REGIONAL POLICY

HC Deb 12 March 1971 vol 813 cc768-871

11.8 a.m.

Mr. John Horam (Gateshead, West)

I beg to move. That this House, noting the rising unemployment and diminishing confidence in the less affluent regions, and being convinced that this is due not only to Her Majesty's Government's general economic policy but also to its inadequate and misleading statements on regional policy, calls on Her Majesty's Government to give immediate economic assistance to the areas of high unemployment and to bring forward stronger and more coherent regional policies. I raise this subject for debate today for two reasons. In the first place the Government's national economic policy is leading to high unemployment and waste of resources of a wholly unacceptable kind in those regions which seem always, through no fault of their own, to bear the burden of any economic difficulties through which Britain passes.

The second reason is that it would appear from what they have done and said—or indeed left unsaid—that the Government are unsympathetic to the whole notion of regional policy. In particular, they do not seem to appreciate that regional planning is just as important for Kensington, or Chelsea or West-mister as it is for the citizens of Pontypridd or Gateshead; and, more particularly, they do not understand that, far from a diversion from the job of getting faster national economic growth, regional planning is an essential prerequisite of achieving the aim, which we all desire.

Since I wish to be fair—and there is no reason for hon. Members on this side of the House to be less than fair—it is right that I should begin by recounting what the Government have done since taking office and I shall then try to analyse the situation.

So far we have had four statements of regional policy. The first was from the Chancellor of the Exchequer in his statement on the mini-budget last year. The second was on 3rd February this year and related specifically to West Central Scotland. The third was once again from the Chancellor during the economic censure debate. It is interesting that the Chancellor always has to be given some "goodies" for his troops to cheer whenever he makes a major speech. This is one reason for hope in the Budget. The final statement was made by the Secretary of State for the Environment on 19th February in the course of discussion of a private Motion similar to this one relating specifically to the Northern Region.

The first three of those statements all related to investment incentives. The definitive speech on this subject was made by my right hon. Friend the Member for Birkenhead (Mr. Dell) in the course of a very cogent contribution to the debate on the Public Expenditure White Paper. In view of that, I will not go over the ground again. But the salient points should be restated in a general exposition, as much as anything else because the Government have failed to come up with anything other than assertions to counter the facts that we have put forward.

We know that in total the Government are hoping to make considerable savings from the changes that they have made in investment aid. It follows, therefore, that aid to the development regions and intermediate areas must consequently be less unless there is an increase in the differential between the development and intermediate areas and the rest of the country. In fact, far from increasing or even remaining the same, that differential has decreased. This is apparent from answers to Parliamentary Questions which show that, whereas if the policies of the previous Administration had been continued there would in 1973–74 have been a differential of £130 million between development areas and the rest of the country, the differential of the new Conservative policies will only be £110 million in 1974–75, a year later. What is more, in calculating the Conservative total they have included payments made on the old investment grant system on contracts which were made before 27th October of last year. This must therefore appropriately be deducted from the total of £110 million.

The gap between these two totals is only slightly diminished by the aid for special development areas, since we know that it is to be negligible in the immediate future and will only come to a total of £10 million in 1974–75. Nor should we forget that in 1974–75, which clearly will be a horrendous year for the regions, the regional employment premium will come to an end, and that totalled £109 million last year.

It is therefore the case that both absolutely and differentially aid in respect of investment for the regions has diminished as a result of Government policy. They have also made it more complicated, and it was not an hon. Member on these benches who made that point first but the hon. Member for St. Ives (Mr. Nott), who called the new system "a jungle".

It may be that the Government feel the need to make the position more complicated, in order to conceal the paucity of what they offer. But it is a silly way of organising regional policy and, what is more, it seems even sillier to change the system at a time when they are operating policies which are pushing the country into recession. Since we want to be fair, it must be conceded that the Government said in their election manifesto that they would make changes in principle to investment grants and aid. But they also said that there would be a switch to infrastructure spending on grounds of cost effectiveness. However, if a switch of this kind is desirable, the last reason for it is cost effectiveness. If the aim is to do something primarily about jobs, wage levels and wealth, it is far better to do it directly by giving aid to factory investment than by indirectly providing more hospitals and roads, however much they may be desirable. However, the Government have persisted in this curious logic and pursued their policy.

So far, we have had only one statement on the subject of infrastructure spending. It was the fourth one I mentioned, and it was made by the Secretary of State for Environment in the course of the debate on the Northern Region. It related only to the Northern Region, but it is interesting as an example of the Government's thinking and of the political morality of the Secretary of State.

The major point which the Secretary of State made in his speech came when he said: I recently looked at the roads programme for the coming five years with the object of using my resources to give the maximum aid to the regions. I am pleased to tell my hon. Friend"— note the Lady Bountiful touch— that, as a result, there will be very substantial improvements of the east-west roads in the Northern Region. I expect to spend in total in the Northern Region over the next five years £150 million on improving the road structure."—[OFFICIAL REPORT, 19th February, 1971; Vol. 811, c. 2331.] Since that debate, I have been examining the figures. In the last five years under Labour, road spending in the Northern Region increased from £6.6 million to £45.5 million, an average increase of 45 per cent. a year. If that figure is projected forward for the coming five years, it implies a rate of spending on roads in the North not of £150 million, but of £793 million. That is unrealistic, of course. Even the Labour Government would not have spread their benificence to that extent in the Northern Region in the next five years. We know that they curtailed the rate of increase in road spending in the last two years of their Administration. But, even projecting forward that reduced rate of spending and assuming that it will taper off in the next five years, one still finds that, far from £150 million, the figure implied is £324 million.

