HC Deb 15 May 1962 vol 659 cc1291-302

Motion made, and Question proposed, That this House do now adjourn.—[Mr. J. E. B. Hill.]

10.28 p.m.

Mr. A. G. Bottomley (Middlesbrough, East)

During the recent by-election at Middlesbrough, East, I was shocked to find once more men and women begging for the right to work. I went into the houses of these decent men and women and found them struggling to make both ends meet in order to provide for their families. Some broke down and cried. I promised them that the first thing I would do when I got back into the House of Commons would be to raise the question of unemployment. At the first opportunity I pressed the Leader of the House to do something about the problem, but I must say that I got very little encouragement from him.

I then asked the President of the Board of Trade if he could help and I asked the Minister of Labour, I regret to say that the Minister of Labour gave no help at all. The President of the Board of Trade offered some encouragement and I wish to ask the Parliamentary Secretary, by referring him to the Answer he gave me as reported in the Official Report for 27th March, 1962, at col. 165, if he is able to say that there has been any opportunity to encourage firms that intend to go to areas where there is persistent unemployment to go to Middlesbrough. That in itself is not satisfactory. That is why I have decided to raise the matter on the Adjournment tonight.

In Middlesbrough there are 6,500 unemployed. Just 5.1 per cent. of the working population are registered as unemployed. Of these, 8 per cent. are steel workers. It is estimated that in the area I represent here, East Middlesbrough, unemployment may go up to 10 per cent. or 11 per cent. Included among those unemployed are 420 boys and girls who have not got work, and there are many boys and girls who are staying at school because they know that if they leave school they cannot find work.

Parliament has laid upon the Board of Trade the duty of promoting employment in England, Scotland and Wales where high and persistent unemployment exists or is threatened. The Board of Trade also has power to deal with imminent unemployment. In the northern region as a whole unemployment does exist, is threatening, and is imminent in different parts of the area. This is acknowledged by the President of the Board of Trade, because recently he scheduled other districts in Durham, Consett, Stanley and Wingate, under the Local Employment Act, but at the same time as he did that he took off the list Scarborough and Filey. The President of the Board of Trade indicated that he was also going to remove other districts from the list. I would ask the Parliamentary Secretary if he would ask the President of the Board of Trade to consider adding Middlesbrough to the list scheduled under the Local Employment Act.

Middlesbrough but a short time ago was a thriving, prosperous centre, and it is a shock to find unemployment there again. However, the people of Middlesbrough are not demoralised or dispirited that is not in keeping with their character. It is, however, necessary to bring an end to unemployment in the district. Full employment in Middlesbrough depends upon two basic industries, steel and shipbuilding, and also upon the chemical industry. There is in the country today less shipbuilding than at any time since 1945. Steel production is well below capacity, and, with the exception of pharmaceutical goods, chemical goods orders are not as high as they should be.

Of course, we all hope that there will be a return to full employment, but some are far to complacent. One newspaper, the Yorkshire Post, and some people who should be more responsible, are saying that the situation is not as bad as it was in the 'thirties. I should hope not. To achieve full employment it is necessary to take action now. It has been said by the leaders of the steel industry that it may be some years before plants will be working to full capacity, and till then this will mean that fewer steel workers will be employed.

It has just been announced that the Britannia works of Dorman Long in Middlesbrough will be closed in June and that another 400 or 500 steel workers will be unemployed. I admit that this had been foreseen as part of the modernisation and replanning scheme, but it is very sad that these works are to close when we remember that it was at these works that the first steel joists in Britain were rolled. The Britannia works also provided the rolled steel for Sydney Harbour and the Storstrom Bridge in Denmark. The closing of the works shows how the modernisation of the steel industry adds to the unemployment position. With fewer steel plants but of modern design it is estimated that there will be over 2,000 redundant workers.

In Middlesbrough today it is sad to meet steel workers who, having been employed in the industry for twenty-five or thirty years, are now out of work. Some are still buying their homes. In the autumn of their days they were looking forward to a happy retirement and to enjoying the fruits of their hard work and thrift. Instead, they are faced with drawing upon their savings to supplement their unemployment benefit. Others not so fortunate are drawing Public Assistance.

