HC Deb 20 December 1971 vol 828 cc1267-76

10.40 p.m.

Mr. Roy Hughes (Newport)

I have sought this debate to draw attention to the unemployment problem in South-East Wales, but, in doing so, I am not referring to an area such as the Rhondda Valley, which has had a chronic unemployment problem for at least two generations; rather I am thinking of Newport which, in industrial terms, could be referred to as the Birmingham of Wales. I am not speaking of Newport as some industrial island fortress, because each day thousands of people from the valleys and the hinterland flock into the town to follow their employment. Thus, when Newport is in economic difficulties, so is the whole of Monmouthshire, and certainly this is the situation at the present time.

The national figure for unemployment is now almost one million. We know that there are many people desiring employment who are not registered as unemployed. Therefore, the actual number of unemployed at the present time is now well over one million. This is nothing short of a national scandal. It is all very well for us to talk of the season of good will, but what kind of merry Christmas will it be for these million or so people and their families?

Wales now has over 51,000 unemployed—the highest figure for a generation. In the first 10 months of this year in Wales alone nearly million has been paid out in unemployment benefits.

According to an Answer which I received today, in Newport there are 56 registered vacancies for men and 2,251 registered unemployed. In Monmouthshire as a whole there are 202 registered vacancies for men and 6,543 registered unemployed. This is the position in what is at least one of the most prosperous areas of Wales. We must also bear in mind that November-December is a comparatively good period for employment. There are, of course, many Father Christmases at this time of the year, accompanied by a shopping boom. The Government have been aided by good weather as well.

Unemployment particularly affects our young people. The headline in my local paper, the South Wales Argus, of 29th November, reads: Bleak future for young job hunters. How can it be otherwise with works closures, widespread redundancy, recruitment at a standstill and a general depressed state in the industry all around?

I understand that there is now a possibility of a Government-sponsored pilot scheme for work for young people in the Newport-Pontypool-Cwmbran areas. I understand that it would be run by the National Association of Youth Clubs, and would provide work in clearing derelict areas, canals and towpaths, in constructing adventure playgrounds, and in building picnic sites. In the present situation that is better than nothing, because our young people are stepping straight from the classroom into the dole queue.

The economy of Newport is based essentially on the steel industry, and in that vital industry morale is certainly low. When the Government came to power we had all the hullabaloo about hiving off, new investment was halted, and the price increase asked for by the British Steel Corporation was vetoed and then allowed to go forward in part. All that activity did not help.

In my constituency there are three medium-sized steel plants. I give the old private enterprise names—Whiteheads, Stewart and Lloyds, and the Orb works. All three have a ban on recruitment, and all three are on short-time working. Stewart and Lloyds has been a very valuable employer of labour in the town for many years, but it is essentially an old works and it badly needs modernising if it is to have any long-term future.

Then there is Whiteheads, and there is certainly a dark shadow over this plant now. About a fortnight ago I received a works deputation of trade unionists. They gave me details of the investment which they felt was urgently needed at their works. I supplied details of that investment to Lord Melchett, the Chairman of the British Steel Corporation, and I hope that there will be some favourable news from him in the not-too-distant future.

The depression in my area is not confined to the steel industry. A month or two ago it was announced that the British Aluminium Company at Newport was to close. There are 400 jobs involved, almost all of them for men. Then, 10 minutes up the road from Newport, at Cwmbran, the G.K.N. factory is to close at the end of this month. About 1,300 jobs are involved there. Alcan, the aluminium works at Rogerstone, has perpetually been cutting down its labour force in recent years. Mass redundancies have been announced in the nylon industry, and numerous other plants have announced redundancies, too.

I appreciate that in modern technological circumstances there must be change, but the most depressing feature of all is that the supply of new industry seems almost to have dried up. I asked the Secretary of State for Trade and Industry how many new factories had been occupied in Newport in 1971, and how many new jobs had been provided, and the Under-Secretary replied: None known to the Department"—[OFFICIAL REPORT, 19th November, 1971; Vol. 826, c. 242.] What can be done? Whatever their political persuasion, the Government today are responsible for maintaining full employment. The late Lord Keynes explained in great detail 35 years ago how this should be done, and his theories are relevant to the present situation. I give the Government full credit for their many tax concessions, apparently to stimulate the economy, but they have been at the wrong end of the scale. By refusing to invest in the economy, business men are demonstrating their lack of confidence in this Government.

There was a mass distribution of leaflets in Newport last Saturday to bring to public notice the distress in which so many of our old people are living. An increase for them would make sound economic sense. It would immediately bring more purchasing power into the economy, and would provide jobs for our people. I give the Government credit for having brought forward the review period, but is this enough? Our old people deserve a better deal.

