HC Deb 18 November 1970 vol 806 cc1386-98

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

11.8 p.m.

Mr. R. Chichester-Clark (Londonderry)

I suppose that every economic study of Northern Ireland since the war has recognised that the Ulster Government has a mammoth task to undertake due to its high unemployment, often over 10 per cent. overall and 20 per cent. in places like Londonderry, with fewer jobs in declining industries like the linen industry, agriculture and shipbuilding, and the rapidly rising number of insured employees. The achievements of the often maligned Northern Ireland Government in this field will earn a most honourable place in history. More than 80,000 new jobs have been negotiated. A new industrial complex in man-made fibres has been created, wide diversification has been achieved in engineering and electronics, and new sectors in manufacturing industry, such as rubber and paper, have been opened up.

All this has been achieved by the optimism and energy of the Northern Ireland Government coupled with the right inducements, and, as I readily accept, varying degrees of help from London. It was established as long ago as 1932 that Northern Ireland needed special help to create employment because of its economic disadvantages. It was in 1954 under a Conservative Administration in this country, 12 years before investment grants were introduced by the Labour Government in Great Britain, that a Capital Grants Act in Ulster established the regular use of investment grants as a means of attracting new employment to Ulster. Subsequently, a wide range of flexible inducements has been developed, and those required for the next five-year period were accepted by the new Government in this country in June, 1970. They included investment grants for new projects ranging from 45 per cent. to 60 per cent., though I should add the caveat that the White Paper said at the time that these were subject to any adjustment which might from time to time be required in connection with the task of managing the economy as a whole". However, while the energy of the Northern Ireland Government is, I believe, undiminished, for the first time since the war there are signs that their optimism is faltering somewhat. The Minister of Development in Northern Ireland said last week that the outlook for jobs and for industrial investment in the Province was at an all-time low, and he went on to describe the situation as "almost grim". I fear that he is a realist. It is true that no major industry has indicated an intention to settle for 18 months. Jobs in new projects so far this year total 1,192, compared with 3,245 in 1968 and 2,491 in 1969.

It is significant that 70 per cent. of all new jobs negotiated this year are in expansions of existing industry. It is interesting to note that those industries already on the spot which know and, at least to some extent, understand the situation have not been deterred by certain events from expansion.

Unemployment is still at the unacceptably high level of 6.8 per cent. overall, and 8.8 per cent. for males. It is higher than a year ago particularly in manufacturing industry. The unemployment rate, sad to say, among men in Londonderry—though it covers a wider area than the name might suggest—is 16 per cent., and in Strabane in the constituency of Mid-Ulster it is 17.3 per cent.

That is bad enough, but there is now an added uncertainty about the level of inducements available both to existing industry and to new projects. It is about them that we must think. I imagine that almost at this moment talks are taking place between the two Governments. I cannot tonight emphasise too strongly how urgent it is that action should follow those talks, and quickly. Otherwise, there will be no movement for an appreciable time on the industrial front, and opportunities may well be lost. We cannot afford to lose a single opportunity at this time.

As I have said, the Minister of Development described the situation as grim, or, to be fair "almost grim". Why is it almost grim? There are two main reasons, one being that the Northern Ireland economy reflects the economy of the United Kingdom as a whole. When there is a buoyant economy here, the economy of Northern Ireland is buoyant, or relatively so. Unhappily, the converse is true: when things are going badly in the United Kingdom, they go disastrously in Northern Ireland. This is particularly true in the matter of investment, which, as we all know only too well, has been stagnant in the United Kingdom for some time. Undoubtedly, that is an important factor in the difficulties which Northern Ireland faces today.

Mr. Elystan Morgan (Cardigan)

I understand that the general purposes committee of the Northern Ireland Economic Council has urged the Stormont Government to maintain a policy of investment grants despite the decision taken by the United Kingdom Government. Would the hon. Gentleman give an undertaking that he will exhort his brethren in the Conservative and Unionist Party to change their policy with regard to development areas in Britain?

Mr. Chichester-Clark

The hon. Gentleman had better contain his soul in patience. If he had waited to hear what I have to say, he would probably not have bothered to make that intervention. He sometimes makes valuable observations, but that was not one of his better efforts.

I was dealing with the reasons why I regarded the situation as almost grim, and I had mentioned the way that one economy affects the other.

The second and, in my view, principal reason must be the recent civil unrest in Northern Ireland, which has without question discouraged those who might have brought new projects and new employment to Ulster. We have to face that. It is vital—and I hope that my hon. Friend the Minister will say this tonight—to say, and say loudly, that only a very small proportion of the working force of the Province has been affected in any way by the disturbances, even when they were at their worst. It is also important to say that the incidents have been almost entirely confined to a few square miles.