The friendliness and kindliness of the people of Middlesbrough is most striking. They are adaptable people, and their record of good industrial relations is most impressive. Everything possible must be done to avoid these periods of unemployment which could lower these standards. Middlesbrough, in addition to being an iron and steel centre, has all the attributes and advantages to make is a progresssive and expanding industrial centre. It stands on one of the most easily navigable waterways in Britain. There are first-class facilities for an export trade. The largest cargo ships regularly visit all the important ports. They go to European and Mediterranean ports, to Scandinavia, the Baltic, the Black Sea, the Persian Gulf, India, Burma, Pakistan, Australia, New Zealand, Canada, the United States of America, South America, the West Indies, North, West and South Africa. Middlesbrough is favourably placed for shipping communications to all parts of the world and is particularly well placed if Britain should enter the Common Market.

There is no doubt that the biggest political and human problem in Middlesbrough today is unemployment. This is substantially due to Government policy which is like a car driven only on the accelerator and the brake but without a steering wheel. The Government have told the country that it must choose between stable prices and a strong £ on the one hand, and full employment and expansion which, they say, will cause inflation, on the other. It is argued that to have price stability we have to hold back investment, sacrifice production and let unemployment rise. In fact, experience has shown that cutting down production does not keep down the cost of living. The Government have shown a keenness in controlling wages but they do nothing about controlling prices. We all agree that it is important to save the £, but it is equally important to save the people.

Local unemployment is heavy when the general level of economic activity is low. When the general level of economic activity is high, industries in local areas usually share in it. If the demand for labour in the country as a whole is strong, it is possible for surplus labour to be absorbed. It appears to me that the Government have virtually abandoned the development area policy of 1945. I am very glad to see my right hon. Friend the Member for Battersea, North (Mr. Jay) seated on the Opposition Front Bench because, as a civil servant, he had much to do with the detailed work and application necessary to make the Act possible.

However, I feel bound to say that the Board of Trade is lagging in its obligation to carry out the necessary functions of the new Act that has replaced the Distribution of Industry Act. Under the old Distribution of Industry Act about 3,000 firms were steered to the development areas in different parts of the country. Since 1951 there has been a slackness and an indecisive use of the Government's powers. This has resulted in a further congestion of industry in the Midlands and the South of England. This leads to economic drawbacks for the whole of the country.

It means that in the areas concerned there is less space available in which to expand or to install modern equipment and plant. There is very little room in which to improve the physical layout of factories. As the number of sites in the congested areas is limited, the price of land goes up. Heavy expenditure is also incurred upon local transport of materials and finished products. This is due to dense traffic on local roads, and, as we all know, because of the demand for labour this sends up the labour costs and adds to the prices, resulting in greater difficulties to meet our export demands.

There are burdens thrown upon the community as a whole as well as upon industry. The high cost of land means heavier costs for houses and public buildings and extra expenditure to meet the congestion on the roads. There is also the overloading of public utility services, particularly sewage and refuse disposal plants and plant treating industrial effluent. All this adds further to the overall cost.

The Board of Trade could use its powers under the Local Employment Act, 1959, which are very wide and flexible, if it wished. It is the responsibility of the Board of Trade to provide inducements to industry to go to particular locations and to restrain development in the already congested areas. I know of some firms which would be quite willing to go to Middlesbrough if the Board of Trade would make arrangements whereby they could take a factory at a reasonable rent. It is possible for the Board of Trade to do these things under existing legislation. The cost of inducements offered to industry to go to Middlesbrough, whether by the building of factories for letting at low rents or by other means, would be more than saved by the nation not having to pay unemployment benefit or National Assistance.

There are clerical workers now unemployed in the area. Is it possible for the hon. Gentleman to ensure that office work of some sort goes to Middlesbrough? Our modern system of communications enables routine work to be done away from London. Is there a chance of a Government Department opening an office in the area? I want the hon. Gentleman to use the influence of the Board of Trade to see whether it is possible that a Government Department could help in this way.

The Board of Trade must do all possible to stimulate and expand industry and trade which is already in the district. The iron and steel industry which is basic in Middlesbrough is also the foundation of all investment in the country. It is wrong that these resources at this time should be under-employed when we want to do everything we can to increase production to build up our standard of living and to help the underdeveloped parts of the Commonwealth. The workers in the iron and steel industry deserve well of the nation. They accept the system under which steel plants operate three shifts a day for seven days a week.

