§ 5.57 p.m.
§ Dr. John Dunwoody (Falmouth and Camborne)
I beg to move.
That this House expresses its concern at the high unemployment rates to be found in the development areas; and, while welcoming those Government actions which have stimulated the economy of the regions, calls, as a matter of urgency, for further measures to attract new industries and to raise social and economic Standards as well as employment levels to at least the national average.
Unemployment is a social Cancer. It is evil, not just for the individual who is out of work but for the Community, especially when the unemployment level rises to a high figure. It is an evil on which can grow despondency, disillusion, and social disruption, and from which, all too often, come delinquency and crime. It is a cause of much misery today— misery that is concentrated in certain areas.
I am concerned about the problem of unemployment at a national level, but my main concern this evening is with the development areas—those parts of the country that we recognise to be facing 972 serious economic problems, often of long Standing; parts of our country that also have to put up with higher rates of unemployment than the country as a whole.
I want to quote figures for the last two months to demonstrate this. In October, unemployment over the whole country was 2.4 per cent. In November, it was 2.5 per cent. Taking the development areas as a whole we find that for those two months the respective figures were 4 per cent. and 4.1 per cent. Indeed, in relation to some of the more difficult development areas—and undoubtedly in parts of other development areas; because in the bigger development areas these figures do not demonstrate the variations from place to place very well —there was an even greater gap between the average and the average for the whole country. The South-West Development Area—a part of which I have the honour to represent—had an October unemployment rate of 4.8 per cent., which rose in November to 5.7 per cent.
At the same time, if we look around one or two of the big cities outside the development areas we see a different picture. In October, unemployment in London was 1.2 per cent., in Birmingham and Manchester 2.2 per cent., in Sheffield 2.1 per cent. and in Leeds 1.9 per cent. These figures are not only much below those in any development areas but are also well below the national average, which underlines the problem which I hope to describe.
But, as I said, these figures conceal the variations which exist in the bigger development areas. This is probably particularly true of the Northern development area and of the Welsh and Scottish development areas. Even so, however, these statistics which we so lightly use are only the tip of an iceberg which represents the neglect of human resources in many parts of the country. The much larger hidden part is represented by the numbers of workers on short time, by those who do not have the opportunity to do the overtime which is accepted as the rule elsewhere, by the number of unemployed women and elderly workers who are not registered as unemployed in many development areas, and, perhaps more seriously than any other factor, by emigration from these areas of a significant proportion, particularly of the most able young men and women.
973 I welcome the fact that many able young men and women in the development areas want to move to other parts of Britain and of the world, but I object to young people with skills being driven out of the development areas because there are not the occupational opportunities there near their homes which they have both the skill and the ability as well as the wish to take up.
I must welcome what has already been done. For the first time, over the last few years, we have begun to tackle this Problem. We may not be much nearer a Solution, but real progress has been made. Particularly when one considers the development areas as a whole, which includes a large proportion of our surface area, the results of the measures already taken are encouraging, but the picture is less cheering for particular places in the development area.
When one compares one development area with another or one part of a given development area with the less fortunate parts one finds the black Spots, the hard core problem areas, which have been recently encouragingly recognised by the designation of "special" development areas, sections of existing development areas to which expert extra assistance will be given. Regrettably, these are at the moment linked almost exclusively with colliery closures. I do not object to this, but I hope that we may be assured that the concept of a special development area will not be linked to just one industry, since there are many other parts of the country which possibly face problems of defining traditional industries.
We must re-examine our methods of assisting development areas and ask our-selves whether we can now, after the experience of the last few years, make the existing measures, which we are using with effect, much more sophisticated! At the moment, the whole of the country is either a development area or not a development area. There is no halfway house. Until the concept of the special development area was introduced, there was no distinction between development areas. I hope that, in the not too distant future, a greater degree of selectivity will be introduced in our means of assisting development areas, along with much greater sensitivity, so that the assistance to and Stimulus of industry there is much more directly proportional to their needs
974 In this context, I am talking about comparatively small areas. I would like us to go right down to labour exchange level, so that we could solve some of the difficult problems of certain areas which have consistent unemployment rates of 10, 12 and 15 per cent., areas which often require only some extra incentive for an industrialist to move in to solve their problems.