From some of the things that have been said and written in this country, one might be led to believe that Ulster was engulfed in a mini-religious war affecting the whole Province. This is far from the facts. In the interests of the unemployed, it is an impression which should be dispelled at once.

Long before the disturbances of 1968, I remember saying in this House that the shortage of employment in Northern Ireland was the tinder out of which community tension could be fanned into flame all too easily. That was long before 1968. That was not then, and is not now, to suggest that full employment had ever been the whole answer to the problems which faced Ulster—it is no use pretending that it is—but a reduction in the level of unemployment at this time would certainly go a long way to help.

Consultants who drew up the development programme for 1970–75 indicated that Ulster needed 8,000 jobs a year for the next five years if any inroads were to be made on the underlying level of unemployment. The sad fact is that now, in 1970, it looks as though we may barely reach 6,000. No wonder the situation is regarded by responsible figures in Northern Ireland as "almost grim".

What we really need—what we have always needed but what we need a little bit more now—is a range of inducements for new projects at least as attractive in cash terms as the present arrangement. In calculating what the inducements should be, I trust that the Treasury in this country will bear in mind that it is as important to take into account the differential with the development areas as it is to measure the differential with the incentives offered by the Republic of Ireland.

This is a very important, and increasingly important, matter—heaven knows, we hear enough about it sometimes in this House, and Stormont hears more about it—having regard to the particular difficulty in obtaining employment for the western counties of Ulster, about which I happen to know a good deal and where we realise that the problem is of exceptional severity. The western counties are very close to the Republic.

The new policies that were outlined for development areas by one of my right hon. Friends the other day indicated that greater use was likely to be made of operational grants linked to employment and infrastructure grants. These operational grants are already used in Northern Ireland by the Ministry of Commerce. The Government here must, therefore, be asked—and I ask them tonight—to consider to what extent these new policies go at least some way, if not all the way, to closing the gap between Ulster and the development areas. It would be unfortunate if it were so.

I must speak rather more warmly of certain measures which, in my own way, in a letter to my right hon. Friend the Chancellor of the Exchequer, I have welcomed as being beneficial, I hope, in the long run to the United Kingdom as a whole. Among those recent measures which will be most welcome is the extension of investment allowances to the services sector in Northern Ireland, which has suffered so badly from selective employment tax.

I assure the hon. Member for Cardigan (Mr. Elystan Morgan) that I have not become any sort of crypto-Socialist and I am not by inclination a devotee of investment grants. Neither am I a believer in featherbedding dying ducks, or any other mixed metaphor of that kind. It must, however, be recognised that investment grants or an alternative to them are absolutely vital at this time to attract new industries to Northern Ireland. They have been in active use there for sixteen years, and to abandon them at this moment without an equivalent attraction would be to court disaster.

I think also that greater consideration has to be given to the assistance available to existing industry wishing to reequip and modernise. There are in Ulster a great many firms which need the help of investment grants if they are to remain in business, and as things stand in Ulster we simply cannot afford to lose a single job there. If it gives the hon. Member for Cardigan any pleasure I will quote what the general purposes committee of the Northern Ireland Economic Council, as he has referred to it, said last week: There are many employers for whom the loss of investment grants alone could create a serious cash problem even with free depreciation for firms earning profits. I must say one word about hotels—the tourist industry in general, but hotels especially—because here in particular there is considerable nervousness being felt about the application of the United Kingdom Government's new policies for the tourist industry. This industry has suffered pretty grievously from the unrest of the past two years. It is capable of very great expansion, perhaps more than any other industry in Northern Ireland. At present the standard of accommodation provided in holiday areas in my constituency could be improved. I hope that is a tactful way of putting it. I am not saying that some of it is not very good, but it could be improved, just as that in Donegal across the Border could be improved, and I know that many of my constituents are looking forward anxiously to seeing that grants to hotels are continued in some form.

I must say a word in regard to military bases, because, as my hon. Friend knows, the closing of the Ballykelly R.A.F. station in 1971 and, most recently, H.M.S. "Sea Eagle" strike severe blows at Northern Ireland. There is the commitment of the British Army in Northern Ireland at present, but it could have an enormous economic and psychological effect if there were some defence establishment which could be sent over to Ulster. I would not make that suggestion if I did not think it possible from the defence point of view that that might well be feasible, and if it is feasible, and feasible for Ballykelly, then I hope that an imaginative plan put forward by a certain county council is kept in mind by the Government, and I hope that they will look at it with sympathy, because the Ministry of Defence, as it was under the last Government, does owe some retribution for what it did about the closing of Ballykelly. The people in that area were led to believe that the base was to remain open, and a lot of money was spent locally in that belief, and the people were led to that belief by the Ministry of Defence.

Of course, the locating of a major Government Department or enterprise in Ulster would be a considerable step forward.

