made to review the field of Government work and to consider not only new Government work but even transfers or moves within the wide and developing structure of Western defence which might be evolved to help these areas and which would give a firm assurance that work would remain in those areas at times when such work may be needed even more urgently than it is needed now.

The President talked about Professor Cairncross's recommendations. We need not, perhaps, go the whole way with them, but there seems to me to be a great case for increased flexibility, to put the matter at its lowest. It is rather illogical if areas of new expansion, adjacent to the old industrial belt, cannot receive equal encouragement to that given to the old Development Areas. Let us encourage growth.

In the solid core of the old industrial belt perhaps we should continue to take steps to build up our secondary lines of light industry. But if I may express a personal view, I would urge for the present a rather selective approach. We must bear in mind that a certain amount of factory accommodation already stands idle in some places, as hon. Members know, and we do not want to construct new factories too readily when those already built are unoccupied. There are shortages, too, of some types of skilled labour, and we must be careful in cases where new firms will compete in the labour market with existing firms for that skilled labour. I do not suggest that that is the overriding consideration, but I think we must be selective and in particular we should favour those firms with lines of production which can be expected to represent the expanding industries of the future, the infant industries, the seedlings which will grow with time.

Professor Cairncross has cogently said that most industries start small, expand where they start and move only in excep- tional circumstances. There is a lot to be said for catching them young. Lord Bilsland, speaking the other day, referred to the efforts already being made to attract small new firms in plastics or precision engineering or electronics so as to build up cadres of design experts and production experts and the key men in such new industries around which, as the tide of progress moves on, the old industrial skill and aptitudes of our people can be regrouped. I think perhaps we should give further thought to the problem on those lines.

I do not want to dogmatise on points like this but merely to offer suggestions. I do, however, feel very strongly that our present policy sprung fully armed from the forehead of 1931 thinking and that some of the armament may now be a little out of date. To use rather more controversial phraseology from another context, the policy may be equipped to fight the wrong war at the wrong place at the wrong time. I think we should carefully reconsider the whole problem. My own inclinations tend rather in favour of the doctrine of Professor Cairncross that, when there is a doubt, it is in the long-term interest of the country to encourage growth rather than to try to rejuvenate age. Growing pains may be unpleasant but they are preferable to any danger of paralysis.

6.29 p.m.

Mr. Harold Finch (Bedwellty)

I hope the hon. Member for Rutherglen (Mr. Brooman-White) will forgive me if I do not follow the line of his argument. This debate offers an opportunity of drawing attention to what I regard as a changed policy by the Government towards the Development Areas. My hon. Friend the Member for Stockton-on-Tees (Mr. Chetwynd) has already dealt with the matter very ably. It is having such a serious effect in South Wales and other Development Areas that I am sure I shall be forgiven if I return to this very important subject.

The notorious Circular 5452 which was issued by the Minister of Housing and Local Government in June, 1952, stated quite definitely that future grants in respect of water and sewerage schemes for local authorities would be discontinued. That came as a very severe shock to local authorities which had for some years, under the Distribution of Industry Act, been receiving grants of 80 per cent. or 100 per cent. to assist them in their policies for industrial development.

I should have thought that the Minister of Housing and Local Government would have come to the House of Commons and given some indication that he was proposing to abolish these grants for local authorities, or that, at least, he would have held a conference with the local authorities and explained to them in some detail what he was proposing to do. I do not think the House was treated with the courtesy the Minister should have accorded it on an important subject of this kind.

A heavy burden has now fallen upon many of those local authorities in the Development Areas as a result of the discontinuation of those grants. In many areas it will mean an increase of 2s. or 3s. in the rates which will have to be borne by employers, business undertakings, and ordinary households, and that will certainly deter many employers from going to South Wales in the future. Great help has been given through lower rentals to assist employers to go to South Wales, but the effect of that policy will be wiped out by the increase of rates which will follow the policy of Circular 5452.

Let us consider South Wales as a typical example of a Development Area. Perhaps more than any other place in the country it suffered in the years of the trade depression. As a result of the Distribution of Industry Act, a great deal has been done. Hundreds of industrial undertakings have been established in South Wales—light industries and heavier industries such as engineering—and they have given employment to hundreds and thousands of men and women in that area. In addition, we have the modern steel works at Margam, the nylon spinners at Pontypool, and the switchgear factory at Blackwood, which have found employment for masses of men and women.

Side by side with those advances, however, there has been the great strain imposed on the local authorities in dealing with local amenities and expanding them to match this vast industrial development, and now we find, before those industrial developments have got well under way, that the amenities are to be stopped, because the local authorities will find themselves, because of the Government's policy, in an impossible position. I would remind the Committee that South Wales suffered for a great many years from the trade depression, and as a result the local authorities were very poor indeed. Those years of trade depression left a heavy mark on the local authorities, and by the time the Distribution of Industry Act came into operation they were indeed in dire poverty.

There was in South Wales a serious lack of local amenities. The Minister of Labour, whom I see on the Front Bench, will perhaps know—and the Parliamentary Secretary to the Board of Trade can know from his officials in South Wales— that one of the difficulties experienced by the Board of Trade officials there was this same lack of amenities, so that when employers went to look at sites where they might set up factories they were deeply concerned about the lack of amenities and on many occasions said, "We can never get our officials and key workers to come to a district like this. There are not sufficient amenities here. They will never come."

It is a compliment to the Board of Trade and the Ministry of Labour and the employers that in so many instances they got over those difficulties. But there was a serious lack of amenities; and it has been the policy of the local authorities in South Wales to try to make up the leeway. But they now find that this circular means a finish to water and sewerage schemes. I consider that to be a very serious blow, and one which will cause grievous trouble in South Wales in the near future.

As an instance, I cite the case of the water scheme in the Rhymney Valley in South Wales. It covers five urban areas. Since 1945 or 1946 there have been many developments. Many factories have been constructed there in these years. The requirement at collieries for pithead baths has been met. The National Coal Board have been helping to build houses there. All these developments have taken place. They have necessitated increased water supplies, and it has been necessary to convert six-inch pipes into 12-inch pipes, and to service a reservoir to meet the situation. The provision of pit-head baths was a major item in the miners' charter, and an important part of the scheme operated by the National Coal Board to improve amenities in the mining industry. In this district it is desired to go on with this scheme, and to make the best of the new industrial development.

It is true that when the scheme came up for consideration by the Ministry, for the first part of the scheme an 85 per cent, grant was allowed, and the work has been carried on, but for the second part of the scheme, which was passed by the Welsh Board of Health and agreed to and confirmed by various Government Departments, the application for grant was not made until after the circular was issued, with the result that we were informed that no grant could be made to the Rhymney Valley in the circumstances. We have had the privilege since of a meeting with the Minister, and he agreed to a grant of 85 per cent. of £7,000, but this scheme will cost something in the region of £320.000, to give an adequate supply of water to those areas.

Where is the money to come from? Where will the local authorities get it? They are bound to supply the water. How are they to get the money? Only by raising the rates, and that will impoverish those areas and be a great discouragement to employers. It is all very well for hon. Members opposite to talk about reducing taxation, but what is the good of reducing taxation if rates are to go up? Here is a burden we have to carry. Worst of all, it has to be borne in a Development Area where there has been such a lack of amenities in the past. I plead with Ministers to have another look at this problem. Indeed, unless hon. Members get some satisfaction about this situation, I am really afraid of the position that may arise in South Wales.

We want to know from the Government what their future policy is in this respect. Section 3 of the Development of Industry Act, which empowered the Government to make these grants, referred not only to sewerage and water, but to roads, transport, communications, health and housing. It may be that the Government will issue another circular in a week or so and discontinue grants in respect of those other services.

The roads in South Wales are bad enough as it is. They are in a deplorable condition. Some wind like corkscrews towards the Midlands. They are a severe handicap to employers in South Wales. They are a handicap to the business fraternity in South Wales. I have spoken of this important matter in this Chamber before. Unless there is an improvement in the roads in South Wales, South Wales will always be under a severe penalty. It will be a heavy burden to carry, and it will be a handicap. If South Wales is to be put on a firm foundation, it will be necessary to improve the road system and to connect up with England by the Severn Bridge.

Those are some of the problems we must face in South Wales as a Development Area. South Wales makes a valuable contribution to our economic recovery through the output of its engineering works, its coal mines and the Margam works; but in any period of depression it suffers a handicap, and I hope that this evening we shall get from the Government an assurance about their policy towards grants to local authorities in the future. Can we have a definite undertaking that there will not be another circular to curtail expenditure by local authorities in these areas? Some of us feel that if we cannot get satisfaction about this, we shall have to carry our protest into the Division Lobby.

6.41 p.m.

Mr. William Shepherd (Cheadle)

I must confess that I have no specific interest in this debate by representing a Development Area, but since 1945 I have taken a close interest in what has happened through the Distribution of Industry Act and I want to make a few remarks of a more general and, perhaps, more objective character than is possible by those who represent Development Areas. I hope the Committee will bear with me, and will not think I am unsympathetic to the general intention and purpose of the Act. At the same time, those who represent these areas cannot, perhaps, be as objective on this issue as the subject demands.

The speech of the right hon. Member for Blyth (Mr. Robens) was in some ways unfortunate, because he did not set the problem of unemployment and employment in its proper perspective. I asked him to give us some idea of what percentage of unemployment he regarded as a norm, and he said he wanted conditions in which there were more jobs available than men to fill them. [HON. MEMBERS: "Hear, hear."] Hon. Members opposite say, "Hear, hear." The right hon. Gentleman went on to say that he wanted to prevent misery and unemployment, but I invite hon. Members opposite to consider that the very condition of having more men than there are jobs to fill may generate misery and unemployment.

At present, we are obviously facing a re-deployment of our economic strength. The circumstances of the war years and the post-war years are giving way to a different situation, and if there are many many more jobs than there are men to fill them, the edge to our industrial effort may well be so blunted that we become non-competitive—although I do not suggest that we are at the moment— and lose our industrial opportunities overseas, and unemployment will result as a consequence.

Mr. G. M. Thomson (Dundee, East)

Is the hon. Gentleman advocating that there should be more men than there are jobs?

Mr. Shepherd

I am only saying that a policy once described by the deputy Leader of the Opposition as a policy of "over-full employment" carries with it a real danger to a country of this character, because unless we have the necessary flexibility to meet, and to meet with speed, the changing demands of world trade, unemployment on a large scale may easily be with us.

Mr. M. MacMillan

Would the hon. Gentleman tell us his own opinion of the desirable percentage of unemployment?

Mr. Shepherd

It is difficult at this stage of our industrial development, in the sense that we have only been experimenting for a few years, to try to state the optimum level. We cannot say at this moment. The right hon. Member for Leeds, South (Mr. Gaitskell) has indicated 3 per cent. as the figure which might be accepted. I do not know what the optimum figure is, and nor does any hon. Member. I am only saying that we must be careful not to take the view that two jobs for every one man is necessarily the right thing for the country in our present economic state.

I wish to say a few words in general about the Development Areas because I am interested in them from the point of view of economic planning. The other day the Colonial Secretary had a few words to say about economic planning. He said it was a "great big bit of boloney'." I can understand what a "great big bit" is, although it is not perhaps very clear; the Prime Minister is not sure what "boloney" is, and I am even more uncertain what "economic planning" means, but it is interesting to realise that the Act was put into operation by a largely Conservative Administration, and that we have accepted it and worked it willingly.

We say, to the concern of many people who take the view that the Government ought not to consider whether employment exists in a given area or not and that we should allow the ordinary run of economic forces to have their play, that that has not been our intention, and the action taken since we have been in office shows that we do not accept that view. Very often people put works in given areas because of personal preferences, and if we can induce them to put the works into areas where they can serve a wider social purpose we should do so.

In Development Areas generally first-class labour is available. Some of our best workers are to be found in Development Areas and, leaving aside social considerations, many firms would do well to go Development Areas and take advantage of this first-class labour. In South Wales, due to the nature of the mining there, few of the miners' wives and daughters work, yet there are in South Wales women workers who are as good as anywhere in the country, and firms ought to be encouraged to go there. Certainly the new estates have produced new industries, some of them Continental, with new skills, developed over many centuries, brought to us, which have been to our immense advantage.

I say that about Development Areas because I want, to some extent, to be critical of them; but I do not want to be critical in the sense that I believe in unemployment. The right of a man to work is a most important right. Man cannot be dignified unless he can find gainful employment. Employment is indispensable to the dignity of man. When I heard the right hon. Member for Blyth talking about unemployment I thought that he did not quite present the problem in its proper perspective. It is true that on 8th December there were 390,000 people out of work, but the Committee ought to bear in mind how they were allocated in terms of the time that they were unemployed, because no society can eliminate transitional unemployment.

A short time ago I looked at the figures, and I found that, of those 390,000, 170,000 were either temporarily unemployed or had been unemployed for four weeks or less; 27,000 had been unemployed for six to eight weeks; and 48,000 for from eight to 13 weeks. The long-term figure from 39 to 52 weeks was only 13,000. I do not want to minimise the effect of that unemployment upon individuals, but I think that it is important, when we are discussing this question of the optimum level, to realise how much of this unemployment under existing conditions is in fact transitional, and to realise that there is only one alternative, namely, a system of forced labour, which I am quite certain neither side of this Committee would for one moment accept.

Why do I say that I am slightly critical of the Development Areas? I am critical of them in so far as they tend to cut across the normal trend of economic flow and tend to establish businesses in places not best suited to them, and businesses which may not stand up to the test of time. I do not know the exact circumstances of many of the firms allocated to these trading estates, but I have some reason to believe that many of them may not stand up to the full force of competition. Therefore, it would be unwise to push the policy of establishing industries which have not a sound economic basis. I think that we are taking a risk if we push this policy too far to the point where we are establishing uneconomic industries in unsuitable areas. I am fortified in the belief that the more widely-established these areas are, the less use the policy of Development Areas will be to the particularly bad areas.

