HC Deb 27 July 1971 vol 822 cc288-326

7.40 p.m.

Mr. Neil Kinnock (Bedwellty)

I will begin this debate on unemployment in South-East Wales on a personal note. I am the first member of my family to have been to university, let alone to have graduated, by some accident. When I was thinking of my future during my time in the fifth form in the grammar school, the advice I received from members of my family was that I should become a fitter, an electrician or a draughtsman. The reason advanced for this advice was that these jobs simultaneously provided a reasonable level of income and, more important, a level of security not enjoyed by the unskilled, the semi-skilled and the miners—the kind of occupation that my family had always followed.

That relationship with an older generation illustrates a whole chapter of social history, not only in South Wales but in working-class areas throughout Britain. The previous generation put an absolute premium on security, and thought that boredom and hard work could be suffered so long as there was job security, so long as a man could say that for the next 20 or 30 years he could be guaranteed a job. The reason for this was the previous generation's continual fear of gross insecurity during the inter-war years, and their determination that that insecurity should never be experienced by my generation.

We now have a new generation of workers in South Wales who since the war have become accustomed to a level of relatively high employment and to secure jobs and fairly advanced affluence—people who expect to take holidays every year and to have comfortable homes equipped with all the modern conveniences and motor cars. But this generation is now experiencing something it has never known before. These people who undertook new skills and have secure occupations, at the age of 30 to 35 are now knowing the sickening worry their parents' generation knew. Whereas 30 years ago the workers in South Wales were almost wholly engaged in the mines and the steel works, they are now employed as textile workers, engineers, chemical workers, glass workers and in all the other diversified trades that have developed since the war, and they are coming to know the worry, insecurity and desperation that was a permanent feature of the life of the prewar generations.

When one talks of unemployment in South-East Wales, one is talking not of the traditional mass unemployment of the coal-mining valleys, nor of the popular image of the depressed and depressing environment and of a depressed and malnourished generation. One is talking about ordinary workers, people who are indistinguishable from their comrades anywhere in the affluent areas of Britain. These are the people who are now facing unemployment on a scale unknown since before the war. There have been redundancies and layoffs in the industries which were intended to provide us with a secure, lasting, economic base. It is just like having cramp in the best developed muscle, and the people of South Wales are not equipped to deal with it.

Unless new initiatives are taken to provide the people with security and jobs and to guarantee the future of the children who are now leaving school, this sense of disappointment and frustration will manifest itself in a way which has not been seen in South Wales since before the war. That feeling is still there, it is latent. There is a high level of expectation, and people want better things. It was bad enough when they never had anything and were not allowed to get anything because of mass unemployment, but when something which they have had is snatched away, the reaction in South Wales will be all the more bitter and destructive. I do not say that as a warning but to illustrate the feeling that the new unemployment is causing in South Wales.

In the last two years in South Wales Switchgear at Pontllanfraith, which is the village across the valley from where I live, there has been a rundown of 1,000 jobs. South Wales Switchgear, which once acted as a springboard for engineering training in our part of the country, now has a reduced apprentice force and announced its latest redundancy last week with the layoff of just over 70 workers—the last in a long train of redundancies stretching over a couple of years.

Alcan-Booth of Rogerstone, developed during the war and extended since, is right at the frontiers of technological development, not a backwoods firm, not a throwback from the last industrial revolution, not a rundown pit or iron mill, but a modern industry. That firm had over a period of 12 months a humanely conducted but nevertheless very large redundancy of 500 workers.

Another firm on the frontiers of technology, Hy-Mac Rhymney, which could have occupied a position in an expanding world market producing large earth-moving equipment, has had a sorry story over the last few years of continual rundown in an area and in an industry where the most sophisticated skills of boilermaking, engineering and instrument-making were being developed. That is a severe setback for our part of Wales.

Looking further down the valley there are the more recent redundancies of British Aluminium in Newport. According to an announcement made last week. 400 workers will become redundant in the next few months. That means that another 400 workers from the city and from the lower parts of the valley will know unemployment for the first time.

Possibly the most tragic of all is the redundancy announced last week by I.C.I. Fibres, Pontypool, of 500 workers. That firm is concerned with man-made fibres, one of the mainsprings of Britain's technological growth in the last 20 years. It is an industry that held out probably the greatest hopes for the future. As the Minister of State will know, textile development is becoming a new industry in South Wales and increasing numbers of people are employed in it. This is a body-blow to a dramatically contrasted area of South Wales—to the south—the new town of Cwmbran and to the north the villages of Blaenavon and Abersychan, villages from which the Chartists marched a hundred years ago.

In this area there was one unifying factor, the apparent security of the industrial complex in the southern part of the area. However, Guest Keen Nettlefold and I.C.I. Fibres are now centres of redundancy. We liked to think of these industries as the new, muscular industries providing opportunities and transforming the nature of industrial South Wales. We thought these would be civilised, high-paying, full-employment industries which would help to remove the scars of the past. The amount of disappointment that has hit South Wales and the coastal plain of Monmouthshire and Glamorgan in the last 12 months has been heartbreaking to behold.

People who thought that they were secure are now having their jobs whipped out from under them and some of them at 40 years of age, after ten or 12 years of gradual development, accumulating all the material possessions and comforts, face the future with a couple of hundred pounds redundancy pay and no promise of employment in the near future. Skilled draftsmen, technicians, mechanics have been hit by 12, 15 or 20 weeks of unemployment and are eking out what remains of their redundancy pay.

There is no more humiliating experience than that of unemployment, but to take a generation which has known something entirely different is to rub its face in ignominy. These people do not feel it is somebody else's fault. In the old days it was always the capitalists who were to blame. There were always working-class leaders to articulate the feelings of the working class. They could always explain that once society was transformed, with new industry being brought in, and with a Government and Parliament which represented workers, these kind of things would not happen.

Well, we have now got all those things, and people are still becoming unemployed in South Wales. They look at this place and at the Government and say, "What is the point of our having any kind of democratic representation because all they do is to consider debate and talk? What we want is hope, security and jobs."

It does not appear to those people that an effort is being made by people with the power—and they know they have the power—to transform that situation. I hope it will not be long before this Government, with which I am in the most profound disagreement, realise the social as well as the economic consequences of this kind of unemployment and decide to deal strenuously with it.

On top of the big redundancies, we have the residue of pit closures over a decade; we also have the fall-out from smaller redundancies and the closure of smaller factories. This kind of bleak, gloomy, grim picture shatters the confidence even of the people in work. I am not just talking about Wales' 40,000 unemployed, on Monmouthshire's 8,000 or 9,000 unemployed, but about the people who are still in work by the skin of their teeth. Behind every redundant worker there are another two worrying themselves into distraction about who will be next—sweating that every weekend the management will put a slip into their pay packet, or a notice on the board, or will call in the trade union representative to decide who will go on the redundancy list.

Lack of confidence of this kind debilitates people's will to work. There is a theory of management—not widely held today, but widely held not so many years ago—that workers in fear are better workers, more responsible, more careful in their work. But the opposite is true. Workers who fear for their future could not care less about what is produced or how it is produced. They are absorbed with the question of their own future and cannot be worried about the national interest, or the company's interest or anybody else's interest. This is counterproductive in more ways than one. Many workers—even those in work—are looking for other jobs. They want to get out of the firm. It emphasises their insecurity when, after redundancy, they try to move to another firm and are told that there is no vacancy. It simply makes them feel trapped, enclosed in a network of insecurity, knowing that there is nothing between them and the dole queue. This is no overstatement.

Any one of the unemployed, skilled or unskilled, could tell the Minister this story in far more erudite terms than I can by taking him to their own homes, showing him the cancelled holiday plans, taking him to the garage to show him the car which has been turned in, showing him the table where the television set used to be. This is the situation in South Wales where the people are liquidating their assets to try to keep their heads above water for a little longer.