I know that the Hunt Committee is considering related problems to that of introducing greater selectivity and sensitivity in encouraging the movement of industry. The Committee's prime concern, of course, is with the grey areas which often lie geographically just outside the existing development areas, but I hope that we will use its recommendations and suggestions when they appear to help solve some of the problems of existing development areas.
Eventually, I would like the aid and Stimulus to industrialists to move into development areas and build up the social fabric, aid to be graduated, and some thought to be given to the problem in terms of central Government assistance to local authorities, as we do at the moment. We have a complex formula for determining how much each local authority should receive from central Government, which takes into account all sorts of variables between areas, like density of population, age structure, number of school children and old folk and so on.
These are all important factors in local authority finance but it should be possible now to create a similar formula for reaching a figure for each area, so that there is an index of social and industrial economic need instead of this black and white concept, with aid graduated in direct proportion to the needs of a given Community at a given time, since these needs vary from time to time.
More jobs are needed in our development areas. This is not a simple question of new industries but one of attracting the right industries for each place, industries with a real future, reasonably sound economically and employing the sort of people who are lining up outside the local labour exchanges, whether skilled men, women or any other workers. We should also consider the problems of existing 975 industry—not only the serious problems of the declining, more traditional industries, but also the problems of those which are established and are doing reasonably well in the development areas.
We should also pay much more attention to some means of indicating when an industrial concern in a development area is about to close down. There was a recent example in my constituency, of which my hon. Friend knows—and there must be many others in other parts of the country—of no prior notice of such a closure being given to the Government. It makes nonsense of much of Government policy if we devote so much time, effort, money and manpower to attracting new industries without any means of retaining existing industry and employment opportunities.
We should seriously consider the place of public ownership in development areas. I am thinking not only of the advance factories which have in some cases been lying idle, but also of the whole question of stimulating the economy of some of these difficult areas. I do not suggest the use of public ownership for doctrinaire reasons. There is a sound and practical reason, when it is patently obvious that private industry, although not unwilling, is incapable of solving particular problems.
More than anything, a sense of urgency is needed. For too long we have tended to take time, appoint committees and discuss these matters, but time is not on our side. We also need a sense of enthusiasm, which I sometimes think is lacking in Government Departments, particularly when we are trying to attract industry to development areas. All too often we rely on the financial carrot which we dangle before the industrialist's mouth.
Let us talk about the wonderful opportunities for firms moving to development areas and about the advantages of living in areas like the far South-West, Scotland, Wales and the North. All too often we do not talk about the positive reasons for industrialists to move out of the dark, dirty and congested areas of London, the South-East and the Midlands. We should approach this more positively than we have perhaps done in the last two or three years; we must "sell" the development areas.
976 We must do more to raise social Standards in the development areas. One need only consider housing to see what is happening in these poorer parts of the country. Housing Standards in the development areas are deplorable and are far worse than elsewhere in the country. There are many houses in my constituency without mains sanitation or the possibility of having this amenity in the foreseeable future. The lowest percentage of bathrooms in homes exists in the development areas and the same applies to most other facilities.
Social Standards must be raised in other spheres; including, for example, in education. I was shocked to note recently in a reference book that the 24 universities opened since the war—only three of them in Scotland—are not in development areas. In other words, even in education we are concentrating more opportunities for young people in the already prosperous parts of the country. The same can be said of the health Services. The shortage of doctors is most acute in the old industrial areas of South Wales, the North country and Scotland. And hospital Services in the development areas are nowhere near as good as in the other parts of the country.
Consider Communications. We have completed an impressive Programme of building motorways and an even more impressive programme lies ahead, but most of this building has taken place outside the development areas. Only a very few miles of motorways have been built in, or are planned for the development areas. Communications are good until they reach these areas, but they virtually collapse upon reaching the development areas. This applies to main road, rail and, to some extent, air links.
When trying to attract new industries to the depressed areas, when endeavouring to bring in opportunities for employment and when trying to enhance the Standard of life in these areas, we must consider the cultural side of life. This has been neglected in the development areas. An indication of this is the way in which the B.B.C. and, to a lesser extent, I.T.V. developed in the early days of television. At first it was the development of a second Station and, later, the introduction of colour television. No one ever suggested starting those developments in the development areas.
977 Why should they always be started in London and the Midlands? Why should my constituents have to pay the same licence fees but have the opportunity of seeing only two television Channels, neither of them in colour? Why should my constituents be obliged to invest money so that experiments can be conducted for the benefit, certainly initially, of people living in more prosperous areas far away?