I say that, in view of these factors, we should take industries out of the scheduled areas as quickly as possible. The fewer Development Areas we have, the better it will be for those in urgent need. Hon. Gentlemen will, I know, protest and say that they do not want to face the hazards, as they conceive them, of de-scheduling, but I think that it would be to the benefit of the distribution of industry that areas should be taken out of the schedule as quickly as possible. My second reason for having doubts is the high cost of establishing factories in these areas. We have spent £41 million on factories employing something like 100,000 men, which is a high cost. Because we are going to areas which are, on the whole, undeveloped, where we have to lay on services, we are involved in very high costs per person employed. Is that always a wise thing to do? If we establish industries where it necessarily involves high costs, we shall render those industries less competitive than they ought to be in present circumstances. Therefore, I say that we must have reservations about the speed with which we proceed in these Development Areas.

I do not accept the view—and I hope that no Member of this Committee does —that full employment means a job for everybody wherever he is. I hope that no hon. Member accepts that view, otherwise this nation is doomed industrially. We cannot accept the view that there should be a job for everybody wherever he is. Mobility of labour is absolutely essential to this country.

Mr. Ellis Smith (Stoke-on-Trent, South)

So are houses.

Mr. Shepherd

That is quite right. Shortage of housing accommodation interferes greatly with mobility, but there are other factors.

Hon. Members will realise that in the '20s and '30s the coal industry was in a very bad state, and there were in South Wales no prospects for men to find employment there. Young men stood at the street corners in their hundreds of thousands. Some of them might possibly have found employment elsewhere, but many thousands did not try. [HON. MEMBERS: "No."] I say that many thousands did not try. I am only saying that it is quite wrong to foster the idea that there must never be any mobility of labour.

Mr. Pannell

The hon. Member is making the point that full employment does not mean that every man everywhere shall be employed at one time. He goes on to make the point that any number of people might have obtained work if they had moved from the distressed areas. If he does not mean that, he means very little. Is he aware that even in one of the most prosperous cities—Leeds—with a great diversity of industries, at the height of the slump there was one engineer out of every four out of work? Perhaps he will tell us where they could have got jobs. I can remember the experience of trying at 80 places in three months.

Mr. Shepherd

I think that the hon. Gentleman has got slightly wrong the view which I am trying to put forward. In giving the example of South Wales, I did not do so in depreciation of those men, because I think that there was a good deal to be said for them and against the coal owners in those days. It is perfectly true and very natural that people do not want to leave their home towns, but it is not necessarily the case that we ought to say that we will make no exception to trying to satisfy their desire to stay there.

While in the Development Areas unemployment is higher than the average throughout the country, I suggest to the Committee that that is not necessarily an argument for intensifying the Development Area procedure. We may well have to say that, with all the assistance we are able to give to these people, they will have a higher level of unemployment than elsewhere, and the answer is not to try to intensify the Development Area procedure but to get the people of these areas to move to other areas.

That is why I view with some concern the uncritical emotionalism with which this problem is being approached. It is not a question that ought to be approached with uncritical emotionalism. We ought to realise that there are many reasons why it is undesirable to put into unsuitable areas new industries which will prove uneconomic and which might go down in difficult times, and many reasons why we should try to persuade people to leave areas which are particularly uneconomic for industrial purposes and go elsewhere.

Mr. Douglas Jay (Battersea, North)

Would the hon. Gentleman have the same balanced view if we pointed out that it was desirable not merely for labour to be mobile but for industries to move into the areas where the labour exists?

Mr. Shepherd

I think that it is a question of striking a balance. I am not criticising the Development Area scheme in its entirety. I am only saying that to go to the extent of siting industries in uneconomic places where it may not be possible for them to stand up to the severe weather of competition is not a good thing to do. Naturally, we expect employers to play their part. We ought not to press this to the point that people say, "Here we are; if we do not get a job here, we are not going to get a job elsewhere in the country."

Mr. Richard Fort (Clitheroe)

Is the hon. Member aware of the surveys which have been made and which were summarised in the "Economist" of last autumn, showing that, by and large, the costs of branches which have moved to Development Areas are little, if any. different, after a suitable period of development, from the costs at the original places?

Mr. Shepherd

I am sure that is the case, and if it is so, by the natural flow of economic events people will tend to go to those areas where there is a supply of labour and economic conditions are favourable. I say that we must not try to push this thing too far. I agree that we have a deep moral obligation to provide the conditions in which men can live, be employed and have a happy life. I know that all the economic processes do not necessarily work towards that end and we should take steps to intervene when that is necessary. but there is a real danger of considering the question too emotionally and with too little regard to the economic factors involved. It may be better to have some transient hardship than a permanent impairment of our industry, and that is what will happen if we site factories in uneconomical places.

So far the Act has been a great success and has done a great deal to restore morale in many parts of the country. Many of the areas can now stand on their own feet without the help of the Act, and they ought to be proud to do so. I hope that where there exists a genuine need for the assistance of the Act for social reasons, its provisions will be applied vigorously, that we shall have regard to the need for flexibility and manpower, and shall continue to implement the Act with sympathy and wisdom.

7.1 p.m.

Mr. Frederick Lee (Newton)

The President of the Board of Trade invited us to make observations about the work of the Distribution of Industry Act, and most hon. Members have tried to do so. The right hon. Gentleman himself made the point that, even under present conditions, which are not too favourable, the Development Areas have stood up pretty well to the test of redundancy in certain industries, and that is an additional reason why we should hesitate about lifting the barriers round Development Areas before making certain that that will not have an adverse effect upon them.

While I say that, the Committee should not infer that because an Act tackled a certain problem in 1945 and has proved itself to be an extremely fine Act, we ought not to look at it any more no matter how circumstances change. The problem we were tackling in 1944 was by no means the problem we are tackling today.

The Distribution of Industry Act was a very fine conception and the Measure has revolutionised many areas of the country. Very many of the depressed areas have ceased to exist and we can now feel that there is a basis of stability in most of them, but we tackled merely the short-term problem in 1944 when the Government were given power to advance public money to any type of employer to encourage him to go into certain depressed regions.

The assistance offered was not particularly directed at siting certain industries in certain areas, and that is a matter we ought now to examine. If British industry is to be able to compete in approaching world conditions, we cannot afford to ignore the costs of our products. If it is obviously uneconomical to put certain types of industry in an area, I should not have thought it was a good thing to subsidise such employers to go there. We should, if necessary, increase the grants to the type of industry which would fit into the circumstances of the area rather than continue to spread the financial assistance over the whole of industry.

If we are looking at the matter from the long-term point of view, we really must try to visualise the picture that we shall create over a period of years in, say, a great county like Lancashire. I am very happy that there is to be another Development Area in Lancashire, but I should not like to think that the surrounding regions will suffer merely because a certain type of Development Area is being sited in a small section of that great county.

The success which has attended the Distribution of Industry Act should not lead us to ignore the fact that there has been constant full employment in most parts of the country ever since the Measure was put on the Statute Book. It may well be that a number of employers who have agreed to go into Development Areas have done so because they know that they are the only parts of the country in which they could get employees in the numbers they require.

There is also the problem of the type of employee available in each area. I have always expressed the view—I base it on my experience at the Ministry of Labour—that the type of employee available is a matter of fundamental importance to the whole of our Development Area policy. The regional organisations of the Ministry of Labour, which are far superior to those of any other Department, have the responsibility in this respect, and are in close touch with both sides of industry.

The Ministry of Labour study trends of industrial employment possibilities and have records not only of the number of unemployed but also of the type of people who are unemployed. The Ministry of Labour are the Department which trains the "green" labour and look to the future employment possibilities. Because of all these things, I believe it is the Department which should deal with this matter, especially now that we are worried about unemployment tendencies. One of the changes which should take place is that the central conduct of Development Area policy should pass from the Board of Trade to the Ministry of Labour. I could not have said that a year or two ago, for I should then have been accused of empire-building, but these days I am an entirely impartial witness and so I offer the Committee the experience that I had during my time with the admirable people at the Ministry of Labour under the last Government.

I come now to a hobby-horse of mine. Let us look at the National Coal Board's long-term plan. In Durham, for instance, the tendency will be to contract in the mining industry as a result of worn-out seams, and the National Coal Board want us to consider an expansion in Yorkshire and a contraction in Durham. The Minister has a terrible problem. Most of Durham is a Development Area, while most of Yorkshire is not. I should have thought that a sensible way to look at the matter would be to say that if we are to contract in Durham we must make certain that the thousands of admirable miners in Durham will not be thrown out of a job and that we must in some way induce them to help us in expanding the mining industry in Yorkshire.

Mr. Ellis Smith

And North Staffordshire.

Mr. Lee

Yes, in North Staffordshire also, but the National Coal Board plan refers particularly to Yorkshire. What we should have to do would be to build houses and create amenities in the coalfields where we wish to expand in order to attract the labour from Durham or wherever else it is. I believe it to be wrong to consider what is happening in a Development Area without looking at what may happen outside which may be complementary to it. The Minister must have power to give assistance in that direction instead of having to think merely in terms of what is happening inside the Development Area itself.

I want now to turn to another important question. We are all agreed that much of our future and our ability to trade in this world depends on whether we can expand our production of engineering products. I am very worried about certain tendencies in some sections of the engineering industry. It would, of course, be an exaggeration to say that there was widespread unemployment or under-employment in the engineering industry, and I do not make any such point at all. Nevertheless, we must keep in our minds that these industries are the ones upon which we are going to depend for the life-blood of Britain. They are to provide the means whereby our standards of life are maintained and whereby we can pay our way in the world. Therefore, it is disquieting indeed when we see unemployment or underemployment in any section of the engineering industry.

In this connection I want to quote from the journal "Engineering" The engineering industry appear to have reached towards the end of 1952, a position in their post-war development in which they are finding it increasingly difficult to sell their products. It is general knowledge in the industry, as some chairmen have already stated in their reports to shareholders, that most companies, even those with three or four years' orders on their books, are finding the inflow of orders inadequate to maintain production at a profitable level. There is also widespread fear of cancellations if the general world economic situation should deteriorate further. It goes on to point out that even in a number of industries where it appears there was work for years ahead cancellations are causing the position to deteriorate quite noticeably. If that is the case, there is a great danger in the present position in engineering.

The "Manchester Guardian" in ant admirable leader last Friday said: Our best chance of flourishing exports lies in the industries making machinery, aircraft and other highly-finished products of engineering. While the resources for this production are by no means as over-burdened as they were, delivery times are still long, and rapid adjustment to the demands of overseas. customers is difficult. I should like to know how all this fits into the general pattern, particularly in the armament industry. I believe that to reduce the arms programme for each particular year is the correct policy, but the mere fact that we are reducing our armament production will not of itself ensure that we shall succeed in the second point, the raising of our commercial levels of production. The two things do not necessarily go together.

There is a vast difference in producing arms as distinct from producing turbines or other commercial products which other nations may wish to buy, and this operation of changing over from producing arms to trying to swell products of a commercial nature is a most delicate and extremely serious operation. In the Defence White Paper we are told that there must be a further lengthening of the programme owing to the overloading of the industry and the need for exports. Again, the "Manchester Guardian" put in the same article these words: Instead of spending over £850 million on arms in the coming fiscal year the Government will spend about £650 million. A good many of the changes have no doubt already been made. This accounts for some of the short-time working in the metal and engineering industries while firms that had counted or started on defence work hurriedly turn to other activities. The House may remember that from the very day in December when the Prime Minister announced the Government's intention of stretching out the period of re-armament, I questioned him and other Ministers on the effects. On 9th December I asked the Prime Minister what steps he was taking to ensure that the most recent changes -in the defence programme did not result in unemployment in the engineering industry. He replied: The changes will not markedly reduce the total labour force employed on defence production in the engineering industry. There may be some redundancies at first in a few firms, but the Ministry of Labour are being consulted on the best way to limit the effect of these redundancies."—[OFFICIAL REPORT, 9th December, 1952; Vol. 509, c. 243.] I then pointed out to the Prime Minister that if he was not very careful those firms which had already laid out their machinery, the balance of their labour force and the type of materials that they would need for the arms programme would be materially affected in a short space of time and I asked what steps he proposed to take. The right hon. Gentleman did not give me a reply to that question, and I have been worried about it ever since.

I have already quoted the leader in the "Manchester Guardian" which said that there is to be a cut in expenditure on the arms programme this year of no less than £200 million. Does that sound as if there will only be a few redundancies? A total of £200 million in an expenditure of £850 million means a reduction of a quarter, and yet the Prime Minister says there will be no danger of redundancy in those sections of the engineering industry which have been employed on arms production. I asked the Minister of Labour whether he would put the point to the N.J.A.C. which had quite an important part to play in advising us when the programme was being expanded, but the right hon. and learned Gentleman could not see his way to do that.

If, as the "Manchester Guardian" says, there is to be a reduction of £200 million this year in arms expenditure, it seems to be pretty obvious that there will be wide-scale alterations in the pattern of production, and that thousands of people in the engineering industry will be affected. I hope the Government realise that, once the balance of engineering production is lost, it can result in wide and serious dislocation, with great demands on industry, accompanied by diminishing products from them. The Government ought to tell the nation that they are satisfied on these particular points.

I should like to summarise the position by pointing out that a number of sectors in the industry are already contracting, while in others the anticipated increase in demand for labour, including skilled labour, will not now take place. We read in the Defence White Paper which has just been issued: Many firms and Government establishments have found difficulty in the past year in obtaining enough skilled workers for defence production, though they have been able to recruit enough unskilled workers. The operation of the Notification of Vacancies Order has helped to provide the labour required, while schemes of upgrading and training in industry have mitigated the shortage of skilled workers. The changes which have been made in the defence programme will not result in redundancies on any considerable scale, but many firms which would have needed to recruit large numbers of additional workers, including much skilled labour, will no longer have to do so. Once we get to the position where skilled labour is becoming unemployed, then it is pretty obvious to any hon. Member knowing the engineering industry that there will be a great increase in the number of unskilled workers who cannot possibly find work in the industry itself.