I am not talking about dire poverty. I am talking about savage cuts in people's standards of living because of unemployment. That is as bad in its way as mass unemployment in the inter-war years. The answers we receive as representatives of the people when we are seeking to improve the economic situation in South Wales—and we have had this sort of answer from the Minister of State and from his right hon. Friend the Secretary of State—is "Others are worse off than we are in Wales." I feel sorry for the Geordies, and I cannot feel happy that the people in Merseyside or Glasgow are worse off than we are, but we in Wales cannot be described as being all that better off.

In the 12 months between June, 1970, and June, 1971, in the travel-to-work areas which serve my constituency there was an increase of male unemployment of 535 and of female unemployment of 19, making a total loss of 554 jobs, or an increase in unemployment of 21 per cent. over the 12 months. I know that others are suffering, but no one can expect me, as a representative of these people, to put up with the situation because people elsewhere are worse off than we are.

We are also told that the measures taken by the Chancellor last week—his reflationary move, the slice off purchase tax—will assist the situation. I had this answer from the Secretary of State for Wales through the post this morning, but what we have done with these measures is to clamber back on to the stop-go treadmill. If it causes a balance of payments strain, as it always has done when we have had a slight boost to the economy, the people will have to pay for the eventual balance of payments deficit. It is the people who are now unemployed who will have to take the restraints regardless of what Government are in power. Those people will be hit both ways.

We were told in another Parliamentary answer that the new public works programme announced for Wales, value £14 million, will be of assistance in the problem. This might be so. Nobody has said how many jobs are to be created, but the fact remains that, however extensive the public works, even if they are worth double or three times that amount, it does not offer much future to the unemployed or the youth of my constituency since very few permanent jobs will be created. I do not want to see our society turned into a nation of navvies. That is not the solution to the job problem we face. Therefore, welcome as the public works programme is, it is only a temporary stop-gap measure and will not compensate for the loss of 500 jobs in I.C.I., 400 in British Aluminium and 1,000 in the South Wales Switchgear or any of the other major redundancies.

We have debated these matters in the Welsh Grand Committee. It does not matter what moves the Government make towards a system of free depreciation or a tax allowance system of incentives to regional industry unless the cash exists, unless the liquidity is there and unless industrialists can get money with which to buy machinery and to engage in capital investment. There is little point in offering them depreciation on assets that they cannot afford to buy or raise the money to buy.

All the answers so far advanced by the Government either are left wanting or are no answers at all. Some, like the measures announced last week, welcome though they are, may ease the unemployment problem. But they hold the seeds of their own destruction and that of the future of the people whom they are intended to assist.

I have even been told in a Parliamentary Answer from the Department of Employment that Bedwellty was all right because it was a special development area. There are four local authorities in my constituency. The Bedwellty Urban District is one, and that is in a special development area. Another, Mynyddislwyn, is also in a special development area. The other two are not. When I have made application to the Welsh office for assistance towards getting special development area status for Risca, which has an unemployment rate of 3.9 per cent., I have been told that matters are not sufficiently difficult in Risca to qualify it for special development area status.

Much as we should like it, the fact remains that, even if S.D.A. status came, it is only a title. It is only another pin in the map. It is no guarantee of additional employment. No great industry will be attracted to an area because of the advantages that accompany special development area status. It is intended to attract the minnows, and they are extremely welcome. But the granting of special development area status in itself is no guarantee of jobs. Certainly it is no guarantee of the right kinds of jobs, although we should be grateful for any kinds of jobs.

We face the progressive devitalisation and impoverishment of our community. Once it has started, it is almost impossible to stop. At best, it will be very expensive to haul our way back up the slope away from depression now that we have started to go downwards at full speed into a slump. Again, that is not expressing the situation in over-dramatic terms.

One aspect of the problem which is causing great distress is youth unemployment. I have spoken of the generation after the war, of which I am a member, which never knew unemployment. We are moving now to a further generation. I mean the young people, the school leavers of 15, 16, 17 and 18, and others in their twenties, some of them married, who are still described as youth unemployed. It is a national problem. The Times has talked of the 400,000 school leavers who face a bleak winter.

The senior careers officer for Monmouthshire, Miss C. A. Morris, was interviewed recently by the South Wales Argus, a newspaper which deserves praise for the way in which it has followed the problems of youth unemployment in Monmouthshire. In the course of that interview, Miss Morris spoke of a situation in which there might easily be 1,250 unemployed youngsters in Monmouthshire by the end of August. She said that there would be 4,000 school leavers in the county this year, and she expects that, even by September, 1,250 of them may still be out of work. She said that if the numbers of children unemployed had not dropped significantly during September and October, the careers service in Monmouthshire would become really worried.

Miss Morris went on: The largest population of young people in the county is in the Eastern Valley and ten years ago it was by far the most prosperous area. But new industries haven't kept pace with the increase in population in the area … A barometer of unemployment in the county is that more boys are taking jobs in coal mining—work which recent generations have avoided if possible. There is an explicit description of the situation by a woman who is involved professionally. She says: We must see that the young unemployed retain their enthusiasm and prevent them feeling they are not wanted. That is the situation that we face in Monmouthshire, where between 20 and 25 per cent. of our young school leavers face unemployment when they leave school. It is a disastrous situation. It is impossible to think of it as anything else, when 1,250 youngsters have no prospect of a job when they leave school.

Miss Morris is not given to exaggeration. She is a temperate and moderate women. In a telephone conversation I had difficulty in getting her to use even mild language to describe the situation. However, the figure of 1,250 is sufficient description in itself.

Mr. James Kegie, the county planning officer, in his quarterly report published last May told us that in the 12 months between May, 1970, and May, 1971, youth unemployment went up by 34 per cent. in Monmouthshire. The other side of the picture is that youth vacancies went down by 68 per cent. in the same period.

There are parts of Monmouthshire in which there are 50 men to every vacancy registered at employment exchanges. The average in the county is that there are 11 unemployed persons for every vacancy. As I have said already, this is the situation in an area which has become used to affluence and which has established a new kind of community where people are accustomed to security and comfort. We find ourselves with dramatically increasing unemployment figures and with no future for our young people. A whole generation bred on security now experiences the threat of the axe over their jobs. This kind of situation is nothing short of disaster. It is disappointing in human terms, and it must cause everyone in this House the greatest frustration. But frustration, compassion, sorrow and regard for the position of these people are not enough. We want positive action. The Government must change their regional jobs policy. There is no alternative.

If it is the case that we face a situation of continual run-down in our regions, the Government must show their interest in the regions by giving a massive injection of incentive capital and by forcing industries to go there. There must be expansion into the regions before the gate of Europe's regional policy sanctions closes upon us. It is no small wonder that the greatest fear exists in the regions about their future should we join the E.E.C. If we decide to go in, in the years before we become fully committed members, we must get as much as possible established in our regions to provide security for many years to come.

So dangerous and difficult is the youth employment position, I suggest that the Government would be justified in introducing a special youth employment premium which would give employers a bigger incentive to employ young people. To young people, who have no roots, who have no family commitments and who are mobile workers, the alternative is to leave the valley communities not just for five or six years but for ever. We shall then enter a vicious circle where industry does not come because we have become run-down communities, and where young people leave because industry is not coming. We have begun on that vicious circle already, and only rapid Government action can solve the problem. My suggestion is for a special premium to attract jobs for youngsters.

I should also like to see more use made of factories which are now standing empty in the valleys following closures in recent months. Some of them are fully equipped with engineering machinery. Let us put the unemployed youth into those factories and give them 12-month apprenticeships so that they will at least have a qualification to face the world. The alternative is a completely disenchanted unemployed youth labour force which will vent its spleen on society, at best by being apathetic and, at worst, by being positively destructive. It is not only an economic case, but a social and humanitarian case which we put forward in asking the Government to take more urgent measures to deal with unemployment in South-East Wales.

