HC Deb 05 December 1963 vol 685 cc1497-508

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chichester-Clark.]

10.12 p.m.

Mr. William Wells (Walsall, North)

The matter I am raising is one which is primarily of interest to my constituency, although it might well have some interest for neighbouring constituencies, also. It concerns the grant of an industrial development certificate—or, rather, the policy underlying the granting of these certificates—in the Brownhills district. The district is within the Birmingham conurbation, which is, as a matter of common knowledge, one of the most prosperous and busy areas in the country.

Quite clearly, no hon. Member from this side of the House would wish to question for a moment the policy of concentrating development in the development districts. Our criticism is that the Government do not pursue this policy actively enough. Equally, I wish to make it clear that I do not propose to plough the sands by going over individual cases in respect of which there have been either refusals or grants of industrial development certificates in the past. What I seek to obtain is a statement from the Parliamentary Secretary which will make it clear for the benefit of my constituents what this policy is and how it will be followed in the future.

The circumstances of the Brownhills district are shortly that, taking the 20-year period from1951 to 1971, the population is estimated to increase, and, indeed, planned to increase, as far as one can plan these things, from 21,000 in 1951 to 36,000 in 1971. With this rapid expansion it is not unnatural to find unemployment difficulties. In fact, the Brownhills Employment Exchange has the lowest level of employment opportunity in Staffordshire, with only 12 jobs at present for every resident 100 population. Since 1957, the unemployment figure in the district has been above the national average, and it has continued to deteriorate until, in 1962, we find that the monthly average of unemployment was 5.1 per cent., which is the qualifying rate for a development district.

Over the 12-year period since 1951, there has been a fairly steady growth in employment in the manufacturing industries so that there are now 1,500 more jobs in this field than there were in 1951. But this has been slightly more than offset by a steady decline in the mining industry so that 1,700 fewer men are employed in the mines than was the case 12 years ago. There will be a further contraction in the numbers in mining both within the constituency and immediately outside it. The loss of employment, therefore, is almost entirely among men, and the local opportunities for employment in manufacturing industry at present are extremely limited. May I, shortly, refer to a comparison between the unemployment rate in the Brownhills district and that for the rest of Great Britain? In 1957, the local rate in Brownhills was 2.1 per cent, and the average rate throughout Great Britain was 1.4 per cent. In 1959, the average rate in Brownhills was 4.5 per cent, and in Great Britain it was 2.2 per cent. In 1962, as I have just said, in Brownhills the figure was 5.1 per cent, and in Great Britain it was 21 per cent.

The figures of unemployment and vacancies in the Brownhills Employment Exchange area in January, 1947, were 39 vacancies and 153 unemployed, and in July of that year 180 vacancies and 144 unemployed. But in January, 1962, there were 160vacancies and 259 unemployed and in July 160 vacancies and 206 unemployed. The position, shortly, is that with the growth of population there will be needed over this period of 20 years, which we are now more than half way through, 1,750 extra jobs to restore the 16 per cent, employment ratio of 1951, which itself was very low. That is the background to the problem.

In the past, it has not been the policy of the Board of Trade undiscriminatingly to grant or refuse industrial development certificates when applied for, and no complaint can be made of that. But some guidance is required in the planning of the development of the area to help both the authority and individual industrialists to make their plans. As the Parliamentary Secretary well knows, members of the authority and of the Staffordshire County Council, accompanied by myself, attended on officers of his Department two months ago, when we were informed that in the future, as in the past, applications would be considered on their merits.

The objects of the debate are briefly two. The first is to secure from the Parliamentary Secretary a public confirmation of what we were privately told. The second and perhaps more important is to secure some clarification of the conditions in which development certificates will be granted. Quite clearly, it is necessary, or at least highly desirable, from the authority's point of view to achieve some balance between the numbers of those locally employed and the numbers of commuters. As it is the policy of the Minister of Transport drastically to reduce the public transport available in Brownhills by the closure of one of the more important means of transport, the railway, it will be even more important in future than in the past to ensure that a fairly high proportion of local men shall be employed locally.

But the second part of the problem is that there are areas sited for industrial development in Brownhills and that businessmen often have to take decisions rather quickly as between, for example, the purchase of industrial sites locally for development and transferring their businesses, or part of their businesses, to quite other districts, with the problems that a duplication or severance of the business might entail.

The main question which I wish to ask of the Parliamentary Secretary is: can it be said with some confidence that industrial certificates will be granted in respect of small developments by well-established local concerns? If this is accepted as a matter of policy, what precisely we mean in this context by small developments and by well-established local concerns is a matter of detail which can easily be adjusted between the officials concerned. But it is important for the future of this community, and of business and employment, that there shall be some assurance on this point, and that is my object in raising the matter tonight.

10.26 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. David Price)

I am happy to reply to the hon. and learned Member for Walsall, North (Mr. W. Wells). He raised the general question of under what circumstances will the Board of Trade grant industrial development certificates for new or expanded projects within what we might broadly call the West Midlands. Secondly, and more specifically, he has related this general question to particular projects in the urban district of Brownhills, within his own constituency. Although he did not go into details, he made passing references to projects under recent discussion between himself and the firm concerned and my Department. I wish to try to reply to those two questions in that order.