The sectors which are contracting at the moment are the motor car, cycle and textile machine sections. When I visited Birmingham a couple of years ago as Parliamentary Secretary to the Ministry of Labour, there was an extremely heavy vacancy list in the region. I remember asking the regional officers whether they were having any difficulty in getting everybody work, and they said that if the body were warm at all they could get it a job. Since then unemployment has doubled in that area, and vacancies have been reduced to something like a half.

There are some 22,500 engineering workers on short time. If we are to see an expansion of unemployment and short-time work in one section of the engineering industry, then it will not be possible for the engineering unions to agree to a further dilution of labour in those other sections where there is a demand for labour which cannot be satisfied. This is a most vital issue, as my hon. Friends from the unions will know. How are we going to accept the position where "green" labour is going to be trained for skilled work in some sections whilst thousands of union members are on short time or are actually unemployed in other sections? I hope that the Government will see that this is something which must be looked at, because it is of very great importance.

The Government should tell us at this stage what the percentage of the total engineering production will be for the re-armament programme. It is now between 7 per cent. and 8 per cent., which is too high. What is the right percentage? Is it 5 per cent.? The Government must tell us otherwise we shall not know the sort of programme that they have in mind.

I have been speaking of the sections which are reducing. What about those which must expand? The aircraft industry is an obvious example. Are new developments in the aircraft industry to be sited in approximately the positions of the sections which must now contract? If that took place, we could have an aircraft industry in the place of the motor car industry. Both the motor and aircraft industries work on line production. Their assemblers can be adapted without the need for expensive training. The skilled men could readily change over.

While I am still on the subject of those sections of industry which must expand, I wish to refer to the industry which is the key to our ability to produce high-quality competitive goods which alone can ensure full employment. I refer to the machine tool industry. I believe this matter must be given urgent consideration, because if our machine tools are either too dear in price or are behind other nations' production in design, then the products manufactured on them cannot compete in world markets. Since the war, we, the oldest engineering country in the world, have been spending £100 million upon importing machine tools, about half of them being dollar machine tools.

Hon. Members may recall that during the whole period there has been a strict scrutiny of the sort of expenditure which manufacturers have been allowed before we gave them permission to purchase anything in the dollar area. In spite of that, the figure which I have indicated has already been spent. Dollar expenditure on machine tools would have been far higher because of imports of single-purpose tools, which is quite inevitable.

The situation revealed is quite alarming. It is fantastic that to increase the efficiency and productive capacity of our manufacturing industries we must lay out scarce dollars in this way. I quote from the White Paper on Defence, which says, in the section headed "Machine Tools "on page 14: Delivery of machine tools has continued to be satisfactory. Satisfactory "seems a funny word to me. Of the 35,000 extra machine tools required, about 18,000 were ordered from Europe and the United States in order to supplement home supplies. 13,000 of these had been delivered by the end of 1952. While we have figures of that sort to show our dependence upon imports of machine tools, we cannot hope that our own position in regard to the expansion of the machine tool industry or its modernisation can be satisfactory.

In 1951 our manufacturing industries in Britain, including the machine tool industry, produced about £735 million worth, and only about half of this total went to our own home industries. It would appear that, while quite rightly seeking to expand our exports of machine tools, we are not enlarging the total size of our output sufficiently, nor are we ensuring that the industry can give home manufacturers sufficient late-design tools to prevent their either using obsolescent ones or having to buy from dollar areas.

I presume that Ministers have read the Anglo-American Productivity Report on Machine Tools which is now available. On page 1, under "Conclusions," the report says: The machine tool industries of both countries are in danger of losing large proportions of their markets unless they rapidly increase their productivity. In our case, we depend so much upon exports that today, they say, we are exporting about 45 per cent. That is the sort of thing we stand to lose unless we modernise our machine tool industry.

The report advocates a return to wartime finish, as regards paintwork and metal-finishing, in order to get a cheaper product. I see that the Parliamentary Secretary shakes his head, but I do not agree with him. I have worked on wartime finish and I know that there is no difference in the finished article. We English people are very old-fashioned about this sort of thing, and about having beautiful handles and machines all polished up with a super-finish on the top. We can get a satisfactory job without it, and I hope that the point will be looked at.

As a long-term consideration the report suggests that we should reduce considerably the number of independent companies in the industry by absorption, amalgamation, or by agreed standardisation. There is only one way of doing that, and that is by getting a public sector of the machine tool industry. For my part, I would advocate that that should be done.

I want to finish on a nice note, because that is what I have to do.

The Parliamentary Secretary to the Ministry of Labour (Mr. Harold Watkinson)

I am sorry to interrupt the hon. Gentleman's able speech, but I hoped that he would quote a little bit from the Report on Machine Tools which said that, in comparing our industry with that of America, that the best of the Americans' was no better and that the worst was just as bad.

Mr. Lee

I am not attempting in what I have said to show that our machine tool industry cannot bear comparison with the States at all. I am not saying that, and I do not think that is a statement which would do any good to our industry. It is true to say that we depend to such a degree on our exports of machine tools that we must modernise them, and that we are getting behindhand in production in our manufacturing sections because of obsolescence in our machine tools and because the price factor is so important.

My right hon. Friend the Member for Blyth (Mr. Robens) mentioned something which the Parliamentary Secretary to the Ministry of Health should not have said in her speech. We do not like that sort of nonsense being talked, such as that we are not able to compete because of an exorbitant demand that we are making for wages, and so on. In this same respect I take the greatest exception to a leading article in the "Daily Telegraph" last Friday in which they talk about defence expenditure and say:

In this connection it is scarcely a co-incidence that the engineering unions, in which Communist influence is strong, are foremost in making irresponsible wage claims. Nothing could serve the purposes of Moscow better than rocketing costs in the industries on which both defence and exports so largely depend. The "Daily Telegraph" is looked upon as a semi-official organ of the Tory Party. I hope that the Minister who will reply will tell us that that is not the view of Her Majesty's Government. To dub the engineering unions "puppets of Moscow" while asking them to increase the production of arms is about the biggest contradiction that one would imagine. If the leader writer asks for an increase, the editor has a good reply, because he is clearly a Communist stooge or at least a fellow traveller.

I hope that the Government will see to it that the question of re-equipping our industry cannot easily be divorced from the standard of living of the people in industry. On this subject I should like to quote again from "Engineering," which said: Re-equipment cannot be discussed in a separate context from manpower.…The work of the Anglo-American Council on Productivity has emphasised that high productivity in the United States is due to no small extent to the constant pressure of the American unions for higher wages. That is not from a Communist paper, or even from the "Daily Telegraph," but from a respectable journal called "Engineering." It proceeds:

Such a stimulus has not been provided in the United Kingdom. …The engineering unions have secured important wage increases in recent years, but the amounts which have been awarded and accepted have not been out of keeping with the national policy of restraint. In 1952, after negotiation, an award of 7.4d. a week was accepted, though the initial demand was for £2 per week. In the present critical state of the United Kingdom's economy it would be unwise to advocate the type of unrestricted wage bargaining which prevails in the United States. The absence of this incentive, however, quickly gives rise to the danger that, in contrast to the United States, where speedy adoption of technical advances permits both a higher standard of living and reduced production costs, industry in the United Kingdom will continue to retain its outmoded machinery and to maintain itself in a competitive world only at the expense of the standard of living of the workpeople. If the unions in the engineering industry—an industry which has succeeded in increasing production to a higher level than that of any other industry in Britain —are to be assailed and insulted by the sort of leading article which appeared in the "Daily Telegraph" that will leave a very sour taste in their mouths. It will not be conducive to the sort of atmosphere in which we get good results.

I hope that the Minister will realise that the question of redundancy and short-time working in the engineering industry is one of great importance, not only because of the quantity of it but because of the atmosphere which it can generate. If he will consult the unions concerned, he will find that they will be only too happy to work with him to ensure not only increased productivity but the right sort of productivity at the right price. If that can be done, and attention given to the matters which I have mentioned, the position will be improved.

7.31 p.m.

Mr. Charles Fletcher-Cooke (Darwen)

I will follow the first part of the speech of the hon. Member for Newton (Mr. Lee)—that relating to the Development Areas—and not the second and longer part which dealt with the present troubles of the A.E.U. I cannot pretend to have that lofty detachment about Development Areas that my hon. Friend the Member for Cheadle (Mr. Shepherd) has, as a potential Development Area has come lapping up to the shores of my constituency but has, unfortunately, stopped short there. I was most interested when the hon. Member for Newton pointed out the disadvantage that areas close to a Development Area but not included in it may suffer from the very fact of a Development Area being there.

It was with some trepidation, although without any sour grapes, that I heard from two hon. Members opposite, the hon. Member for Bedwellty (Mr. Finch) and the hon. Member for Stockton-on-Tees (Mr. Chetwynd), how industry was thriving in their Development Areas and how the whole scene was changed as a result of this Act. So thriving was industry, in fact, that they were worried about the supplies of water and other necessities to keep this hive of industry and employment in full operation. One almost pitied poor Torquay and Brighton who apparently were suffering very considerable unemployment, according to the right hon. Gentleman the Member for Blyth (Mr. Robens). It seemed that life in Stockton-on-Tees and Bedwellty was a good deal more preferable.

That, of course, is an exaggeration, but it shows that, especially in an industrial area such as the one I have the honour to represent, there is a grave danger that a Development Area if it abuts on and adjoins such an industrial area will, like a magnet, artificially draw away industry which would otherwise naturally come into one's own area. Although we ask no special favours if all is equal, when all is not equal then inevitably people who think that they can do well enough standing on their own feet feel very bitter if factories that might have come to them are steered next door.

That argument can be developed too far, but in a natural unity such as the weaving belt of Lancashire there is a great danger if it is to be cut in two, as apparently it is. Those people who are left outside will be at a grave disadvantage compared with those who are to be put in. I wonder if perhaps we should not follow the line of thought referred to by the President of the Board of Trade, who spoke of Professor Cairncross, and touched on by the hon. Member for Cheadle and the hon. Member for Newton. Having had six or seven years' experience of the working of this Act, we should perhaps alter this rigid division between a Development Area and a non-Development Area. Perhaps the gradation should be more even and it should not be a question of either inside the walls or outside the walls. It may be that the whole concept of special privileges for special areas should be less rigid and infinitely less permanent.

Despite the instructions in the Act, it is becoming crystal clear that no scheduled area will ever be de-scheduled. That is wrong. Sooner or later we shall get into a position where scheduled areas show a much lower level of unemployment than many areas outside the scheduled areas, and persist in doing so. Then the areas outside the scheduled areas will feel bitter, will lobby and press to be included in the scheduled areas. Then the poor President of the Board of Trade for the time being will either have to extend the number of areas so that the position is unworkable or he will have to take on the most unpopular task of de-scheduling, and so far there has been no sign of that.

In the North-East Lancashire area already, since this proposal was mooted, there are towns whose present figures of unemployment are no worse than those outside the designated area. The hon. Member for Nelson and Colne (Mr. S. Silverman) is not here, but I am sure that he would not mind my pointing out that for January his two boroughs which are within the area show unemployment figures no greater than those for places immediately outside, such as Blackburn. That shows how dangerous it is to take any special moment of unemployment as decisive and to draw the frontier round the towns at that time.

I plead, therefore, for the whole machinery of this Act to be reconsidered. The Act has been very valuable. Obviously it ought not to be scrapped, but there ought not to be this black and white division of people inside the frontier and outside the frontier. One of the grave dangers that it produces is that it militates against mobility of labour. It cannot be too frequently shown that everything the Government, local government and employer and employee are doing at the moment is militating against greater mobility of labour.

Local authorities, rightly because they have a duty to their localities, prefer in their housing lists people who have lived in the areas for many years. Employers like to keep in their own industries as many people as they can, and so do the trade unions. The trade unions rely on their membership. All these considerations militate against people moving their houses and changing their jobs. As long as that goes on there is no hope that British industry will become competitive and able to meet new demands quickly and cheaply. I am afraid that the workings of the Development Areas are also tending in that direction. If they are, that is another reason why this rigid division should be reconsidered.

We do not grudge the Development Areas their luck. We do not grudge— although it is difficult not to—even the new Development Area its luck. But, at the same time, we feel most disappointed that an industrial area such as mine, which has done very well in its efforts to diversify its industry, should now have this artificial magnet placed on its frontier. Inevitably this will mean that any industrialist thinking of coming into North-East Lancashire will almost certainly not come into my constituency because of the artificial advantages he will achieve by going next door.

I hope, therefore, although it is too late to change the proposed frontiers of this new Development Area, that the whole rigidity of Development Areas will be seriously reconsidered and that the question of allowing those industrial areas which do not come within the charmed circle to partake of the advantages will be most carefully weighed.

7.40 p.m.

Mr. J. D. Murray (Durham, North-West)

The huge constituency I represent is causing great alarm and anxiety to all responsible persons within the area and to many important individuals and organisations outside it. If I were to respond to the request of the President of the Board of Trade that we should express our views, I should say that the present alarm would be nothing compared to what it would be if there were to be any change at present in the set-up under the Distribution of Industry Act.

I well remember the time when over 20 collieries were at work in my constituency and were working at their peak. The position of late, I am very sorry to say, has changed considerably. Now, instead of over 20 collieries working, only about 10 or 12 are at work and some of them with considerable reductions in personnel and with a very bleak outlook for the future.

For some years, miners in my constituency have been travelling 20 to 25 miles a day to earn their daily bread. This means that for 10 hours at least they are away from their homes and families. It means also the extra weekly cost for transport, and their standard of living is considerably reduced. Therefore, I beg of the President of the Board of Trade to take notice of the stark reality with which my area is faced. I want the right hon. Gentleman now to see the trend of events.

Just over a year ago, a good number of miners were transferred from New Brancepeth Colliery to Brandon, which is practically at my doorstep, but a few months ago a further 300 miners were transferred from the Roddymoor Colliery, near Crook, which is over seven miles away. I hope, therefore, that the President of the Board of Trade, together with the Minister of Fuel and Power, will at least do something to help us in our terrible plight.