8.10 p.m.

Mr. Alec Jones (Rhondda, West)

It is a great pleasure to follow my hon. Friend the Member for Bedwellty (Mr. Kinnock) and to echo many of the words which he has uttered, particularly his concern at the genuine sense of bitterness felt by many people in South Wales at the loss of the security which they thought was theirs, security for which they have fought and built up since 1945.

I share my hon. Friend's compassionate concern for young people. As long as the young people of Wales have a voice in this House, such as that raised so eloquently tonight by my hon. Friend, I am sure that we shall be able to solve many problems to their satisfaction.

The people of Wales have a long memory. It is possibly unfortunate for the Government, because that long memory guarantees that they will never have a majority of Members representing Welsh constituencies. Not only is that memory long, but certainly the oldest among us—in some cases, the not-so-old—have bitter memories of the high and lasting unemployment which was inflicted upon us by pre-war Tory Governments. That past experience taught us that unemployment was one of the greatest misfortunes which could be visited upon any community. It is because we remember those matters that we are debating this issue tonight.

It is because Welsh Labour Members share these long and bitter memories that, at the first meeting of the Welsh Grand Committee in this Parliament when we discussed the effect of the Chancellor of the Exchequer's October policy statement on the Welsh economy, we constantly emphasised unemployment throughout our contributions. We asked questions and criticised the Government. We criticised them then over their decision to abandon investment grants. How right we were. As events have shown, the abandonment of investment grants has proved catastrophic for Wales.

Despite the fears which we expressed on that occasion—indeed, almost because of those fears—we were admonished by the Secretary of State for Wales. On 9th December, at column 17 of the Welsh Grand Committee Report, the right hon. Gentleman said: "In particular, we"—that is the Government— reject the shameful waste which has occurred in the last six years in terms of unemployment and migration—a waste of the talent and skills of Welsh workers … we are determined to follow new policies, policies which will be more effective in securing the development of the Welsh economy."—[OFFICIAL REPORT, Welsh Grand Committee, 9th December, 1970; c. 17.] The Secretary of State for Wales, in his first address to the Welsh Grand Committee since the new Government took office 12 months ago, said that the Government were determined to follow new policies. We do not expect the leopard to change its spots, but I am sure that we will be forgiven our cynicism as many of the things which we said on that occasion have proved to be right.

What have the Government's new policies brought to Wales? Certainly they have brought new records of unemployment—wonderful new records. Month by month, almost without exception, there have been new records of unemployment in Wales. On 12th July this year there were 44,062 unemployed persons in Wales. The number of unemployed in Wales has shot up by 9 per cent. in just one month. We have unemployment such as we have not seen since the last war. We now have unemployment figures which most people in South Wales certainly thought had gone for ever.

July, 1967—some hon. Members will recall that I have a personal reason for remembering 1967, since July was but three months after I fought a complicated and difficult by-election in the Rhondda—was not a popular month for the Labour Government. We had the worst July figure for unemployment under Labour—36,851. I criticised that unemployment figure then. Indeed, many of my hon. Friends criticised our own Government when we thought that they were hesitant or reluctant to go far enough or fast enough towards the solution of that problem. If we were right to criticise our own Government about a level of unemployment of 36,000, as I believe we were, then we are more right—nay, it is our duty—to criticise the present Government with an unemployment figure of 44,000. The July, 1971, unemployment figure is 20 per cent. higher than it was in July, 1967.

These new policies, which were so proudly fanfared to us in Committee by the Secretary of State for Wales, have achieved what many of us had hoped was impossible, even for a Conservative Government. The Welsh unemployment figure has gone up by 26 per cent. in the first year of the new Conservative Administration. The sum of their achievement for Wales is a 26 per cent. increase in unemployment.

It is not merely the present figure of unemployment which worries us. The figure of 44,000 was compiled on 12th July, well before most of the Welsh school summer leavers joined the ranks of the unemployed. My hon. Friend gave details of youth unemployment in Monmouthshire. I have spoken to several youth employment officers in the county of Glamorgan. They have told me that this is the worst year they have experienced for trying to place school leavers in employment. If the figure was 44,000 before the school leavers were added and if this is to be the worst year for placing school leavers in employment, we have every reason for fearing that the figures for August and September will be infinitely worse.

It is a dreadfully demoralising experience for young people to be forced to sign on at the Labour Exchange as their first job in life. There are already about 2,000 young boys under the age of 18 unemployed in Wales, and nearly 1,500 girls. Those numbers must soon be inflated by our summer school leavers. Not for these young people the dignity and independence which comes from good and valuable employment, but the indignity, at the earliest possible age, of joining an ever-increasing dole queue.

It is not only these young people who are likely to be added to the dole queues in the coming months. We know that there are normal seasonal trends in unemployment. Looking at the records of unemployment in Wales over the past few years, we see that between July and January there is likely to be an increase in the number unemployed, under normal circumstances, of between 6,000 and 8,000. It has sometimes reached between 10,000 and 12,000, but in most years, under normal conditions, the increase in unemployment between July and January has been between 6,000 and 8,000. If the trend continues this year, Wales will have at least 50,000 unemployed by the end of the winter. This is a heavy price to ask the people of Wales to pay for the confidence trick played upon them last June.

On 28th June, the Chancellor said that our fears were unfounded. He said that there were some distinct signs of an improvement … in a variety of fields. He said that there had been improvement in industrial production, in the volume of retail sales, in new car registrations, and in the volume of exports. For good measure the Chancellor went on to say this in an attempt to reassure those of us on this side who had misgivings: On the basic problem of unemployment. I have repeatedly said that, taking account of the Budget measures"— I am not sure which Budget he meant— I expected that the rate of increase in unemployment would, after a time, slow down and then stop. That is what I said, and certainly that has been happening, as is apparent from the figures that have been published in recent months."—[OFFICIAL REPORT, 28th June, 1971; Vol. 820, c. 57–8.] Unfortunately, when the unemployment figures came out on 12th July they gave the complete lie to the picture which the Chancellor had painted on 28th June. All those glorious signs of improvement had disappeared like water off a duck's back. When they disappeared, we had the third Budget in less than a year. On 28th June everything in the garden was lovely. Twenty-one days later there were the extra measures because the good signs had disappeared and it was necessary for even this Government to take action.

It is reasonable to be fair to all Governments. This Government's third Budget at least showed that the Government had become frightened by the level of unemployment—by the monster of their own creation.

I welcome many parts of the Chancellor's third Budget. I believe that much of it is belated and should have been done months earlier. If it had been done months earlier many of those who are now unemployed in Wales would have been saved the indignity of having to join the dole queue.

I sincerely hope that the Chancellor's measures will have some success in reducing the level of unemployment. If I am proved wrong in my estimate of 50,000 unemployed in Wales this winter, no one will be more pleased than me. I look forward to being proved wrong.

I issue this warning to the Government. It will not be sufficient merely to slow down the rate of increase in unemployment. What Wales wants, what my Scottish colleagues will want later, and what all the unemployed throughout the United Kingdom want, is a dramatic drop in the real numbers of unemployed and a movement towards the time when all men and women who are able and Willing to work are in employment. That is the goal. Unless we see some positive steps taken to reach it, we shall expect even this Chancellor to give us the fourth Budget, if necessary.

Few of us in Wales are anything but depressed by the news we have read in the Press in the past year. Almost every local paper in South Wales, and even the national paper—the Western Mail—has given us detail after detail of closures of one factory after another, of cutbacks in production, and of redundancies, until these words have become as well known in the Wales of 1971 as they were in the Wales of 1931.

