HC Deb 06 April 1971 vol 815 cc411-8

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

11.56 p.m.

Mr. Dick Taverne (Lincoln)

I am glad to have this opportunity to raise a matter of the greatest importance for over 3,000 of my constituents, namely, the very serious unemployment situation in Lincoln.

I should first describe the background. Employment in Lincoln is heavily dependent on engineering. We produce diesel engines, large and small, gas turbines, excavators, cranes, parts for the motor industry and the aerospace industry, boilers and a host of other engineering products. I have long felt, as did my predecessor, the present hon. Member for Kettering (Sir G. de Freitas), that we should have greater security if we were less heavily dependent on one industry, but until last year the position was never serious.

As the heavy engineering products are varied, dependent on different markets at home and abroad, there was traditionally an element of swings and roundabouts: one firm generally took up the slack of another. As our unemployment was never much above the national average, we were in no position to claim favours compared with the depressed areas.

One would have expected an engineering centre near the edge of the prosperous Midlands to expand and there were many studies and reports published by the East Midlands Council which saw Lincoln in their prognostications as a growth point. But instead, the population has greatly declined. It has fallen over the last four years from 77,320 to 74,740 in 1970, when the last count was taken.

In addition, we have had more than our fair share of mergers, one of which ended in a closure affecting over 600 people a few years ago. There is undoubtedly a sense of insecurity which has spread and has to some extent affected morale.

This is the background. Last November, unemployment in Lincoln stood at 3–1 per cent., higher than in many intermediate areas. But since then, the position has worsened drastically. The figures rose to 4 per cent. in January and then to 6–6 per cent. in February and the same figure in March. One major cause was heavy redundancies in a firm which makes cranes and excavators, and the unemployment figures in manufacturing in particular are much higher than they were in any previous years.

When I raised the position with the Minister in early March, he told me that he could not give Lincoln the intermediate status for which I asked. He turned this down for three reasons, and no doubt the Minister will correct me if I am wrong. The first reason was that our figures included a considerable proportion of part-time unemployed, and that full-time unemployment was only 4–1 per cent. at the time, although the March total is rather higher. Secondly, we were a relatively small area, and intermediate areas were designed for larger "grey" areas. Thirdly, he said—and this is a point of considerable substance—that it was important not to dilute the concept of intermediate status. I do not accept that the refusal was justified at that time, and since then the position has worsened.

I want to put to the Minister the following reasons why Lincoln now needs the special help which intermediate status at least can give us. First—a comparatively minor point—our figures are somewhat depressed by a below-average number of women employed. Many who would be on the register elsewhere are not on the register in Lincoln. This makes the total figures look better than they are.

Secondly, and rather more important, we are in a somewhat isolated position. There are no nearby areas where alternative employment is available. Gains-borough, Grantham, Sleaford and Newark, while not as badly hit as us, are in no specially favourable position in their unemployment rate and have no spare jobs to offer, nor have our rural surroundings. At a time of expansion they can provide an extra supply of labour, but at a time of slack they can offer no supply of work.

The third point which I wish to stress to the Minister is that several nearby areas can offer greater advantages to a prospective employer, and that policy discriminates in their favour.South Yorkshire, which is not so far away, is an intermediate area, although the average level of unemployment there is no higher. Gainsborough is an area for London overspill. Lindsey, which is just over the city border—and parts of it are in the same employment exchange area—has a 10,000 sq. ft. limit before an industrial development certificate is needed, whereas our limit is 5,000 sq. ft. as for the East Midlands generally. But then for the East Midlands as a whole the average rate of unemployment in March was only 2.7 per cent. This general limit is wholly inappropriate for an area which has a figure of much more than that.

Fourthly, as I have mentioned, our position has worsened since March. There are now, in addition, 600 part-time unemployed at a forge who do not feature in the figures, and are not likely to, because by accident they do not appear on the Monday count, the day when the count is taken. Another firm, which secured some time ago a £5 million export contract for diesels for East Pakistan which were to be paid for from West Pakistan, has been hard hit by the catastrophe in East Bengal. A large question mark must now hang over the whole order, and some of the shipments are in a state of suspense. From 23rd April, 1970, 270 workers will be on a four-day shift, and this firm has suffered a bitter blow which it will take a long time to overcome.