It is therefore the case that the figure so generously produced by the Secretary of State does not add up to an increase in the aid which the Northern Region is getting, looking at the trends before right hon. and hon. Gentlemen opposite came to office. The net result will be a decrease year by year in road spending in the Northern Region. That is what that statement means. That leaves a gaping chasm between the truth and the impression that the Secretary of State sought to give, which was faithfully reported in the Press the next morning. I cannot believe that the civil servants who provided him with these figures were unaware of their true significance, which leads to the conclusion that the right hon. Gentleman deliberately sought to give an impression which is the reverse of the truth. In doing this, he thereby scored a cheap publicity victory. But the price that he has paid subsequently in terms of the dismay and disillusion among people concerned about regional policy, not in politics or necessarily on this side of the House, but everywhere, is very high.

To be fair to the Secretary of State, in a less important part of his speech concerned with sewage works, he announced a genuine acceleration of ex- penditure. But I cannot believe that the prosperity of the Northern Region will be founded on superior means of dealing with its muck.

That is the total sum so far of the Goverment's doings and sayings on infrastructure spending and investment grants. How can they defend the totality of this policy? They may say that we have misrepresented it. But the facts are on record in the OFFICIAL REPORT, so far as they have been revealed. They support our contentions conclusively.

They may say that they intend to do more. But we know from the answer to a Question tabled by my hon. Friend the Member for Chesterfield (Mr. Varley) some two weeks ago that they do not intend to do more, and we have seen the total sum of their efforts. That was repeated in answers to Parliamentary Questions on Monday of this week. As far as we know, we have had the lot.

It is true that in the intitial statement in reply to a Question from my hon. Friend the Member for Chesterfield, there was a caveat about a continuing review of infrastructure spending. It may be that the Minister who is to reply has some future programme up his sleeve which he will annouce, in the way that the Secretary of State made his announcement, to try to catch tomorrow's headlines and so take any sting out of the Motion. It may be that the Minister is sitting there with a scheme up his sleeve for a sewage works for Accrington, a waterworks for Glasgow or two new primary schools for Derby. We do not know. We shall be interested to hear. But I hope that the Minister will not repeat this cheap trick a third time, because it is no contribution to the serious problem we have to face.

The Under-Secretary of State for the Environment (Mr. Michael Heseltine)

Do I take it that in the event of any such announcement being made the hon. Gentleman would regard it as a cheap trick?

Mr. Horam

Certainly, if it turns out that when the Government appear to be announcing an increase they are actually announcing a deceleration in spending. I hope that if there is anything of that kind my hon. Friends from Scotland and Wales and the intermediate areas will examine the fine print to see exactly what it means.

The Government, pending what we may hear later in the debate, might have the audacity to claim that what they are doing is adequate. But in logic that cannot be true, since Tory policy is less helpful than Labour policy. I admit that Labour policy was inadequate. Therefore, Tory policy cannot be adequate. However, Labour policy certainly prevented the situation getting worse and brought about a significant, though small, improvement.

But the problem remains vast. Activity rates in the development regions are lower than in the South and the Midlands. The family expenditure survey shows that a person in Greater London has a weekly spending power one-third greater than a person in the North or in Scotland.

The biggest problem is that emigration from the North to the South is still continuing on a considerable scale, as it has for decades. There is no possibility of the level of regional policy to which the Government have committed themselves coping with all this.

Increasingly, therefore, sensing what the Government will say about this matter, they will fall back on their final line of defence, which goes something like this: "We understand you Labour chaps have to go on about the development regions and intermediate areas. After all, that is where most of you come from. But we are a national party. We take a broad view of the economic situation. We have to get the economy going and to do this we have to stop inflation and get investment up. That means giving the businessman his head and letting him put his plant where he wishes. After all, if he chooses it, it will probably be the most economical place. Regional policy has to be paid for. Quite frankly, speaking as businessmen, not as a bunch of academic economists, regional policy has to be subsidised in the first place, so it is probably a bit dodgy anyway. Therefore, if we get our national economic policy right it will all fall into line and all you chaps will find that your constituents will not be so worried; they will all be making so much money."

Mr. John Cordle (Bournemouth, East and Christchurch)

May I ask you to raise your voice slightly? I am finding it very difficult over here to follow your rather interesting dissertation.

Mr. Speaker

Order. I take it that the hon. Gentleman was addressing the hon. Member for Gateshead, West (Mr. Horam), not me.

Mr. Horam

I was saying that the general sort of thought which I can see coming to us from the Government benches is that what counts is national policy, not regional policy.

Unfortunately, this particular policy, if anything, is even more superficial and ridiculous than previous lines of defence taken by the Government. When it comes to investment, businessmen are not necessarily great profit maximisers. This is not necessarily a criticism of them. It is often hard to choose between two alternative sites for a factory. Indeed, the balance between disadvantages and advantages is hard to assess in advance. Also, they may be reluctant to leave an area where they have built up good faith and traditions over a considerable period. Therefore, the element of inertia may be great. Businessmen may not necessarily take the right economic decisions. Even if they do, there is a further point to be considered, and this, I think, is the crux of the argument about regional policy on which the Government have so far said nothing.

It is almost certainly true that in the absence of regional policy, or with an ineffective regional policy, the cumulative effect of the host of separate, in themselves quite sensible, decisions which businessmen may take will throw up costs to the entire economic and social system which will in the long run give less or lower economic growth than if we had had a strong regional policy. This is the fundamental point.

Unless we have an effective regional policy the natural tendency is for market forces to pull investment disproportionately towards the more affluent regions. People naturally follow in the wake of this investment. They therefore leave behind the social capital which they were using. But new public services have to be built in the new areas to which they go. New tubes, buses, houses, schools and hospitals will still be needed in the new areas.

It is often far more expensive to provide these facilities in the new congested urban areas than in the areas from which people came. Recently it was said that it costs about £7,000 to build a council house in London.

We know the cost of the motorway box—the biggest single item of investment to be undertaken in this country, and certainly the most expensive. Whether it will finally be completed we do not know on grounds of cost. All these costly items of expenditure come on the taxes or the rates.

