§ Motion made, and Question proposed, That this House do adjourn.—[Mr. Bishop.]
§ 3.57 p.m.
§ Mr. Tarn Dalyell (West Lothian)
It is my good luck to have a second Adjournment debate in 10 days on the subject of Treasury measures in relation to the motor industry and regional development. For this, I make no apology. This represents a heartery from Bathgate, where the unemployment rate is now 9.2 per cent. The late Aneurin Bevan once said that when one throws stones in the House of Commons they turn into sponges. I do not wish to throw stones at my hon. and learned Friend the Financial Secretary to the Treasury, who has been extremely helpful. None the less, this represents a crisis in a desperate situation.
I will not go further than to say that the noble Lord, Lord Hughes, in another place, referred to the unemployment situation in West Lothian as of the greatest seriousness, a combination of motor industry troubles and regional troubles. Basically——
§ Mr. Speaker
When the hon. Member refers to the noble Lord, is he referring to a Minister speaking on Government policy? If not, he must not refer to speeches made in another place.
§ Mr. Dalyell
Mr. Speaker, to convey the bitterness that many of my constituents are coming to feel, at our big meeting of the trades council and other organisations the question was asked, "Is Montagu Norman still the Governor of the Bank of England?" Certainly, the position now statistically is worse than when the seat was held by my right hon. Friend the Member for Easington, (Mr. Shinwell). It looks as though it will be a grim winter. Nevertheless, I believe that mud thrown is ground lost, and that we should concentrate on the constructive sides of the problem.
To quote the Prime Minister, speaking to the T.U.C. at Blackpool:I have referred to the exemption of housing, schools, hospitals and factories. I have referred to the measures we have taken to shield the development areas.1800 I am prepared to face up to the policy implications of what I wish to say. There is no doubt about that. What I am calling for is export reflation and regional reflation——
§ It being Four o'clock, the Motion for the Adjournment of the House lapsed, without Question put.
§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bishop.]
§ Mr. Dalyell
—because there is developing in the regions a very great impatience with the unemployment problem.
I do not think it too fanciful to suggest that some people at any rate if faced with continual unemployment will go in the sort of direction that we have seen elsewhere in Europe and not least in the German State of Hesse. This is the sort of reaction that unemployment provokes among some people because they are desperate, and this must be understood. The question is how to shield the development areas.
In a sense this debate should be addressed not perhaps to the Financial Secretary to the Treasury, but to the First Lord of the Treasury. It is relevant because it concerns the machinery of government. Let me make clear that in almost all the dealings that I have had with individual civil servants, I have had the highest admiration for their quality and ability and the devoted work that they have done in their Departments, and nothing that I say implies any criticism of permanent officials—the "permanent politicians", as my hon. Friend the Member for Stepney (Mr. Shore) called them in a very notable book. I am talking about principles and not people.
The object of the debate is not in any futile sense to be so small as to try to attack such people. The object is to ask how the Civil Service and the Government machine can best be manipulated for the good of Bathgate.
I must refer again to my hon. Friend the Member for Stepney, who writes:The first and most crucial area for reform is the apparatus of central government, the organisation of the great Departments of State and the functions, compositions and powers of the elites of the Home and Foreign Civil Services which control them. The contribution made by the top men in the Civil Service to 1801 the success or failure of Government policy can hardly be exaggerated. Ministers may bring with them broad ideas of how future policy should develop but in the transformation of policy goals into future plans, and, still more, in policy responses to new and unexpected developments. Ministers are largely, if not wholly, dependent on their official advisers.This is not an attack on the civil servants in Whitehall and not a question of facile criticism. I think that Whitehall is good for dealing with familiar problems which concern many Departments. I also think that the Civil Service is good when it comes to a new problem that affects one Ministry. But the problem really occurs, as was said in the Adjournment debate of 9th November, when a crisis situation arises unexpectedly which concerns very many different Ministries.
The problem of Bathgate at present concerns the Board of Trade; the Ministry of Technology, which is responsible for the motor industry; the Scottish Office, self-evidently because of the responsibilities of the Scottish Development Department; the Ministry of Labour, again self-evidently from the point of view of employment; the Department of Economic Affairs; the Treasury, of course; less directly, but because of the importance of the Government's earnings-related pensions legislation, the Ministry of Social Security; from the point of view of the power of the public purse, the Ministry of Public Building and Works; the Ministry of Transport in so far as the purchasing power of British Road Services is extremely relevant to the problem; the Post Office, deeply relevant to the Bathgate position because of the presence of the Telegraph Condenser Company, making much of the technical equipment used in Post Office work; and certainly, again for the same reason, the Ministry of Defence.