§ Dr. Hugh Gray (Yarmouth)
Would my hon. Friend agree that it would be a good idea if, when large grants are being given to, say, symphony orchestras in London, a condition should be that for a certain number of months each year the orchestra should tour the provinces, as they must do in Czechoslovakia?
§ Dr. Dunwoody
That is an interesting idea which I would like to see pursued. A great deal more should be done to spend money on cultural activities in the development areas. If only a small Proportion of the financial assistance that is at present given for cultural activities to the more prosperous areas was given to the development areas, the whole cultural quality of life would be improved.
We must improve the economic Standards in the development areas, for it is in these areas that rates of pay are at their lowest. Having noticed that the rates of pay in the County of Cornwall, which is virtually the South-West Development Area, were the lowest in England, I inquired to discover where rates of pay were even lower, and when I was given the answer I found that although those localities were few, they were all in the development areas. Yet it is in these outlying parts that, partly because of transport costs, costs generally are higher, with the Single exception of housing. We therefore expect the people living in the development areas to tolerate not only a lower Standard of pay and, therefore, a lower Standard of living, but also higher costs of living.
It would be a measure of social justice for us to attempt to improve this State of affairs. I therefore ask in the Motion that we bring the Standards in the development areas up to at least those of the national average. I appreciate that this will require a massive, co-ordinated effort. In these areas we face at least a 978 century of neglect and I accept that the errors of the past cannot be put right overnight. To suggest that they could be put right in one, two or three years would be naïve. However, almost every Government Department must be involved in this battle, and I am glad to see a Minister representing the Department of Economic Affairs here to answer the debate because that Department has the duty to co-ordinate these efforts.
If we do not take this step, there will be no Solution to the economic ills of this country and there will be little hope for the deprived areas as a whole. The whole nation must share in the economic progress which, I am sure, will be ours in the years ahead. This means that every development area has a right to share in this progress. They are prepared to share the burdens. They must also share the benefits. Every individual has the right to work. It is our duty to transform that right into reality.
§ 6.16 p.m.
§ Mrs. Winifred Ewing (Hamilton)
Scots will recall that unemployment peaks are nothing new in Scotland. There have been nine squeezes since the war and I need not remind the experienced politicians around me of the dates. In July 1966, the latest freeze and squeeze started, but we are still enduring it, and recently we had devaluation.
There are a few complaints which I must get out of my System at the beginning of my speech. I agree with Dr. Dunwoody that the rate of unemployment in Scotland is far too high—this is the theme on which I wish to concentrate today—and is not acceptable, whatever one means for "acceptable". We have been told that 2.4 per cent. is acceptable, but since the Scottish unemployment rate has not been at the acceptable rate in the memory of many hon. Members present today, I wonder why successive Governments have gone on accepting it.
We in Scotland get the worst of all possible worlds. Combined with this high unemployment rate, we have fewer Jobs and must pay higher prices for our food, fuel and many other essentials required by people in the lower wage brackets— and we have lower wages as well. The Situation is disguised by our disgraceful emigration rate, which is running at about 45.000 a year of our best Citizens. 979 We do not lose the lame, blind, delinquent, physically and mentally handicapped. We lose out best people, those who are readily employable and who comprise the skilled and professional classes.
We were told that the July, 1966, measures would be the springboard to expansion, but we in Scotland have found that they are proving to be the gangway to the emigrants' ship for many of the Citizens we cannot afford to lose. We are told that things will get worse before they get better. Lord Robens has estimated that we will lose 30,000 jobs in Scotland's coal mining industry. Devaluation can only make the Situation blacker. The unemployment rate in Lanarkshire is far from "acceptable". In the autumn it increased from 5.6 per cent to 6.5 per cent. Where it Stands today I do not know, but I am hopeful of finding out.
The freeze and squeeze has not been the right policy to cure the unemployment and other ills of which Dr. Dunwoody spoke. We were told that this policy was designed to cure us of over-spending and luxury living. If one goes around the development area about which I am speaking—which is almost the whole of Scotland—one finds that, in addition to finding all the other social ills, that very few people indeed are suffering from either of these two diseases. But we got the freeze and the squeeze just the same.