I appreciate the desire of the National Coal Board to keep the miners employed and that we must get as much coal as it is possible to produce, but to transfer 500 miners from one pit to another is only a short-term palliative. It is no solution whatever to the problem, and it will certainly reduce the life of any colliery to which these men are transferred. It is the old, old story over again —we cannot have our cake and eat it.

I represent a large constituency with three urban and two rural areas. In the 1931 Census, the population was 84,222, but in 1951 it had dropped to 75,191, or a reduction of 9,031 persons in 20 years. That is a serious situation. During that period I knew men in the Crook urban district area who never did a day's work for over 12 years. That is a terrible calamity for any man to have to face. I am one of those simple individuals who does not believe that it is a good thing to pay a man for doing nothing, and there were hundreds of them who for 10 or 12 years never could do a day's work simply because the work was not available and had to be kept, fed and paid.

I had personal experience of unemployment on at least two occasions, each time for four years. I was four years unemployed before I came to the House. I know from experience of the sorrow, the suffering, the struggle and the lowering of the standard of life that men and women have undergone. Sometimes when I have looked at some of those men and then looked at myself I have felt ashamed of their condition when they become shabby, when they could not get the clothes that they ought to have or the food necessary for their children. Experience is the greatest teacher of all. and I have been through it.

I am anxious, therefore, to know whether the Minister will use his good offices to steer new industrialists into the North-West Durham area. I have letters from every council in my constituency revealing the worry and anxiety of both councillors and their officials regarding the future of the area. They are anxious to know whether the Government have any plans ready now, or are waiting until all the coal seams give out. Are the Government going to wait until every colliery stops before they do anything? I remind the party opposite that procrastination is the thief of time.

Neither I nor my people have forgotten 1932, when one in three of all the insured population were unemployed and the proportion was much higher in places like Jarrow. I impress upon the President of the Board of Trade the seriousness of waiting until the worst has happened. When men are turned off or a colliery is closed down, the state of people's minds is entirely changed, especially among the young people, who have their lives to live and their families to bring up.

These young people want security. They want at least to feel that there is a decent chance of earning a decent living in the good old British way of working for the things that they like and enjoy. I have heard them say that they would get out while the going was good. There were 800 men and their families turned out on to the streets at Browney four years before I came to the House. I know what I am talking about, and I know what it means to those men. Does anyone blame these young people for wanting to get away? We would all do it if placed in similar circumstances.

The worst of this situation is that the young people go first; the best people go and they leave the older people who have to depend on others. As I see it at the moment, migration is our only hope unless something is done, and I would remind the Committee that migration is no solution of this terrible problem. I understand that the purpose of the Distribution of Industry Act is to reduce the need for migration; in other words. to bring the workshop to the workers. That is what I am asking the Government to do. In my constituency one thing is as sure as night follows day—that coal production will decline year by year. Not only will it decline, but eventually it will finish altogether. Therefore I say earnestly and very sincerely to the President of the Board of Trade, "Now is the time for action."

Dr. Barnett Stross (Stoke-on-Trent, Central)

My hon. Friend has told us that he does not believe in migration as a solution of the problem and he followed that by saying that coal production in his area will decline and cease altogether, perhaps in the foreseeable future. Does he object to migration, say, from his area to an area like that of north Staffordshire, where there is valuable coal sufficient for two or three hundred years yet?

Mr. Murray

I do not entirely object to migration to a certain degree. In fact, I have already said that the first people to go are the young, and I know that common sense has to be used. Another matter to which I would call attention is that in this area there is a vast amount of fixed capital in schools, shops, clubs, public houses, cinemas, local authority offices, council houses, private houses, churches and chapels. All these have to be maintained or the fixed capital in them will be allowed to deteriorate and waste.

A further matter which gives great concern to me is the fact that all the councils in my area are doing their best to provide the necessary houses and services for the people, but that can mean a terrible disadvantage to the councils unless more new industries are steered into the area to assist councils labouring under the very heavy rate burden. The immediate concern in this area is the growth of financial difficulties due to a lack of balanced building development.

We require more factories for male labour, more shops, more schools and so on which contribute large sums but require few services. We need something like the tobacco factory on the Newcastle—Whitley-Bay Road which has a rateable value of £10,000. The approximate post-war capital expenditure on houses and sewers alone in the area I represent runs into millions of pounds. It can be seen at a glance that we require some alternative employment to meet inevitable redundancy. This would assist my area tremendously.

It must be remembered that the whole of Durham County was scheduled as a Development Area and lost 48,000 people by migration during the depression between 1931 and 1939. In 1951 we had a population of more than 22,000 below the level of the population in 1939. Durham was the only county in England except London to have a smaller population in 1951 than in 1931.

I am asking for special consideration for Durham which the county richly deserves. In my division councillors have a very difficult job. Uncertainty in planning for the future is very great. They have a terrific housing problem and they have various other schemes which need serious care and thought before embarking on them. They should be given all the information possible from the National Coal Board in regard to future projects. It is no earthly use having a beautiful house to starve in it. The men must have work in order to pay their rent. An unemployed man simply cannot meet his obligations and live at the present time. What are the Government going to do? Are they going to leave this area so that eventually it will become a National Assistance area?

In opening my speech, I said that there was alarm and anxiety among important individuals and organisations outside the division. I think it only fair to justify that statement. A report from the North-Eastern area says: The Northern Industrial Group and the North-East Development Association believe that the facts call for action. The National Coal Board must be pressed to give their estimates of any reduction in the numbers likely to be employed in coal-mining in the various parts of West Durham over a period of some years ahead and also to indicate to what extent and in what ways they plan any additional employment other than in the pits in the area. The Group and the Association take the view that as a solution to the problem migration is a desperate resort and must be avoided by making every effort to provide alternative forms of employment in the right places, on the scale and at the times needed in order to prevent it. The Government is the authority which can find out the facts from the Coal Board "— I have tried many times but cannot get very much information. That is why I say that the Government are the authority and agree with these people—

and which can take action under the Distribution of Industry Act to deal with the employment problem. To that end the President of the Board of Trade is being asked by the Group and the Association to receive a deputation to discuss problems and advise the two organisations on what action is intended. The Group, together with the Association, in the light of this Report, are determined that the problem which it examines shall be tackled without delay and in the most positive manner possible. I suggest that this is very strong language from a group of people anxious and willing to help. They sincerely believe that "Prevention is better than cure." I think that proves my contention that organisations and individuals outside the area are very much interested in this matter.

I have talked about labour with those industrialists already in the area and I have yet to receive a complaint from any of them. In fact their attitude is that it is "entirely satisfactory." Good sites are readily available scheduled and improved for industrial development. Sewers, gas, electricity and water supplies are laid on. Labour can readily adapt itself to meet all the requirements of those who care to come. Transport arrangements are very good indeed and well able to meet all needs.

I hope that what I have said today will not fall on deaf ears, but that we shall find a ready response from the President of the Board of Trade. If he rises to this occasion I can assure him that all the councillors and officials in North-West Durham will co-operate to make any effort a huge success.

8.1 p.m.

Mr. Ralph Assheton (Blackburn, West)

I wish to intervene only for a few moments to discuss a point which is a matter of great concern in my part of the country. Some time ago it was suggested that a Development Area should be formed in North-East Lancashire. I had some doubts about that proposal, because I had fears and anxieties as to what might happen. I am sorry to say that some of my anxieties have proved to be justified. The President of the Board of Trade decided to make certain parts of North-East Lancashire into a Development Area. North-East Lancashire is an entity. The ancient Hundred of Blackburn has been a political entity for a thousand years, and it has been an economic entity for most of that time. One cannot make a sensible job of cutting it in half.

When the Order is discussed later this evening, whether I speak on it or not, I shall not be an enthusiastic supporter of it. I do not want to go so far as to say that I shall oppose it, because that would be adopting a dog-in-the-manger attitude. Neighbouring towns to mine will get some benefit from it, and so I am put in a difficult position which I hope will be appreciated by the Parliamentary Secretary to the Ministry of Labour who is to reply.

When this proposal was made I led a deputation of hon. Members from both sides of the House to meet the President of the Board of Trade and to ask him to include the whole of North-East Lancashire in the area. We put our case as best we could, and the right hon. Gentleman received us very kindly. But he did not give us a satisfactory reply. I and other hon. Members pointed out that it was not wise to go on the figures of unemployment for any particular date. We indicated to the President that on looking back into the past it would be found that when serious unemployment affects that area it is apt to come from one direction down the valley until it fills up the whole area. That is what has happened in the past.

We tried to persuade the President of the Board of Trade to include the whole of the area, and I would draw the attention of the Committee to the fact that our case has been proved by events. If we look at the figures of unemployment today in the area which the Minister has delienated, we shall find that with one small exception the unemployment is no more severe there than it is in the area he has excluded. The constituency of the hon. Member for Nelson and Colne (Mr. S. Silverman) is suffering to about the same degree as is mine, and as is the constituency of the hon. Member for Blackburn, East (Mrs. Castle). That justifies our suggestion that it is unwise to base a decision upon the facts as they exist at any one time.

I wish to ask the President to do something to prevent the damage which can arise from his decision, and I would illustrate my point by giving an example of something which happened to me last week. One of my constituents came to me and said he wished to increase his business, to develop it and to add to his existing factory. If he was not able to do that he said he could obtain accommodation quite near which would serve his purpose. He told me that he had been to a certain Government Department, which shall be nameless, and had been told that he had a much better chance of getting orders if he went to Burnley.

It is all very well to talk about drawing new industry into North-East Lancashire, but if it is drawn from Blackburn to Burnley I shall complain, and so will the hon. Member for Blackburn, East. We cannot stand for that. It is not really fair that this magnet, as it was described by my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke), should be placed next door to us. It is hard because we are nearly as badly placed as they are, and later on we may be in a worse position. That magnet is supposed to draw business and trade from the south of England or from some other wealthier parts of the country which have already plenty to do. If it manages to draw trade to Burnley or to Nelson and Colne, although I shall be sorry it is not going to Blackburn, I shall be glad it is going to Burnley and to Nelson and Colne. But if trade is to be drawn from Blackburn to Burnley, I warn the President, that is something we cannot stand for. I ask for an assurance that he will make certain that in the working of this Act such a thing will never happen

8.7 p.m.

Mr. David J. Prude (Midlothian and Peebles)

We have listened to one of the finest debates in this House in recent years. I detected heart searching and mind searching and a genuine desire on the part of everyone who has spoken to try to find ways of improving our national position. The President of the Board of Trade told us that we have to make certain efforts. He asked certain questions. He asked whether the Act was a success? Would we require to abolish the Act?

The debate arose principally upon the fact that one district in Lancashire is to be scheduled as a Development Area. That district should not play too much upon the fact that it is to be scheduled. In the constituency which I have the honour to represent we have a district which was scheduled, and nothing has been done. The President spoke of the possibility of his Department steering industry. That may or may not be successful, but everyone will agree that if his Department makes a wild slap-dash approach to any area which shows an incidence of unemployment at any given time, then Government policy will resemble a little dog chasing its own tail.

In certain districts in Scotland we have had the introduction of workshops and factories which have been described as only running half-time. That means there has been a misdirection of industry. Let me give one example. One fine firm in Edinburgh of world-wide reputation, Messrs. Ferranti Ltd., had for many years contemplated using the reserves of labour in the Calders area of Midlothian. Every morning 'bus loads of people are brought to the City of Edinburgh after a 55 minutes run and the girl who works in Edinburgh is 18s. 6d. worse off than her sister who stays at home because she must pay those transport charges. Messrs. Ferranti made up their minds that they would set up business in the Calders area, but this year the Board of Trade apparently took the responsibility of directing Messrs. Ferranti to Dundee, irrespective of the fact that in the last days of the Labour Government the Chamber of Commerce of Dundee had petitioned the Government not to send any more light industries to Dundee. So we must regard that performance under the Act as requiring a certain amount of revision.

Mobility of labour is a phrase often quoted from the other side of the House and it slides off the tongues of hon. Gentlemen opposite with an oiliness which sometimes makes a chill run down my spine, because I have been a mobile unit. Instead of coming from South Wales into England, at one time during the period between the two wars I went from Midlothian down to Durham. When the hon. Member for Cheadle (Mr. Shepherd) talked of 1935 and of coal miners being idle, let me tell him that all over Britain half a million miners were either temporarily or permanently unemployed and that that figure was common to all the years between 1927 and 1938.

It is all very well being mobile, but if the hon. Gentleman will come with me to the Lanarkshire coalfield and to Fife and Midlothian we will show him glaring examples of the mobility of labour. Pits were shut down in Lanarkshire which at one time produced four-fifths of the coal supply of Scotland. As many as 50 collieries have been shut down in a few short years in Lanarkshire. The county councils of Fife and Midlothian and the Coal Board have responded in such fashion that they have built houses quicker than has ever been known in the history of Scottish house building in order that men may be transferred there.

Will those Lanarkshire men consent to uproot themselves and their families from all their local associations and go to a new house in Fife or Midlothian if there is no employment for the other members of the family who do not work in the pits? In the County of Midlothian we have more seams than anywhere else. We have 41 workable seams of coal, 20 on the north bank of the North Esk, 14 on the east bank of the South Esk, and above the confluence of the two branches of the Esk there are seven workable seams and the finest deposits of clay in Britain for pipe making and brick making. Also on the banks of the River Esk there are 10 paper mills where the workers are only employed four days a week.

I think hon. Members will agree with me that here is a case, not for the scheduling of an area, but for sympathetic consideration on the part of the Board of Trade for the introduction of new industries in order that the great experiment on the part of the Coal Board of transferring miners from one part of Scotland to another shall not be torpedoed. I do not want to convey the impression that I am critical of the President of the Board of Trade. On the contrary, the right hon. Gentleman has been courtesy personified. He has approached the problem when I have presented it to him with the greatest amount of sympathy—in contrast to those who went before him who, when the proposition was put before them, faced me with the President, two other Ministers and two top-ranking Board of Trade officials, one brought from Scotland, to impress upon me that it was absolutely essential that those girls should be brought from the Calders area or the economy of the City of Edinburgh would crumble. I was too flabbergasted even to argue, but I looked at the Board of Trade official and thought, in sorrow, "And they are paid a salary for doing it?"