Here I wish to pay tribute to the work of my hon. Friend the Member for Glasgow, Craigton (Mr. Millan), the Joint Under-Secretary of State for Scotland, who is on the Front Bench this afternoon, and of the Under-Secretary of State for Defence for the Royal Air Force. My hon. Friend the Under-Secretary of State for Defence for the Royal Air Force is at present examining this problem.
If, as I am, one is arguing that the link between the aid Britain gives and the under-used capacity in this country, then it must be admitted that the Foreign 1802 Office, Commonwealth Office, Colonial Office and the Ministry of Overseas Development are all involved.
The question, not who in Whitehall is involved, but who in Whitehall is not involved, is the important consideration. Whitehall has great virtues, but the machinery for which I am asking and the suggestion I am making is that, in this case, the Scottish Office should appoint a small task force to look into all aspects of the Bathgate problem.
I hope that I shall be in order in referring to a debate in another place, because it may be argued that we do not want any more machinery—that we have enough as it is. Consider, for example, the Scottish Economic Planning Council. A former Secretary of State, Viscount Muirshiel, said, and I quote——
§ Mr. Speaker
Order. The hon. Member will appreciate what I told him, that he must not quote a speech made in the other place unless it is a speech made by a Minister giving a declaration of Government policy.
§ Mr. Dalyell
Of course, I accept your Ruling, Mr. Speaker.
Briefly, a former Secretary of State was profoundly disturbed about whether the machinery that existed in the Scottish Office was adapted to this kind of West Lothian problem. That is why I ask for a task force to go into the question of seasonal variations in credit.
I admit at once that the manipulation of Purchase Tax is far more complicated than seasonal variations in the hire-purchase arrangements. It transspired from an Adjournment debate some time ago that the amount of hire purchase on cars was 19 per cent. down in the third quarter of 1966 compared with the third quarter of 1965. The position in relation to commercial vehicles could be very different, and the spokesman for the Ministry of Labour said that the problem would be referred to my right hon. Friend the Chancellor of the Exchequer.
I admit that there is an element of anticipatory buying and that there may be no question of a general relaxation of hire-purchase restrictions until our balance of payments problem is solved. Having accepted that, I now ask the Treasury to consider whether there is a case for making regional variations and, 1803 in making this request, I draw the attention of my hon. and learned Friend to the debate on 9th November.
Can the Government give an estimate of the possible pick up in domestic demand? In asking this question, I must point to the danger of deliberately fostered economic booms—and I agree that there is a difference between the situation in Scotland and the situation in, for example, Oxford and elsewhere where the motor car industry is the dominant industry.
When considering the problem of components, a great deal of our difficulty has arisen when there have been stoppages through fog on Shap Fell and when the Bathgate factory has been cut off from its component manufacturing base.
I have great hopes of the I.R.C. and I trust that my hon. and learned Friend has noted the discussion which took place in Committee on the Industrial Reorganisation Corporation Bill, when the hope was expressed that the Secretary of State for Economic Affairs would take the initiative with Sir Frank Pearson and his colleagues at the first available opportunity to create a joint division between components manufacturers such as Hardy Spicer and Wilmot Breeden and, perhaps, use the advance factories which are now empty in the Bathgate area.
What are the possibilities of early regional variation in the Selective Employment Tax? In paragraph 143 of the White Paper we are told that the Government are conscious of the rôle which the service industries have to play in the expansion of the Scottish economy. The hon. Lady the Parliamentary Secretary to the Ministry of Labour said that possible regional variation of the tax was one of the matters being considered by the Committee reviewing the tax. In my view, this is urgent and there is a case for regional reflation before Christmas.
There is also a case for the study of a possible payroll subsidy to manufacturing industry of the order of 5 or 10 per cent. This has the economic advantage of quick action. On the other hand, I admit that the difficulties of adding further complicated measures are to be reckoned with, because many people are now of the opinion that some of the Government's measures are too complicated. I realise 1804 that in suggesting extra measures like this I am running the risk of complicating the fiscal system even further.
I understand that the Scottish Office share of national deferment was only £3½ million of £55,000,000, and in this respect the Government have shown real regional discrimination in favour of Scotland. But having accepted that, I do not think that it is greedy to ask that there should be a rephasing of local authority expenditure in certain areas where there is underemployment. The request for restraint made to the Scottish banks made allowance for the different conditions in Scotland. Scottish banks were asked to make a special deposit with the Bank of England at the rate of 1 per cent., while for English banks it was 2 per cent. During the Adjournment debate of 10 days ago, it was said that this type of difference between the two was something which could be taken further. Has the Treasury thought along these lines, because this is clearly a medium-term measure which is practical and realistic?