To answer the first question, under what circumstances will we grant I.D.C.s—I hope that the House will accept the use of the jargon "I.D.Cs", I know that the hon. and learned Gentleman knows what we mean—I must say a little about the Government's distribution of industry policy which clearly sets the general context. Broadly speaking, our distribution of industry policy has two principal aims. First, to try as far as possible to "steer" new industrial projects, by which I mean ones completely new and ones which are major expansions of existing projects—including major extension of existing enterprises—to areas of high unemployment which, broadly speaking, are the development districts. Secondly, to limit further industrial development in the highly congested areas. I am certain that there is nothing between the hon. and learned Gentleman and myself in respect of those aims.

Both aims must, of course, be pursued within the context of maintaining the momentum of our drive towards continued modernisation and an ever increasing level of efficiency of British industry. Unless the British economy remains viable and thus able to expand, no distribution of industry policy, however toughly pursued, will produce the economic and social progress desired by all hon. Members. The general debate of the last two days makes clear that the House agrees with the general proposition that it is right to give priority to "steering" new industrial projects to the development districts where unemployment is higher and more persistent than in the country at large.

What is less obviously accepted by hon. Members who represent—as do the hon. and learned Gentleman and myself—the generality of constituencies which, I am glad to say, do not suffer from the same level of high and persistent unemployment as do the development districts, is the implication that from the point of view of our own constituencies a policy of priority for development districts must at times appear to be rather hampering.

The hon. and learned Gentleman and I both have experience of this in our own constituencies and I can assure him that, as a constituency Member, it is painful to have to turn down an I.D.C. for one's own constituency. But I am sure he will agree that if we are to give priority to the development districts then, by definition, we have to give the remainder of the country a lower priority. In practice, this means refusing some at least of the I.D.C.s for Brownhills and Eastleigh.

Despite the successes we have had in steering industry to development districts this simply has not been sufficient for their needs, as is evident from the fact that the problem of the regional unemployment is still with us and, of course, as the hon. and learned Gentleman is aware, from the Government's two White Papers, from the fact that the Government are embarking on a comprehensive programme for the North-East and Scotland. The main reason why there have not been enough new projects for development districts is that many new industrial developments are not mobile, because they are tied to the existing factory, or to markets or subcontractors—the hon. and learned Gentleman, coming from the West Midlands, knows so well that so many of the factories in that area are assemblers and must be close to their suppliers—or they are prepared to be mobile only if pushed. This, unfortunately, is a fact of human nature, as one knows from one's own experience. Firms say, "We simply cannot move," but if they are pushed hard enough, then it is surprising how they are then prepared to move, to set up in another part of the country and make a go of it.

A great deal of new development, on the other hand, does consist of relatively small extensions to existing factories which, in sum, come to a substantial amount, but, individually, are small, and would be impracticable, and, from the point of view of the firms, hopelessly uneconomic, to transform into new projects set up sometimes a considerable distance from the existing establishments. Other projects may be tied to a particular area for reasons such as a localised market—for example, the extension of a local brewery, or a local bakery to meet increasing population—or the need to be very close to raw materials, particularly raw materials whose cost is a high part of the production costs.

Against this background, experience shows that we shall get very little industry into development districts if we do not examine projects for other areas extremely critically and refuse permission to expand unless we are completely satisfied that they could not be undertaken in a development district. In industrially congested areas like the West Midlands, where unemployment is normally low, we do take—I will be perfectly frank with the House—an exceptionally tough attitude to new industrial development.

This is for two reasons, First, we must obviously look to the centres of industry, where it is most concentrated, most progressive, for the main source of industry and new projects for development districts. Secondly, the further growth of industrial congestion with the execessive demand which it creates for land, labour and public services of all kinds, is, as I think the hon. and learned Gentleman will agree, undesirable in itself. The individual firm in an area like Birmingham does not in its own costing pay the full economic price which the nation as a whole pays for adding to the congestion, because an increasing burden falls on public investment in roads, sewers, and so forth.

I wish that I could give the House a direct statistical relationship between one individual project in Birmingham and the cost to public investment. I have tried very hard, but I cannot do it. However, I think that the hon. and learned Gentleman takes my point, and, of course, he will also agree that existing industrial congestion in the Midlands and the South-East is a main source of inflationary pressure in the economy. This is brought out very clearly in the recent N.E.D.C. Report, that a distribution of expanding industry would make it easier for us to get expansion without running into inflation.

The prospects of any new industry being allowed to set up in the West Midlands—I say "new", which is foreign to the area—are very poor, certainly, if I have anything to do with it. New industry provides the best hope of getting the extra industries that we need into the development districts. In such areas as the West Midlands even existing firms are required to make out a strong case to satisfy us that they should be allowed to undertake further development where they are. In some instances the balance of national advantage may lie in refusing the development, even though it could not reasonably be undertaken in a development district. But that, of course, is the exception. If a project could be manned only by wholesale poaching from other employers the disruptive and inflationary effect might be beyond what we would regard as being in the national interest.