A comparison of export figures for Scotland and the United Kingdom, provided by the Scottish Council (Development and Industry), expressed as a percentage of total Output of manufacturing industry, demonstrates that Scotland is above the level of the United Kingdom. It is also demonstrated that in 1966 the Scottish worker's export rate was higher than that in the United Kingdom, and second only to that in West Germany. Whereas in the first part of 1967 United Kingdom Output dropped, Scotland's Output did not. Many of us in Scotland feel that we have already done our bit to bolster the economy. We do not have a balance of payments problem. Our exports are rising. The Selective Employment Tax was an unsuitable measure for Scotland. It hit many areas of life with disastrous results. It directly and im- 980 mediately affected the number of houses being built, and lack of housing is one of Scotland's most crucial social ills.
The freeze-and-squeeze was not justifiable, and it is time that we had policies tailor-made to fit us in Scotland. As it is, Westminster is for us the West End misfit shop. I shall not repeat the excellent arguments advanced by Dr. Dunwoody, though I take them as being applicable to my case also. I agree with him that it is surprisingly difficult to sell certain areas, I cannot imagine why any-one would not move to live in Scotland as against England if they could choose freely.
As I want to be construetive, let me quickly suggest one or two things I would do were I at the helm. Time will not permit me to go into them in detail in an Adjournment debate, and in any case, the House might not wish me to do so. Basically, Communications are the heart of a great deal of industry, but we are not getting them. Norway, a country comparable with Scotland, has managed to encourage the growth of population in remote areas. In Scotland, we have a declining population. Norway regards Communications as a social Service, and that should be the basic attitude to the development area of which I speak.
Freight charges should also be looked at from this point of view, and decentralisation should really be carried out. That the head Office of the Forestry Commission should be in England is a very curious comment on the future development of the industry. The effect on Bank Rate of devaluation will be disastrous for us.
The retraining of our unemployed in Scotland seems to need a great deal of investigation. It appears that when issuing the necessary forms to applicants certain employment exchanges in Scotland indicate that unless the applicants are prepared to delete from their application form those parts that would enable them to remain in Scotland the applications will not be considered. Applicants have been told that if they are not prepared to work in England, they cannot be accepted for vocational training. This attitude to retraining makes cynics of all those in Scotland who come into contact with it.
§ Mr. Tarn Dalyell (West Lothian)
The hon. Lady has referred to forestry. Is it 981 not the fact that massive advances have been made during the past three years, and that planting in Scotland is now up to 32,000 acres per annum?
§ Mrs. Ewing
That strengthens my argument that the head office should be in Scotland, where the industry's major development really lies. But I agree that much has been done, and that more acreage has been authorised for the future.
Some cuts and stringencies should begin at home—in Whitehall. I find that from 1964 to 1967 the number of civil servants increased by 44,400, with an increased wage bill of £75 million. I find that the Ministry of Technology has seven buildings in Scotland, but 86 in England and that its proportion of expenditure is £28 million in Scotland and £580 million in England. The Ministry of Defence alone has 33 buildings in London, with over 2 million Square feet of office space. This seems to be an example of Parkinson's Law gone wild. A lot of defence spending might be spent more wisely in developing the development areas.
Addressing himself recently to the people of Britain, the Prime Minister asked us all to put Britain first. Scotland has been doing precisely that for too long, but the Scots are at last finding out, and have decided to take steps at elections to express their view.
Mr. Willie Ross, speaking, presumably, for the Government, said that we could not isolate Scotland from the freeze and the squeeze, but there is a way in which Scotland can do this and get measures to improve her Situation in all the respects that have been discussed by voting for the party which can.
§ Mr. Speaker
Order. I did not interrupt the hon. Lady at the time, but hon. Members refer to each other here not by name but by the names of constituencies.
§ 6.26 p.m.
§ Mr. Alec Jones (Rhondda, West)
A week of two ago we debated a White Paper, Wales: The Way Ahead, part of which read:The greatest resource of Wales is its people ‖982 That is equally true of the remainder of the United Kingdom. Yet in all the development areas we find that these human resources have in the past been most shamelessly neglected. Representing a Rhondda constiuency, in the development area of Wales, it is natural that I should concentrate my remarks on Wales, but I believe that what I have to say about Rhondda and Wales is equally true and valid of every other development area.
Throughout my life so far, unemployment in Rhondda has been a matter of varying degrees of height. Sometimes it has been exceptionally high, sometimes rather high, but always it has been too high. Today, the problem is much more acute, because we have to deal not only with the closure of collieries and the run-down of the coal mining industry, but with past neglect—something for which the party opposite bears a very heavy responsibility.