The Government have done very well in bringing advance factories to Scotland, but if they are not filled, great difficulties are created. What are the possibilities of bringing bio-engineering projects, which were suggested to the former Minister of Technology by the Scottish Council on Development and Industry? I do not ask for an answer on that this afternoon, but this is certainly something which has been argued in detail by the Scottish Council and it deserves at least a reply. In the long term, much depends on what is done on the scientific and technological front. The Chairman of the Scottish Council on Development and Industry refers to the importance of the link between industry and the research establishments and not least in the motor industry where the export element is so high. Professor Ritchie Calder has argued at length the necessity for research to be rooted locally.
The last Labour Government brought the National Engineering Research Laboratory to East Kilbride. Will the present Government consider bringing some major research to the new town of Livingston, which is in the Bathgate area and which is covered by the area where 1805 there is a 9.2 per cent. unemployment rate?
Another matter of major importance to the area is the provision of private housing. I think that the lack of suitable housing for potential incoming industry has been a major factor in adding up to some of our economic difficulties. Perhaps there would be an argument for the use of a national building agency in this respect.
The Chairman of the Scottish Council has argued about the need for direct flights between Scotland and the North of England, on the one hand, and the Continent of Europe, on the other. In the light of what my right hon. Friend the Prime Minister had to say yesterday, the question of flights from Turnhouse and Newcastle direct to the Continent becomes a matter of urgency.
I wish to refer to the matter of underutilised capacity and aid to developing countries. I am not asking for expansion of it, but for the linking of such aid. I have given to my hon. Friend the very full correspondence which I have had with Pierre Paul Schweitzer, the Secretary of the International Monetary Fund, and George Woods, of the World Bank. Schweitzer has argued that there is a clear basis of self-interest to support assistance to facilitate the expansion and substantial growth of international trade.
Whether this should be done through the great international agencies or on a bilateral basis is a matter for argument. Having given the Treasury the detailed correspondence, I would simply ask whether it thinks that it is worth pursuing this point. It seems from his stated pronouncements that the American Secretary to the Treasury, Mr. Henry Fowler, would be prepared to listen to schemes put up from countries, temporarily in deficit, but nevertheless basically advanced in order to carry out the obligation of the developed nations to the underdeveloped nations. I would ask the Financial Secretary to look closely at Mr. Fowler's speech to the Association of American Bankers, in Grenada, which seemed to offer a basis for negotiation.
I do not believe that all aid ought to be tied. This would be very unrealistic. The argument is that only a proportion of aid should be tied. If it is argued, as it has been in various quarters, that tied 1806 aid is not acceptable to recipient countries, the reply is that it may not be a question between tied aid and free aid, which ideally is far better, but between tied aid and no aid at all. It is in our immediate and long-term self-interest to deal with this question of aid, because problems of the kind that we have been discussing will not be settled in the long term if the pace of development in the developing world goes on rather faster than it has done in the early years of the 1960s.
§ 4.19 p.m.
§ The Financial Secretary to the Treasury (Mr. Niall MacDermot)
This is the third Adjournment debate that there has been during the last two weeks on the motor vehicle industry. That is not surprising because hon. Members, particularly those representing constituencies affected by the redundancies, short-time working and unemployment in the industry, are naturally very anxious to raise these matters in the House at every opportunity. Very full answers were given by my hon. Friends the Parliamentary Secretary to the Ministry of Labour and the Joint Parliamentary Secretary to the Ministry of Technology in the previous debates, and I have not a great deal to add to what was said then.
The subject for this Adjournment was, as I understood it, "Treasury measures to help the motor vehicle industry". My hon. Friend has covered a wide range of subjects, in some of which there is an element of Treasury responsibility but in others of which there is none. Some are more directly related to the motor vehicle industry than others.
For example, my hon. Friend raised the question of using our powers of dispersal policy to bring research establishments to Scotland—in particular, to Livingston New Town. The whole of our dispersal policy is something in which I personally am interested and involved from the Treasury standpoint. We push this policy hard, because we think that it is a useful contribution and an example which the Government can set in helping to get a better balance in our economy. My hon. Friend will remember this Government's decision in connection with Dounreay. One of the new computer centres is being located near Edinburgh. This policy is something which we keep constantly in mind and I 1807 know that my right hon. Friend the Secretary of State for Scotland always very forcefully represents the interests of Scotland in connection with this policy.