I want the Parliamentary Secretary to the Ministry of Labour to think in terms of economics. Here is misapplication of labour because transport is being used to take it to Edinburgh where it is not required. The transfer of Labour from Lanarkshire has given Midlothian such a reservoir of female labour that we cannot employ it. Unless we get a little assistance from the Government, there is no doubt that Scotland will have a large incidence of unemployment.

It is true to say that of the Calders area we have not got thousands of unemployed. Indeed we have less than 200, but that is because the Calders people are industrious and are not afraid to travel long distances in order to earn their living, rather than to sign on at the employment exchange. However, under 200 represents a greater degree of unemployment than 2,300 would, for instance, to the City of Dundee. Not that I have anything against the City of Dundee which, from the point of view of industrial history, has had a very drab existence indeed. I do not for a moment grudge them Messrs. Ferranti, but I suggest to the Minister of Labour that that factory in the Calders area would have gone a ion?, way towards improving the conditions in the constituency which I have the honour to represent.

In the southern portion of the constituency we also have a great problem. In the County of Peebles we have only one industry upon which the people can depend for a livelihood. When tweed goes wrong the livelihood of the people of the county is in danger. Here again is a position which requires the most delicate treatment. Here, again, the Scottish Office can assist. They know the conditions perfectly well and it is no use talking about industrialising the Highlands when everyone must agree that there is a stumbling block in the transport charges.

The remarks of the hon. Member for Rutherglen (Mr. Brooman-White) had a certain amount of logic in them when he spoke of the small unit. For instance, Stornoway has a high incidence of unemployment, perhaps the worst in Britain. It had a patron in the late Lord Leverhulme, who attempted from the standpoint of a millionaire to try to solve the problem in a large way. It should be remembered that in the First World War we drew from those islands 6,600 men to our naval forces but in the Second World War we could only get 3,300.

Any attempt to solve the Highlands problem without a nationalised transport system is flinging good money after bad. We should copy the Commonwealth countries. In South Africa, when it is not possible because of a dry season to feed the sheep on the lower parts of the Karroo, they are put into the trains free and taken up to grass which is growing in the higher regions. We must have more initiative in regard to earning our bread and butter. I am appealing to the Minister of Labour not to be afraid to cast his eyes across the Border, because Scotland can yet play her part in regard to our national economy.

8.20 p.m.

Lord Malcolm Douglas-Hamilton (Inverness)

I want to make only one comment on the speech of the hon. Member for Midlothian and Peebles (Mr. Pryde). He said that any attempt to solve the Highland problem without a nationalised transport system was doomed to failure. I would not follow him on that point, but I would say that any transport system which we have in the Highlands must be efficient and cheap if we are to reach a satisfactory solution of our problems. The hon. Member for Midlothian and Peebles believes that nationalisation will do it, while I do not, but I am sure we all agree that the transport system must be both efficient and cheap.

My right hon. Friend the President of the Board Trade posed a question in his speech, and asked hon. Members on both sides of the Committee to give him their views about it. It was whether the policy which the last two Governments have been following in regard to the Distribution of Industry Act was right or not. My right hon. Friend put the matter very clearly, and he asked whether we were doing our best in our present policy to bring industry into places where there are spots of unemployment; whether we should bring employment to those places or whether the Government should assist in industrial growth in the most promising locations. That brings me to the problem with which I wish to deal, because my right hon. Friend also mentioned the question of bringing industry to the Highlands, and these two things are very much linked together.

I do not think there is any dispute about the intentions of the Act. It was meant to provide for the development of certain areas by the introduction of premises in order to secure a proper distribution of industry, and the only point on which there might be dispute concerns the way in which the Act has been administered. What has this Act done for the Highlands? As my hon. Friend the Member for Caithness and Sutherland (Sir D. Robertson) said, precious little. Yet the Board of Trade and the Treasury have immense powers. We are faced with what is called the Highland problem—the problem of bringing industry to a very great area in Britain.

I do not think that anybody would dispute the desirability of spreading industry more generally throughout the country, or the desirability of inducing industry to go North. After all, the Highland area is the only place in Britain today where we have got the necessary space, but we have also got highly intelligent labour, hydro-electric power being developed, and—a consideration which should not be far from our thoughts—certain strategic advantages in that the hills and glens of the Highlands are very difficult for air attack. What we need most of all is not so much small pilot schemes, but the provision of basic services, the tackling of the essential transport problem, with the provision of better roads and cheaper freight rates.

There are three factors which are militating against any development in the Highlands. The first is high freight costs; the second is the fear of a labour shortage by the industrialists; and the third is the credit shortage at the present time. On the question of freight charges, I want to say that the Government must face this problem if we are to have development in the North, and especially where it is desirable, but the Government must realise that they will have to bear much of the cost of any Northern development for several years to come. If necessary, the Government must subsidise transport charges in Scotland to a greater degree than they do at present, because their present efforts are not curing the de-population problem.

With regard to the fear of labour shortage, the Minister touched on the case of a firm which wanted 200 employees and could not get them. I wonder if that firm was one which I know, which wanted to go to Fort William and asked if they could have 200 women. They were told by the Ministry of Labour that they were not available. Yet, there are 10,000 people who live in that area. I never heard such nonsense, but that firm went elsewhere. The policy of the Government is to try to give industry to places where there already is population, and they are not working on the line of developing likely localities, although they have in mind the development of Peterhead.

If, however, we establish an industry and build houses for the workers in the North, it will not only help the Glasgow employment situation but will assist the Glasgow housing situation as well. There are a great number of Highlanders in Glasgow who would be glad of the opportunity of working in the Highlands, and there is this further consideration. If we look at the employment exchange figures of unemployment in the Highlands, we find that there is practically none at Fort William. Of course there is not, because there is only one large employer in the district, and if a man loses his job he does not go to the local employment exchange but goes to Glasgow, and so the Glasgow figures rise. That is the way we ought to look at it, and we ought to realise that we can help the whole country by assisting likely places to develop.

We have large deposits of dolomite in the Highlands. We could also make cement there, but there is not one single cement factory in Scotland. One firm is doing processing, in the Lowlands, but no one is doing the whole job. Then there are great opportunities for industries for satellite factories in the Highlands, but the Government must do more to overcome the problem of the basic services which are now lacking, especially in regard to transport and freight charges for transport. For instance, we have a small concern in Inverness which makes the fastest welding machine in the world, but they have to pay a zoning charge of £2 and increased freight charges on the products they send from Inverness to whatever port from which they are shipped.

It would be in the greatest interests of this country if we had a real plan for development in the North of Britain. There is no reason why the South-East of Britain should have such a large population while so little is done at the same time in the North-West, and I submit that one large centre in the neighbourhood of Inverness, comprising 250,000 people, with factories of various kinds and all the wealth which they could provide, should be the end to which we should look forward in due course.

There are good natural harbours in the North-West of Scotland, some 200 miles nearer New York than Southampton, and we should make much greater use of them. It would be entirely to the advantage of Britain if we had more than one centre to which the great trans-Atlantic liners sailed. I look forward to the time when trans-Atlantic liners will arrive in the North of Scotland as they are beginning to arrive in the Clyde. We know there are difficulties, but there is no harm in thinking ahead. I submit that the Government have to do very much more than they have done in the past if they want to see industry brought to the North of this country.

8.30 p.m.

Mrs. E. M. Braddock (Liverpool, Exchange)

The President of the Board of Trade asked for suggestions on this subject. I have listened to practically the whole of the debate, and all sorts of suggestions have been made to him, but I am sure that the suggestion which I shall make will not be accepted in any circumstances, although I believe it to be one which would have the most effect. It is that his Government should get out of office as quickly as possible in order that the policy of the previous Government can be continued. I know that that would have the best effect on the country. Indeed, I do not intend to make any suggestions to him about how the present situation could be altered, because I know that Government policy is making it impossible for any alteration to be made.

It is quite obvious that the situation is determined by the Government's financial policy. The Government decided that there would be fewer imports, so that obviously there are fewer exports and, in consequence, fewer transport men are needed, fewer dockers are needed and fewer seamen are needed. The Government's financial policy is entirely responsible for the difficulties of the Development Areas.

Merseyside and Liverpool have the greatest task of all. Our unemployment problem, stretching right back to 1919, has been one of the utmost difficulty. At that time, one in seven of the working population of Liverpool was out of work, and that figure continued for a very long time. When the Labour Government took control in 1945 and began to work the Distribution of Industry Act, we knew that it would take a long time to deal with the problem of Liverpool. The application of the Act which gave permission for the establishment of Development Areas brought a steady improvement, although the political section responsible for the administration of Liverpool vigorously opposed any suggestion that Merseyside should become a Development Area. Later in the life of the Labour Government, however, Merseyside became a Development Area.

Liverpool has had all the advantages of legislation from every point of view. The local authority took Parliamentary powers to itself in 1936 and was enabled to develop industrial areas, to lease land to manufacturers and industrialists, to loan them money and to see that factories were placed at their disposal. Later, the Development Area was scheduled and, as a result, in 1951, as part of a very gradual process and as a result of decent, sensible, sound administration and a decent monetary policy, we had reduced unemployment in Liverpool and the Merseyside to a figure lower than that attained in the history of any other Government.

I can assure the Parliamentary Secretary to the Board of Trade and the Parliamentary Secretary to the Ministry of Labour that the people of Liverpool have very great respect for the type of legislation which the Labour Government were putting into operation. They had hopes of security. They were assured that the difficulties which, under other Governments, had seemed to be insurmountable, were at last being dealt with swiftly, and many of them made arrangements to improve their housing accommodation. They had lived in very bad housing conditions, for some of the housing conditions of Liverpool are amongst the most shocking in the country. As a result of the legislation being operated by the Labour Government, people were given the chance of permanent employment, and were able to obtain new houses when their names were reached on the housing list.

One of the biggest tragedies of my "surgery "every Sunday morning is when working-class women come to me with tears in their eyes to tell me that they have been living in desperately bad circumstances for a long time, that they have been offered new housing accommodation but that they cannot afford to accept it. They tell me, "My husband has not the security of a job and I cannot afford to pay the rent charged for the new house. I have been waiting a long time for accommodation, but I have still to remain in the bad housing circumstances I have been in so long."

That is very bad indeed, but it is part of a decided policy of the Tory Party. It is due to the fact that the Tory Party are concerned mostly with how much profit can be made out of an industry before they decide whether it is possible to bring it into operation. Our point of view was different. We decided what sort of things required to be manufactured. It was not a slap-happy sort of arrangement whereby people manufacturing things out of which they could make the most profit were allowed to go on making those things irrespective of the demands of the export trade or the home trade.

I quite agree that there is point in what the Colonial Secretary said yesterday or the day before—that economic planning is a "big bit of boloney ": that we cannot have economic planning and freedom. Of course we cannot. We cannot have freedom for industrialists to exploit industry from a profit point of view and at the same time have State economic planning. We have to decide which we want, and I know that the industrial workers of this country in the main desire the effect of decent, sound State economic planning rather than the slap-happy methods of huge profits that were adopted and are again being adopted by the Tory Party. It is a question of deciding what we want.

My hon. Friend the Member for Midlothian and Peebles (Mr. Pryde) said this had been a good debate. I think it has been a rotten one.

Mr. Raymond Gower (Barry)

In the midst of these remarks, would the hon. Lady agree in any degree at all that at the time when this Government took office there were some financial difficulties on the national front, and second, would she agree in some degree that international competition has been aggravated in the last year or so?

Mrs. Braddock

I thank the hon. Gentleman for that interjection, because it gives me an opportunity of saying something which, perhaps, I would not have said otherwise. Of course there were financial difficulties, but there had been two occasions before when there were financial difficulties, which were overcome not by decreasing the number of people working in the country but by increasing productivity and increasing the numbers working. The Tory Party have talked a lot about the mess that the Labour Government left the country in. Believe me, the people in Lancashire want to get back to that mess, because it meant complete employment.

Mr. Gower

rose

Mrs. Braddock

I am not giving way again. If it is a question of living in a mess, with decent security and full employment, I know that the people I represent would sooner live in that mess than in the poverty and misery and unemployment that are forced upon them by the activities and the financial policy of the present Government.

Let us look at the situation. The President of the Board of Trade said that we could get out of this difficulty with the will to work long and hard. Who is to work long and hard? And how in the name of goodness can people work long and hard if they find they are thrown out of work and are on the labour exchange? The will to work long and hard? The working people of this country have done nothing else all their lives but work long and hard. I want some of the people who have never done a hand's stroke of work in this country, and have lived decently and well on the exploitation of those who were willing to work hard and long, to do a bit instead of talking so much. When we get to that situation we may perhaps talk of the rest of the population working long and working well.

The unemployment figures in Liverpool are growing every week. Let us look at the situation at the docks, because, peculiarly enough, the figures of those men unemployed on the docks, or not employed from day to day under the scheme, do not appear in the records of the Ministry of Labour. When there are difficulties in an area the figures given for the area are never added to the total number of unemployed. Let us see what the position is at the moment, not on Merseyside but in Liverpool.

On 31st January, 3,431 dockers were stated to be surplus to the needs of the docks. In January, 1951, there were only 160 surplus. That is very peculiar. I do not see how the Tory Party can explain why, immediately they get the reins in their hands, all these figures increase. They say it is never their responsibility but always the responsibility of someone else, but that sort of thing has always happened, mostly in industrial areas, at any time in our history when either a Tory or a National Government have had control of our administration and legislation. In Liverpool the number of unemployed is increasing week after week. In Liverpool alone there are well over 20,000, and in the Development Area of Merseyside there are just on 32,000, whereas in October, 1951, at the time of the Labour Government, there were fewer than 16,000 in the whole of the Merseyside area.