During the decade 1956–66, the total number of employees in Great Britain as a whole rose by 8.4 per cent. but in Wales it grew only by 5.3 per cent. In addition, the whole of the Welsh increase was represented by female employment. This is certainly evidence of the neglect of those 10 years. This Government will be judged by the people on the success of their regional policies. I want the Government to succeed, because they are my Government and because they come from my own party. Above all, I want them to succeed because that will be for the betterment of the people whom I represent.
If we look at the Government's chosen instruments of regional policy—the advance factory programmes, the investment grants, the I.D.C.s and the dispersal policies—they are all more powerful than any used by previous Governments. However, I am convinced that such weapons are not enough to attract new and viable industries to development areas such as Rhondda and Wales. They are inadequate and slothful. They take too long to have any impact upon the problem.
Furthermore, these measures could not hope to succeed against a background of national deflation, and I hope that we will use the opportunity presented to us by devaluation to return speedily to the policies of expansion and full employment. 983 In most development areas it seems to me that the problem can only be solved by the rapid introduction of new, modern, viable industries. The Government's present instruments are too slow to deal with the problem.
In my own constituency, almost the whole of the few new developments taking place are by existing long-established firms. We have failed completely to attract new industry and, without it, we cannot recreate a modern industrial background to give us all the social advantages spoken about by my hon. Friend the Member for Falmouth and Camborne (Dr. John Dunwoody).
During the Summer Recess, I visited a considerable number of factories in Rhondda and found evidence of management and men working hard to make a success of the industries in which they are engaged. Without those existing industries, we should be in a pretty dreadful plight.
What worries me is the complete failure to attract new industries. In Rhondda, there are two factories, one of which has been empty for a 12-month and the other for two years. If present policies of inducement and persuasion fail to fill these factories quickly, it is time that we implemented new policies. I believe that the policies which we should implement are those which we on this side advocated as a Party in 1964 with regard to the extension of public enterprise. It is interesting to note that we said then that we would establish control over the location of new factories, and we have done that through the I.D.C. policy. We said that we would offer inducements to firms to move to certain areas, and we have offered massive inducements. Further, we said that we would accept the idea of the establishment of new public enterprises where these proved to be necessary. The delay in solving the employment problem in development areas shows that the time is now ripe for public enterprises to be established.
I have read the recent Report by my hon. Friend the Member for Bucking-ham (Mr. Maxwell) in which he draws attention to the fact that public spending accounts for about 41 per cent. of the gross national product. Can this vast purchasing power not be used to promote growth in the development areas? Can 984 the Government not persuade and encourage local authorities to combine and use their purchasing power to promote growth inside their own areas? I know that I am repeating what has been said in the House on many occasions. Tragically, they are suggestions which have been dismissed.
I conclude by quoting from The Guardian of 28th November. It contains a contribution by Mr. Dan Smith, Chair-man of the Northern Economic Planning Council, a man with considerable experience of trying to tackle the problem of unemployment in the development areas. He said:If, among the many other things, devaluation buys the time to begin the major correction of the imbalance between the various regions in the country, it can be of historic significance. But it needs drastic action in this direction now. The Government must use its own purchasing power to influence the movement of industry and commerce on a massive scale. It can make a decisive beginning on this at once. An efficient public sector can do as much to make our exports competitive as any other factor.The interesting feature of those remarks is the emphasis on the need for drastic action now. It seems to me that the problem of unemployment will be solved only when the Government accept that there is a vital rôle which can be and ought to be played by public enterprise.
§ 6.36 p.m.
§ Mr. Nicholas Scott (Paddington, South)
The hon. Member for Falmouth and Camborne (Dr. John Dunwoody) was fortunate in drawing first place in the Ballot, but slightly less fortunate in having his subject come up for debate on a day on which the Prime Minister has told us that there will be a need for further political sacrifices from the nation. We look forward to hearing from the Minister what degree of political sacrifice will be required from the development regions, because I am certain that much of the burden will fall on them. I do not suppose that one needs to warn hon. Members opposite that, even if the Minister seeks to say that they will be insulated or exempted from the effects of the proposed measures, they should take that sort of Statement with a large pinch of salt.
