HC Deb 14 March 1963 vol 673 cc1702-14

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

12 m.

Mr. Jeremy Thorpe (Devon, North)

The subject I wish to raise relates to the granting of an industrial development certificate for a firm in Tiverton in March of last year. It is a matter in respect of which I have had much correspondence. I raised it in the debate of June last year and subsequently visited the Parliamentary Secretary to discuss it with him, and there have been Parliamentary Questions by the hon. Lady the Member for Plymouth, Devonport (Miss Vickers), the right hon. Member for Battersea, North (Mr. Jay), the hon. Member for Falmouth and Camborne (Mr. Hayman) and myself, and it is therefore true to say that disquiet has been expressed in this matter by Members of all three parties.

The subject matter of this Motion is really the behaviour of the Board of Trade in the granting of this certificate, the varying explanations it has given for this grant, and the need for a thorough public inquiry into this whole matter.

My original motive was to deduce what the Government's policy was in regard to the operation of the I.D.C. system. One is naturally delighted when any town is able to get a new factory and increase its employment prospects, but it has always been the declared policy of the Government to steer new industries wherever possible to development districts where there is high unemployment and only to allow an extension, or indeed a new industry, in an area of full employment when there are special reasons for so doing.

I speak tonight representing a town which has 13 per cent. unemployed, in the same county as Tiverton, and in which there is a town, Appledore, in the constituency of the hon. Member for Torrington (Mr. P. Browne) who would be here were it not for the fact that he is not well, which now faces an unemployment rate of nearly 30 per cent., and we are therefore entitled to ask what are the priorities which the Board of Trade follows in the allocation of I.D.Cs?

In the town of Tiverton there is the firm of John Heathcoat, a textile manufacturing company. It is a very well known firm and has been in business for many years. Lord Amory, a former Chancellor of the Exchequer and now High Commissioner in Canada, was a director of this firm until he took up his appointment abroad. It is the main employer in that town, a town in which there is virtually full employment, or at any rate far fuller employment than in many other parts of Devon and Cornwall which are scheduled areas.

In the autumn of 1961 a subsidiary of Charles Churchills, of Birmingham, applied for an I.D.C. to build boats and to set up a factory in this town. Its application was refused. If the Board of Trade had said that this was a town in which there was relatively full employment, clearly this was the right decision to take, and one could not quarrel with that. We do not know what local opposition there may have been to the grant of an I.D.C., but we know that on 31st May the deputy chairman of Heathcoats, at a mayoral banquet in Tiverton, said that if there were to be any industrial expansion the existing industries must have prior claim Ion the labour market; a perfectly proper point of view, but it would lead one to suppose that this firm at least was not over-enthusiastic about welcoming competition in the limited labour market.

However, notwithstanding the refusal to Churchills to develop, an application was made in January, 1962, three months later, for the purchase of six acres of land for industrial purposes, and in April, 1962, this was confirmed by the council, although the name of the company was not disclosed, the names of the directors were not made known, and the product and processes were not disclosed. However, it was indicated that this was a firm which was 50 per cent. owned by Heathcoats and that there would be co-operation between experts of this new factory and Heathcoats, and indeed in support of the application for an I.D.C. a high-powered deputation led by the chairman of the Devon County Council waited on the Board of Trade, and that application was successful. Five months after one firm had been refused permission to develop, no doubt because of full employment conditions, another firm was granted a certificate.

I therefore wrote to the Parliamentary Secretary to the Board of Trade, the present Minister of Pensions and National Insurance, asking why this had happened; why there had been a complete somersault in the policy of the Board of Trade, and what efforts had been made to steer this into a development district. He said that the Board of Trade had tried to persuade the firm to develop in a development district. It had been to Ilfracombe, the area I mentioned, but there was no site available. This was a strange view, as there was an industrial site already in existence.

