HC Deb 08 December 1964 vol 703 cc1508-18

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ifor Davies.]

12.36 a.m.

Sir Harmar Nicholls (Peterborough)

Almost from the first day on which this Government took office we have had Ministers giving speedy but, I am afraid, hazy statements of what future legislation is likely to be. I suppose that their reason for doing so is to give an impression of alertness and dynamism in anticipation of a General Election which cannot be all that far away, in view of the general situation.

I agree that useful and properly thought out legislation cannot make the some immediate impact as do these breezy but ambiguous interim statements, but I believe that, at the end of the day, the proper course is still the best course, and that the proper course is that it is a less dangerous way of governing if a statement is followed up immediately by a Bill or at least a White Paper. One of the best examples of the present method was provided by the Chancellor, when he gave his disastrous, provoking anticipation of his next Budget, and we saw part of that from the paper that had to be put in the Vote Office today.

The other example is provided by the statement made by the President of the Board of Trade on 12th November, and it is this that I wish to discuss. The right hon. Gentleman said: … I told the regional controllers of the Board of Trade yesterday, after a full discussion, that I wished to see a tougher application of the I.D.C.s on factories being built in the really congested areas."—[OFFICIAL REPORT, 12th November, 1964; Vol. 701, c. 1226.] A tougher application in regard to the industrial development certificate policy. I should like to know exactly what that means. It is right that we should know, because from my knowledge of the policy of the last four years as practised by the previous Government, anything much tougher could not be put into operation without direction of industry, and the corollary of the direction of labour if the thing was to work at all. With this possible interpretation of the words of the President of the Board of Trade, we should have more clarification as soon as possible.

The previous policy on industrial development certificates was made quite clear by my hon. Friend the Member for Eastleigh (Mr. David Price) when, as Parliamentary Secretary to the Board of Trade he spoke in this House on 4th May, 1964. My hon. Friend said: As the Study makes clear, the South-East makes a vast contribution towards the prosperity of Britain. In our desire to deal with the problems of the South-East we should be wary of pursuing economically masochistic policies towards the South-East such as a blanket refusal to grant any more I.D.C.s in the South-East irrespective of the merits of the individual application. Does a tougher application go back on that statement? My hon. Friend went on to say: Just as it is true that we cannot have proper regional development without national economic growth, so it is equally true that we cannot hope to optimise our national rate of growth its unless every region is itself optimising Its economic potential."—OFFICIAL REPORT, 4th May, 1964; Vol. 694, c. 1039–40.] Will that piece of good sense still stand when the tougher application is brought into being?

My hon. Friend a little later said: As I made quite clear, development districts have priority when I.D.C. applications are considered. Few certificates are granted in the industrially overcrowded part of the country for new ventures or for major expansion of existing factories. On the other hand, it is quite unrealistic to suppose that all industrial development can be prevented in the South-East, or that areas of high unemployment would benefit if it were. There are, for example, efficiency schemes which can reduce employment; local service industries which cannot be separated from existing factories, and others which, although not requiring adjacent premises, need to be within a relatively short distance of the parent plant or parent suppliers. It would be unrealistic and unsound to try to prevent such industrial development…"—[OFFICIAL REPORT, 4th May, 1964: Vol. 694, c. 1046-7.] Is that practical and sensible approach to be replaced by something more rigid? If the hon. Gentleman in replying can say that it is not intended radically to alter the basic approach to this question, the optimum of productivity which is the nation's need will be more likely to be achieved.

If the new toughness means forcing industry to development districts without regard for individual factory needs, I tremble for our 4 per cent. national growth need and our balance of payments problem. If anything like that had been in the mind of the right hon. Gentleman when he made the speech on 12th November, the interim statement may have done some good in the sense that it might have given us a chance to try to deter him in time.

Everyone accepts the need and the good sense in making it difficult for any more factory building in the busy areas of full employment. To build there they should have to pass strict and rigid tests, but I claim that the door ought not to be bolted and barred irrespective of merit. Everyone accepts the need and the good sense of inducing firms to prefer the development districts. That is right and my right hon. Friends in the previous Administration had notable success with a policy which brought that about without being as rigid as the words used by the President of the Board of Trade indicated he might intend to be.