We have heard the promise before. On 20th July, when the freeze was intensified, the Prime Minister said that 985 the development areas would be exempted from the effects of the measures then announced, yet, steadily and relentlessly, unemployment in the development areas has risen since then. It was 2.7 per cent. in August, 1966, 2.8 per cent. the following month, 3.2 per cent. the following month, and the figure Stands at 4.1 per cent. today. There has been a steady and remorseless rise, and in no way have the development areas been exempted from the Government's measures.
It might be possible to argue that the development areas have done rather better in times of squeeze than they did under previous Administrations. How-ever, if one compares the 16-month period from July, 1961 to November, 1962 with that from July, 1966 to November, 1967, one finds that three of the development areas have done rather better under the present Administration, but three have done rather worse. Certainly, they have done no better, and in no sense have they been exempted from the Government's economic measures. I do not expect that they will be exempted from the additional burdens which the whole country will have to share because of the incompetence of this Government.
One particularly disturbing feature of the present Situation in the regions is that long-term unemployment is well above average. If one compares the present figures for those unemployed for periods of over eight weeks, which is the most serious type of unemployment, they are above average and well in excess of those for November, 1962, which is the comparable point of the squeeze under the Conservative Administration. In the Northern Region, the figure is 59 per cent., as opposed to 53 per cent. In the South-West, it is 51 per cent., as opposed to 41 per cent. In the North-West, it is 53 per cent., as opposed to 51 per cent. Overall for Great Britain, 54 per cent. of those wholly unemployed have been unemployed for more than eight weeks, compared with 49 per cent. in November, 1962.
This is one of the most disturbing aspects of the present impact of Government policy, because it is long-term unemployment—unemployment for periods of eight weeks and longer—which is the most damaging, the most souldestroying, and the most akin to a cancer, as was 986 pointed out by the hon. Member for Falmouth and Camborne. It argues for a massive training Programme on the part of the Government.
One point that I want to raise with the Minister is the extent to which adult retraining is still being hampered by the attitude of the trade unions towards adult trainees. The Minister of Labour has told us that there are still parts of the country where the attitude of the trade unions is a considerable obstacle to the acceptance of adult trainees. It has been said that the Manchester G.T.C. was closed largely as a result of the un-helpful attitude of the trade unions in that area. It would be helpful to hear from the Minister what progress has been made on the front of securing increased co-operation on the part of the trade unions towards adult trainees.
Far from exempting the regions from the effect of their policies, the Government have done positive damage to the regions. The hon. Lady the Member for Hamilton (Mrs. Ewing) drew attention to the way in which the Selective Employment Tax has hit particularly hard at the regions. Of course, this is true of Scotland, but in the South-West, which has the highest proportion of any region of people employed in Service industries, the impact of the Selective Employment Tax has been savage.
The Guardian, in an article in May, 1966, said, in trying to assess the impact of Selective Employment Tax, that the Midlands stood to gain most from the tax and the South-West stood to lose most from it. I believe that all our experience since then has borne out that forecast. The attempt to mitigate the follies of S.E.T. by moving to R.E.P. has only compounded, and will be shown only to have compounded, those follies. We need a much more serious study of the best tax methods of helping the development regions.
In two minutes I want to run through the points which we believe the Government should adopt to help the regions. First, it must be realised that the regions can be looked at only in the context of the whole country. There cannot be prosperous and growing development areas in the context of a stagnant, poor country. It is a contradiction in terms. We shall get prosperous development regions with a rising Standard of living 987 and the rising social and cultural Standards referred to by the hon. Member for Falmouth and Cambome only when the country again has a high growth rate. I am very doubtful whether this can ever be achieved under this Administration. Until we return to a high growth rate, factories in the regions will remain empty and firms will not move to the regions.
Progress in the regions depends upon confidence—upon confidence in the future, upon confidence in the ability to make profits and build up businesses. This is a confidence which is notably lacking in the context of the present economic Situation. This is a confidence which demands changes in our taxation policy and a return to incentives.
The Government should give up their investment grant system and return to investment allowances and free depreciation. A thorough study should be made of the reasons why firms have in the past moved to development areas. We should analyse their motives for doing so and their experiences since they have gone there. We should work out what changes are needed in inducements to firms to move to development areas. More should be spent on the infrastructure and transport Systems in development areas.