However, when the President of the Board of Trade was taxed on the matter in the debate on 26th June, he gave a somewhat different reason and, as a debating point, it was very effective indeed. I remember the delight with which it was received by the party opposite when this opposition was effectively crushed. We now know, on the word of the Parliamentary Secretary, that it was an erroneous one. He said: The proposed development … was only granted on condition that the firm set up additional employment in Cornwall more than equal to the amount of additional employment we are getting in Tiverton. We are getting two for the price of one which is a very good bargain."—[OFFICIAL REPORT, 26th June, 1962; Vol. 661, c. 1033.] On 16th July the Parliamentary Secretary had somewhat retreated from this view of the President of the Board of Trade that this grant of the I.D.C. was subject to the condition precedent of extra employment. He said that this was not the deciding factor, but one of the factors taken into account. Then we had Questions by the hon. Member for Falmouth and Camborne and the right hon. Member for Battersea, North and the President of the Board of Trade said that he was satisfied that this could go to a development district and: could be carried on with advantage at Tiverton without putting undue strain on labour and other resources. That is interesting when one reads it alongside the letter of the Minister of Labour of 16th October, 1962, in which he said: I know that in general demand for labour in Tiverton—where unemployment is well below the national average—exceeds the supply of suitable workers in the area. In one case it is said that there is no threat to employment, and the Minister of Labour says that, while unemployment is well below the national average, there is a shortage of suitable workers.

The Parliamentary Secretary wrote on 9th August and said that this expansion was due to a misunderstanding. A misunderstanding it may have been, but it was more than that: it was thoroughly misleading to the House. He said this had nothing to do with facilities, which was only one of the factors, and there had been no discussions with the authorities at Tiverton. That was a contrary view to that expressed by the Minister and by his predecessor, who said that there had been discussions with the local authorities. Therefore, I put down and the hon. Member for Devonport put down further Questions last month to find how much additional employment had been created in Camborne. We were told that there had been none and that there was no agreement which had been registered, but they had declared their intention—

Mr. R. J. Maxwell-Hyslop (Tiverton)

rose—

Mr. Thorpe

I will give way when I have finished this passage. Sir John Amory, having perhaps got a little annoyed with these suggestions of agreements saying that employment could be created in Tiverton, leapt into print and said there was no agreement. He wrote: I would like to make it clear that there was no agreement of any sort. It will be noted that the replies to Questions confirmed what I did say, that when the new factory was bought and jobs became available, in the event of there not being enough applicants for those jobs we would try to find jobs. That was a totally different view from that of the Minister who said that, in all probability, the factory would not be ready for work next year and they must wait to see what the employment position was then. It was a total reversal of the view the Minister gave on 26th June as the whole reason for the grant of the industrial development certificate in Tiverton.

Mr. Maxwell-Hyslop

At the point at which I sought to interrupt the hon. Member, he expressed surprise that no new jobs had been created in Camborne. Would he accept that no new jobs in Camborne could be provided before the factory has been erected and therefore the case for transferring work has not yet arisen?

Mr. Thorpe

The hon. Member must remember what was said in June, that the certificate was granted only on condition that additional employment would be created in Cornwall. There was an agreement. It may well be perfectly fair to say that employment will not be set up till the new factories come into being, but this was a clear agreement told to the House of Commons by the President of the Board of Trade. It was on 26th June. It is no good the hon. Gentleman shaking his head. The Parliamentary Secretary agrees with me about this. We know from Sir John Amory that there was no such agreement. We know that the Minister misled the House. Through what is euphemistically called a misunderstanding all through his initial justification for this very extraordinary behaviour falls totally by the wayside.

We are faced with this position, first that the Government have changed their views. To start with, they were satisfied that it could not be a development district. We find that there were no discussions on a development district, particularly Ilfracombe. We then hear from Sir John Amory that there was no such agreement of any sort. We were then told that there must be a pooling of the factories. We were given three totally different reasons from three different representatives of the Board of Trade.

So I think we are entitled to ask these questions—and I have given the Parliamentary Secretary notice of the questions to which I should like answers. First, why was the House misled on 26th June by the Minister when he said that this grant was made subject to this condition precedent, which we now know, on the evidence of the Board of Trade, is wholly fallacious? Does he agree with Sir John Amory that in fact no agreement was reached apart from a vague expression of intention? Does he think that that vague expression of intention is sufficient to go against the whole policy of the Local Employment Act? Is it true that no discussions were held with any development district by the Board of Trade even though this is an area where there is a high level of unemployment? Does he agree with Sir John Amory that there may well be a shortage of available labour if this new factory is created, and if so, is that the sort of condition upon which a new factory ought to be allowed to develop in an area of employment? Does the Minister not think that this is a case where there ought to be a thorough-going inquiry?