As I have already said, a large number of relatively small extensions to existing factories are approved and I think that these will go some way to answering the question put to me by the hon. and learned Gentleman. Every case is considered on its merits. If a firm can convince us that its project must be undertaken in the West Midlands and could not be undertaken in a development district, and if it can satisfy us that it would not make economic sense to refuse its request, we would not normally refuse permission.

Of course, there is always the question—the hon. and learned Gentleman was extremely generous to me in not asking me to define this too closely—of what one means by "small". Frankly, that can only be determined in the particular instance. Many of our great industries today started as very little firms. There comes a point in the development of a firm when, if it is not persuaded to move, it is too late, and, owing to the natural momentum of its development, it is difficult to prevent it developing where it is. This could sometimes appear rather tough on the small firm. It is because we take the view that the firm may become a big firm one day, that we want to get it moved.

In general, however, large expansions and those that appear to have good growth prospects are unlikely to get our blessing. The aim of limiting further industrial development in already congested areas has a more positive aspect, of course, in the support that the Government give to schemes for moving population from the overcrowded conurbations to new and expanded towns. We recognise that if these schemes are to achieve the purposes for which they are undertaken, industry as well as population must move. In the case of projects proposed for the West Midlands conurbation, therefore, it is not the end of the matter if the firms concerned satisfy us that their projects could not be undertaken in a development district. We then consider whether they might not be undertaken in one of the overspill areas within the West Midlands, and unless we are satisfied that they could not, the applications are refused and the firms invited to consider setting up in one of the overspill areas.

The proper working of overspill schemes requires that the movement of population should be matched by movement of industry, and as far as possible we try to achieve this. But we can, of course deal only with projects that firms propose. As the hon. and learned Member knows, we cannot direct. Also, with regard to employment, manufacturing industry in the West Midlands, even today, provides a good deal less than 50 per cent, of employment. Equally, we cannot conjure industry out of the blue at the moment it is needed, just when the local authority has completed another 100 houses, or whatever it may be.

There are two corollaries arising from the need to match movement of industry and population which I ought to mention. The first is that industry, in our view, ought to come from the same area as the population. In other words, if population is moving out from Birmingham to Brownhills, then we want to get the equivalent amount of industry to move out of Birmingham to match the population. In general, we are not prepared to approve projects in overspill areas which originate from a third area. I express that as a general rule; in all these things, of course, there may be exceptions.

Secondly, when a firm has moved to an overspill area, we cannot guarantee that we shall allow it to expand there indefinitely. I think it is fair to say that, if it is a modest expansion, the answer would be "Yes", but not indefinitely, and the test of whether the expansion could form a viable unit in a development district would still have to be applied. In fact, it was this consideration which led us to make one of the recent refusals of an I.D.C. in Brownhills, which, of course, is the area with which the hon. and learned Gentleman is primarily concerned.

As regards the two specific cases about which the hon. and learned Gentleman brought a deputation to see my Department recently, he will know that we granted permission in the case of one of the firms, and this was the firm which was already established in Brownhills. About even this firm, I say at once, we had doubts as to whether it might not be possible to steer it to a development district. But, finally, the hon. and learned Gentleman and his colleagues and the firm satisfied us that it was not. Therefore, we gave it permission to expand in Brownhills.

The other firm about which we maintained our refusal to give an I.D.C. to go to Brownhills, was a firm which was wishing to move from another part of Staffordshire into Brownhills, and we were not satisfied that it could not go to a development; district.

I realise only too well that, with the overspill agreements that Brownhills has with Birmingham and Walsall, the hon. and learned Gentleman's council is, of course, anxious to ensure that it gets sufficient industry to balance its expanding population. In spite of the fears which he has expressed, the Brownhills overspill scheme has not been seriously prejudiced by lack of industrial development. I will give some of the figures. Since the inception of the Brownhills overspill scheme, we have approved projects which, when they are completed, will amount to 750,000 sq. ft. of industrial floor space and will have created about 700 additional jobs for men, which, I am informed, is more than the number of houses built by the Brownhills Urban District Council under its overspill scheme.

Given the present needs of the development districts, I think that Brownhills has not too much cause for complaint, although, equally, we recognise that every go-ahead council—I am sure that Brownhills has a very go-ahead council—wants expansion. But all councils which want expansion simply cannot have it. There is, at any one moment of time, a limited amount of industrial expansion, however well we are doing and however quickly the economy is improving. Our priorities are greatly influenced, and, I am sure, must continue to be greatly influenced, by where the greatest unemployment exists. Unemployment in Brownhills, I am glad to say, is close to the national average. In November of this year, there were 118 males and 38 females on the unemployment register. This represents a 27 per cent, unemployment rate. Of course, one must remember the distortion which takes place due to the fact that—

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 seventeen minutes to Eleven o'clock.