South-East Wales is representative of the whole country. This emergency situation calls for emergency measures. I would advocate a 2 per cent. cut in hank rate, because our country has a huge balance of payments surplus, heavy unemployment, low investment and a large inflow of funds. Such a move would have a decisive effect in all four directions at once.

Investment grants brought many jobs to South-East Wales. It was a blunder to scrap them and they should be brought back forthwith. We get the parrot cry from various Ministers about wage increases having such a detrimental effect on the economy, but in 1971 the level of wage increases has receded considerably, while unemployment has been rising.

The retail price index for November reached 157.3, a rise of 9.3 on the corresponding period 12 months earlier. The Government's food levies have not helped, and their proposals on rents will not help either. The Government cannot expect the co-operation of the unions over wage claims unless they take a firm grip on the cost of living. These are the fields in which urgent action is necessary. The Government claim that all along their aim has been full employment. I can only say that they must be the most incompetent Government of all time, for everything they have done has been either too little or too late.

For far too long unemployment has been the story of South-East Wales—or, for that matter, Wales as a whole. I remember as a lad of ten, in 1936, lining up in my uniform with the other members of the junior section of the Church Lads' Brigade. We stood at the side of the road in the little village in which I grew up as Edward VIII passed by. A few miles up the road, in the constituency of my hon. Friend the Member for Abertillery (Mr. Jeffrey Thomas), he stopped and uttered that now famous sentence, "Something must be done". I say the same tonight. Something must be done in this situation.

But it is clear that the Government have lost their grip. It is therefore unlikely that anything will be done by them. When the late Franklin D. Roosevelt was elected President of the United States in 1932 he promised the American people a new deal. The British people need a new deal now, but they will not get it from the Conservatives. They will get it only when hon. and right hon. Gentlemen opposite resign, for they have utterly failed the nation.

11.57 p.m.

The Minister of State, Welsh Office (Mr. David Gibson-Watt)

The hon. Member for Newport (Mr. Roy Hughes) made a thoughtful contribution to this short debate and in some of his general remarks he gave credit to the Government for their efforts, particularly in regard to the annual review for retirement pensioners.

I am sure the whole House received with pleasure the news of my right hon. Friend the Secretary of State for Social Services on this subject the other day, and I am grateful to the hon. Member for emphasising the importance of that news.

The hon. Gentleman suggested that the present situation called for an emergency cut of 2 per cent. in Bank Rate. Without going over what Lord George-Brown may have said before going to another place, I must remind the House that when we took over the reins of Government Bank Rate stood at 7 per cent. In the last 18 months it has been twice reduced, until it now stands at 5 per cent. It would be a bold man who would go further than what I have said on this subject, and I make this point only to underline what we have achieved in this respect.

The last debate we had on unemployment in South-East Wales was in July last and this short debate, like that one, has been useful. The hon. Member for Newport spoke of the number of people out of work, quoted figures relating to this part of Wales and spoke of the human problems to which unemployment gives rise. I repeat what I said in July and what my right hon. and learned Friend said at Question Time today—that the numbers out of work in Wales are too high and that everyone with any knowledge of human affairs recognises this. In the course of July's debate I also said that Wales could not prosper independently of an increase in prosperity throughout Britain as a whole. Certainly I would agree with the view that for the foreseeable future we shall need to continue with a vigorous and effective regional policy.

But regional policies, vigorous though they may be, will not succeed in bringing full employment and economic growth to Wales unless we first of all have a sound national economy, an economy in which industries—

Mr. Jeffrey Thomas (Abertillery)

Having regard to the fact that 24 per cent. of the unemployed in Wales are to be found in Monmouthshire, and particularly having regard to the fact that of those unemployed 48 per cent. are to be found in North Monmouthshire, would not the Minister agree tonight to take drastic and immediate action to alleviate this disgraceful situation?

Furthermore, would the Minister give an undertaking that if there is to be a pilot scheme involving young people that scheme will be extended to North Monmouthshire?

Finally, having regard to the position in North Gwent, would not the hon. Gentleman agree that it was criminally irresponsible of the Secretary of State, in announcing his road programme last week, to ignore completely the urgent claims of North Monmouthshire regarding particularly the road from Crumlin to Aberbeeg, and to ignore the desperate situation generally with regard to roads in North Monmouthshire?

Mr. Gibson-Watt

No, I do not consider that it was criminally anything of my right hon. Friend, but I am interested to hear what the hon. Member for Abertillery (Mr. Jeffrey Thomas) has said. When I have had time tomorrow morning to read his rather long intervention, perhaps he will allow me to reply to him by letter.

Meanwhile, as I say, regional policies, vigorous though they may be, will not succeed in bringing full employment and economic growth to Wales unless we first of all have a sound national economy—an economy in which industries, and employment too, can expand and go on expanding, without the constant fear that rising costs will undermine their competitive position.