The other day I read that Mayor Lindsay is to make New Yorkers the highest-taxed people in the world. They are complaining about this. So are the companies on Wall Street, which are leaving because of the high tax rates in New York. All this is a consequence of not having a proper regional policy.

In addition, this migratory process, which is so costly, exacerbates inflation in the more affluent regions. It has been calculated, in studies in this country, that each migrant worker adds to the excess demand for labour in the area to which he goes by the equivalent of two jobs within four years of arriving at his new place of work. This is only a more theoretical way of saying that inflation in practice is largely a phenomenon of the South and the Midlands.

Meanwhile, in the areas from which there has been an exodus, there is social and economic waste on a huge scale. Private development is low, so public development, paid out of rates and taxes, has to be higher. Activity rates are low and welfare benefits are high. This is true even when there is a boom. But when the Government are deflating, as this Government now are, the figure for unemployment rises to 5, 6 and 7 per cent.—higher in specific limited areas—and there is waste on an even greater scale.

If I may draw an analogy, it is rather like an aeroplane; this flies fastest and most economically when all four engines are operating at roughly the same level of efficiency, but does not fly fastest or most economically when two engines are overheating through overwork and two are only spluttering along. I often think that one of the advantages that Germany enjoys over us in this respect is that its population is well scattered throughout the country. This gives it advantages in achieving a faster rate of economic growth.

For all these reasons it is folly to imagine that we can have a successful national economic policy for maximising the growth of investment if we do not also have a strong regional policy, in the same way that it is folly to imagine a successful economic policy without a successful policy for fairly and properly managing prices and incomes. The analogy is the same; these are planning devices that we throw away at our peril. The Government are trying to throw them away—and look what has happened! They want to expand, but they find themselves forced to deflate. That is proof, if proof were needed, that it is folly to imagine that we can run the economy without using the planning methods that are available.

On purely economic grounds the case for a strong regional policy is conclusive. It would more than pay for itself, in terms of increasing the gross national product. But there are wider considerations, including social and environmental arguments. As Members of Parliament we spend a good deal of time living and working in London. Who would deny that London would be a more pleasant place if it were less populous than it has become as a result of market forces and the drift of population over the decades? As Members of Parliament we read a lot about the problems of the London homeless—very desperate problems. The largest proportion of the homeless are families from the regions who have come to London in search of better living standards.

In terms of mental health, how much harm is caused by the stress and complexity of modern urban living On the other side of the coin, how much hardship and deprivation is caused in, for instance, Gateshead, by the regional imbalances that exist inside the National Health Service, or the educational system? Medical and educational facilities are far better in London than in Gateshead, but the people of Gateshead suffer just as much ill health, and are just as much in need of the good education. How much improvement to the environment is held back by low rateable values in old, worn-out areas? I suggest that a great deal.

We are learning every day that improvement of the human condition demands ever more planning. We hope that it will be careful and sensible planning, but there must certainly be more planning. This need not mean a conflict of the basic human freedoms—as the Tories seem to imagine. A board of directors may have to operate inside a slightly tighter planning framework, but when the Tories say, "Set the people free", they really mean, "Set the boards of directors free" Boards of directors have plenty of freedom; they can buy it. But for ordinary people the sort of planning that we need will not only lead to a higher quality of living and better living standards but also to an increase in basic freedom.

The Labour Party understands the proper réle of planning, of which regional planning is just one aspect. That is one reason why I never despair of the future or the relevance of the Labour Party. I am aware that that goes against the grain for the Conservatives. They are the party—if there is a party—of market forces. I remind them that the most logical and coherent exponent of this viewpoint is the right hon. Member for Wolverhampton, South-West (Mr. Powell), who takes the argument to the point of saying that regional policy is totally irrelevant. He would spend no money on it. I remind hon. Members opposite that the right hon. Gentleman came into politics to save the Indian Empire. The anti-planning, anti-regional planning, anti-incomes policy viewpoint that he represents, which is so attractive to many members of the Conservative Party, will seem just another lost cause in years to come.

Since I am talking about the Conservative Party, let me point out that in its negligent attitude to regional policy it is doing considerable damage to other things, some of which it has close at heart. I think, here, of the Common Market. Some hon. Members on this side of the House, including myself, have not finally made up our minds on the issue—not because we are ditherers but because this is genuinely a complicated issue, and we want to hear all the arguments for and against it.

In the long run, it may be that there is a future for us in the Common Market, but there are some major costs to face. There is the problem of capital flow. Will too much capital flow out of this country? How much will be made up by American capital, and what will be the consequences? There are also problems on the prices front, resulting from the absurd agricultural policy of the Common Market. Problems also arise on the regional front. If, as I have said, the more affluent regions of this country pull investment towards them, this will happen on an even greater scale in the Common Market.

If I felt that the Government had a coherent policy on regional planning and were prepared to go to the extent of advocating a centrally-financed regional policy, on the lines of the common agricultural policy of the Common Market, if and when we joined, I should be influenced by that sort of consideration, but at the moment the negligence that the Government are displaying on this as well as on other fronts, such as prices, is forcing people like me towards the anti-Common Market side of the argument, and that is a great pity.

I have now talked for 30 minutes, which is quite long enough. I end by throwing out some suggestions, since I believe that it is incumbent upon us to make positive suggestions—not that I think that they will be accepted—besides criticising Government action. First, something must be done about these problems in the short-term—quite apart from the long-term question of development and regional policy. In this respect I suggest that whatever boost to the economy the Chancellor may give in the Budget it should be biased towards the development areas, and possibly one or two intermediate areas and other areas with special difficulties. In doing that the Government would be expanding the economy and achieving higher growth with a minimum risk of inflation. That is so because of the high unemployment that exists in these areas. Since the problem of unemployment is an immediate one, the boost should be directed towards soaking up as much unemployment as possible.