It is no use asking for suggestions to be made, because the Tory Party have no intention of taking any notice of suggestions. The suggestions that we make are our policy, and we cannot possibly ask them to accept our policy when it disagrees fundamentally with their policy and the way they want to see things done. It is no use shedding crocodile tears about the number of people who are becoming unemployed, because that is all part of the necessary formula for the maintenance of a capitalist system in this country.

The sooner the Tory Party realise that they will not be able to do to the present youth of our country what they did to our youth in 1918 and onwards, the sooner they get into their heads that either they must take some action about this growing unemployment problem in the Development Areas and in other parts of the country or else our youth will get rid of them as quickly as they can so that they may have the chance of some sort of decent existence and some chance of permanent security, the better.

The special powers which Liverpool has are being used. On top of that, the Development Area Council have been trying desperately to attract people to the Development Area. I interjected in the speech of the President of the Board of Trade to ask how many requests there had been for factories or to investigate the opportunity of putting up factories in the Merseyside area. In November of last year there was not one; no possibility of dealing with the increased unemployment problem of the Merseyside area. Nobody is asking to look at sites, and nobody is asking about the possibility of putting up a new factory. Why? Because of the financial difficulties the Government have put in the way of manufacturers extending their premises or opening new factories and new businesses.

This has been a friendly sort of debate, with everybody patting everybody else on the back and saying what an excellent sort of fellow the President of the Board of Trade is. I do not dispute that. What I do say is that it is useless for us to make suggestions or to talk about the Development Areas and what can be done in them while the present Government, with their present financial policy, have control of our financial position.

If when my right hon. Friend winds up this debate he puts the point of view of our workers and what they are thinking, he will echo what I am saying. He may make suggestions about what might be done to save the Tory Party from committing political suicide—although I hope he does not, because I should like to see them commit political suicide. He may make suggestions about it. The suggestions he may make will no doubt be very useful ones, but I believe that they will fall on deaf ears and on very barren ground because I believe that the Tory Party have not yet learned the lesson that the administration and legislation which they could use in the years before the war and between the wars is not the sort of legislation that most of the people in the Development Areas, or in those parts of the country where unemployment is growing very desperately, are likely to believe will give a decent policy.

The whole situation in the Development Areas and Merseyside is this: Every section of industry, the local authority, the Industrial Council, the Advisory Committee and the Development Council itself have been pressing upon the Board of Trade the drastic results of their financial policy. This pressure is not coming only from the Labour members of the council and the Labour members of the committee; it is coming from the local authority and from every branch of industry in the area.

The Parliamentary Secretary knows that not long ago I led a deputation to him on this matter. He knew absolutely nothing about the position, and nor did his officers. They could not give us the information we wanted. I had to tell him what was the situation. It was deplorable to discover that his hands were tied completely, and he could not make any suggestion about what might be done to ease the situation, because he had had his instructions from his party chiefs and from the Treasury that there was to be no additional finance allowed to the Development Areas where unemployment is growing. So as far as I am concerned, it is no use making a suggestion, except the one that the sooner the Government get out of the way and give us an opportunity of building things up properly, the more the people of this country will be satisfied.

8.47 p.m.

Mr. Kenneth Thompson (Liverpool, Walton)

I am pleased to have the opportunity of speaking after the hon. Lady the Member for Liverpool, Exchange (Mrs. Braddock) and of righting some of the false impressions she may have conveyed to the Committee. May I say that my party both in the House and in the country has pledged itself in so many words and in the spirit of its doctrine to avoid a recurrence of unemployment so far as it lies within its power to do so. We stand in that respect not only pari passu with the party opposite but, I am sure, as the whole community of this country stands, resolved not to see the kind of conditions return to which the hon. Member for Durham, North-West (Mr. Murray) referred.

The tenor of the hon. Lady's remarks was to blackguard my party not with an imputation of what we had done or about what was to happen but with the imputation that we were deliberately designing our policy to create unemployment. [HON. MEMBERS; "Of course you are."] There could not be a worse type of accusation to make of a public policy or one more inaccurate, as the hon. Lady herself knows.

Let me remind her that the party which is in control of our affairs in this country is the same party as is in control of the city on whose behalf she assumed to be speaking. [HON. MEMBERS: "That is why we are in such a mess."] In 1936, that city took powers to itself which are roughly equal to the powers which the Government of the day took in the Development Area. The Tory Liverpool City Council took powers to attract a diversification of industry to the city in order to provide alternative employment in an area which greatly needed it. That was no wicked capitalist attempt to keep out of employment those who needed work or to see that the great millstone of unemployment remained about the neck of one man or woman one day longer than necessary.

The party at present governing the country is motivated by the same spirit as that Tory council, and my hon. Friends and I completely, absolutely and in every degree share with the Tory Liverpool Council their abhorrence of the burden placed upon a man when he is unable to provide for the well-being of his family by his own efforts and ingenuity. We recognise that no human dignity compares with that where a man can provide for the necessities and well-being of his own family. I hope that disposes of the unjust and unworthy imputations of the hon. Lady.

All of us are concerned at any tendency for the unemployment figures to increase, but let us remember that the Conservative Party came into power at the time the Labour Party ran away from the consequences of its own policy. Fifteen months ago it became clear that the balloon of artificial prosperity and full employment which the Labour Party had built up was on the point of bursting. By a vigorous and far-sighted policy, the Conservative Government have prevented the worst happening. During the months which have ensued we have endeavoured to maintain the best possible conditions for all our people.

I wish to say to my hon. Friend who will reply—I know he is as concerned about all aspects of this as any one of us is—that there are many other things a Government can do besides declaring an area a Development Area. There have been instances of factories attracted to the Merseyside Development Area, either before or after its declaration as a Development Area, which are now able, for reasons of international trading difficulties, to employ fewer than the maximum number they are capable of employing. I should like my right hon. and hon. Friends to direct their attention to some of the fringe problems by providing work by way of defence orders, and so on, for factories in the Development Areas. There are many other aspects of the matter to which I should like to direct the attention of the Committee, but my time is limited.

In a Development Area such as Merseyside, many factories are capable of providing further employment and so reducing the numbers remaining unemployed provided that we can gain places in markets overseas. I have previously mentioned our trade with Brazil; I believe we have not been as vigorous as we should have been in settling the problem, which has now gone on for a long time. There must be other instances. We could well do with more merchant adventurers among our industrialists. I want to see more of the spirit of merchant adventuring in my right hon. and hon. Friends at the Board of Trade, and I very much hope that later in the debate we shall be told that these problems are being tackled in that spirit.

The Chairman

Mr. Ness Edwards.

Mr. M. MacMillan

I wonder if my right hon. Friend the Member for Caerphilly (Mr. Ness Edwards) would excuse me for one moment, because I want to ask him if he will be good enough to put to the Minister some questions concerning the Scottish position. No Member on this side of the Committee from the Scottish development or other areas has been called in this debate, while three Tories have been given the opportunity of putting their point of view. If my right hon. Friend will now make our representations and put the questions to the Minister, it will enable the Minister to reply to the representations we would have made had we had the opportunity.

The Chairman

I think that remark was meant to be offensive. It was rather personal and I resent it. I do my best to call Members representing all parties and the hon. Member for the Western Isles (Mr. M. MacMillan) had no business to make a remark like that. Mr. Ness Edwards.

Mr. MacMillan

On a point of order.

The Chairman

No point of order arises. I have said what I have to say.

Mr. MacMillan

I do not know whether it is in order—[Horn. MEMBERS: "Nol—to refer to a private conversation with the Chair. You told us that three Scottish Tories were a fair proportion to one Scottish Socialist.

The Chairman

What was said to me was most offensive, and I have said all that I have to say about it. I do my best, and I will not stand remarks like those made by the hon. Member.

8.57 p.m.

Mr. Ness Edwards (Caerphilly)

I am sorry about this misunderstanding which has developed, but let us get back to the debate. The speeches of my hon. Friend the Member for Liverpool, Exchange (Mrs. Braddock) and that of the hon. Member for Walton (Mr. K. Thompson) raised the temperature a bit, and if I am to take sides, my hon. Friend need not worry. I shall be on the right side, and I think that when I have finished she will find that she and I will not be too far apart.

This debate was staged for the purpose of discovering the Government's mind in this matter, and I am sorry to say that we have not discovered it. We have discovered certain differences among hon. Members on the other side of the Committee, and we have had a Ministerial declaration here tonight completely at variance with a Ministerial declaration made outside some days ago. I shall try to develop that point in the course of what I have to say.

First, I am sure we are all pleased at having seen the President of the Board of Trade making his first speech today since his illness. We hope he will soon be restored to full health and to that oratorical vigour for which he has been known for many years in the House. Secondly, I should like to refer to the very excellent maiden speech of my hon. Friend the Member for Farnworth (Mr. Thornton), who succeeds a late colleague of ours who was deep in the affections of every one of us, the late George Tomlinson. My hon. Friend made an excellent speech, and I am sure we shall welcome his contributions in the future.

My right hon. Friend the Member for Blyth (Mr. Robens) opened the debate in a very unimpassioned way. He surveyed the whole field and, I thought, he deployed the general position to the attention of the Committee. He indicated the apprehension that was being felt in many parts of the country, and the debate has shown that the apprehensions are not limited to one side of the Committee but are widespread. People are wondering what is going to happen. What he did say was not said in any state of panic, but it is a fact that throughout the country in responsible circles the position is regarded with very great seriousness.

I closely followed the speech of the President of the Board of Trade, and I came to the conclusion that, when looking at the number of briefs which he has in his office, he must have taken one that related to 1950 instead of to conditions under the present Government. His speech was identical in sentiment with the speeches which were made when we were on the Government side of the House, and identical in sentiment with the original White Paper presented to the House by my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) when he was President of the Board of Trade in the Coalition Government.

I was pleased to hear the right hon. Gentleman say that, as a matter of principle, we were all agreed upon the purposes of the Distribution of Industry Act. That was a very excellent declaration and showed far greater statesmanship than the "boloney" speech made by the Secretary of State for the Colonies outside the House the other day. Here was a Minister approaching his problems with a sense of responsibility and trying to bring his mind to them. All that the Colonial Secretary did was to bring his prejudices to bear on the problem. The President of the Board of Trade is maintaining the reputation which he established in his very early days here before the old House of Commons was burned down, when he was one of the young Tories and achieved great admiration on all sides.

We have had the usual statistics, declarations about identity of policies, and assurances that there has been no change in policy and that the old policy of taking the work to the people instead of driving, the people to the work was still the policy of Her Majesty's Government. I agree as to the limitations of that policy, because we were faced with exactly the same limitations when I was Parliamentary Secretary to the Ministry of Labour and used to preside over the Distribution of Industry Committee. We found ourselves up against exactly the same limitations as those to which the Minister referred, and so we make no great criticism.

He seems to have left out from his speech anything about the usefulness of the Act. Doubts were expressed by other hon. Members on that side of the Committee. I must therefore make it clear that the Distribution of Industry Act, 1945, saved South Wales—[An HON. MEMBER; "And the North-East "] —and other Development Areas of this country. Action taken under that Act will be a permanent monument to my right hon. Friend the Member for Bishop Auckland, who was more responsible for it than any other statesman in the last 20 years. We all recognise the good will that has been created, and I was glad to hear the right hon. Gentleman's agreement with that.

He declared that the policy had not been changed, but he posed three questions. First, he asked whether or not the time had come to change policy. So long as unemployment in the Development Areas is higher than the average of unemployment in the country, the time has not come to change policy because our job has not been done or our work completed. Until we have reduced unemployment in the Development Areas to the national average, there should be no tinkering and tampering with this very important issue. That is my conclusion, and I think I carry my hon. and right hon. Friends with me on that point.

The next point in the Minister's speech was when he said that for the 12 months ended 31st December, 1952, 6,000 new factories had been licensed. Surely that was not the position?

Mr. P. Thorneycroft

Up to the end of 1952, during the whole post-war period, 6,000 have been built.

Mr. Ness Edwards

I am much obliged to the right hon. Gentleman. What is the number built in the non-Development Areas compared with the number in Development Areas since the right hon. Gentleman took office? I am speaking from memory, but in the period 1947–48 I think that 50 per cent. of the new factories were licensed to be built in the Development Areas and 50 per cent. outside them. The figures may have varied 2 or 3 per cent. I want to know whether there has been a substantial change in the location of industry practice by the Location of Industry Committee. Have the proportions changed? That is what we did not get, and until we get that information I am afraid we must be suspicious as to whether or not there has been a change in policy.

The next point which was repeated a number of times in the admirable survey of the right hon. Gentleman was that there had been no change of policy. I am afraid the right hon. Gentleman is wrong. There has been a change in policy. Is it the case that the President of the Board of Trade does not know what the Treasury is saying? Is it the case that the President of the Board of Trade does not know what the Minister of Housing and Local Government is saying? I admit that he has been absent from his office and I am prepared to make all sorts of concessions, but here is an important question and I want to draw his attention to what has been happening.

The position in the Development Areas is that the industrial needs have been largely attended to, though there are spots here and there in most of the Development Areas where the supply of jobs exceeds the supply of people. It is equally true that there are other parts of the Development Areas where the supply of jobs falls far below the availability of labour. Taking the country as a whole, however, we have certainly beaten the main problem of supplying new jobs. That has been absorbing the time of Government, of estates management committees of local authorities ever since the end of the war.

What is happening is that having largely put the industrial side right, we now start upon putting the amenity side right by building houses, making roads, supplying water, providing for drainage. All those amenity schemes are now going forward and Section 3 of the Distribution of Industry Act now becomes of great importance. At one time it had not the significance that it has now. Our job in the Development Areas is only half done, and unless we build up the amenity side we are cutting the throat of our own policy.

It is no use putting the factories there unless the public amenities are attended to. Key men will not go and live in some of our villages in the condition in which some of those villages are today. How many hon. Gentlemen have had the experience of meeting industrialists in the valleys in the Development Areas? They send a bunch of key men down to look at the areas and they say, "We are not staying here." So they cannot bring the jobs to that area. We must put that right if we are to attract key men from other areas into the Development Areas.