Only when we get a return to prosperity in Britain as a whole can the regions look forward themselves to prosperity. We need incentives on the taxation front. We need the pressures of competition. We need a new structure of industrial relations. We need an attack on restrictive practices. We need a whole new outlook and a return to a high-earning, high-efficiency economy. I do not believe that we can get that under this Administration.
§ 6.45 p.m.
The Joint Under-Secretary of State for Economic Affairs (Mr. Alan Williams)
I want, first to thank the hon. Member for Paddington, South (Mr. Scott) for his courtesy in agreeing to curtail his remarks. I know how difficult it is when an hon. Member who wants to get through a substantial speech finds that he has been left with only 10 minutes. I am grateful for the hon. Gentleman's co-operation.
The hon. Gentleman said that in the present economic circumstances, where 988 changes in certain policies may be envisaged, the development areas might suffer. A fundamental facet of the policy is that the development areas shall have top priority in the move into the exportled boom, which I shall deal with later. I want to make it clear that it is a far higher priority than the development areas ever had under the Conservatives.
I am grateful to my hon. Friend the Member for Falmouth and Camborne (Dr. John Dunwoody) for giving us this opportunity to discuss development areas. I represent a development area constituency and I have the utmost sympathy with the points my hon. Friend made in his most helpful and very constructive speech. I have noted his point about prior notice of closure of firms. Although mention was not made of it today, I know that my hon. Friend the Member for Rhondda, West (Mr. Alec Jones) would have particular sympathy in this respect because of experiences he has had of firms closing in his constituency at short notice. I have noted this point and will study it.
I further agree with my hon. Friend the Member for Falmouth and Camborne that it is imperative, when we try to sell the development areas, that we sell them for their social opportunity as well as for their industrial opportunity. We should sell the good and attractive side of life in development areas instead of showing gloomy terraced houses and slag heaps, thus deterring people from going to such areas.
My hon. Friend also touched on the problem of motorways. We must bear in mind that a true indication of the transport provision in an area is not gained merely by looking at the transport figures within that area. It is not only the transport within the locality. Hon. Members opposite will agree that the Strategic road Services to a locality matter every bit as much. For example, the M4 across England is as important to Wales as it is to England, because it links Wales with the mass markets of London.
In the short time left to me I want to deal with the general position of Government policy. I intimated earlier that we regard development area policy as fundamental to our economic strategy. I will not go into this in any depth. We have covered this topic in many past debates. We do not merely regard the unused resources as unacceptable in human 989 terms, as my hon. Friend the Member for Falmouth and Camborne said. We are not particularly happy that the slack is there, but given that it is there, economically we have the slack on which we can found an expansion for our exports in the next few years.
Secondly, we regard the regions with fundamental sympathy, because this is a way in which we can avoid the continuous cycle of regional inflation which has beset us in the London area, in the South-East, and in the Midlands, in the past.
It would be naïve to pretend, and no hon. Member has pretended, that the nature of the development area problem is simple. It is a complex problem, because there is a whole series of variables at work at one and the same time. These areas start from a position of disadvantage in that they have very low activity rates. They start from another position of disadvantage, in that they are by definition—this is why they are scheduled as development areas—areas which already have a high unemployment rate. The third disadvantage from which they suffer—this was touched on by my hon. Friend the Member for Rhondda, West—is that they had a grossly inadequate share of development in Britain during the period when the Conservatives were in office.
In the period during which right hon. Gentlemen opposite were in office regions containing development areas saw an expansion in Jobs of 6 per cent. compared with 15 per cent. in regions without development areas. In Wales, for example, if the increase in the labour Force had been the same as that in the labour force in Britain as a whole, there would have been 30,000 more jobs when hon. Members opposite left office, while in Scotland there would have been 190,000 and in the North 65,000 more. One can imagine what would have been the impact of the diversification which would have followed in the events of the last few years and on our economic difficulties. One can imagine the impact on the very high emigration from these areas, 200,000 people leaving them during the last ten years of office of right hon. Gentlemen opposite.
The Motion asks for further and urgent measures and my hon. Friend the Mem- 990 ber for Falmouth and Camborne said that we should try to make our development area policy more sophisticated. The Government completely agree with him and I should like to demonstrate that we do not have a static approach to the problem. Essentially, we have an evolving and dynamic policy towards these localities, and the Hunt Committee demonstrates that we are willing to refine the policy even further if that should be necessary.