I will state some of the facts which lead me to say that the whole economic climate in Wales has worsened in the last 12 months. We expect the Government to take action to solve the problem created by these facts. First, unemployment has increased by 26 per cent. from July, 1970, to July this year. Second, between January and April, 1971, 8,100 workers were declared redundant in manufacturing industries. I take that figure from a Parliamentary Answer. Trade union officials to whom I have spoken both in my constituency and throughout South Wales tell me that this is the worst period they can remember since the war for having to deal with redundancies. One trade union official said that practically the only thing he does nowadays is deal with redundancies in factories.

Third, in June, 1970, there were 30,000 jobs in prospect—the hope for the future, as it were; in June, 1971, there were less than 25,000.

The fourth fact concerns industrial development certificates. When hon. Members opposite were in opposition they used the question of the granting of I.D.C.s as a rod with which to beat the back of the Labour Government because we were not doing enough in this regard. In the first quarter of 1971 I.D.C.s were granted for a total of 0.7 million square feet. That sounds a lot, but in the first quarter of 1970 under the Labour Government the figure was 1.9 million sq. ft. So there has been a reduction of 63 per cent.

The Government must direct their attention to those facts. The people of Wales want to know what concrete proposals the Government have for dealing with the redundancies, the loss of job opportunities, and the unemployment which has been created.

I am sure that the Minister of State will inform the Secretary of State of the points which have been raised during the debate. The Secretary of State is responsible to the people of Wales. If the unemployment figures show further increases in August and September, we shall expect action by the Secretary of State. Up to now the Government have been able to claim—with a certain amount of justification—that they have not been long in office and that part of the blame can be laid on the Labour Government. That excuse is wearing thin. Wales will expect to see some action from this Government if the July and August unemployment figures are excessively high.

The Minister of State will have seen Motion No. 653. In it, hon. Members on this side say that if the figures are high we expect the Secretary of State to recall the Welsh Grand Committee, even during the recess, so that the Government can be asked to give some account of their stewardship.

My speech has been almost entirely concerned with Wales, although I know that my hon. Friends for Scottish constituencies are raring to go. All that I have said on Wales is equally true of Scotland and the other development areas. It will go down to the everlasting discredit of this Government if they continue to tolerate the ever-increasing unemployment figures of the United Kingdom in 1971.

8.29 p.m.

Sir Brandon Rhys Williams (Kensington, South)

I congratulate the hon. Member for Bedwellty (Mr. Kinnock) on initiating this debate. He spoke finely and made a useful though depressing contribution. He is not, perhaps fortunately, old enough to remember South Wales as it was before the war, but I was brought up there before the war and I have very vivid memories of it. It would be a disaster not only for South Wales but for the nation if we saw those times again.

I should like to warn against deliberately creating a climate of depression. Loss of confidence will be the biggest obstacle that we shall eventually have to overcome again if we are to bring blooming prosperity to South-East Wales.

This is not the occasion to discuss the wider implications of the Government's strategy—namely, the attempt to join the Common Market and its effects on South Wales. I think that hon. Members would agree that that subject has been discussed enough for the time being. Nor would it be especially fruitful to discuss the Government's tax reforms, the object of which is to strengthen and make more realistic the developments in areas like South-East Wales, because that subject too has been considerably worked over.

But it may be useful to consider the strategy which is being followed and to say something about the preliminary reactions that I personally have had to the Severnside feasibility study. It contains ideas which have not been given sufficient publicity. For instance, the summary of conclusions on page 13 contains the words: Our main conclusions are: 1. Severnside is an area where we believe there will be continuing tendencies for growth sufficient to attract a net inward flow of about 7,000 people a year, unless positive measures to restrict growth there, for which we can see no economic justification, are taken. Throughout this detailed and highly interesting report are ideas which suggest openings for much deeper and further consideration. I have the feeling that a strategic error is being made in our placing too much emphasis on the responsibility here of the Welsh Office. It seems to me that the problems of South-East Wales are national problems and should be tackled on the basis of a national strategy. I should like to be sure that the Government have absorbed the long-term problems of the economic development of this island and can see the problems of South-East Wales in the national context.

Many people have complained that, since the war, there has been an overheating in the South-East, that the growth which we have had since the war has been concentrated too much in the London area and the Home Counties. There is a great deal of truth in this. I should like to see the Government as not a short-term but a long-term strategy, devising means for shifting the whole basis of growth, not away from the South-East, because one wants the South-East to continue to grow, but more widely over the whole island, including particularly the Severnside area.

It is unfortunate, possibly, that, in this report, for reasons that I do not know, the Cardiff area and Glamorgan were regarded as a fringe area of Severnside. I should have thought that the Glamorgan area, with its great concentration on population and industry, could have been taken as one of the major objects of the study. It is possibly because of this decision that the study has concentrated on the development potential of Newport, rather than the north bank of the Severn, including Barry, Cardiff and Newport, all together.

Among the important developments in the area during recent years the ultimate effects of which have not yet been fully felt is the building of the Severn bridge. There are many people in South Wales who complain that, although the Severn bridge is an enormously valuable facility for business, trade and production, it is nevertheless tending to suck business away to Bristol and is making Bristol into the capital of the Severnside region. From my limited observation, I think that there is an element of truth in that. I hope, therefore, that we may see a greater emphasis on the balanced development of Severnside, without Bristol being allowed to emerge as the capital, with Newport, Cardiff and the other towns on the north bank simply being satellites.

I owe to Lord Brecon, who speaks so wisely and with such knowledge of Welsh affairs, the vision of Cardiff and Newport gradually growing into one major population and industrial centre able, as it were, to look Bristol in the eye, or, perhaps—not to use a platform phrase—able to ensure that there is a balanced growth on both sides of the Severn, with as much growth in, so to speak, the Welsh part of the area as on the English side.

I was one of those Members who felt, when public opinion rose up and decided that it would not wear a new national airport at Cublington, that we ought to consider the possibility of building the new airport on the Severn. I still regard this as an idea worth consideration. I feel that, if we had the tens of millions—or is it hundreds of millions?—to spend on the creation of a new national airport, we could well have thought of putting it into an area of high population and declining industry rather than in an area where there are at present relatively few people and only a large number of Brent geese.

If the decision has been firmly taken in favour of Foulness, it is probably too late to go back now, but that still leaves us with the possibility of creating a national airport in due course on the Severn. I have seen the study and been impressed by the work done by the Cardiff firm of engineers which has examined in considerable detail the possibility of building a new airport on the Severn, and I think that the Government should look much more closely into the possibility if not of building a national airport there, at least of building a new airport which would serve Severnside and the Birmingham area.

I am afraid that one of the projects which the Government have in hand, namely, the concept of the Llantrisant new town, may prove to be contrary to the ideal strategy for Severnside. I think that hon. Members know my interest in this matter, and I do not hesitate to declare it, although I am not exactly sure what it is. Whether it is in my personal interest or the interest of my family that there should be a new town in Llantrisant, that there should not be a new town there, or that Llantrisant should be allowed to develop in some other way, I am not perfectly certain, but I am extremely interested personally in this matter none the less.

My view from the start has been that it would be a mistake to concentrate growth in Llantrisant to the exclusion of the opportunities available in the neighbouring areas. I regard Llantrisant as a highly promising centre for industrial growth, and it is an attractive area where I should be glad to see the development of population as well, but it ought not to be overdone by Government attention being concentrated upon it to the exclusion of the other openings for growth. We cannot afford to stifle growth anywhere in South-East Wales, even if it be done with the idea of making a great success of the Llantrisant new town project.

I should like to see the development of Llantrisant allowed to proceed in a much more natural way. I do not like population forecasts of 140,000 by the end of the century. That seems to me to be more hectic even than the development of the Klondyke. Population growth on that scale cannot be well carried through. Nor am I very happy with the idea of a population of 70,000 to 90,000 in Llantrisant in the lifetime, probably, of all hon. Members now in the House. That also seems too hectic and unbalanced.