The Government have changed their mind and they have shifted their ground. They refused this certificate in one month for one firm, and granted it to another five months later, and have given three different reasons, and have argued against their own evidence. I believe that this is thoroughly unsatisfactory. Considering that in the West Country there are areas of heavy unemployment—as I say, 30 per cent. in one area—if the Local Employment Act is to work, I believe the Minister must be very much more assiduous in directing industry into the right places. I believe that the Board of Trade has acted in a thoroughly disingenuous way in this, and that the sooner we have a full inquiry into this the better it will be, to clear the Board of Trade of the allegations made against the Board of Trade not only in the West Country, but, I believe, in many other places also.

12.13 a.m.

Mr. R. J. Maxwell-Hyslop (Tiverton)

Very briefly in the short time available I put two factors of which the House ought to be aware. The first is that the only question which arose—and does arise—was whether this factory went to Tiverton or did not come to the United Kingdom at all. This process which will be carried out in the factory is not one which is yet fully developed. In so far as it has been developed, it has been developed partially by John Heathcoat engineers who have gone to America to co-operate with the company which owns over half of the share capital, and those personnel are also required to superintend the manufacturing process in Tiverton. I understand—I have checked this fact today—that there would be no question of this factory being acceptable to the American company putting up half the money anywhere else than in Tiverton. So the only question which arises is whether it should have been allowed to go to Tiverton or not allowed to come to the United Kingdom at all.

Mr. Thorpe

If that is so, would not the hon. Gentleman agree that it was most unfortunate that the Board of Trade should not have made this clear?

Mr. Maxwell-Hyslop

I do not think it is unfortunate in the least. It happens to be the absolute truth, and when the hon. Gentleman has heard my hon. Friend's reply, doubtless this will be apparent even to him.

But since the hon. Gentleman has asked for full disclosures of all the facts I think the House ought to be aware that, to the best of my knowledge and unless I am misinformed, his attention was first drawn to this matter by a constituent of mine who believes that the erection of the factory would spoil the view from a bedroom window in his castle, and who, through his solicitor, wrote to me subsequently, asking for me to arrange a meeting with the President of the Board of Trade and with the hon. Gentleman the Member for Devon, North (Mr. Thorpe) who has no locus standi whatever in Tiverton. Of course, as I have said, there was no question of this factory going to Ilfracombe or, indeed, anywhere else. It is only right that the House should be aware of how the interest of the hon. Member for Devon, North was aroused in this matter. He would have been more frank with the House if he had also informed hon. Members of that fact.

Mr. Thorpe

The hon. Member has made a very grave allegation. I put him to the test on this. He is impugning my motives in raising this matter, and of course he is quite entitled to do so. I represent a town which has had between 10 and 13 per cent. unemployment since 1959 and is scheduled under the Local Employment Act. It has received no assistance from the Board of Trade and there has been no increased employment. I border a constituency where there is 30 per cent. unemployed. The hon. Gentleman is seriously impunging my motives.

Mr. Maxwell-Hyslop

I do not say anything about the hon. Gentleman's motives. I merely said that I had received a letter from a constituent of mine asking me to arrange a meeting with the President of the Board of Trade and the Minister of Housing and Local Government in conjunction with the hon. Member for Devon, North with whom he had already been in correspondence on this subject. This was before the gentleman concerned approached his own Member on the matter. I merely think that it is right that these facts should also be known, as the hon. Gentleman has not given them to the House.

12.17 a.m.

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

It is my task to reply to the hon. Member for Devon, North (Mr. Thorpe). I realise that the hon. Member would have preferred to have received a reply from my right hon. Friend the President of the Board of Trade rather than from myself. Apart from the fact that it is customary for junior Ministers to reply to Adjournment debates, my right hon. Friend is making an official visit to Portugal and, therefore, could not have been with us even if he had been minded to depart from custom and to have replied himself. I am sure the hon. Member recognises that my right hon. Friend has to make many foreign visits in the course of his duties which have to be planned some time ahead.