That is one reason. Of course there is the overwhelming reason that people living in the Development Areas are entitled to as much humanity in their surroundings as those living outside the development areas. We have lived among the dust, the slush and the muck heaps long enough, and it is time that it was put right. The right hon. Gentleman knows all about Section 3 of the Act. On 27th June there was issued Circular 54/52, to which reference has been made. It was astonishing that nothing was mentioned about it by anyone here until November. Here was a circular relating to Government policy, issued behind the back of Parliament, and none of us knew anything about it.

The President of the Board of Trade made an announcement about scheduling that part of Lancashire which is the subject of tonight's Order, and he did not know a thing about it. When I asked him whether he knew that Section 3 had been suspended, he did not know. It is astonishing that behind the back of Parliament this important change of policy depriving local authorities of millions of pounds, should be indulged in just prior to the Recess.

On the face of it, the circular is very innocuous. It makes a reference to the Chancellor's speech, and it says this: We need a sustained effort to put economy first: an effort which my colleagues have agreed to make and in which I ask all local authorities and other public bodies to share to the full I cannot stress sufficiently the importance of economy in the sphere of local government as well as national government. That is the only declaration of policy in relation to this problem ever to be made in the House, and it was made in the Budget speech. I am sure that not one hon. or right hon. Member suspected that what the Chancellor of the Exchequer was doing under that paragraph was to cut the throat of the Distribution of Industry Act.

One has to turn to the appendix to the circular to discover that in paragraph 6 it says: Distribution of Industry Act, 1945. It has been decided that grants under Section 3 of this Act for water supply and sewerage shall not be made in future, except in the cases where the authorities have entered into contracts or commitments on the strength of undertakings by the Ministry that grants would be paid in respect of approved expenditure. Where there has been a provisional undertaking to pay a grant, but there is no contract or commitment to expenditure, the undertaking will lapse. Did the right hon. Gentleman know about this? This is a change of policy, a suspension of one of the most important provisions of this Act of Parliament. Despite that, the right hon. Gentleman said today that there has been no change of policy and that the Government were continuing to make grants.

Mr. Chetwynd

By a Minister not responsible.

Mr. Ness Edwards

It does not affect the right hon. Gentleman's Department, but it does affect the Minister of Housing and Local Government.

I am sure the right hon. Gentleman will now agree that there has been a change in policy and that there is not now an identity of activities between his Department and the activities of my right hon. Friend the Member for Bishop Auckland when he held that office. It is this change in policy which is having such a serious effect upon the Development Areas.

Let me go one step further. The man who should be in the dock is not the right hon. Gentleman but the Chancellor of the Exchequer. Where I blame the right hon. Gentleman is that he has not only misled himself about this—I am not questioning his bona fides—but he has misled the House. I hope that the Parliamentary Secretary will have an adequate answer to this charge.

Mr. Watkinson

He will.

Mr. Ness Edwards

In that case I had better anticipate him a little, I had better deal with what the Minister of Housing and Local Government had to say. I hope the policy has not changed again since 18th February, because I now propose to quote the letter from the Minister of Housing and Local Government. This is what he says: In my letter of 9th December I promised to look again at the water and sewerage schemes in South Wales and see how far I could ease the effects of the decision that grants under the Distribution of Industry Act must be discontinued. I am afraid that for the reasons explained in my letter, I cannot vary the decision as far as new works are concerned.

Mr. Manuel

How can he get round that?

Mr. Ness Edwards

It is up to the Minister who is to reply to prove that what the Minister of Housing and Local Government said is all "boloney." If he does prove it, it only shows the incompetence of the Government.

I will carry the matter a step further to show the effect on local authorities. A series of Questions to the Minister of Housing and Local Government shows that in the North-East Development Area 11 schemes, costing £7 million, have been refused between June and October. Previously they would have been eligible for 85 per cent. grants, but on the North-East Coast alone from the end of June to the end of October schemes costing £7 million failed to rank for grants under this Section of the Act.

In the same period, 12 schemes which would have ranked for grant in Scotland have been rejected costing nearly £2 million. In South Wales the situation is most serious. There 29 schemes costing £2,500,000 in four months which were entitled to grants and have been approved for grant by the Welsh Board of Health and encouraged to proceed, have been turned down by the Treasury. Is not that a change of policy? They were approved by the Ministry of Housing and Local Government and it was said that they would rank for grant, but the Treasury says, "No." So the "long hand" of the Minister of Housing and Local Government does not know what the "short hand" of the Chancellor of the Exchequer is doing.

This is really a terrible business—51 schemes providing water and sewerage in the Development Areas and costing more than £12 million in four months have now been excluded. Will the hon. Gentleman be able to tell us something about it? How many schemes have been refused up to date? If they rejected £12 million in four months, as further months have elapsed since then, what is the size of it now? If the President of the Board of Trade disputes that, he might look at the answers supplied by the Minister of Housing and Local Government giving the precise figures which make up the total. He will find them in HANSARD, and I am sure that his staff will be able to dig them out for him.

The Rhymney Valley Water Board has been mentioned. They proceeded with a comprehensive water scheme as a consequence of an investigation by the Welsh Board of Health made for the head office of that Ministry. They have been paid grant up to a certain point. The National Coal Board wished to start three housing schemes. There were to be two new pithead baths and one electricity generating station, plus the active housing policy of the local authority. The Welsh Board of Health approved the scheme, which amounted to £328,000, and said that it would rank for grant. They said that the pipes for the scheme could be ordered and they gave a certificate to enable the authority to get the pipes from steel control. But when the authority applied for the grant, they were told they could not have it.

If they cannot have that grant, and although they modify their scheme, the rates will be raised by 2s. in the £. That is an extremely serious matter. This is a mining area, a Development Area. The Minister of Housing and Local Government have said they can have the houses. but the Treasury say they cannot have the water and the drainage. The same thing applies to the pithead baths and to the new industrial development. It will mean that the rates in the Rhymney urban district will go up from 30s. to 32s. in the £. What a condition of things in which to attract new industries. In the Caerphilly urban district the rates will go up from 26s. to 28s. in the £. These authorities have a statutory obligation to supply water for a rate that they will not be able to collect. That is the situation, and I hope that the Parliamentary Secretary will be able to tell us something about it.

My hon. Friends have quoted other cases with which I will not deal, but I put these questions to the Parliamentary Secretary. What projects have been authorised under the Act since June, 1952? What advance factories have been authorised since that date? What factories have been authorised and built at Government expense since 1952? Has there, in fact, been a change of policy in that respect? I hope we shall obtain answers.

I come now to the wider question of the employment policy generally. I do not know what has happened to the Ministry of Labour. It used to be one of the most important Ministries in the Government. The voice of the Ministry was heard in the House in all major debates. It made declarations of policy regarding the deployment of labour. I am not saying this in derogation of the Minister, who is probably one of the most courteous Ministers of Labour we have ever had. But I must say that his Ministry does not seem to loom large in the affairs of the Government in these days. It used to decide the location of industry, and that is why I hope the Parliamentary Secretary will be able to tell us whether there has been any change in the location policy. I was astonished to find that so many new factories had been built outside the Development Areas while there was still much unemployment within them.

I go one step further. What do the Ministry propose to do about this falling tempo of production? It looks as if a malaise is coming over the productive forces of this country. Everywhere one looks there is a manifestation—I put it no higher than that—of all the signs of unemployment. What do the Ministry say about the position? What about the tremendous change in connection with tinplate at Llanelly. We all welcome the good news from Margam. There are also Cardiff and Barry and the docks there. They are very much in the doldrums, but we see the Government doing nothing and saying nothing about them.

There is hardly a dock in the country where the fear of unemployment is not growing and where the burden of the dock labour scheme is not extremely heavy. We have not been told about that. My hon. Friend the Member for the Liverpool Exchange referred to the extremely difficult position around Merseyside. I know that it is an old problem. Have not the Ministry anything new to bring to it; or are they going to let it fester and get worse?

There is also the position in the Midlands and the apprehensions in the engineering industry. We have not heard a very optimistic story from the textile industry either. We have had all sorts of apprehensions expressed by Scottish Members. We must not forget that we still have the Development Area problem with an average unemployment higher than the unemployment in the rest of the country. Perhaps the Minister of Labour has no plans. He may believe, though I rather doubt it, in the "boloney attitude of the Secretary of State for the Colonies. I should be sorry to see the Ministry get into the state where they do not attempt to project plans for the purpose of dealing with problems as they arise.

The Minister of Labour has pleaded for industrial peace and co-operation, and his Government are devaluing the wages of the men employed in the industry, cutting subsidies and sending up the prices of food. The President of the Board of Trade said that we must get prices and costs down. I suppose that he would say that one way of doing that is to take subsidies off food. The Minister of Fuel and Power wants more coal and more miners. The Minister of Housing and Local Government tells the local authorities to build the houses, and the Treasury say that they will not give the grants to provide the amenities that make the houses effective.

The future of this country is at stake. What I am trying to say is above party. The pattern of industry and of production is being changed by external events. No matter what Government we have they will have a tough task to get the country back on to its feet. I do not know how many hon. and right hon. Gentlemen saw the series of articles in the "Sunday Observer" under the heading, "Re-thinking our Future." I should like to see much more of that re-thinking of our future. I see no sign in anything the present Government are doing which gives the idea that they are coming to grips with this problem.

They are abandoning all controls, abandoning all attempts to guide and steer the economy. Credit is being made more difficult. People are going into the wrong industries and producing the wrong things. We are trying to find markets for goods which people do not want. The deployment of the manpower of the nation seems to be completely out of joint. No attempt is being made to deal with the problem.

We ought to have some constructive plan, some general idea where we want to go, what ought to be the size of our industries, and we ought to have the courage to say what ought to be the size of the textile industry, the mining industry or the agricultural industry. These are the things we ought to be talking about, and it is the Minister of Labour who ought to be taking the lead in this matter, because he believes, as the rest of us believe, that full employment is the only basis on which this country can recover.

9.30 p.m.

The Parliamentary Secretary to the Ministry of Labour (Mr. Harold Watkinson)

I think the Committee can take credit, on the whole, perhaps with one exception, for an objective and expert contribution to a very complex and difficult subject, and, of course, a very wide one when we are dealing with the distribution of industry linked with full employment. I think that the right hon. Gentleman the Member for Caerphilly (Mr. Ness Edwards) rather wanted the debate kept entirely on the distribution of industry, but none the less the words "full employment" have been used fairly frequently, and I therefore take it that he will acquit me if I spend some time on the question of full employment.

First, let me deal with particular issues concerning the towns included in the new Development Areas. As my right hon. Friend explained, he has made the most careful examination of the situation in Lancashire, and he has chosen the area which in his view is the area most in need of Government assistance. As I was myself in Nelson, Colne, Padiham, and that area during the depth of the slump, I can appreciate from my own personal experience how difficult it was to make that decision.

We have to draw a line somewhere, but in his examination my right hon. Friend had careful regard to the White Paper on the Distribution of Industry and to the long-term prospects of the area. I see the difficulties of places like Darwen and Blackburn, but I can also see those of Nelson and Padiham. This is a most difficult decision to take, and I think the Committee will agree that, wherever we drew the line, somebody would be dissatisfied.

There is a special point raised by my right hon. Friend the Member for Blackburn, West (Mr. Assheton), who quoted an instance of a firm which was attracted away from Blackburn into the new Development Area by promises of more access to Government contracts. I should like to ask my right hon. Friend whether he will be kind enough to send details of that particular instance to the President, who I know will look at it and give him a considered answer on it.

I think it is right that I should say that at this time, and also answer the point made by my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke) and other hon. Members. It is certainly not the intention, in producing a new Development Area, that it should be a magnet to draw away all enterprises from surrounding areas. I wish to make that quite plain, for the whole thing would be rendered nonsense in that case, and we should only be transferring unemployment from one area to another. There is no intention that this new area should be a magnet drawing the life-blood out of the surrounding areas, but, as to the particular case mentioned by my right hon. Friend, if he will be good enough to give particulars to the President, he would be very glad to look into it.

There is one other matter while I am dealing with these general issues. My right hon. Friend, in his opening speech, dealt with the question of towns not in a Development Area, and he instanced the case of Portsmouth as a town to which the Government were trying to give special help. That criterion might well apply to any town in this country, wherever it is situated, and I should like to make the point that it is not essential that it should be in a Development Area for the Government to bring special help where it is necessary in a particular area.

There was also the general argument whether we should follow the principles laid down in the present Act or try to spread the benefits wider and not keep within the strict limits of Development Area policy. My right hon. Friend has listened to that argument carefully, and it is not for me to try to sum up the different arguments which have been used, and very rightly, by hon. Members on both sides of the Committee. All I can say is that if hon. Members travel round the country, as we all do—and certainly I try to do so they must appreciate the great difficulty there is in making the right decision.

Shall we leave Buckie, in North-East Scotland, to die because we think it has no future, and so destroy all its social capital? Or shall we leave Padiham to die? After all, the lives of men and women, and very much social capital, are involved. Shall we plump, instead, for some Development Area which we think will grow? Or are we to try to keep the,old area alive and perhaps thereby prejudice the future of a new area? I do not know whether there is a complete answer. Perhaps the answer is the usual British compromise. My right hon. Friend has listened to the arguments and it is not for me to sum them up.

Many hon. Members have mentioned this "wicked" circular from the Ministry of Housing. I have it in front of me and I hope I can make it clear that there has been a misunderstanding about it and that what my right hon. Friend said in his opening speech is perfectly correct. In so doing perhaps I can answer not only the right hon. Member for Caerphilly but also the hon. Member for Stockton-on-Tees (Mr. Chetwynd) and the hon. Member for Bedwellty (Mr. Finch), who also raised points under Section 3 of the Act.

We have always maintained, as the circular says, that owing to the need for economy we have to restrict to a minimum any new grants under Section 3 of the 1945 Act for the improvement of the basic services, although schemes of quite exceptional industrial urgency can still be considered. Let me give an example of one scheme which has recently been approved—the Whitehaven scheme, about which the right hon. Gentleman knows. The Committee knows the great interest which he has taken in this matter, and I think he has performed a very useful service in raising it, but, to be fair, the Treasury have just approved a total grant of no less than £300,000 for a water supply project in the Development Area at Whitehaven. There have also been other relaxations in this restriction. I can tell the hon. Member for Stockton-on-Tees that his problem about the water supply in the Tees Valley is fully understood and that the question of a grant under Section 3 of the Act is at this moment under consideration by the Department concerned.