A population target by the end of the century of, perhaps, 40,000 or 50,000 seems to me to be much more realistic, and it would be attainable, in my opinion, if the Glamorgan County Council, or whatever be the appropriate authority, were to publish a town map for the Llantrisant area and say, "This is the type of development which we should approve in Llantrisant. Now go ahead and do it yourselves". Fortuitously, the local authority is already the owner of a large part of the area which would be likely to be included in a town map for Llantrisant, so one would, therefore, have balanced public and private development which could make the old town of Llantrisant live again as something really fine. But I doubt what may come if the idea is persisted in of establishing in due course a corporation, with all the pomposity and red tape which goes with this idea of a formal new town.

I say no more about the concept of Llantrisant new town, but will the Government put their minds to the attractions of developing the areas lying between Cardiff and Newport, and particularly the area lying south of the railway and of the main road; that is, south of the motorway that is to be? There we have a very large flat area, relatively without existing population and relatively without history, which can be easily drained, which has immediate access to the sea and could easily have access to an airport as well, which would present, if it were done with vision and as a national project and not something merely loaded on to the Welsh Office as a Welsh project, an opportunity of producing a new trading estate for the 21st century which would be as fine as anything in Europe.

I do not want the opportunity to be lost because responsibility for development on the north bank of the Severn is divided between too many small centres, none really powerful enough to be a magnet for professional, business and, indeed, recreational developments. Already we are too much fragmented on the north bank. We have Barry—a fine place, but not large enough to attract a business community of real size on its own. We have Caerphilly, another historic centre; Llantrisant, Cwmbran, Newport, Pontypool. All these centres are attractive in themselves, with great potential, but none is able to look at Bristol as the headquarters as it might be for a great new industry, for a sales force, or as a place where professional people will come together to provide the centre of excellence which I would like to see in this part of the country.

I believe that it was I who first used the phrase "Britain Garden City, the world capital". I am quite serious in using that phrase again. We must look forward to the continuing growth of population, to a total reconstruction of the old eighteenth and nineteenth century housing in which our people are still living, and to the creation of completely new industries for a new age; and must see Britain not just as an offshore island of Europe, but as one of the world's major trading and business centres.

In this development, as I envisage it, south-east Wales must play a prominent part. So may we hear from my hon. Friend that his eyes are set on the distant scene; that he is not too much preoccupied with pinpointing developments here and solving a particular immediate problem there, but is determined that south-east Wales should be integrated with the economy of the whole island, of Europe and of the world?

The other day I read the sketch for a transport programme for Europe in the 1980's, and the phrase in that sketch which stuck with me is: "Birmingham, Severnside, Bordeaux, Turin"—just an example of the sort of way in which we should be thinking of new trade routes and new areas for development and intercommunication. We must not see ourselves as being a region away from the main centre, as we have tended to do, thinking of South Wales as simply a fringe area of the South-East. Instead, we must have a much larger vision of the way in which people will earn their livings and contribute to society in the 21st century.

8.45 p.m.

Mr. Arthur Probert (Aberdare)

I will try to be brief, as there are so many more topics to be discussed. I have been tempted to speak by what my hon. Friend the Member for Bedwellty (Mr. Kinnock) said in his admirable opening speech and by certain remarks of the hon. Member for Kensington, South (Sir B. Rhys Williams). I agree wholeheartedly with what he said about Llantrisant. But I disagree with his suggestion about the development between Newport and Cardiff. He should have learnt the lessons of the South-East and the massive growth of conurbations. If we develop that area between Newport and Cardiff we shall fall into the same trap as the South-East, creating a massive conurbation which could result from the development of Severnside to Cardiff and Barry. As far as South Wales is concerned, heaven forbid!

My hon. Friend referred to his personal experience. He is of the post-war generation. I was born just before the First World War, and I remember the 1930s. I believe that my experience exemplifies the basis of the thinking amongst the older generation in South Wales today. Perhaps the hon. Member for Kensington, South will understand when we are perhaps accused of painting too gloomy a picture.

I was accepted for two universities, having taken what was then known as the Higher Certificate. For domestic reasons, I could not accept either. The older generation will recall that there were only two safe jobs in the valleys—the town hall and the local co-op. There was a vacancy in the town hall, and 150 of us tried for that one job, boys who had done well, passing their Higher Certificates with dislinction and so on. I was the lucky one. I do not know whether I was fortunate to stay in the valleys of South Wales, but I think so, because of the great communities which exist there.

The pay for my job rose from £1 to £2 a week. Although that was a long time ago, those were very low wages even then. I was fortunate in that I gained tremendous experience in various departments of local council work. I have found that very useful to me, particularly here.

I know that the Minister knows the areas of which we are speaking as well as any hon. Member does. It is because of my own experience there that I think that the ghost of the 1930s still stalks the valleys of South Wales. It is no good accusing us of painting too gloomy a picture when we know that the situation at present is gloomy indeed.

My hon. Friends the Members for Bedwellty and Rhondda, West (Mr. Alec Jones) have referred to the various means the Government are adopting to provide incentives for industry in the development areas. They have been discussed in the Welsh Grand Committee, but for certain reasons I could not say a word there. I will not develop what my hon. Friends said, except to say that I think that the incentives will be insufficient to attract the industry which we need when the hoped-for expansion in the economy comes. I would refer to only one aspect, for which I do not blame the present Government; my own Government were equally responsible. In 1973 the regional employment premium will disappear. I implore the Minister of State to press on the Secretary of State the urgent necessity of introducing something that will replace the regional employment premium, which has been a tremendous inducement to industrialists in development areas, particularly in South Wales.

The hon. Member for Kensington, South referred to Severnside and Llantrisant. I would be out of order were I to discuss the new towns. I shall simply refer to the Llantrisant development in so far as it affects the employment prospects and the prospects of the communities in the valleys of South Wales in Glamorgan and Monmouthshire.

I was very pleased to read that the Minister of State had said that as far as the Severnside development was concerned he had priorities for solving the problems of the valleys. I am paraphrasing what I read in the Press. I welcome that because it is a correct priority. I would like the Welsh Office to use this priority in relation to Llantrisant. It has been stated by the Government that the new town will cost ultimately about £3 million. An authoritative study of the problems of the valleys by a civil engineer has suggested that we could solve them, and this would involve a population of about 700,000, for less than £130 million. It is my contention that we could solve the problems for far less than that.

There are one or two serious fallacies in the thinking about new towns. We all know that at the moment studies are being made into the effects of new towns—what they are or are not achieving. What they are not achieving is the community spirit. They are soulless places, apart from their other problems. If we depopulate the valleys, as Llantrisant will certainly do, we shall find—and the Secretary of State admitted this in answer to my supplementary question—that we have destroyed the existing, lively communities. Others will ultimately evolve, but not within the next 50 or 100 years. That is one of the things which the studies of the new towns is revealing.

If the new town of Llantrisant is to go ahead, and I understand the preliminary planning steps are being taken, we shall find that more and more of the existing social capital in the valley towns in Monmouthshire and Glamorganshire will be under-used. The social capital is not poverty stricken. In my valley there are many new schools, including a comprehensive school, which admittedly consists of a number of schools. There is existing social capital which if brought up-to-date will ultmately be of great benefit.

I am convinced that the various Secretaries of State—and I am talking about Secretaries of State in previous governments—with one exception to which I will refer, have been persuaded, whether by the officials in the Welsh Office or elsewhere, into taking unnecessary actions. What the hon. Gentleman for Kensington, South said was quite right. Llantrisant can develop quite naturally. Industry will be welcomed there. I know all about the arguments that money could be available through the New Towns Act. This is not necessary in Llantrisant. I refer to the destruction of the existing communities.

No one who has lived in the valleys of South Wales, which I know as well as anyone, can deny that the communities which exist there, not only educational but cultural, are equal to any others in the United Kingdom—certainly surpassing anything existing in a metropolis like London or in those vast conurbations around Manchester and Birmingham—and I say that with all respect to my colleagues from those areas. These are lively communities. I feel horror-stricken by certain developments which far-seeing Ministers should not be persuaded by officials and so-called planning experts to undertake. From my experience in local government, I know a lot about planning experts. When I first came to this House, one of my jobs was to do with planning.