My last reason is that even when allowance is made for some of the 6.6 per cent. total being part-timers, if one counts only one-fifth of these as equivalent to full-time unemployed, we in Lincoln are worse placed than some areas which have not intermediate status but special development area status. Our rate on that basis is well over 5 per cent., yet figures published on 25th March show that most of the special development areas of Wales, for example, are no worse off than we are. In fact, five or the nine are below 5 per cent.

Lincoln now needs help. There are grave dangers for the future. Intermediate status can give this help. The land is there for industrial development. If, despite the clear case for giving us this aid, the Minister feels unable to do so, at least he could unequivocally declare that there will be no obstacles to giving industrial development certificates for would-be employers of Lincoln labour. I know that, in practice, applications have nearly always been granted, but the fact that approval still has to be obtained is in itself an obstacle to applying. As an absolute minimum, the Minister should agree to raise the limit to 10,000 square feet which applies just outside the city boundaries in Lindsey.

I trust that this serious situation for my constituents will be recognised by the Government and that they will provide the remedies which we need and which they have it in their power to provide.

12.7 a.m.

The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant)

The hon. and learned Member for Lincoln (Mr. Taverne) has once again expressed very eloquently his concern about the employment situation in Lincoln. I have of course already had a personal discussion with him, as he said, on the position and prospects of the area. I am glad that he has taken the opportunity to bring this question before the House.

I appreciate the concern that is felt locally about the current level of unemployment and the short-time working and the anxiety that the specialised nature of much of local employment in the engineering and electrical goods sector may make the area specially vulnerable. However, I think it is important at the outset to set the unemployment statistics in their proper perspective.

It is true that, in March, the total number of unemployed was 3,500, equivalent to a rate of 6.6 per cent. compared with the 2,002, or 3.7 per cent., a year ago. But practically the whole of this increase is attributable to the fact that some 1,200 workers at one firm have been placed on a four-day week. I note, too, with regret the case which the hon. and learned Gentleman mentioned. We have just heard ourselves that Dorman Diesel will have to put 270 workers on short time owing to a decline in the market for their productions in the circumstances he mentioned.

But short-time working, although disquieting, does not present nearly such acute problems as does actual unemployment. The key figures for Lincoln, therefore, are those for the wholly unemployed, that is to say, 2,287 in number in March, equivalent to a rate of 4.3 per cent. These figures are admittedly somewhat higher than a year ago, but the increase has been of much the same order as for the rest of the region and for Great Britain as a whole.

While I fully appreciate the reasons that led the hon. and learned Gentleman to dwell on the problems of Lincoln. I cannot accept that an adequate case has been put made out for assisted status.

Mr. Taverne

It is not quite fair to disregard the short-time working because it was agreed to as an alternative to a larger number of redundancies, and therefore, if one takes a proportion of this—I suggested one-fifth equivalent to redundancies—the figure is still over the 4.3 per cent. Indeed, taking account of the short-time working there now, it is up to over 5 per cent.

Mr. Grant

To compare it truly with other parts of the country, one must look at the full unemployment situation. There may be part-time working in other assisted areas. I maintain that it is the wholly unemployed situation which is the crucial test.

As I was saying, I regret that I cannot accept that an adequate case has been made out for assisted status. A comprehensive survey of areas throughout the country with problems of unemployment, poor industrial structure and inadequate economic growth has only just been concluded as part of the Government's review of regional policy. We did not then consider that there was a strong enough case for assisted status for Lincoln, and I do not think that the situation has changed sufficiently since that time to cause us to alter our decision.

Perhaps I might explain some of the reasons underlying this decision. In evaluating the case of any area for assisted status, we have to look not only at the numbers and rates of unemployed but also at the age structure, the real size of the labour pool involved, migration movements and the prospects and locational attractions of the area. Moreover, the claims of any area must be set against those of other areas, and determined in the light of the limited supply of mobile industry.