The first change which we undertook when we came to office was from the district concept, so liked by right hon. Gentlemen opposite, to the area concept. Whereas in 1962 7.5 per cent. of the working population was in development districts, and 12.5 per cent. in 1963, today the figure is 21 per cent. We made the change because we felt that it was necessary to create a wider industrial base both within and outside the localities of great difficulty. We did that to make the areas viable and so to generate the purchasing power which in turn would perpetuate the development of market-based firms, the type of firms which now tend to be attracted to the Midlands and London.
We then undertook another change of approach. We switched from tax allowances to investment grants. The old allowance System was too slow in Operation and worked only as the firm actually made profits, and yet the early years of its establishment in a development area might be the time when it most needed help and also might be the time when its profits were lowest and it would there-fore get the least benefit from allowances. Allowances were therefore unpredictable to a business man making decisions and were consequently of little help as an inducement to firms to go to these localities.
We moved to a grant System to meet these very problems. It is now quicker in payment, which is now made in 12 months—we have already accelerated payment from 18 to 12 months—and we hope to be able to reduce the period even more in the not too distant future. A further advantage is that the amounts are predictable, so that business men can therefore undertake investment decisions knowing precisely what sort of return they would get from the Government. 991 Already the 20 per cent. differential enjoyed by development areas is costing the Government £40 million a year.
We have undertaken further development of the policy again to demonstrate that our approach is not static. We have added to incentives tied to capital the incentives for labour-intensive industry and it is against that background that we have to see the regional employment premium of £100 million expenditure which we hope will create 100,000 Jobs in the next four or five years.
A further refinement since we came to office is that we have changed from a single-tier System to a System of differentiated areas. We have now added the special areas which get further inducements over and above those given to development areas generally. In addition to all these factors we have stepped up the grants under the Local Employment Acts so that we are now paying grants at virtually double the rate paid by right hon. Gentlemen opposite in the early 1960s.
Training has also been accelerated. Firms undertaking training are given help with capital costs and help with costs per head and we have set up the G.T.C.s. The hon. Lady the Member for Hamilton (Mrs. Ewing) spoke of certain limitations being imposed in Scotland on those applying for places at the G.T.C.s. We have no knowledge whatever of that and if she is right—and I do not suggest that she is misleading the House—I would appreciate it if as quickly as possible she would let us have documentary evidence so that we can examine it and ensure that it does not happen again.
We have also to bear in mind the massive programme of advance factories for the development areas. Right hon. Gentlemen opposite cannot sit disinterestedly, as they now do, and then justify the fact that during the whole period of their office only 49 advance factories were completed, whereas we have already completed 53 and have approved 124 since October, 1964. Right hon. Gentlemen opposite were so complacent about development areas that they actually suspended the building of advance factories in the 1950s and we are now having to make up for that backlog of inadequacy. There is also the incentive for dealing with derelict land and there is the dispersal of Government Offices.
992 How effective is the Government's policy proving?
No one would deny that the prevailing unemployment figures are high, higher than we would like them to be. It is no consolation to say that the proportionate increase has been less than in other parts of the country. That is not much satisfaction to the people in the dole queue. But the important factor which was overlooked by the hon. Member for Hamilton and others is that the trend is to an improvement. The basic seasonably adjusted figures are showing that unemployment in the development areas is falling and vacancies are increasing.
During the three years 1961, 1962 and 1963 right hon. Gentlemen opposite made i.d.c. provision for 36 million sq. ft. whereas in the last two and a half years we have given i.d.c. approval for 70 million sq. ft., double the amount in less time.
Hon. Members opposite have spoken of the possible effect of devaluation. If, as I suggest, we are moving into an upturn in the economy, that upturn will be accentuated by devaluation and that will have an important effect for the development areas and for industries in them. It will affect ship building, tourism and steel. If hon. Members opposite are violently against devaluation, they must equally be against the benefits which devaluation is bringing to those areas, or they must alternatively support a policy of deflation to deal with the economic Situation, and we all know what that would mean to the development area policy.
Hon. Members opposite have talked about the development area policy as though they approved of its breadth. In fact, when they were in office they had a far narrower development area concept. There are now 4 million people enjoying the benefits of development area Status who would not be enjoying it if we returned to the System of hon. Members opposite.
§ It being Seven o'clock, the Proceedings thereon lapsed, pursuant to Standing Order No. 5 (Precedence of Government business).