My hon. Friend then asked about the possibility of regional variation of the Selective Employment Tax. We debated this question at considerable length during the debates on the Finance Bill and on the Selective Employment Payments Bill. My right hon. Friend the Chancellor of the Exchequer, as part of the general undertaking he gave to keep the tax under review, then undertook in particular to review this subject, because he agreed that it was a tax to which in principle it would be possible to give some regional variation.
My hon. Friend referred to the very many measures which this Government have taken to discriminate in favour of the development areas. What remains to be seen by study and by the review which is now taking place is whether the tax is one in which we should seek to introduce an element of regional variation; and, if so, how? There certainly would not be any question of any action being taken on that before Christmas, which is what I think my hon. Friend suggested. This is a matter which is being reviewed before next year's Finance Bill.
My hon. Friend raised the question of advance factories, on which I do not think I can assist him. This is a matter for my right hon. Friend the President of the Board of Trade.
My hon. Friend then raised some general points which he referred to in both previous Adjournment debates about the machinery of government. I listened with considerable interest to what my hon. Friend had to say, because machinery of Government is one of the subjects on which the Treasury keeps a fatherly eye. It is a matter for which we are responsible, both constitutionally and from the overall point of view of ensuring efficient government and ensuring that we get the best value for public expenditure. We should like further to study what my hon. Friend said.
I wonder whether the general criticism that our present machinery of government is not well attuned to dealing with a new crisis situation as it develops is fair as a general allegation. I call to 1808 mind the special measures which were taken at the time of the TSR2 cancellation to cushion the effects of unemployment. It is generally agreed that those measures were very successful and that the fears which were expressed at the time the decision was announced have not in the event been realised. That was an easier situation in which to act than the present one.
One of the difficulties is that one factor—certainly not the only one, but undoubtedly a considerable factor—which has led to the very problems which my hon. Friend is raising is the Government's own decision, as announced by my right hon. Friend the Prime Minister in July, that it was necessary to introduce measures designed to reduce home demand in the consumption of consumer durables to the extent of £160 million a year. One obviously cannot take measures of that kind and allow them to take effect if at the moment when they take effect one immediately, as it were, tries to take steps to cancel out the measures at the point where they are biting.
§ Mr. Dalyell
At public meetings, of which we have had many in the Bathgate area, I have always been prepared to face the consequences of Government policy. But is there not a special case where the pocket of unemployment is markedly higher than the average?
§ Mr. MacDermot
That may well be so. What my hon. Friend is suggesting is that in a case like that, particularly in relation to the problem of his constituency, my right hon. Friend the Secretary of State for Scotland should appoint what he called a small task force to deal with that problem. This is a suggestion which I will certainly draw to my right hon. Friend's attention. Not having notice of it, I do not know what specific action or machinery my right hon. Friend has set up to deal with it. I imagine that it is a matter on which my right hon. Friend would be in close contact in any event with the Scottish Economic Planning Council, which already has machinery for bringing together many different interested parties in dealing with a situation of that kind.
When it is a situation as local as that, it is not a matter so much of the machinery of the central Government to 1809 deal with it as finding what is the appropriate machinery at regional and, in this case, at Scottish level.
In the few minutes that remain, perhaps I may deal with the final point raised by my hon. Friend. He suggested establishing a closer link between aid to underdeveloped countries and, in particular, under-utilised resources. This is a matter with which, I know, my hon. Friend has been concerned for some time. He raised it, I believe, with the previous Government while we were in Opposition.
As my hon. Friend has said, he has been in correspondence with Mr. Schweitzer and Mr. George Woods, of the International Bank, and he has been kind enough to send me copies of that correspondence. In it, Mr. Woods in particular pointed out some of the difficulties which are involved in this kind of aid. It is sometimes referred to as aid in kind. This already exists in some 1810 fields, particularly in the food programme, but there are difficulties about it as was pointed out in that letter. The overhead costs of mobilising, distributing and supervising a programme of this kind are very high in relation to the value of the aid which is given to the recipient countries.
It raises issues which go beyond the broader question of whether aid should be tied to a certain country and it involves considerable administrative problems. In so far as it is an administrative matter, it is more the responsibility of my right hon. Friend the Minister for Overseas Development. From the Treasury point of view, I do not feel——
§ The Question having been proposed at Four 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 half-past Four o'clock.