I am sure that what the House wants to learn from me tonight are the reasons which led my predecessor as Parliamentary Secretary, and now my right hon. Friend the Minister of Pensions, to grant the Industrial Development Certificate now put in question by the hon. Member for Devon, North. The certificate was granted to John Heathcoat & Co. Ltd. on 6th March, 1962, for the erection of a factory of 120,000 square feet for the production of textile fibres. I would remind the House that John Heathcoats are textile manufacturers who have been established for 150 years in Tiverton where, at the time they applied for the I.D.C., they employed 1,700 people in a factory of 350,000 square feet. They also have a factory at Crediton, where at the time of the application they employed 50 girls, and another in the development district of Camborne, Cornwall, where they employed 250 people.

The new factory at Tiverton is needed to provide capacity for the production of elastic thread by a new process, a venture in which they are associated with an American company. The American com- pany is contributing its patents and some of the "know-how". Heathcoats are to provide the engineering, maintenance and administrative services, plus further essential research and development techniques of their own. The Heathcoat contribution, therefore, requires the use of their existing technical and administrative organisation. The project is to be carried out in stages over a period of six years and when completed is expected to employ about 150 people, mostly men, on the process.

When the application for the industrial development certificate was made, my predecessor considered whether the project could be carried out in the nearest development district, namely, Ilfracombe, or, failing that, in the development district of Camborne where the company already has a small factory. Both locations were unsuitable for the following reasons. First, the project involved the development of an entirely new process for the manufacture of a new elastic known in the trade as Spandex. Elastic thread is the key material in the manufacture of elastic fabrics at the company's Tiverton factory. The rubber threads currently used at Tiverton are, in the main, made there.

There are obvious economic and technical reasons why the new thread and its manufacturing process should be developed at Tiverton in parallel with the existing process and close to the user interests, namely, the elastic fabric manufacturer. Indeed, prior to the decision by Heathcoat's to manufacture Spandex, the company had carried out research and development into the manufacture of elastic thread at Tiverton. In applying for its industrial development certificate, the company was moving from the research and development stage to that of manufacture, but, even then, there was still a strong experimental element in the new process. It was not—nor, I understand, is it yet—a 100 per cent. proved success.

Secondly, it follows that that means that the process requires close technical and managerial supervision and will continue to require it for a considerable time ahead. The management involved are the same people who manage and supervise the existing processes at the Tiverton factory. They are the key men in Heathcoat's, the men who run the factory.

If this new process were to have been located either 100 miles away at Camborne or even 40 miles away at Ilfracombe, the nearest available development district, the company could not have provided the close supervision required, unless, of course, it had ceased to supervise adequately all its other activities. This is a case where the determining factor is the human one. A technical supervisor cannot be in Ilfracombe and Tiverton at one and the same time.

Mr. Thorpe

If that be the determining factor, are we to take it, therefore, that the reason given by the President of the Board of Trade on 26th June is both irrelevant and inaccurate?

Mr. Price

I shall come to that. I want, first, to clear the reasons that were in my predecessor's mind. The hon. Member will realise that I am doing this at second hand, because the decision was not mine.

Furthermore, the services already available at the company's factory at Tiverton were ideal for the new venture. To duplicate them elsewhere would have been a waste and an uneconomic use of the company's resources in relation to the scale of the new process, remembering, too, that there is still the element of chance in it as to whether it will he a complete success.

Having reached the conclusion that the project could not be satisfactorily carried out at a distance from the main plant, my predecessor had to consider whether there were any overriding local industrial location reasons, as distinct from planning reasons, why the development should not be carried out at Tiverton. The only possible doubt was whether the additional labour could be met without embarrassment to other activities in the area.

There was not much surplus labour at Tiverton. At the time of the application, in the Tiverton exchange area there were 123 men and 49 women unemployed, or 1.9 per cent. of the registered working population. I regret to have to tell the House that the current figure is significantly higher. As the project was expected to create employment for only 150 people at most, building up to this figure gradually over a period of six years, it seemed unlikely that any embarrassment would be caused to other local activities, especially when account is taken of school leavers coming on to the local labour market over the next few years. Tiverton has a relatively high school population.

Furthermore, my predecessor learnt from the company that it was proposing to transfer some of its existing activities from Tiverton to its establishment at Camborne. The effect of this would be to increase employment in the development district of Camborne and to release labour at Tiverton for employment on the new project. As I have explained on a number of occasions to the hon. Member, this was a consideration which came into my predecessor's determination of the application, but it was not a contractual undertaking demanded of the company. That answers one of the hon. Member's questions.