I ask the Government to examine without prejudice the success of the previous Administration, who were firm without being rigid to the point of not taking merit into account. The figures I have for the years 1962, 1963 and 1964 give this message of success by the previous Administration. In the year ending 31st March, 1962, 41,155,000 square feet of extra development took place. Of that, 5,500,000 took place in a development district. In 1963 the total was 30,537,000 square feet, of which 5,116,000 was in a development district. In the year ended 31st March, 1964 the total development was 42,470,000 square feet, of which 12,747,000 was in a development district.

I suggest that 23,370,000 square feet in needy areas in three years is a good record. It was achieved without losing the good will of all the industries involved. This is very important. It would be a bad thing if the Government allowed a fleeting satisfaction of applying what they call toughness to interfere with this very satisfactory trend. It is agreed that Government measures are required to encourage economic growth in areas of unemployment and underemployment, but the most effective way of doing that is to improve the facilities and services in the areas to which we want to attract industry. Better roads, improvement in port facilities, airports, hotels, power services and water supplies, houses, schools and hospitals are the sort of improvements that will attract industry naturally to the areas where we want it to go.

It should not be attempted by extreme I.D.C. toughness. The refusal of an I.D.C. for location A does not necessarily mean that the applicant will obediently go to location B. Often he goes nowhere, because expansion in the existing location is the only practical course as he as a business man sees it. If that happens, the nation is the loser; we do not have the improvement that we want for our general improvement in productivity.

Indeed, reports from the Central Midlands indicate that many small and medium-size firms have expansion potential which is not being realised. Both in Birmingham and in Manchester, industry has emphasised the need for attention to be given to management problems and the shortage of management staff. Before an I.D.C. is refused, it should be remembered that the scale of business of many firms is such that if they have to open a branch too far away from their parent plant, they do not have the management staff capable of working it. If the distance is too far for the managers of the original firm to travel with success, the result is that the potential from the new factory will not be achieved, and for that reason it is not even started. If a Midland firm is compelled to go to a distant location, this necessitates a new organisation, which often is not available. This is sufficient to deter companies from making the move which would be in the best interests of the nation.

My hope in bringing this matter to the attention of the Department is that we shall be able to get from the Government tonight clarification of the statement by the President of the Trade and a statement that they are prepared to copy their predecessors in at least one respect: that is, in trying to achieve the same success in applying industrial development certificates. It is right that the Government should urge everyone who wants extension to go to development districts, but in the absence of agreement every application should be judged on its merits. It is surely good sense to give permission even in areas of full employment rather than not have the development.

I suggest to the Government that the success of our policy so far has justified its continuation. I hope that the interpretation of the Government's new policy will not injure the good will and success which has been achieved.

12.48 a.m.

The Minister of State, Board of Trade (Mr. George Darling)

I assure the hon. Member for Peterborough (Sir Harmar Nicholls) that we will not endanger the success—I admit, the success over the past years—of the industrial development certificate policy. The hon. Member asked me to explain what my right hon. Friend the President of the Board of Trade meant by a "tougher application" of I.D.C. policy. What it means is that applications from the heavily congested areas will be examined a little more critically than in the past.