I welcome the reference to the Severn-side development by the Minister, but it must be one of his priorities to see that, before the development of Llantrisant to a new town of 70,000 or 80,000 by the early 1990s, capital is diverted into the valleys to retain the communities there as they exist now.

There is an excellent precedent. I am pleased to see my right hon. Friend the Member for Anglesey (Mr. Cledwyn Hughes) here because I think he has an idea of what I am about to say. I commend this precedent to the Minister of State because he knows the area as well as anyone. Jim Griffiths—I was going to say, my right hon. Friend—when Secretary of State for Wales, suggested a new town for mid-Wales. I was horrified by the idea, and when my right hon. Friend the Member for Anglesey succeeded Mr. Griffiths, he had the force of character to sweep it aside. Where was the population for that new town to come from? From existing communities, which the Minister knows so well, in Mid-Wales and other valley communities, and from the Birmingham area. I felt that we would be destroying existing communities. We would not be bringing employment to the sorely distressed areas which needed it. We would be sucking them dry of their population for the new town.

My right hon. Friend the Member for Anglesey, however, decided to develop the existing communities, and what a wise decision that was. Those of us studying the effects of new towns—and a study is long overdue—should have regard to what happened in Mid-Wales when my right hon. Friend set up the Mid-Wales Development Corporation. By that action alone, he and my right hon. Friend the Member for Cardiff, West (Mr. George Thomas), who succeeded him, set a first-class example to the rest of the United Kingdom in considering new town development. One of the reasons for a new town is to house overspill from existing conurbations. But there are no conurbations in South Wales. Nor are there conurbations in Mid-Wales.

Indeed, people are moving away from Mid-Wales. They are migrating en masse. Therefore, the excuse for a new town in Mid-Wales was to house overspill from Birmingham. I am not a nationalist and I welcome English people to Wales. My father was, in any case, an Englishman. Llantrisant New Town is not designed to satisfy an overspill but ostensibly to satisfy the industrial development taking place there. Where, however, is the overspill to come from? The Secretary of State himself answered this when he said that thousands would have to come from existing communities in the valleys. I therefore ask the Minister of State to look seriously at the Llantrisant project.

I am pleased that the Secretary of State has agreed to meet my colleagues and a number of local authorities about the problems of the heads of the valleys. I ask him to look at this more seriously and to think of what is happening in an area, the Newtown area, which he knows as well as anyone.

My colleagues and I, when we meet the Secretary of State with members of the local authorities, will ask him to think about a feasibility study for the Heads of the Valleys with the ultimate object of establishing a development corporation for them. All the evidence—and I have it and I defy any official of the Welsh Office or anywhere else to counter it—shows that in all respects this is a strategic area. I know that there is difficulty about inducing industrialists to come, but, once there, they will remain, dependent on the economic climate.

I have not referred to my own constituency and I have three brief questions about it. We have one advance factory which is idle and we have the old Lastex Yard factory in the Hirwaun trading estate which is idle. Thirdly, we have the promise of a Remploy factory, one of the achievements of which I am proud and for which I have been agitating for many years. J hope that the Minister of Stale will consider these three and will let me know about them in due course.

9.6 p.m.

Mr. Gwynoro Jones (Carmarthen)

J shall not follow the comments of those hon. Members who have discoursed on Llantrisant and the area between Cardiff and Newport, interesting though that would be. The problem which we are facing is more closely related to next year, the next 18 months, the next two years.

The problems of Wales cannot be solved while there is high unemployment. Those are not my words: they are the words of that euphemistic document, "A Better Tomorrow", the Tory manifesto for Wales of last year. In case the Minister of State did not mean what he said then, we had better get the Minister of Agriculture here to define the meaning. I will quote the sentence again: The problems of Wales cannot be solved while there is high unemployment. Then 34,000 people in Wales were out of work; now, 44,000. If there were high unemployment in June, last year, what is the figure now? Is it high, very high, or absolutely disgraceful?

The Tory manifesto went on to say that the aim of the Government was an effective regional development policy. It said: We regard an effective regional policy as a vital element in our economic and social strategy. It went on to promise a thorough-going study of development area policy. We are still awaiting that thorough-going study. Measures have been taken in the last nine or ten months which have been completely divorced from any study and which have gravely damaged the employment situation in Wales.

Nobody can doubt that with the change of Government there was a considerable loss of confidence in Wales about the economic situation, not just by the opponents of the Government, but by economic experts and by industrialists, a loss of confidence which was at variance with what had previously occurred. At the end of 1969, The Times said that A decade of growth lies ahead for Wales. as a result of Labour Government policy. It did not use those final words, but that was the implication. It said: A decade of growth lies ahead for Wales. In July, last year, Peter Jay said: The fundamental weaknesses in the South Wales industrial base are being repaired. In other words, a structural reform was taking place as the old industries were in decline and the efforts made from 1965 were beginning to pay dividends.

Although there was a considerable loss of jobs in five years, 50,000 to 60,000, to counter that more than 30,000 jobs were provided in new manufacturing industries. While employment in manufacturing industries in Britain was declining by 88,000 in 1967 and 1968, 1 per cent. in the two years, there was an increase in employment in manufacturing industries in Wales of more than 2.3 per cent.

Before I come to what has happened since June of last year, I should like to refer again to "A Better Tomorrow". In it, the Tory Party claimed that We shall concentrate on building up the advantages and amenities of those areas best suited for growth"— I would like the Minister of State to decide which areas are best suited for growth— rather than on giving indiscriminate and wasteful help. Are the Government now saying that wasteful help was given to almost 200 new firms which came to Wales under the investment grant policy?

From 1965 to 1970, more than 190 new firms came to Wales. Was that wasteful help? If the Government claim that it was wasteful, it is a further reflection on their so-called friends in private industry that they were prepared to throw that money away. Indeed, the contrary is the truth. This money was spent in a very good way. During those five years, over 190 firms came to the Principality.

The manifesto of the Conservative Party said nothing about the abandonment of investment grants. This is the key to the whole situation. The abandonment of this policy——

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

indicated dissent.

Mr. Jones

The Minister shakes his head, but I will endeavour later to quote what industrialists have said about the effect which the abandonment of investment grants has had on unemployment in Wales.

Lord Robens said that the National Coal Board could not go on any further with the Abernant plant. I have often quoted the words of Lord Robens and the Minister of State is aware of them. Lord Robens said that the multi-heat plant for Abernant was cancelled as a direct result of the abandonment of investment grants. As a comparison Sir Val Duncan, Chairman of R.T.Z., claimed that it was only a Labour Government investment grant that brought the aluminium smelter to Anglesey—a £50 million investment.

The C.B.I. survey of 194 industrialists in Wales gave rise to the claim that the significant drop in expansion proposals for the Principality was directly the result of the abandonment of investment grants. It is no use the Minister and his Government saying that this change of policy did not affect the situation. The fact is that it affected it to a great extent.

One of the ways in which we can measure the situation is by industrial inquiries. In the second half of last year, we had the lowest number of industrial inquiries in the Principality since 1967—that is, since the development area policy was in full flow. In the first half of 1971, however, the figures were far worse. Comparing the second half of 1970, for which the present Government are responsible, with the second half of 1969, there was a drop of 20 per cent. in industrial inquiries for sites in Wales. In the first half of 1971, compared with the corresponding period in 1970, the drop was not 20 per cent. but was even greater at 35 per cent.

My hon. Friend the Member for Rhondda, West (Mr. Alec Jones) spoke of 7,000 or 8,000 redundancies during the first three months of 1971. If he quoted the figure for the full year for which the Government are responsible, it would be far more condemnatory of them. During the time of this Government, 16,490 people have been made redundant in Wales. This is what this debate is all about.