Mr. Chetwynd

It is taking too long.

Mr. Watkinson

That is a very proper argument, but I want to make it plain that it is under consideration and that there is no question that it has been rejected out of hand. The hon. Gentleman is quite right in making his own point about whether it has taken too long, but that is not a point for me in the general argument.

Turning next to the point about South Wales raised by the right hon. Member for Caerphilly, the largest amount of money has been spent there—and I am not taking credit for this to ourselves, because many of the schemes followed those ably started under his administration. Over £2,500,000 has been spent in South Wales, of which £2,200,000 has been for water and sewerage schemes. I think there is some confusion over the large amount which he mentioned. We are dealing with the amounts of grant, and the cost of the schemes is probably two, three or four times the amounts of grant.

Mr. Ness Edwards

I think the hon. Gentleman is wrong. The grant has been usually on an 85 per cent. basis. Will the hon. Gentleman kindly explain what this means: I am afraid that for the reasons explained in my letter I cannot vary the decisions so far as new works are concerned. I have, however, given special attention to those authorities who feel that they have incurred commitments on the strength of promises that grants would be forthcoming and I am pleased to be able to tell you that I can do something for them.

Mr. Watkinson

I thank the right hon. Gentleman for reading me the letter. I am not blaming him, but he did not give me any notice about this beforehand, nor have I had an opportunity of seeing the letter or understanding the context in which it was written. All I want to say is that what I have just said, and what my right hon. Friend has said, is the policy of the Government, and I hope that that disposes of the matter, and that I may be allowed now to get on with my other remarks. [Interruption.] I am very sorry, but I stand on what I have just said. I think I made it plain. What I have just said is the policy of the Government.

Mr. Ness Edwards

On a point of order. The hon. Gentleman is making a declaration of policy. We are entitled to know what that really means, and I am entitled to ask him whether new works are eligible for grant under Section 3 of the Act.

The Chairman

Is that a point of order?

Mr. Watkinson

If the right hon. Gentleman had informed me or my right hon. Friend beforehand that he was going to read that letter, we might have been able to answer his point, but I have made it quite plain what our policy is, and I propose now to pass on to answer some of the other hon. and right hon. Gentlemen who have spoken in the debate.

Let me start by making one thing quite plain; it is this: The Government accept as one of their primary aims and responsibilities the maintenance of a high and stable level of employment. Those words are not mine. They are those of the 1944 White Paper on Employment Policy, which was the creation of right hon. Gentlemen on both sides of the Committee. I want to start this part of my speech by saying that we intend to implement that White Paper to the full wherever those conditions are applicable to the situation today. I am quite sure that the maintenance of full employment is the honest and sincere desire of every Member of this Committee, as it is of every employer and trade union leader outside it. Perhaps, we may differ on how we approach this problem.

I listened with very great interest, as I know we all did, to the maiden speech of the hon. Member for Farnworth (Mr. Thornton) who, I thought, brought something quite new and refreshing to the problem in his speech. He brought an expert approach, and while we all of us regret the death of the right hon. Gentleman who was formerly the Member for Farnworth, whom the hon. Gentleman follows in this House, I think I may venture to say that he has a worthy successor, and one to whom we shall listen with great interest and close attention whenever he addresses us.

There are two methods of approach to employment policy. There is the human approach, remembering that this is a matter which affects human lives, and the political approach of the hon. Lady the Member for Liverpool, Exchange (Mrs. Braddock) in which unemployment figures are, I am afraid, bargaining counters, rather than human problems. We have talked a lot about statistics in this debate, but at the same time we have to remember that behind the statistics are human hopes and fears that, in my view and in the view of the Government, are far too important to be made a matter of party political strife. But I am glad to be able to go on to say that the Committee has taken the factual approach. That is the kind of approach that the Government want to make to this problem.

It is, in our view, a combined operation whose success depends on the willing teamwork of the nation as a whole. Perhaps, I may refer once more to the 1944 White Paper. I think that that is a very remarkable document, which is not quoted enough in the country or in our proceedings. This, I think, is the objective of the Government set out as plainly as anyone could set it forth: Employment cannot be created by Act at Parliament or by Government action alone. Government policy will be directed to bringing about conditions favourable to the maintenance of a high level of employment; and some legislation will be required to confer powers which are needed for that purpose. But the success of the policy outlined in this Paper will ultimately depend on the understanding and support of the community as a whole— and especially on the efforts of employers and workers in industry; for without a rising standard of industrial efficiency we cannot achieve a high level of employment combined with a rising standard of living. That is the objective of the Government, and in saying that it depends on other people's efforts besides our own we are not in any way trying to ride away from our responsibilities on some sort of easy phrase. The right hon. Gentleman the Member for Caerphilly accused us of not having any sort of plan for full employment. Let me deal with that, because we have a plan to maintain full employment, and it has four main objectives. The first objective is to get the facts right, and I want to deal with the point raised by the right hon. Member for Blyth (Mr. Robens) about the question of creating anxiety. None of us wants to create anxiety, because if we do we bring it into millions of homes. If I may say so, I thought he made a very fair and factual speech, and I am very glad that he has departed from his forecast of one million unemployed. I hope that we shall all remember our responsibilities in this, that if we go about the country spreading gloom and foreboding by talking of millions of unemployed, we are bringing the shadow of fear into the homes of millions of our own people, and we are doing no good to industrial efficiency or industrial teamwork.

Mr. Robens

I wish that kind of speech had been made between 1945 and 1951

Mr. Watkinson

Well, it is being made now anyway. Obviously we have passed out of the post-war phase of shortages and sellers' markets and are now having to consider a full employment policy in the light of severely competitive conditions. In those circumstances we must expect more rapid shifts and changes in the month-to-month employment and unemployment figures. We have already had an example of that sort of pattern in Lancashire. We have another now, although on a much smaller scale, in the motor car industry. I do not under-rate the seriousness of this problem. but no Government should allow themselves to be diverted from their long term objective planning by panic over every pool or pocket of transitional local unemployment. To get the thing right we must stick to the main plan.

Let us look at some facts on unemployment figures for a moment. I want to quote what I think is a most significant figure, namely, the number continuously unemployed; that is to say, the hard core of the problem. The number continuously registered as unemployed throughout the year remained a very small proportion of the whole. In 1952 it was only 31,000 throughout the year compared with 27,000 in 1951. That is very encouraging and shows that the real hard core of unemployed over the whole year is not rising to any serious extent.

Now let us look at those unemployed for more than eight weeks. In January 1950. the number was 43.5 per cent. of the total wholly unemployed; in January, 1951, it was 42.5 per cent., and in January, 1953, 43 per cent. so that the number of those unemployed for more than eight weeks is not altering in its proportion of the total figures. That is another important and encouraging sign.

All these figures must be looked at against the background of a working population of over 23 million. Another interesting figure, showing the good work done by our employment exchanges, is that nearly 3¼ million people were placed in the course of last year. Generally speaking, therefore, I think it is fair to say that, although there is cause for concern over every person unemployed, there certainly is no cause for panic in the figures at the moment.

The right hon. Gentleman mentioned Coventry. I know there were several hon. Members who wanted to speak, but who were not called, who would have spoken about Coventry, so may I briefly mention that. Although the figures are going up and the situation is worrying, in Birmingham the figure of unemployed is only 1.4 per cent. of those employed, and in Coventry only 1.1 per cent. That is half the national average. Again, on balance the figures do not show that there is any cause for panic in the problem.

It may be said that this is disguised by a great deal of short-term working. Let us have a look at those figures, when we shall find that in the week ended 24th May, 1952, 300,000 operatives lost five million hours. By the end of November last year, which is the last date for which we have detailed figures, these totals had been reduced to 100,000 operatives and only one and a quarter million hours. These figures were distorted by the textile recovery. We are very happy to see that as textiles recovered they have improved, but it is equally important to note that with textiles excluded short-time working still decreased by 25 per cent. That proves my point. We are in an undulating economy, if I may call it that, and we must have our peaks and valleys, but we must not get too worried if an industry does hit a valley.

The next part of our plan to meet unemployment and to get full-employment is to get the general planning background right. We will certainly implement the White Paper full employment policy and we have had a great deal of experience in working it out. I want to say this: it recognises quite clearly that the balance of payments difficulties could completely wreck the 1944 plan. These balance of payments difficulties can only be overcome by increasing exports. That of course, was also said by the right hon. Gentleman who was Chancellor of the Exchequer at the time.

So we come to the paramount need that if we are to get the plan right, everything we do must be directed towards increasing our efficiency and competitiveness in export markets. The hon. Gentleman the Member for Newton (Mr. Lee), who preceded me at the Ministry of Labour, made that point in what I thought was a most able and thoughtful speech to which I listened with great interest.

It is so easy in all these questions of planning to prove anything by statistics. That is one of the snags about statistics. For example, the right hon. Gentleman said that the engineering industry had lost 29,000 workmen. That sounded a very depressing and worrying figure until one looked at the next figure in the group, which showed that the broad vehicle group had gained 28,000, so we are only 1,000 less when we come to add up the sum. I am glad to say that in that broad vehicles group 30,000 people went into the aircraft industry where they are desperately needed to fulfil export orders and where there is still a shortage of skilled operatives.

To sum up all the facts, we have got to get a plan ready and get the facts right if we are not to take a wrong action and put needless anxiety into the hearts of people. We are in more competitive times and these are reflected in the fall in the level of unfilled vacancies. The normal increase of unemployment in the peak month of January to 452,000 has certainly been slightly accentuated but it shows that the normal proportion of two-thirds of the increase is in the purely seasonal industries. Once again, the pattern has repeated itself.

In answer to the point raised by the hon. Member for Newton about the effects of the cuts in the armaments industry, he is right to be worried about it. It is our view—and we have thought it over very carefully—that they will not have a serious effect. They will reduce the number of people that some armaments industries would have had to engage, but they will not seriously reduce the number of people already engaged, except in the Gloster Aircraft Company, where the cut has already happened. We do not anticipate any more cuts of that character.

Our third objective in this plan for full employment is to get the conditions right. We recognise the primary responsibility of the Government to get the economic background right. I will not say more about that, as it was ably put by my right hon. Friend in his opening speech today.

There is one special matter to which we attach great importance. That has to do with the work of the British Productivity Council which sits under the able chairmanship of my hon. Friend the Member for Edgbaston (Sir P. Bennett), and I think that the whole House will agree with me that we could not have a better chairman. The Council is shortly going to get to work and its main job is to get the "know-how" and "know-why" of productivity right down to the shop floor level where it will do most good, and right into the smaller factories.

There is one other point in getting conditions right. We attach great importance to creating stable conditions in the delicate balance between wages and prices. The Interim Index of Retail Prices, on which the wages of two million people depend and on which the whole wages structure also largely depends, has now been stable at 138 or below for seven months, and that is the longest period since the index was started. We hope that within that framework of stability we can keep a level balance on wages.

In asking, as the Government have a right to do, for restraint in wages, I want to make it quite plain that we do not ask in any way for restraint in earnings. That is something about which we on this side of the Committee feel very strongly. If we can link earnings to output, the more a man earns the better it will be for him, for his employer and for the country as a whole. Let us make it plain that wage restraint is not earnings restraint. Jolly good luck to those who are earning £20 a week in the mines or the motor car industry, for they are doing themselves and the country good.

Mr. Robens

The hon. Gentleman has talked about the stability of the price index. Does he believe that wages have yet caught up with the price index?

Mr. Watkinson

Yes, I do. I believe a balance has been achieved. I believe the recent award to coal miners, a matter which arose last year, completed the cycle, and I hope we may now be able to stop the boat rocking. The index is now stable, but I do not want to enter into any difficult negotiations which no doubt may ensue later in the year.

The last part of our plan is to try to keep human relations right. The right hon. Gentleman was kind enough to mention the National Joint Advisory Council over which he presided with great skill and ability. The right hon. Gentleman the Member for Caerphilly tried to have a crack at my right hon. and learned Friend the Minister of Labour, saying that he was not in the Committee, or something to that effect. Perhaps the right hon. Gentleman did not hear the opening remarks of his right hon. Friend the Member for Blyth, who said that my right hon. and learned Friend was not here because he was presiding over that very important body. Today it has discussed a great many matters of vital importance to the House of Commons, such as double-shift working and productivity.

My right hon. and learned Friend attaches very great importance to this body, and we shall continue to use it as. a governmental form of joint consultation. We believe in joint consultation throughout the whole range of industry, and we must certainly practise it ourselves. We shall be delighted to do so with this most efficient and expert body. Throughout the scope of our work as a Government we shall all the time try to get human relations right and try to make people see that the job of economic survival is something to which, whatever our politcal affiliations may be, we can give our heart, because it means something to all of us and to our children afterwards, and is not at all a matter for party politics.

Mr. Thomas Fraser (Hamilton)

Will the hon. Gentleman say something about Scotland?

Mr. Watkinson

I seem to remember saying something about Buckie. I should like to pay a tribute to the very able speeches which we have had concerning Scotland from a number of hon. Members, but unfortunately not many from hon. Members opposite, although I know several wanted to speak. I know my right hon. and learned Friend will listen very carefully to matters concerning Scottish problems.

We promise no easy future on the employment front but we believe that, by getting the facts and the balance right, and by getting conditions in human relations right, we can place our policy of full employment on a stable and lasting foundation.

Resolved, That a sum, not exceeding £898,676,000, be granted to Her Majesty, on account, for or towards defraying the charges for the Civil and Revenue Departments and for the Ministry of Defence for the year ending ors the 31st day of March, 1954.

To report Resolution, and ask leave to sit again.—[Mr. Heath.]

Resolution to be reported Tomorrow.

Committee to sit again Tomorrow.