The major conclusion to emerge from the review was that it was essential to give greater priority to the problems of the older industrial conurbations in the development areas with high persistent unemployment—for example, West Central Scotland with nearly 60,000 unemployed—and the shortage of mobile industry meant that only in quite exceptional circumstances could new areas be given assisted status. Lincoln's unemployment problems are clearly much less pressing than those of the development or of the intermediate areas. The Yorkshire Coalfield Intermediate Area, for example, had unemployment totalling 19,300 in February, a rate of 4.6 per cent.; and the North Humberside Intermediate Area had 8,960 unemployed, a rate of 4.8 per cent.

Lincoln is attractively located with a highly-skilled labour force and a substantial base of engineering industry. Lincoln faces neither the comparative isolation of North Humberside, nor the widespread dereliction and limited industrial base of the coalfield. Nor does Lincoln present the exceptional problems of the newly-listed intermediate areas—for example, Edinburgh and Portabello with 6,300 people unemployed, completely surrounded by the Scottish and Northern development areas, or of Bridlington/Filey and Okehampton/Tavistock where stubborn, though small-scale, unemployment problems are compounded by proximity to assisted areas.

There are, of course, a number of other areas similar to Lincoln. If we were to extend assisted status to Lincoln, therefore, we would have, in equity, to extend the same treatment to a number of other claimants. The supply of mobile industry is very limited, and no useful purpose is served by spreading the jam too thinly. However, the Government fully intend to keep a close watch on changing circumstances through the country, and the situation in Lincoln will, of course, be kept under review.

I can quite understand the hon. and learned Member's concern that the exemption limit for I.D.C.s in Lincoln is only 5,000 sq. ft., while in that part of Lincolnshire in the Yorks and Humberside Region the limit is 10,000 sq. ft. Lincoln is, of course, in the East Midlands Region where we have thought it right to restrict the recent relaxation of the exemption limits for I.D.C.s to 5,000 sq. ft. I can, however, assure the hon. and learned Member that in practice Lincoln will bear no disadvantage as a consequence of these differences in exemption limits, and it is most unlikely that we shall ever wish to refuse an application for an I.D.C. in Lincoln up to 10,000 sq. ft. We have said clearly that we intend to operate the I.D.C. policy flexibly; that is to say, we shall have regard to difficult local circumstances, even in non-assisted areas.

The situation in Lincoln is, in essence, a reflection of the national situation. Unemployment has been rising largely because many companies are facing continued deterioration in their profit levels and a severe cash shortage, and have responded to increases in wage costs by closing factories and by laying off workers.

I do not want to repeat the Budget debate, in which the hon. and learned Gentleman took a prominent part. But the measures announced last week in the Budget will go some way towards helping to stem the rising tide of unemployment. They should have a beneficial effect on output and investment, and hence employment. Additionally, the Budget gives considerable stimulus to profitable industry and will increase the cash flow of profitable companies, enabling them to expand more easily.

These measures, taken together with those introduced since last June, have laid the foundation for our long-term aim of securing soundly based industrial prosperity in Britain, in which growth and investment in all regions of the country will be self-sustaining. But no Budget can achieve such an objective by itself: industry must play its part in achieving steady and sustained growth. A continuation of the cost inflation in industry brought about by excessive wage settlements will put more jobs at risk and could lead to a further increase in unemployment.

However, provided cost inflation can be brought under control, Lincoln with its substantial core of engineering and electrical industry, stands to benefit, in terms both of employment and prosperity, from the stimulus to the economy provided by the Government.

I regret, therefore, that I cannot give any more comfort than that to the hon. and learned Gentleman. But I am sure that he understands, as I hope that the people in Lincoln will, that we have to look at the whole country. We have to look at the overall unemployment position, and I can only say that Lincoln should not be too depressed at its prospects. In the long term, if our policies work out, we believe that Lincoln has a successful and prosperous future before it.

Question put and agreed to.

Adjourned accordingly at seventeen minutes past Twelve o'clock.