I endeavoured to analyse this problem in the economic affairs debate last week. The differential between the development areas and the non-development areas has closed. With the abandonment of investment grants, it is not now as great an incentive or much of an advantage for industrialists to go to Wales, Scotland, the North-East or North-West of England. If the Minister questions my assertion, I draw his attention to the reply given to my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) by the Secretary of State for Trade and Industry which showed that the investment allowance system had resulted in a cut of 60 per cent. in the incentive. Not content with that, the Chancellor of the Exchequer last week lowered the incentive still further by increasing the first year allowance in non-development areas from 60 to 80 per cent. That further closed the differential between the development areas such as Wales and non-development areas.

It is for reasons such as these that the situation in the Principality is gradually getting worse. The number of firms going to Wales has considerably decreased. In the first five months of 1971, 12 new firms went to the Principality. In the first five months of 1969, the figure was 24. The situation is reaching the point at which the Government must believe that what we are saying is true. It is one thing to play party politics, but the facts as presented in Wales show clearly that what has been done has been damaging and that what the Government are endeavouring to do will have no beneficial effect.

Carmarthenshire, in West Wales, has been involved in this gradual rundown. Unemployment in Carmarthenshire on average has doubled. Hon. Members have spoken of increases of unemployment in their area of 20 to 30 per cent. My hon. Friend the Member for Llanelly (Mr. Denzil Davies) could quote statistics for the Llanelly employment exchange area, which includes Kidwelly, showing that unemployment there has doubled in the last year. A recent report said that unemployment in West Wales had increased by 2,000. The redundancies in Carmarthenshire in the last few months have totalled 600. This may not sound a large figure, but it is large in an area like Carmarthenshire where industries are few and far between.

They were much more few and far between when we had a Government before 1964 which carried out policies which in some respects were similar to those being adopted now. The present policies are not new. The thoroughgoing study to which "A Better Tomorrow" refers is not a thorough-going study. It is a reversion to policies adopted before 1964. Free depreciation and investment allowances were in vogue then. The Conservative Party believed in them. What are the facts? From 1960 to 1964, 63 new firms went to Wales. The figure for 1965 to 1970 was 196. From 1960 to 1964 we had investment allowances and free depreciation. From 1965 to 1970 we had investment grants.

One of the bogies raised by hon. Members opposite—and it is frequently raised by the Secretary of State for Employment—is that unemployment in the regions and development areas will not decrease unless wage-cost escalation is controlled and that high wages are the cause of unemployment.

Not being content merely to make my own remarks, on which the Minister of State might not put great weight, for fear they might be too partisan, I will quote from the Western Mail, which has this to say about the C.B.I. survey of March, 1971, in Wales: Somewhat surprisingly the survey fails to confirm the view expressed by the C.B.I. itself and others that rising wages and labour disputes are major factor affecting industry's willingness to invest. These two factors are at the bottom of the list of reasons singled out by firms in their replies as reasons for not going ahead with projects. There were many other reasons of far greater importance than the bogus arguments of the Government about wages being too high. If high wages are the sole reason for high unemployment, why is unemployment higher in South Wales, where wages are on average much lower, than it is in the South-East and the Midlands where wages are higher?

Under the present Government the future for Wales is bleak. The Government's efforts in the last few weeks, the measures of last week and the public works programme which has been announced will do nothing to ameliorate the situation in the Principality. Will the Minister say what percentage of the 11,000 people who have lost their jobs in the last year will be able to get work as a result of the public works programme? The giving, on the one hand, of £14 million and the taking away, on the other hand, of £38 million in investment grants does not strike me as a fair deal for the Principality. The reduction of purchase tax, welcome though it might be, does nothing to tackle the basic structural problems of the Principality.

The Government will have to rethink on a major scale their policies towards the regions. They will have to be less doctrinaire on investment grants. It is surprising that, according to the Prime Minister, if the European Commission comes out in favour of investment grants then even this Conservative Government, with all their love for the Common Market, would be prepared to accept the advantages of investment grants. If that will be good enough then, why cannot it be good enough now for the development areas? If the Government are not prepared to do this, will they consider giving a choice to the industrialist? Let the industrialist to speak for himself let him have a choice between investment grant and investment allowance. The Conservative Party is the party of freedom. Let the industrialists have the freedom of choice.

What is happening is completely contrary to what right hon. and hon. Gentlemen opposite have said about the value of investment allowances. All we know in the Principality is that we were hav- ing on a pretty significant scale small but albeit important industries, and these industries have been hit by the taking away of investment grants. They have lost cash in the first few years of their existence.

I return to a document which we shall have to quote to keep the minds of the people of Wales constantly alert to the dangers of being hoodwinked into another election catastrophe. "A Better Tomorrow" talked of fiddling by the Labour Government, about muddling and the chaotic position. If that was muddle, the last year has been an absolute disaster.

"A Better Tomorrow" spoke about "Record prices." At the end of Labour's period of office the average increase was 6 per cent. a year. The figure in the last year has been 10 per cent. That document also mentioned "Record post-war unemployment." Unemployment in the Principality has increased by 20 to 25 per cent. in the last year. A better tomorrow will only come under a future Labour Government.

9.20 p.m.

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

It might be convenient for the House if I were to say something in answer to this debate, which has been a helpful and serious discussion of the employment problems we face in Wales today. The fact that my hon. Friend the Minister of State at the Department of Employment is also sitting on the Government Front Bench at the moment underlines the importance which the Government attach to employment problems in Wales.

This debate has been full of reasoned and courteous speeches and I shall do my best to answer as many as possible of the points which have been raised. I shall not be able to answer in detail the three points raised by the hon. Member for Aberdare (Mr. Probert), but I shall be pleased to answer him in correspondence. Nor shall I answer the speech made by my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) [HON. MEMBERS: "Where is he?"]—who raised the matter of Severn-side and also the question of Llantrisant.

Perhaps I will at least deal with what my hon. Friend said about Llantrisant. I do not accept that the development of Llantrisant as a new town poses a threat to the valley communities. I know that this is a matter of disagreement between the hon. Gentleman and others and myself. Some of the jobs created there would be taken by people travelling from the valleys, but there is a danger that if many of those people are not found work at more attractive locations, such as Llantrisant, they might well leave Wales and we shall lose them altogether. We must do all we can to get industries to the valleys, to Llantrisant and to other places in the mouth of the valley.

I do not believe that Llantrisant is a threat to the valleys. It is an essential part of the process of stabilising the population of the area as a whole. I repeat what I have said on television that it is not the Government's intention to go ahead with the planned developed of Severnside until the economic problems of South Wales have been satisfactorily dealt with.

Nobody would deny that the number of people unemployed in Wales is too high. This is accepted in all parts of the House and by anybody who has at heart the well being of the Welsh people.

Many figures have been quoted in this debate. If those figures told the whole story, the prospect would be an unhappy one. Fortunately they do not do so. In the time available I want first to put these figures into a better perspective; and, secondly, to explain yet again to the House and the people of Wales what the Government are doing to create more employment in Wales.

I begin by recalling that the present deterioration in the employment situation in Wales dates from July, 1966. Not a winter has passed since that year without unemployment in Wales topping the 40,000 mark. Wales is not alone in this and, although it gives no great comfort to us, some other parts of the country have experienced a more marked deterioration than we have.

The rate of unemployment in Wales in July was 1.35 times the rate in the country as a whole. A year ago, the ratio was 1.44. In mid-1969, it was 1.7. In mid-1965, it was 1.85. It is of considerable significance that unemployment among men has, in proportionate terms, risen less in Wales over the past year than in any other region of the country— even less than in the South-East and the Midlands.