It is also logical that the Government should raise the level of the regional employment premium. They may be reluctant to do this, given their commitment to end it, in which case a more politically acceptable alternative might be to cut S.E.T. in the regions. This could be done in such a way that there was a boost to manufacturing industry as well as to the service industries. Neither move would cost a great deal, by comparison with what is being urged on the Chancellor from many respectable quarters.

Mr. J. Bruce-Gardyne (South Angus)

The hon. Member has talked about cutting S.E.T. on a regional basis. I agree with him about the damage that S.E.T. has done, but since it is a neutral tax to manufacturing industry I am not clear how a cut would help.

Mr. Horam

The hon. Member for South Angus (Mr. Bruce-Gardyne) has not followed what I said very carefully. I said that this could be done on a basis that would help manufacturing industry as well as the service industries, because under S.E.T. manufacturing and service industries—and others—make payments and in some cases are reimbursed. If the Government cut the payments but maintained the reimbursements it would help manufacturing industry as well as service industries.

For the medium and longer term, I have a few suggestions to make. First, we must get the central machinery right. At present we have two Ministers and two separate Departments. This is illustrative of how there is an uneasy division of regional powers between the Department of Trade and Industry and the Department of the Environment. They should be integrated, either as a separate Ministry for Regional Development, or, second best, put into Environment.

Secondly, we must get the statistics right. At the moment there are simply too few statistics of all kinds. No sensible private company would market new products in the way the Government are trying to achieve their policies in this sphere with such scanty figures. Indeed, cost effective studies on the part of the Government would undoubtedly be of assistance.

Thirdly, we must take a really hard look at the large bits of either public or private investment that come up from time to time, and make sure that the development areas get a disproportionate share. Too much of what goes there now by way of routine grants and so on is small scale.

I am always struck, when examining the position of, say, North Durham and South Tyneside, by the fragility of the situation. For example, there may be enough jobs, but they are jobs which offer low wages with companies whose headquarters may be many miles away. There is a fear that a close-down would result should there be a recession. It is also felt that the chances of promotion are small. In other words, although there may be enough jobs, they are only just jobs.

Fourthly, we must develop a more systematic and positive policy for office development. There is a growing imbalance between London and the Midlands and other areas. On a local note, Gateshead has plenty of office space and could do with this type of employment.

Fifthly, we must relate aid more closely to need. For example, it may well be that the emphasis in the development areas should continue to be on jobs and wage levels, whereas in the intermediate areas it should be on communications and the environment.

Sixthly, above all, we must not treat regional policy as a lame duck. Economically, socially and environmentally, it is a national necessity.

11.42 a.m.

Mr. John Tilney (Liverpool, Wavertree)

I hope that the hon. Member for Gateshead, West (Mr. Horam) will forgive me if I do not comment immediately on all the points he made in his extremely interesting speech. I found myself in general agreement with much of what he said. I will comment later in my remarks on the ideas he adduced about aid, investment and, above all, infrastructure.

I wish at the outset to apologise if I am unable to be here for the whole of the debate. I must catch an early train if I am to keep a long standing engagement in Liverpool.

I welcome this opportunity to speak for the North-West of England, which is so densely populated. People tend to forget that it was the world's first heavily industrialised region. Along the Mersey, from the mouth to the upper reaches, live about five million people, the same number, incidentally, as there are in the whole of Scotland. Yet apart from Merseyside and some coastal towns, the problem there is not so much one of very high unemployment but of obsolescence, dereliction and a lack of investment.

In describing dereliction as one of the outstanding examples of the way in which an unfavourable environment can depress economic opportunity the Hunt Report stated: The dereliction now left imposes a significant economic penalty on the area around since it deters modern industry which is needed for the revitalisation of these areas and helps to stimulate outward migration I understand that there are no less than 10,000 acres of officially derelict land in the North-West, representing 16 per cent. of all derelict land in this country. In an area east of Wigan, more than 25 per cent. of the land is derelict. In the Ince-in-Makerfield urban district the figure is 35 per cent.—because of railway, pit and mill closures—and despite the reclamation that is going on, there is still a net increase in dereliction. I am told that it costs £1,544 per acre to reclaim. Yet after the 75 per cent. grant, it still costs a net £400 per acre to a local authority to do this reclamation, and local authorities usually find it hard to meet this. Indeed, there is a good argument for this grant being increased.

I am told that if £16 million per annum was spent every year throughout the United Kingdom on reclamation, there would be no dereliction in 15 years' time. It is worth while bearing this in mind because much harm is done to the general image of an area by dereliction.

Manchester, Liverpool and Salford have cleared more than 70,000 slum dwellings since 1955, yet in the two conurbations of Manchester and Liverpool, which have a density of 7,200 to the square mile—it is even higher on Merseyside—there are still, according to the North-West Economic Planning Council, a further 200,000 houses to be cleared and another 400,000 in need of improvement. This represents a massive task.

Well over 50 per cent. of the industrial property in the North-West was built before 1914. In some cases the figure is as high as 75 per cent. There are some more modern factories on Merseyside, but these were mostly built for specialised purposes and are, therefore, not adaptable.

I am alarmed at the figures quoted by the North-West Industrial Development Association for the average area of industrial building space approved per worker in manufacturing industry by the Board of Trade in the years of the Labour Government, 1965–69. The Association states that the average area of industrial building space approved during those years in Wales was 22 sq. feet; in the North, 18.1; East Anglia, 17.6; Scotland 13.5; giving an average for Great Britain as a whole of 8.1 sq. feet. In the North-West, however, it was as low as 7.3 sq. feet, putting us well down near the bottom of the table.

The problem on Merseyside is even more obdurate. Indeed, we have more problems than the North-West area generally. The House will be aware of the difficulties which the Mersey Docks and Harbour Board faces. This has been due in some measure to the meddling in which governments have indulged over many years. It was they who appointed four directors, and, who—this was done by the Labour Government—forced the board to borrow short and invest long, thereby creating an immediate crisis this year.

Mr. Edmund Dell (Birkenhead)

Is the hon. Gentleman suggesting that the Docks Board should have borrowed long when, according to information given by the present chairman, it cannot finance its £90 million of capital?