It is not only the steel workers who are unemployed but ancillary workers also. Many in the building trade and the ancillary trades are unemployed today. I said earlier that there are 450 boys and girls out of work. What I did not say was that many of them have been out of work since Christmas.

If we are to secure full employment in Middlesbrough, it is necessary to bring further light industry there and some office work so as to offset the unemployment in the heavy industries and provide a more balanced economy. Development must be undertaken—as the hon. Gentleman said in a debate last week on unemployment in another district in the northern region—in a way which will make it easier to avoid Middlesbrough being smitten from time to time by unemployment in one industry. I suggest to the hon. Gentleman that the Governments responsibility is to provide work for the workers, and in this the Board of Trade has an important part to play. I shall be glad to hear the hon. Gentleman's reply, and I hope that he will give greater cause for encouragement for the relief of unemployment in Middlesbrough than the Government have so far been able to do.

10.44 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Niall Macpherson)

I welcome the right hon. Member for Middlesbrough, East (Mr. Bottomley) back to our Adjournment debates. It must be quite a long time since he took part in one, and he has tonight initiated a debate about his new constituency in a part of the country very different from the one he represented in the past.

We all very greatly sympathise with the rising unemployment in Tees-side, and, if it comes to that, in the North-East. The right hon. Gentleman has stressed mainly the need to reduce the dependence of Middlesbrough on the heavy industries, the need to diversify industry and to bring in light industry, to try to bring offices to the area, and so forth.

The core of the right hon. Gentleman's argument is that there is an obligation on the Government to bring in other kinds of industry to Middlesbrough. Unless existing and prospective unemployment is high enough to justify the Board of Trade in putting a place on the development district list, the Government at the moment have no power to do so. Therefore, in considering this matter, we have to consider firstly whether Middlesbrough ought to be on the list. I assure the right hon. Gentleman that we examine all cases very carefully. We have regular reviews of those areas which are marginal to the development district list and we consider them carefully.

I think from what he said that the right hon. Gentleman will agree with me that we could not consider Middlesbrough in isolation, because there is a whole group of employment exchange areas on Tees-side which forms one travel-to-work area, including Middlesbrough, Billingham, Redcar, South Bank, Stockton, and Thornaby. There are no separate statistics for the insured population of Middlesbrough as opposed to unemployment statistics and therefore it is not possible normally to make an exact comparison of percentages of unemployment in Middlesbrough. One has to take the employment exchange group of Tees-side as a whole.

The figures show that in April, 1962, there were 7,863 unemployed, which was a percentage of 4.5, in the Tees-side group. That included 1,232 temporarily stopped on the day of the count. Therefore, the wholly unemployed were 6,331 or 3.8 per cent. To put the matter in perspective for Middlesbrough, we cannot give the percentage but we know that the registered unemployed there on the day of the count in April were 3,577 of whom 642 were temporarily stopped. The main cause of the increase in unemployment was the position in the iron and steel industry, as the right hon. Gentleman said. Plant is working at only about three-fifths capacity in the area.

We know that one of the main reasons for the lower level of demand for steel at the moment is the amount of de-stocking, the reduction in stocks held, but there are other reasons as well. There is, for example, the fact that the National Coal Board and railways and shipbuilding are all making less calls on steel. Whatever Government policy had been, this would have occurred. In the particular situation of the Coal Board and of the railways it would have occurred, and the demand for shipbuilding depends very much on the shipping situation in the world as a whole.

The right hon. Gentleman said that it was wrong that resources should be under-employed, but what in the main dictates how resources are employed is the demand for the products. Undoubtedly one could stimulate the demand, but one has always to bear in mind the overwhelming need to maintain our balance of payments and the fact that we are running a pretty small reserve compared with what it used to be before the war. We have to bear in mind that over-riding factor. It is a fact that in the last year there has been a serious deterioration in the steel industry and that there have been 2,000 redundancies in the industry as a whole in this area. That has been due in part to closures which, as the right hon. Gentleman said, were foreseen, for example the No. 1 and No. 2 Britannia mills. There is another closure unfortunately due to take place in the course of this month on the other bank, involving, I believe, about a hundred workers. Those were foreseen, but the other redundancies, of course, were not and are due to the recession.