I do not know whether consideration has been given lately to a car assembly plant. That might be the debut of the steel industry in Northern Ireland, but we shall hear what the Minister has to say, if anything, about that.

In agriculture, the new measures pose a certain threat to the industry in Northern Ireland which still employs 10 per cent. or slightly more of the Province's labour force. The Milk Marketing Board in Northern Ireland estimates that the ending of the cheap welfare milk and free school milk for those aged over 7 will mean a loss of 4 million gallons a year in milk supplies, and that is bound to depress the overall return for milk, which is already 6d. a gallon lower there than in the rest of the United Kingdom. This is a situation in which the Ulster dairy farmer has to fight against the higher cost of feedingstuffs and the prospect of a lower return on milk. I ask the Minister to bear in mind that 10,000 tons of milk products were imported into Northern Ireland from the Republic in 1969, representing £2.8 million in value. The largest item was butter, which for various reasons, is being sold cheaper on the Northern Ireland market, making it uneconomical for the Ulster farmer to produce. Certainly, an immediate levy on milk products would greatly alleviate what is a very unsatisfactory situation. It would help to make the Northern Ireland farmers a good deal happier about the whole concept of the support system if they knew that levies on milk products were to be introduced.

Most of the problems about which I have been speaking are in some way the legacies of actions of United Kingdom Governments long ago, and the measures which are needed now are proportionately no greater than those required by some other areas. I know that I am asking for much, and I know it will be said that I am asking at the wrong time. It is always the wrong time, but for Northern Ireland in a sphere wider than that of the economy it may be that it is a "make or break" time. Community peace in the future certainly does not depend wholly upon great economic prosperity—not while we have the presence of those determined to disrupt it for their own ends—but a higher employment level would certainly help towards greater harmony.

Miss Bernadette Devlin (Mid-Ulster)

rose—

Mr. Chichester-Clark

I cannot give way. I have not the time.

There has been much talk in another context of direct rule. I am not tonight advocating that, but I sometimes speculate whether, had that form of government existed, involving direct responsibility over the years, any Government of any complexion in this country could have allowed to continue in any part of this kingdom an unemployment rate of between 6 and 8 per cent.

I ask my hon. Friend tonight whether he can give us some form of reassurance.

Miss Devlin

rose—

Mr. Chichester-Clark

I hope my hon. Friend will answer the points I have raised and say something which will alleviate the anxiety which is deeply felt in many parts of Northern Ireland.

Miss Devlin

rose—

11.27 p.m.

The Minister of State, Home Office (Mr. Richard Sharples)

I am grateful to my hon. Friend for bringing this important issue before the House at this time. He said that he thought it might be the wrong time to do it, but I would not say so at all, and I congratulate him upon his timing.

The Government have already announced their new policies for public spending and investment incentives for Great Britain in two White Papers. Discussions are now taking place with the Northern Ireland Government about the matters for which they are responsible. We here at Westminster are in no doubt as to the particular economic problems which face Northern Ireland.

A great deal is said about Northern Ireland, and no small part of it is nonsense. It is not easy for those living outside to get a balanced picture of what is happening. Many people this year have thought of the whole population as having to survive riots, searches, the discharge of smoke, and so on. The truth is that the great majority, even of those living in Northern Ireland, would be unaware of most of the incidents were it not for the Press and the television.

I am sure that the House will wish to pay tribute to the considerable efforts of the Northern Ireland Government to promote new industry in the Province. This, one must admit, is against a background of certain industries in decline, a constant drift of labour from the land, and a general and often mistaken belief that Northern Ireland's geographical disadvantages, such as distance from the market, cannot be offset by its undoubted advantages. The Northern Ireland Government's efforts have had a good measure of success in the past, attracting many firms from overseas. It is the aim of the United Kingdom Government to enable the Northern Ireland Government to continue this work.

Miss Devlin

rose—

Mr. Sharples

There is not time. I am sorry; I cannot give way.

We have already shown this by our agreement in June of this year, immediately upon taking office, to the addition of £75 million to anticipated expenditure in Northern Ireland on development during the next five years.

Partly as a result of the measures contained in the new development plan, partly as a result of those which the previous Government agreed to last October and partly as a result of earlier measures, the Northern Ireland Government have been able to offer to new and expanding industry greater inducements than anywhere else in the United Kingdom. Without these differential advantages Northern Ireland's economic position would be much worse than it is today. Discussions are now in progress between the United Kingdom Government and the Northern Ireland Government about the most suitable financial inducements for Northern Ireland to offer in the light of the recent Government proposals to rely on investment allowances rather than investment grants. The House will not expect me to anticipate the outcome of these discussions, but it may be helpful if I indicate some of the guidelines we are following.