Those words have been used before. The hon. Member was rather selective in his quotations from Board of Trade Ministers of the previous Administration, and I should like to quote a statement that was made by the then President of the Board of Trade, Sir David Eccles, in July, 1958. He said: As the House is aware, it is not the practice of my Department to issue industrial development certificates—save in the most exceptional circumstances—for firms wishing to set up new factories in the more congested parts of the country. The certificates issued in those places are almost entirely for extensions or efficiency projects"— that is the point which the hon. Member has made— which it would be uneconomic to separate from the existing buildings. I propose in future to examine all such applications, both for new buildings and for extensions, even more critically than in the past and to extend the practice at present applied in the Greater London and Greater Birmingham areas to other parts of the country where unemplopment is low."—[OFFICIAL REPORT, 30th July, 1958; Vol. 592, c. 156–7.] Those are practically the same words that my right hon. Friend used a day or two ago. The same thing happened in 1962 when the then Chancellor of the Exchequer, the right hon. Member for Barnet (Mr. Maudling), in the debate on the Address, said: We shall continue the very tough policy of I.D.C.s that we have pursued for some years. It is nonsense to suggest that our policy has been other than tough."—[OFFICIAL REPORT, 17th November, 1962; Vol. 666, c. 663.] Later on. in July of this year, the then Secretary of State for Industry, Trade and Regional Development, the right hon. Member for Bexley (Mr. Heath), said: There is no intention of relaxing the industrial development certificate policy. As far as the Midlands and the South-East are concerned, it will remain as tough as ever."—[OFFICIAL REPORT, 16th July, 1964; Vol. 698,c. 1517.] This emphasis upon toughness in carrying out the I.D.C. policy has gone right through the previous Administration and it has again been expressed today, for obvious reasons. This country has got resources of manpower that are not being fully used because the industries are not in the places where the spare manpower happens to be. Somehow or other we have got to ease the load, which is now very oppressive indeed in some of the congested districts.

In fact, I think it is generally agreed now that one of the reasons for what is called the "overheating" of the economy is that in certain parts of the country the industrial firms are fully stretched. They have no new skilled labour which they can take in when expansion of their production is called for. In many cases, because of the congested area in which they are working, they are in difficulties in getting arty factory expansion at all, even if I.D.C.s were given to them. This has meant that there is a backlog of orders which cannot be fulfilled, and it goes all the way down the line. Somehow we have got to do all we possibly can as quickly as we can to break this situation, and the I.D.C. policy is the best way of doing it.

Therefore, when my right hon. Friend says that we are going to be tougher than in the past, we are saying precisely the same thing that Ministers in the previous Administration had said, that we have got to be tough and examine very critically indeed, and, in our present circumstances, be even more critical than before.

Mr. Geoffrey Lloyd (Sutton Coldfield)

Is the hon. Gentleman suggesting that what the President of the Board of Trade said was that he was going to be as tough as he had been before? We interpreted his statement to mean that he was going to superimpose extra toughness on the toughness that existed before.

Mr. Darling

No, we are going to examine even more critically than before all the applications which come in. This is extra toughness. In those circumstances, for the reasons which the hon. Member gave, and with which I agree, if an application comes along where if one does not allow the extension to go ahead one will interfere with the efficiency of the set-up, the question has got to be examined from that point of view. But where industries or extensions to industries can go to development districts where there are spare labour and resources without hardship to the existing firm, whatever the circumstances may be, they should go. That is what the industrial development certificate system is for.

It is very difficult indeed to pinpoint how extra toughness will operate except by taking examples, which—and I do not mean this in any unduly critical way—the hon. Gentleman did not produce. He knows very well that the applications as they come into the Board of Trade are thoroughly examined. If a firm, perhaps in a congested area in the Midlands, is dissatisfied with the attitude of the officials of the Board of Trade, senior officials can look at the matter again. It can be looked at by Ministers, and, as the hon. Gentleman knows, issues are raised in the House, deputations are received, and so on. I am confident that, if we carry out my right hon. Friend's words and make the examination of all applications for I.D.C.s in the congested districts more critical, all the factors will be taken into account and will be properly examined. But I repeat that, in the present circumstances of overheating of the economy, something must be done.

Over the past 12 months, to the surprise of almost everyone I think, industrialised production in this country has not gone up. This is a surprising fact because all the forecasts made earlier in the year suggested that there would be a continuous rise. Somewhere in this country, with our economic system, there must be spare manpower. Otherwise, these production figures do not make sense. We know that there is spare manpower in the sense of under-employment in some of the development districts, and there are great numbers of unemployed. I cannot make the calculations, and I do not know what would happen to our production figures if all the people who could be fully employed were, in fact, fully employed today.