Mr. Tilney

I am suggesting that had the board borrowed long several years ago it would not have had to face an immediate crisis within a few weeks last autumn on the change of Government, and would have had a longer period for manœuvre. It was the right hon. Gentleman's Government which, with their price freeze, prevented the board from putting up its charges when it wanted to in order to create a bigger reserve fund.

The trouble is that the board has no reserve fund on which to fall back. That is one of the major problems it has to face, so much so that a large section of our docks is likely to close down, and morale and confidence has been shaken probably for years because of Government interference. I believe that the Government should take a larger share in the equity, and give the small bond holders a better chance of a choice between equity and bond than at the moment looks likely, though we shall have another chance of developing that argument when we discuss the present Mersey Docks and Harbour Board Bill.

Another example of where the Government could have helped Merseyside is the building of the two new Mersey tunnels. The House will be aware that these tunnels, with the old tunnel, are managed by the Mersey Tunnel Joint Committee consisting of the corporations of Liverpool and Birkenhead and, since 1965, of Wallasey. In 1934, the old tunnel, consisting of four lanes, was opened at a cost of £8 million. The two new tunnels, also consisting altogether of four lanes, will cost £29 million.

Under the original Act it was hoped that tolls would come off in 1974. For the first 14 years the old tunnel operated at a loss but since then has made a profit, though for social and industrial reasons that profit has never been taken in relief of rates by the contributing authorities. Tolls have gone up by only one-third since 1934, but since then the pound has been quartered in value. Two new tunnels are now being constructed, and if no action is taken there will be a deficiency of £1¾ million in 1971–72 and of £2½ million in 1974–75.

The Government knew all about this, and they had five options. The first option was that they could have managed all three tunnels. They could have taken the equity, as they have done with the Severn Bridge. After all, the argument is that the Mersey Docks and Harbour Board should be a statutory company and that it is a good thing for people to have an equity in a business, be those people a corporation or the Government or individuals. Why not have the same policy for operating our tunnels? Indeed, with long-term inflation, such an investment might turn out comparatively well. But the Government turned down that option.

The second option was that Merseyside should have aid comparable with that given elsewhere. The hon. Member for Gateshead, West will know that his area has received a grant of £3 million towards the Tyne Tunnel which was opened in 1967. It cost about half the cost of our two new tunnels and will take about half the traffic load. But the hon. Gentleman's area and that of Merseyside are alone in having a toll between the north and south of what will become a new metropolitan county. This seems to be a new consideration and one to which the Government should attend, especially when one remembers that they gave £2½ million for the Dartford Tunnel in the rich South-East. Yet we on Merseyside get nothing.

The third option was that the Government should treat our road approaches and the roads in the tunnels as principal roads, as indeed they would have done were the roads not under the Mersey but merely joining one section of Merseyside with another.

The fourth option was that they might have given us a loan with a grace period —similar to that applying to loans given to developing countries, for which we pay much in taxation—even though the interest could have been cumulative and could have been subsequently repaid once the enterprise made a profit. But, again, that has been turned down. The Government have said "No" to all these suggestions. They are exacting a high rate of interest, and the result is now bound to be much higher tolls. These will further depress morale on Merseyside, which now has many large factories standing empty and which is facing the partial bankruptcy of the Mersey Docks and Harbour Board. Indeed, when Her Majesty the Queen opens the new tunnel in June it will not be quite as happy an occasion as many of us would have liked.

All I plead for is fair treatment. With unemployment going up very rapidly on Merseyside, it is as well to remember that even in the past we have had to run very fast in order to maintain our place, and we are now going backwards. I hope that the Minister will tell us whether he can initiate an analysis of the causes of the inherent unemployment on Merseyside. Why are so many of the unemployed between the ages of 25 and 45? They are not all shirkers. Why is there this inbuilt resistance to employment? Is it because of the big Irish reservoir of labour or because we have so many unskilled and not enough skilled workers? If the latter is the case, all the more reason for having more training and retraining schemes, and perhaps for looking at the school curriculum as a probable way of easing the problem.

Considering the bad publicity we have had, it is no wonder that there is an inbuilt resistance by outside capital to investment in Merseyside. The trouble now is that decisions are often made not in Merseyside but elsewhere—in London, in Germany, in Detroit—and we have less power than we had formerly over our own future. I do not say that local management and direction are not to blame in many cases—there are faults on both sides—but there is no doubt about our reputation for strikes. Throughout the country people talk of Merseyside committing economic suicide. Actually, it is more like economic murder by one section, because there are many good aspects in this respect. I am told by many insurance companies, that our white-collared clerical staff is probably the best in the world.

Like the hon. Member for Gateshead, West, I cannot understand why so many companies are prepared to move their headquarters and all their staff to London, paying very high rents in the city when they could perfectly well keep the bulk of their staff in the provinces.

The runway of our airport was built in under two years. We had a strike, but only for one day. So there are certain things which should be said in favour of Merseyside.

There is one way in which the Government can help us. It has always been Conservative doctrine to phase out regional employment premiums because that merely helps the rich companies not just the poor; it gives aid to some companies which would have employed the people there, anyway, and which have done so for years. The same applies in many ways to investment grants. We believe that there should be a proper infrastructure, and not only an infrastructure for roads to the docks.

One of the best things that the Government could do now would be to look again at the report of the Roskill Commission and consider establishing a first national airport in South-Western Lancashire. It could be of the size of Heathrow. It could work with British Railways. The passengers would arrive in London possibly no more than half an hour or three-quarters of an hour later than from the suggested sites.

I urge the Minister to consider the basis of the sample on which all Roskill's suggestions are made. The sample was taken by questioning every fiftieth person for half a day between 15th August and 14th November, 1968. The half-day militated against those coming from the North, anyhow. Anyone flying from or to the North was not asked, so it is well under a 1 per cent. sample.