The House will be interested to know that since then the company has already transferred some work from Tiverton to its factory at Camborne, where, I am informed, there has been an increase in employment of between 50 and 60 jobs. This shows that my predecessor's judgment was not too far off the mark. It is also relevant to note that the company intends that over 50 per cent, of the output of this new elastic thread when it is in production will be spun at its factory in the development district of Camborne.

Mr. Thorpe

The Parliamentary Secretary will realise that, although this information is interesting, it shows that the answer the President of the Board of Trade gave to me about this on 5th February was inaccurate.

Mr. Price

I am trying to give the hon. Member the reason that was in my predecessor's mind. In addition, there was the consideration that if the new thread succeeded in replacing the rubber thread in Tiverton to any considerable extent, labour would be released from the rubber thread production and be available for the elastic thread production. There was a real possibility, therefore, that in the end the new venture would be manned without any substantial increase in the company's labour force at Tiverton. All these factors having been weighed, it was decided to grant the I.D.C. The decision was taken by my predecessor, the former Parliamentary Secretary.

I come to the hon. Gentleman's remarks about the statement of my right hon. Friend the President of the Board of Trade. During the distribution of industry debate on 26th June, 1962, to which the hon. Gentleman referred, the hon. Gentleman took up this question of the I.D.C. He remarked that it seemed strange that in one county there should be a town—Ilfracombe—scheduled for special assistance but which had not had any success, while in another—Tiverton—a decision had been taken which, in his view, completely reversed an earlier decision. Replying to this intervention in his closing speech, my right hon. Friend the President of the Board of Trade said this: The proposed development he mentions was only granted on condition that the firm set up additional employment in Cornwall more than equal to the amount of additional employment we are getting in Tiverton."—[OFFICIAL REPORT, 26th June, 1962; Vol. 661, c. 1033.] This information was based on a misunderstanding of the information given to my right hon. Friend during the course of the debate to which he was going to reply and of which he had not had notice. He had not himself—I emphasise this—been personally involved in the decision, which had been taken by my right hon. Friend the then Parliamentary Secretary.

The creation of additional employment in Camborne was not, in fact, a condition of the grant of an I.D.C. for Tiverton. It was, as I have indicated, a factor my predecessor took into account when considering the impact of the new project on the employment situation in Tiverton. This misunderstanding has since been corrected, on several occasions in the House, in correspondence between myself and the hon. Member, in a talk which I had with the hon. Member on 26th September, and by my right hon. Friend in reply to a Question asked by the hon. Member on 5th February.

The earlier application, to which the hon. Member referred, was made by Charles Churchill and Co., a Birmingham firm which proposed to start a new venture—the manufacture of glass fibre boats—for which no essential technical requirement demanded location at Tiverton, which is not in a development district. My predecessor refused this application and invited the company's attention to the various development districts in the South-West, including Ilfracombe. But Ilfracombe could not offer Churchills a site ready for its immediate construction, a condition necessary to enable production to be started in time to meet the next year's export market.

Within two weeks of the refusal of the I.D.C. for Churchills to erect a factory at Tiverton, the Board of Trade granted the firm an I.D.C. to erect a factory on a site which suited its conditions in the Isle of Wight, which was then a development district. The House will see that there is little parallel between the case of Churchills and the case of Heathcoats.

In one of his letters the hon. Gentleman asked how, in the absence of discussions with the local authority, my predecessor could be satisfied that John Heathcoat's new project could not be carried out at Ilfracombe. The answer is that the Ilfracombe local authority was not competent to comment on the technical and business reasons which decided the location of this project, and it would have been quite improper for my predecessor to have discussed these matters with the local authority. The fact that Ilfracombe needed some additional employment was not in dispute. If my predecessor had been satisfied that the project could have been satisfactorily located there, he would not have granted the I.D.C. for Tiverton. By the same token, he did not consult the local authority at Tiverton. I.D.C.s are granted in accordance with a national policy for the proper distribution of industry and not in accordance with local planning considerations, which are properly the province of local authorities, and therefore any discussion as to the precise site or the manner in which the site is to be developed is not a matter—

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

Adjourned at twenty-nine minutes past Twelve o'clock.