That the main cause of the unemployment in the whole area is due to the steel industry can be seen from the percentages of male unemployment. The fact is that whereas in April, 1961, two out of three were men, in April, 1962, four out of five were men, and over one-third of the men unemployed in the area were previously engaged in metal manufacturing. All this shows quite clearly that the main cause lies in the fluctuations in the demand for steel.

It may be that given a reduced demand from the coal industry, from the railways, and so on, for steel there may be a rather lower demand for that commodity in the future, but I do not think that anybody seriously supposes that this recession is going on for ever. The right hon. Gentleman himself did not suggest that, and I think that he would have been very much a pessimist had he done so. In any case, the steel companies themselves by their expenditure in the area indicate that they have confidence in the future. As I mentioned the other night when we were discussing The Hartlepools, the steel companies spent some £13 million in the area last year and they are spending much the same amount this year.

The difficulty is, of course, that under the Local Employment Act we have to be satisfied not only that there is high unemployment at a given point in time but that that unemployment is likely to persist. If we consider that steel is not a declining industry, then it is very difficult for us to say that this is a high rate of unemployment. It should be noted that 3.8 per cent. is not a very high rate of unemployment compared with many other rates in the country. It is not possible to say that this is likely to persist and unless we take a very pessimistic view of the steel industry and unless we honestly believe that it is likely to persist then the Government have no power to list the area as a development district.

Mr. Douglas Jay (Battersea, North)

Surely the Minister realises that though the Board of Trade cannot list the area as a development district except under these conditions, it is perfectly open to the Board of Trade, without doing that, to operate the I.D.C. system, to refuse I.D.Cs. to firms in the Midlands or the South-East and let them know that they will be granted an I.D.C. in Middlesbrough or Stockton.

Mr. Macpherson

I am coming on to that.

The right hon. Gentleman made this point and made the comparison with the position immediately after the war. But then there were a lot of industries seeking a home and wanting to settle down in a place and to expand from there. At the present time there is bound to be, in the nature of the case, nothing like as many new industries on the move.

I am asked how we operate the industrial development certificate policy. If a firm applies for an industrial development certificate, where it is for an expansion we have to have regard to the possibility of whether it can move elsewhere. If we consider that there is the possibility of its moving to a development district we exercise the utmost pressure on it to do so. Most of the industrial development certificates which we issue are for comparatively small expansions in the areas of high employment. Indeed, we should be considered not to be carrying out our obligations if, having encouraged a firm to go to a place and if it wanted to expand, we did not allow it to do so. If we think that it can divide itself or even more go altogether to a development district we encourage it to do so, but the number of cases in which that can be done is sound to be relatively small. We are under an obligation under the Local Employment Act to steer such industries to development districts.

Mr. Jay

The Parliamentary Secretary does not suggest, does he, that the Board of Trade is under an obligation exclusively to use industrial development certificates to steer industries to areas which are development districts at the moment?

Mr. Macpherson

I said that we are under an obligation, in the first place, to try to steer these industries to development districts. There may well be cases where, for one reason or another, they are unable to go to development districts. In such cases—as I told the right hon. Member in my reply in the House—we are perfectly willing to give them industrial development certificates to settle in an area such as Middlesbrough. But the number of industries which are available to transfer to other districts—which cannot go to a development district but would be prepared to go to Middlesbrough—are bound to be relatively small.

If an industry can go to Middlesbrough it may well go to the Hartlepools. It is more likely to do so, because at the moment the Hartlepools is a development district and receives financial assistance under the Act. That is all within Tees-side, and it would benefit the area as a whole.

It would be wrong to give the impression that Middlesbrough and Teesside as a whole are solely dependent on one industry. The employees working in chemicals were nearly as numerous in 1960 as those employed in metal manufacture. The chemical industry is rapidly expanding, and is doing a good export job. About 13,800 were employed in the engineering and electrical industries, not to mention over 6,000 employed in shipbuilding. There is also the clothing industry, which employs mainly women, notably in one large and another very large firm.

While there are bound to be some industries which are becoming out of date there are also other industries in the area in which there is natural expansion. New jobs in prospect in the area in the next few years number 3,000, according to the plans of industry itself. Admittedly only 360 of those are in Middlesbrough, but there are 3,000 in the whole area. We shall be glad to allow any firms which cannot go to development districts to go to Middlesbrough.

I can assure the right hon. Gentleman that we shall watch the position very closely—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at two minutes to Eleven o'clock.