The most absurd point of all was that the origin of anyone spending more than 24 hours in the South, as many do either arriving or leaving for their holiday, goes clown as the South of England. On that basis the airlines urge that the South should have three large airports, whereas we have only one international airport, and that is a dicey one at Manchester, because it will have to resurface its runway in the near future.

I hope that we will have the chance of the infrastructure which is badly needed and which would cost one-tenth of what is likely to be the cost of Cublington or Foulness, which, with a new town and all the roads, may well be £1,000 million. We could probably do the whole thing for just over £100 million in an area where the environment is already partially spoiled.

I ask the Minister to look at our infrastructure in South-West Lancashire. We want the work and the jobs rather than to be forced to emigrate to Australia or even to Foulness.

12.3 p.m.

Mr. Frederick Wiley (Sunderland, North)

I have much that I could say, but it is a Friday and I think that we should concert to ensure that all hon. Members who are present have an opportunity to speak if they wish to do so. I shall, therefore, confine myself to making only a few points.

I am particularly anxious to try to get the debate out of its present dialectical rut. My constituency symbolises the difficulties inherent in regional policy. We have had the unenviable distinction of being the town with the worst unemploymet in Britain not for the past few months but for the past few years. The North-East Coast has been a development area, with its heavy unemployment, not for the past few years but since the war, and for the whole of the years between the wars it was a distressed area.

I am much more interested in facing up to this as a national problem than in party gymnastics. It is no solace to tell us that the position might have been worse.

This concerns Britain's future, because what we are concerned about is the full utilisation of our national resources, and whilst we have development areas we are confessing that we are not making full use of the resources we have.

The Secretary of State keeps on saying that we must await the recovery of the national economy. This is a fallacy. In a debate of this type a few years after the war I defined development areas simply as areas continuously with twice the national average of unemployment. This is a good rule of thumb definition of a development area. I can see no hope or prospect of any improvement in the development areas by that standard.

The dictum that we must wait till the national economy recovers is a very dangerous fallacy because, quite contrary to the popular conception, when development area policy is needed and when it can be effective is at the time when we have a national recovery. Firms cannot be persuaded to expand in the present situation, but if there is a national recovery it can be done. That is when we want development area policy, but that is when we invariably get a relaxation of development area policy.

As I was away and unable to take part in the debate on the Northern Region, may I make two brief points? I would make it clear that I personally welcome the extension of the special development areas. This is a matter for which I campaigned for years. It is important for us in Sunderland. It is ridiculous that the mouth of the Wear was outside the special development areas. It is a good thing that it is now within them.

It is a good thing, too, that we are now to have a two-tier development area. That part of the North-East Coast which is particularly hard hit will have some advantage over the other part of the development area which is less hard hit. This is an administrative improvement, but does not go to the root of our problems.

The argument for a Minister for the North has been put on completely wrong grounds. I argued for the appointment of such a Minister years before the appointment of Lord Hailsham. I have argued for it again more recently. I agree that there is some advantage in the Secretary of State, within his Department, having a specific commitment and responsibility for the North, but the problem about which I have always been concerned is one of which you, Mr. Speaker, are well aware, and it is an entirely different one. I am concerned about decisions taken in Cabinet, and more particularly in Cabinet committees.

There are three major development areas, two of which have Secretaries of State in Cabinet and on those Cabinet committees—the Secretaries of State for Scotland and for Wales. The Northern Region must get some parity with this. The Secretary of State for the Environment appears at those committees with a departmental view. It is an advantage that he has had to consider specifically the problems of the North, but he is then faced with the powerful forces exercised by the two Secretaries of State. I know the difficulties about this, and this is why at this point we need an articulate voice to speak for the North.

I know the difficulties, because a Cabinet must be kept within bounds. I therefore make the specific suggestion that the Lord President of the Council should be appointed Minister for the North, thus following the precedent of the appointment of Lord Hailsham. This would have the advantage that the Lord President is himself the Member for one of the constituencies in the Northern Region. This would assure us that, at any rate when these important decisions are taken, the North had its own specific point of view clearly put before the Cabinet and its committees.

Another formidable advantage which the two other major development areas have is that the Scottish Office is in Edinburgh and the Welsh Office is in Cardiff. We should follow this precedent for the Northern Region, and particularly for the North-East. I should like to see a decentralisation of the administration of regional policy.

I should like to see, for a beginning, a revival of the North-Eastern Trading Estate Company, with its headquarters at Team Valley. I speak from experience. When I was a member of the trading estate company—not because I was a member but because there was a full-time chairman—more was done for industrial development in the North than was ever done before or since. The North-Eastern Trading Estate Company, with the other trading estate companies, was merged in the English Industrial Estates Corporation. This was done on a false premise. It was done because it was believed that the period of Government factory building was running down and that what we were mainly concerned about was estate management.

I am also convinced about this because of a visit I made last year to Denmark. I went to see the North Jutland development area, and I met those responsible for development policy in Aalborg. I found more or less the same pattern—estates grants, loans, and guarantees. But what I also found was that the executive decisions were taken locally. There were a regional development board and a regional development council. The local authorities provided the land and the estates. They were backed, incidentally, by a local bank. Local energy and initiative are vitally important to any regional policy.

I have no confidence at all in the departmental officials. They can receive the forms, they can apply the formulae and they can take the consequent decisions, but we are concerned not only about this. We are concerned about industrial promotion and work being attracted to particular regions. When I say that I have no confidence in the officials, I intend no reflection on the civil servants of the Under-Secretary of State for the Environment, but it is a job which needs energetic promotion which ought to be based locally.

Mr. Cordle

Would the right hon. Gentleman have made that comment a year ago?