But there must be other factors in the levelling off of production over practically the whole of this year. It may be, as the hon. Gentleman said, that in certain parts there is transport congestion. There are resources and public services not properly planned. In many areas where the overheating occurs, because of lack of supplies of components further down the line or lack of semi-finished materials coming at the right time, many firms may well be holding on to skilled workers and not working full time in the sense of giving full production.

If one of the factors in this situation is that loss of production is being caused by congestion of one kind or another while in the development districts and elsewhere there is labour underemployed, we must somehow spread our production activities over the country and take a lot more to the places where there is spare labour. In this situation we must look more critically at applications for factory extensions in the congested districts. If we do not look at them very critically indeed, we may be making the situation worse.

I am not sure—I am thinking aloud—whether it may be necessary to look at the application of industrial development certificate policy afresh, if we have time, so that we may be able to offer inducements to firms to move out of the districts where they are now even though, at present, they are not thinking of applying for any additions or extensions. We certainly do not want to put any firm in the situation where, by refusing an extension to its factory, we reduce the opportunities for it properly and efficiently to expand and, perhaps, do what we want many more firms to do, that is, move strongly into the export trade. We have to look at the matter as a whole, from all these points of view.

There is another important factor to be taken into consideration. It may be that, in certain cases of application for extensions which come before the Board of Trade for examination, the labour force would actually be reduced if that extension were to be for automatic machinery, because such machinery occupies more space with fewer workers than previously.

We must look at extensions in relation to the number of workpeople to be employed. In the Midlands area, with which the hon. Member for Peterborough is very much concerned, we have also surely to look very carefully at the proposals that are being made for overspill. I do not want to go into that aspect now because it raises different issues but the whole picture must be looked at and I feel sure that the hon. Member will agree with the approach I am taking.

We want to look at development districts and I.D.C. policy very carefully, but we must insist that all the applications for extensions in heavily congested areas, particularly the Greater London and Greater Birmingham areas, are looked at very critically. But I assure the hon. Member that, as far as we know, we have had no complaints that suggest that the tough policy of the last Government caused any great hardship to any firms. Individual firms may protest that their development is being frustrated if we refuse applications in getting a little more critical, but we must set that against those firms which complain—and this happens frequently—that new developments undertaken by other firms in their neighbourhood are stealing their workers away from them.

These are some of the factors we have to balance. I assure the hon. Member that the needs of individual firms are not ignored when I.D.C. applications are under consideration. Each application is thoroughly examined. Full discussions are held with the applicants and we give every opportunity to them to argue their case. The large number of applications that are approved in such areas as the Midlands and the South-East are evidence of the consideration which has been given to every case.

Another point needs making. The hon. Member touched upon it. When I.D.C. applications are being considered there is discussion with the other Departments involved. He is right in saying that public services in the development districts must be looked at so that we can make them more attractive to firms that we hope will go there. This is where our regional planning proposals come in.

I assure the hon. Member that the close consultation which has taken place in the past under the last Government between the Board of Trade and other Departments will be continued and, indeed, strengthened and made more effective by the regional planning proposals which will be announced this week.

I feel sure that, although we must stress also that all applications for I.D.C.s in congested districts must be examined very critically, we do not ignore the points the hon. Member has raised. We shall make sure that all applicants receive the fullest consideration and that we do not interfere with efficiency and the reasonable development of industry in any way.

Mr. Harold Gurden (Birmingham, Selly Oak)

Many of the industries peculiar to the Midlands are service industries serving the larger industries. Will the hon. Gentleman ensure that they are dealt with fairly? There are thousands of these small firms and the whole economy could be disrupted, particularly in such industries as the car industry. It would be to the advantage of the country if these smaller businesses were more generously dealt with in relation to their size. More could be gained by persuading larger industries to move rather than hurt the great service these small businesses do.

Mr. Darling

That raises wider issues, but I think I said that it may be that one solution is to get larger industries to move en bloc.

The Question having been proposed after Ten o'clock on Tuesday 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 six minutes past One o'clock.