A great many redundancies have been announced in Wales over the past year or two and South-East Wales, and the Newport area in particular, as has been said tonight, has experienced more than its share.

Let me say at this point that I and my colleagues are deeply concerned about the very real difficulties which face employees, especially older employees, who are made redundant. The solution to this problem of redundancy is twofold. First, we must do everything to ensure that labour costs are held as stable as possible. Certainly some of the redundancies announced in recent months are the direct result of rising wage costs which make it vital for firms to streamline their production and, in the process, to lay off workers. I am sure that both the hon. Gentlemen opposite entirely agree with what I have just said. It is beyond doubt that rising labour costs have been an important factor in this whole situation. There are at last some very real signs that we are winning the battle to hold down rising costs. This is absolutely essential if we are to bring down unemployment.

But I recognise that on its own it is not enough. We must also have an expanding economy. Only if we have growth will alternative employment opportunities arise for those already unemployed or those who in the future will find it necessary to change jobs.

I had hoped that by now we should all have accepted that the Government have taken very significant measures indeed to bring about renewed economic growth. Within a few months of taking office last year, we announced cuts in corporation tax and income tax. My right hon. Friend the Chancellor of the Exchequer, in his Budget, announced further cuts in corporation tax and a halving of S.E.T. On 19th July he went further and cut purchase tax all round by two-elevenths. At the same time, controls on hire purchase were lifted. These are the most significant tax cuts that we have seen for many years. The hon. Member was good enough and honest enough tonight to give credit to the Government for those tax concessions. To stimulate industrial development, first-year allowances on plant and machinery outside development areas were raised from 60 per cent. to 80 per cent. and for firms inside development areas the significant concession of backward free depreciation was written into this year's Finance Act.

Bank Rate has twice been cut and there is now no problem about the availability of finance for new investments. Not least, we have announced a major acceleration of spending on infrastructure projects in development areas and intermediate areas, the Welsh share of which is about £21 million. To this was added a further £9 million of expenditure on Welsh trunk roads in November. These measures together add up to a major stimulus to the economy.

As I have said, there are at last signs of recovery and the picture is by no means one of unmitigated gloom. Demand for consumer durables and motor cars has risen and Wales is well placed to take advantage of it. Certainly we have a long way to go. Since we debated unemployment in South-East Wales in July, we have learned of the redundancies at G.K.N. Cwmbran, British Aluminium at Newport and in other firms. But on the other side of the picture we have Golden Ltd., whose Llantrisant factory will employ 850 persons. There are others, too, including Foley Packaging at Abercarn, which will provide 140 jobs, and Airflow Housewares at Blackwood, which promises about 100 jobs. It is quite incorrect to paint a picture of stagnation; in the first 11 months of this year there were 158 visits to Wales by industrialists seeking premises and this compares with 189 in the first 11 months of 1970. This is encouraging.

Last week, the Department of Trade and Industry announced two more 25,000 sq. ft. advance factories to be built at Merthyr and Abercarn in the special development areas in East South Wales. It is intended to reserve both these for firms offering employment for a predominantly male labour force. To an industrialist seeking a location for his development, good communications are vital. In this respect South-East Wales is fortunate. This week sees the opening of the motorway link all the way between Newport and London. The effect of the motorway's opening in the medium and long term will be much more than just to reduce journey times. Newport, Cardiff, Cwmbran and the surrounding areas will be brought much closer to London and South-East of England and this must make them more attractive to industry.

It is not only the motorway that will benefit South-East Wales. A few weeks ago the stretch of the Cardiff to Merthyr road from Manor Way to Nantgarw was opened. This road will open up the Merthyr and Rhondda Valleys, providing greatly improved road links.

In the Welsh Grand Committee last week, my right hon. and learned Friend the Secretary of State referred to the great volume of additions to the principal road programme and preparation pool. In the context of employment and industrial development in South-East Wales, I think it appropriate to mention the Newport Docks access road which is now in the firm programme; the A472 from west of Nelson to Ystrad Mynach; the Caerphilly northern bypass; Cwmbran Drive (Stage 1), and the Tonyrefail bypass, all of which are in the preparation pool. The importance of these road schemes is that they provide vital links, direct and indirect, between the valleys and the motorway. This brings the whole of South-East Wales much closer to the industrial centre of London and the Midlands. This more than anything will help to encourage the growth of new industrial projects in the area.

I am confident that in 1972 we shall see a strong resurgence of production. This will provide the basic for renewed confidence which will encourage industrialists to invest. It is in this expansion of investment that I see a true hope of achieving a permanent reduction in unemployment in South-East Wales.

Question put and agreed to.

Adjourned accordingly at nine minutes past Eleven o'clock.