Mr. Willey

I have made this comment for many years. I made the comment forcibly when I was a member of the North-Eastern Trading Estate Company. I will give the hon. Gentleman the benefit of some of my experience. We believed strongly that, provided that we undertook an obligation to provide the rate of interest which the Treasury thought was appropriate, we should be left to take our own decisions. We found in case after case that we could have got a higher rental than the district valuer calculated on the 1939 formula. Why should not we be allowed to do so? We could have run the business on businesslike lines. But we were caught by the formula and we were not allowed to do so.

We would have been even more effective if we had been allowed to exercise discretion and take our own decisions. Time after time we found that an enterprise coming to the North-East was not interested in the rent. There were other attractions which brought it there. Often the main attraction was that the Government bore the capital costs of the factories. But we were bound by bureaucratic formulae. We could have used our own discretion far better.

This brings me to my second major proposal, one which I have made repeatedly for a long time. If we had such a corporation based on the revival of the North-Eastern Trading Estate Company we should considerably extend its powers. We should recognise that as a public enterprise it should be enabled to go into production and promote and finance production. I say this much more confidently than I would have done a few months ago because we now have the experience of Rolls-Royce. The lesson I have learned from the experience of Rolls-Royce is that it ought to have been nationalised three or four years ago. It ought to have been nationalised on the ground of Concorde rather than of the RB211.

But if we are considering development area policy, regional policy, think of the position in which I find myself now. I am told that we have in the North-East alone 1,200,000 sq. ft. of Government-built factory space at present unoccupied. What consolation do I derive from the fact that there is another 600,000 sq. ft. being completed?

I should have thought that the obvious reaction to this was not to go on building more but to ensure that the factory space built at Government expense was utilised and put to work. I am trying not to be partisan about this. I have had the same difficulty with both Governments. There is a vast field of public ordering—the National Health Service office equipment, the Post Office and the like—but it would be far better to intervene directly and say that so far as some of this work is concerned we provide the factory space, and, therefore, we are going to put in the production. That has been done in many other countries. This is important in the situation in which we find ourselves in this country. What we want is not a slack which can be taken up, but a pressure on capital investment. If we had a north-eastern corporation with power to go into production or finance production—

Mr. Bruce-Gardyne

May I interrupt the right hon. Gentleman? He said that we should operate on the principle that if we provide the factory space we should provide the production. Is he saying that, if need be, we should also direct the labour to work the production?

Mr. Wiley

The second part of the question does not arise, because of unemployment. As to the first part of the question, we have in Sunderland a very large factory which has been empty for more than three years. I am not being flamboyant about this. All I am saying is that in these circumstances we ought to have in the North-East a public corporation which could itself consider putting in work in such a factory.

The third point I make is that we need much larger decisions taken about regional and development area policy. Again I am trying to be less partisan this morning than usual. I pay tribute to what has been done about dereliction and training, although I would add that what has been done about training ought to be related more specifically to industries which might come into the North-East. I am very concerned about infrastructure. I recognise that when we talk about infrastructure we are talking largely about local government expenditure. We have a parsimonious bunch of local authorities at the moment. We hope they will be upset at the local elections.

Incidentally, Mr. Peter Jay has talked about the new towns. I think the concentration ought to be on urban renewal. It is the drab urban areas which discourage people from coming to the North. We should not avoid the issue by concentrating on new towns. There are, however, more fundamental fields than this. For instance, I have argued over the past 20 or 25 years about the importance of education to regional policy. I argued that in the matter of the school-leaving age we might have been dealt with separately. In the Northern Region we might have been obliged to increase the school-leaving age before the rest of the country. I argued in the same way on higher education. I believe the Northern Region should have had a clear priority in the expansion of higher education. It was a disgrace that we did not even get a college of advanced technology.

I have been a Member for my constituency for 25 years. If such broad policy decisions as these had been taken discriminately in favour of the development areas, this could have made an enormous difference. This is the way in which these areas will be rehabilitated. I am asking for fewer formulae and less form-filling, but more major decisions. These decisions have to be courageous and discriminatory in favour of the regions which have been particularly hard hit, but this has to be reinforced by an expression of confidence in the regions themselves. They do not want industrial location to be determined by civil servants applying formulae to the forms which are submitted. They want vigorous active industrial promotion, and this could be done if we had reestablished with greater powers than it had before a corporation in the region itself.

Mr. Cordle

May I ask the right hon. Gentleman for clarification? To return to the principle of utilisation of space which we all know exists, how does he propose to secure the orders and contracts which will provide the production under present inflation?

Mr. Wiley

I will be very brief in my answer. The hon. Gentleman is tempting, but I am trying to exercise some self-control. Local authorities have recognised, regardless of party politics—some Conservative authorities go further than others—the validity in certain circumstances of direct labour. All I am saying is that if, for example, there are substantial orders for office equipment from Government Departments and if there are large orders for equipment from the National Health Service, the Government should combine regional policy with sensible supply policy and should say, "We will go into production ourselves, and we will help the development areas by doing so".

12.20 p.m.

Miss Joan Hall (Keighley)

To begin with, I must say something about the suggestion that there should be another board. There are some wise owls on the benches opposite, I know, but this country has a proliferation of boards and councils, and as for the amount of "bumph" which we get from them—well, I have had more "bumph" through the post than I have had hot dinners. We have been inundated with it. It is action we want, and a bit less "bumph" through the post, with boards and councils meeting and talking but getting nowhere.

Mr. Willey

People read our debates, and I hope that they will not be misled by the hon. Lady's approach to that question. This work is at present being conducted by civil servants in a third floor back in Whitehall. I am saying that it would be far better done by local businessmen and industrialists, by public-minded people in the North-East itself.

Miss Hall

In my part of the country we have already got the Yorkshire and Humberside Economic Planning Council, and that is a proliferation of business men which turns out an awful lot of paper just the same.

Unemployment is not unique to the development areas; it affects all parts of the country. I must make the partisan point that this is one result of six years of freeze and squeeze under the previous Government. Firms, particularly small firms, survive for a year or two without making a profit, or even making a loss, but eventually they must be realistic and go to the wall. This means that jobs go out of the window. [Interruption.] This is obviously true. The number of bankruptcies has grown enormously in the last couple of years.