Right hon. and hon. Gentlemen opposite will say that the new developments brought to the Principality during their term of office are one reason why Wales can withstand the pressure of events rather better these days. However, successive Governments since the war have done much to restructure the industries of Wales. This is a continuing process. Perhaps I might draw attention to the decision announced last week to complete the removal of the Royal Mint to Llantrisant. All the productive processes carried out at present at Tower Hill will be transferred to Llantrisant, and it is hoped that the new Mint will be in full operation in 1974.

The introduction of new industry to Wales, although on a smaller scale than last year and certainly much less than we would wish, has not ceased entirely. In the first half of this year, companies located outside Wales have continued to inquire about sites and premises in the Principality. It is even more encouraging that a substantial number of firms have pursued their interest by visits to sites and factories in Wales. In the first half of the current year, there has also been a not inconsiderable number of new industrial buildings authorised by the issue of I.D.Cs. in respect of projects in Wales.

It is not enough to say that, though the situation is worrying, it is not as bad as it might be. Hon. Members opposite have asked what the Government are doing about it. The answer is that we are doing a great deal. It is no good pretending that Wales can prosper independently of an increase in prosperity throughout Britain as a whole. Therefore, the starting point is the measures covering the nation as a whole announced by my right hon. Friend the Chancellor of the Exchequer, both in his Budget and more recently, to stimulate investment and to encourage economic expansion.

Mr. Gwynoro Jones

Reverting to the hon. Gentleman's point about I.D.C. figures and industrial inquiries, does the hon. Gentleman believe that a drop of 35 per cent. in inquiries and a drop of 60 per cent. in I.D.C.s mean that the Government are doing a good job?

Mr. Gibson-Watt

I was not saying that the numbers had not dropped. However, there is a considerable volume in both these directions which the House would be unwise to ignore in any general future look at how employment can come to Wales.

To the cuts in Corporation Tax and S.E.T. which my right hon. Friend the Chancellor of the Exchequer has announced has now been added the stimulus to investment over the next two years given by the raising of the first-year allowance in respect of all capital expenditure on plant and machinery outside development areas from 60 per cent. to 80 per cent. This will apply to the substantial intermediate areas of South Wales and the non-assisted areas of North-East Wales.

More than that, major steps have been taken to stimulate the economy. These cannot fail to benefit Wales. All existing term controls of hire purchase, credit sale and rental agreements have been removed, and the four rates of purchase tax have been cut. Together with the cuts in taxation announced last autumn and in the Budget, the total reductions in taxation amount to about £1,100 million this year and £1,400 million in 1972–73. National output is expected to grow between the first half of 1971 and the first half of 1972 by between 4 and 4½ per cent. This surely is the most fundamental way of tackling unemployment, wherever it may be.

It will be said—indeed, it has been said tonight—that the increase in the first year's allowance on plant and machinery outside development areas reduces the differential advantage of those development areas. If nothing else had been done, this would be true; but the stimulus announced by the Chancellor of the Exchequer must be seen in conjunction with two others. The first, also announced by the Chancellor last week, is the decision to make free depreciation available on plant and machinery in use in service industries in the development areas. The second—this is a significant concession-is the provision allowing firms in development areas——

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Order. I am inclined to think that the hon. Gentleman is not, strictly speaking, in order in discussing matters of allowances, and so on, which are considered part of taxation. That is not in order in this debate. I do not want to put too fine a point on it, but I think that we must have regard to that. I was on the point of pulling up an hon. Member about it before, but he left the point so I did not go on with it. I leave it to the hon. Gentleman to use his discretion.

Mr. Gibson-Watt

I am grateful to you, Mr. Deputy Speaker. I shall certainly use my discretion. I am trying to illustrate the particular problems of the development areas, but I shall shape my speech accordingly.

This is the provision allowing firms in development areas to set off free depreciation against profits of the preceding three years, if need be. This will enable such firms, even when current profit levels may be low, to take full advantage of the free depreciation concession.

Important as they are, the backward free depreciation concession and the extension of free depreciation to service industries are by no means all that has been done specifically to help the development areas, about which hon. Gentlemen opposite are particularly concerned.

Allowances for Government training centre trainees are to be raised in September so that, for example, a single man will receive £5 a week more than he would get by way of unemployment benefit compared with the £3.25 which he get now.

Mr. Kinnock

The hon. Gentleman knows that the Government training centres, one of which is situated in my constituency, are over-subscribed in any case. While the extra allowance is welcome, it surely will not make much difference to the reduction of unemployment in the area.

Mr. Gibson-Watt

I cannot agree that these training centres are over-subscribed.

Mr. Kinnock

Some training centres are highly over-subscribed.

Mr. Gibson-Watt

I hope that what I have just announced will raise the occupancy rate in Government training centres to a higher level in Wales than at present. In addition, employers are being approached to increase the retraining of unemployed workers, at Government expense, in spare capacity in employers' establishments. The educational interests concerned are also to be consulted about the promotion of more extensive training for the unemployed, including, for the first time, those under 18—a point raised by the hon. Gentleman—in colleges of further education.

The House and the country at large will have noted the announcements of accelerated infrastructure expenditure referred to in the debate. Projects with a value of perhaps £14 million are likely to be undertaken in Wales between now and March 1973. Officials at the Welsh Office are in urgent consultation with county and county district councils——

Mr. Neil McBride (Swansea, East)

Welcome as is the announcement of the £14 million on public works, is it not a palliative? Is not the real need in Wales for modern, self-generating industries bringing with them greater employment opportunities for men?

Mr. Gibson-Watt

The hon. Gentleman should not look a gift horse in the mouth. If we in Wales can get £14 million for such a job we should not be slow in accepting it. I share the hon. Gentleman's view that we would all like to see more science-based industries coming to Wales. Indeed, that is our objective.

The work which is to be done by local councils will include school works, hospital works, and road projects. The criteria are that the works in question should be labour-intensive, they should represent a permanent improvement of the infrastructure, and they should be substantially completed by March, 1973. A major objective of this acceleration of the infrastructural expenditure is the immediate provision of additional employment. Works of this sort are part of the continuing effort to make Wales a more attractive place—more attractive to industrialists from elsewhere and more attractive, too, for those of us who live in the Principality.

Mr. Cledwyn Hughes (Anglesey)

Is the Minister of State satisfied that the £14 million will be taken up entirely between now and March 1973? If it is not, will the Government allow a spillover so that the total is spent in Wales by local authorities?

Mr. Gibson-Watt

The object of this exercise and the reason for having a reasonably short time is to inject a sense of urgency. That is why I said that the Welsh Office officials were having urgent consultations with the councils concerned. I cannot give the right hon. Gentleman a definite answer to his question about spill-over, but I will raise it with my right hon. Friend.

Over the years since 1945 various Governments have played their part in modernising and varying the pattern of industry in Wales, particularly in South Wales. Both Conservative and Labour Governments have been in Office when the coal industry has cut out pits. Today coal is in great demand and, indeed, the National Coal Board is advertising for more men in these areas.

Certainly the picture in these major industries is one of change and the importance of retraining cannot be over-estimated, but we must all admit that for the older middle-aged worker it is not so easy to readjust to another job, particularly when industry is becoming so highly automated.

If I have concentrated on the employment position in South-East Wales, it is because the greatest concentration of population lives there. It is also because the two hon. Members who put their names against this subject represent constituencies in Monmouth and Glamorgan in South-East Wales. Other parts of Wales have different problems which are sometimes difficult to measure exactly because of the seasonal aspect of the tourist industry. The halving of the selective employment tax should help.

Wherever one lives in Wales it must be the firm intention of government to aim for as high a level of good employment as possible. It is true that the situation cannot be judged on a month's figures or on a quarter's figures, but for far too long the British economy has been stagnant. The steps taken by my right hon. Friend the Chancellor of the Exchequer will certainly help the economy to grow. They will increase industrial activity and Wales will benefit alike with other parts of the country and her people as a result will get better employment.