First, we recognise that there is a need for Northern Ireland to retain a lead in the level of investment incentives. Secondly, it would not be right for Northern Ireland to enjoy the benefit of the Chancellor of the Exchequer's proposals about investment allowances without at the same time making changes in its other industrial incentives. Thirdly, we must take into account the concept of parity which has grown up in dealings between the two Governments. As the House will know, this requires that the citizens of Northern Ireland should enjoy the same standard of services as the citizens of Great Britain so long as the rates of taxation, both transferred and reserved, are the same in both places. Fourthly, at a time when public expenditure in Great Britain is being carefully pruned, we think it right to ask the Northern Ireland Government to have a further look at their own programmes.

These are the principles which are guiding our approach to the discussions.

Mr. Elystan Morgan

Even accepting the superficial validity of the Minister's arguments, is it not a fact that very many firms which went to Northern Ireland did not make a profit for the first few years and, therefore, do not gain a penny's benefit from the investment allowances?

Mr. Sharples

I must stick to what I have been saying. Discussions are going on between the Westminster Government and the Northern Ireland Government, and it would be improper, while those discussions are taking place, for me to go further than I have gone in outlining the broad principles which guide our thinking.

I want to say a few words about today's situation. It is fair to say that there are very encouraging factors about the economy of Northern Ireland. The gross domestic product increased by over 45 per cent. between 1963 and 1968 while that for the United Kingdom as a whole increased by 35 per cent. Between 1960 and 1968 the index of manufacturing production rose by 46 per cent. in Northern Ireland compared with 24 per cent. in the United Kingdom.

Miss Devlin

rose—

Mr. Jones Kilfedder (Devon, North)

rose—

Mr. Sharples

I am sorry; I cannot give way.

Investment by manufacturing industry is increasing rapidly at a time when relatively little increase has occurred on this side of the Irish Sea. Northern Ireland is a go-ahead place, and I can understand why. The Northern Ireland authorities go to great pains to attract and encourage industry to settle and expand there. The amenities offered by the beautiful unspoiled countryside are ex- cellent. The reserves of good labour are one of Northern Ireland's greatest assets.

But there is another side to the picture. Total unemployment stands at 6.8 per cent.—nearly three times the Great Britain average. There are specific concentrations of unemployment, too—Belfast, where there are 11,000 people out of work, Londonderry and Newry, where the male rate of unemployment is about 16 and 18 per cent. and the number of unoccupied males alone is more than 2,700 and 2,000 respectively. These are facts which we must recognise. It would be foolish to pretend that there are any easy solutions.

My hon. Friend has raised a number of points and I only wish I had time to reply to them. He raised particularly the situation of the tourist industry, including the hotel position, the situation of agriculture and the situation relating to the Ballykelly airport. With regard to Ballykelly I can say that the Ministry of Defence is at present sympathetic to the civil use of the airport, and its future is being considered by the Northern Ireland Government with the local authorities concerned. I cannot go further than that at the moment.

My hon. Friend has also raised certain points in a letter to my right hon. Friend the Chancellor of the Exchequer. I understand a reply is on its way to him, if he has not already received it. He also referred to the resolution made last week by the general purposes committee of the Northern Ireland Economic Council. I assure him that it is receiving careful consideration.

In the two or three minutes that remain to me, I want to say something about one matter that was touched upon by my hon. Friend, and that is the effect of disorders on the economy of Northern Ireland. I have mentioned the distorted impression held by many people outside Northern Ireland. I do not want to be over-optimistic and it would be a mistake to be so, but I am sure the House will welcome the real improvement which I think it is fair to say has taken place in recent months. We must, none the less, recognise that there are those criminal elements who appear to have a vested interest in creating trouble. They are the real enemies of full employment in Northern Ireland. They are the main deterrent to investment, without which—

Miss Devlin

On a point of order, Mr. Deputy Speaker. Is it in order for the Minister in this House to make a statement which is in contradiction to the actual facts of trade and exports in Northern Ireland?

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

No point of order whatever arises on that.

Mr. Sharples

I believe the vast majority of people in Northern Ire-land—

Miss Devlin

Will the Minister give way?

Mr. Sharples

—want no part of these troubles. The time has now come for all those who believe in the future of Northern Ireland to help the police in putting these criminals behind bars, where they belong. At the same time, I ask industrialists who are thinking of placing orders or setting up firms in Northern Ireland to look at the picture for themselves. They will not in any way be disappointed by what Northern Ireland has to offer.

This has been a useful debate. I am only sorry that it has been so short. It is difficult in a short debate of this kind to reply to a very great number of detailed points which have been raised by my hon. Friends, points to which I certainly would have wished to reply had I been able to do so. I should like to have been able to reply to his points about agriculture, and to his important points about the tourist industry. I appreciate very much the importance of the growing tourist industry to Northern Ireland—

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

Adjourned at twenty-two minutes to Twelve o'clock.