Now, the question of new jobs. A job comes if someone has a commodity to sell, and a commodity to sell of the right quality, on the right delivery, and at the right price. I think that the Leader of the Opposition was right when he said that one man's wage increase is another man's price increase. It is increasingly becoming another man's job, because in certain fields we are pricing ourselves out of the market.

My constituency is not in a development area or in an intermediate area. We in Keighley do not ask for a change of status, which seems to be what most people are asking for because they believe that they would get so many benefits. Nevertheless, we have to take into account that in certain parts, particularly in the West Riding, we have a number of older industries, notably in textiles, which are up against fierce competition from low-wage countries abroad.

The firms which will survive, and which are surviving, in these circumstances are those which are running fewer lines but running longer on those fewer lines, putting in more machinery and employing more skilled operatives but at the same time, to a certain extent, fewer operatives. They have to run round the clock and seven days a week. At the other end, there is the highly specialised, high quality firm which is surviving because it offers a special cloth for a small market.

One of the problems we have faced—we are now seeing the results of it—has been that there have been too many company mergers in the past few years, which has not been to the advantage of certain areas. When firms have been merged, there has been a great fanfare of trumpets—"Your jobs are safe. We shall put new money into the mill."or whatever it may be—and then, seven or eight years later, the place is shut down overnight and hundreds of people are out of work.

I do not believe that biggest is necessarily the best. We have learned this over the last few weeks. I hope that we shall come to realise that same of Britain's strongest companies are comparatively small. The idea of the biggest always being the best should be treated with great caution.

When a firm in a the textile industry is shut down, it means, very often, that a large number of women become unemployed. But they are not shown in the unemployment figures for the area because, generally speaking, women do not register as unemployed. Some of them stay at home, some of them go into other unskilled work like cleaning or working in shops, or some take seasonal jobs; but they are not registered at the employment exchange as unemployed. This is what I call hidden unemployment. But they want jobs, and they want jobs in which they can become skilled.

What about the establishment of new companies? If we do not have the acorns of today we shall not have the oak trees of tomorrow. New smaller companies have many advantages. They are adaptable to change, they are not hide-bound, and they are adventurous in trying out new ideas and new commodities and products. They can fail or succeed, but all our successful companies started small in the first place. One of the biggest advantages is that the smaller companies have some of the best records in labour relations, for the management is there on the shop floor every day; management and workers know one another, they were probably brought up in the same area, and they have consideration for one another. These things are extremely important.

I hope that the Conservative Government will help with the problem of penal legislation as it affects small companies and close companies. When I speak to some of the newer and smaller companies in my area and ask them what they really want, they say, "We want incentive; we want to be able to feel that it is worth while going out to expand and be adventurous." I am pleased that the standard rate of income tax will be coming down from 1st April, because this is a step in the right direction to that end. The same applies to corporation tax, which will be coming down, too; that will help a good deal.

But for a number of companies the great need is money, capital, and this is extremely hard to come by just now. So many companies in the West Riding would like to expand but they cannot because they cannot get the money for the new machinery and so forth.

Mr. W. E. Garrett (Wallsend)

I am interested in the hon. Lady's economic analysis regarding small companies, and I can appreciate the confusion in her mind, but the inevitable conflict between the small company and the large company is a conflict which must be discussed within her party. Many of us on this side do not hold the same views about small companies.

Miss Hall

I did not catch the last few words, but I know very well that hon. Members opposite do not believe in private enterprise; they believe in nationalisation. [An HON. MEMBER: "Does the hon. Lady believe in it?"] No, I do not. Let us take the question of free enterprise for a moment. All the gadgets which the housewives have nowadays to help them were not produced by the nationalised industries. The refrigerators, the washing machines and the other things which are of such value to women today were developed and produced by free enterprise, with hot competition keeping prices down so as to bring them within everyone's reach.

Mr. Dell

A lot of them came from Italy.

Miss Hall

I wish that the right hon. Gentleman would speak up. What is he saying?

Mr. Dell

I just remarked that, unfortunately, most of the refrigerators have come from free enterprise in Italy.

Miss Hall

They do not; they come from free enterprise in this country. The right hon. Gentleman should go round the shops. Obviously, he does not know what is being sold in the electric appliance shops.

Now, the question of industrial development certificates. This is an important matter, and I am glad that the floor space limit has been raised from 5,000 to 10,000 square feet. When I came down with the delegation from Keighley Borough Council to see my hon. Friend the Member for Harrow, Central (Mr. Anthony Grant), the Under-Secretary of State for Trade and Industry, we made the point that people so often say today, "They should do something"—"they" meaning the Government. But there is a great deal that we can do for ourselves. This is an important question for firms in my area which wish to expand and which need flexibility in Government policy for that purpose. I am glad that the Minister used that word and said that the Government would be "flexible" towards those parts of the country which did not have development area or intermediate area status but which were nevertheless experiencing unemployment difficulties. I hope that Government policy will continue to be flexible on industrial development certificates.

Now, the question of freedom. The hon. Member for Gateshead, West (Mr. Horam) spoke about form filling and the giving of statistics. Firms in my area tell me that they are sick to death of the amount of form filling which they have to do. There are far too many forms. If there were fewer, the information might be more useful to Government Departments. What firms in this country want is more freedom to get on with the job, for they themselves know what is best for their industry. It is very true, as the right hon. Member for Sunderland, North (Mr. Willey) said, that the civil servant is not necessarily the best person to know what is right for industry. I hope that a great deal of the infuriating legislation will be lifted so that firms will be able to get on with the job, expand where they want, and run themselves as they want, not as the civil servants want.

12.30 p.m.

Mr. Raymond Fletcher (Ilkeston)

I intend to be unashamedly parochial in my very brief remarks. There are occasions in the House when we must take the larger view and there are others—this is very definitely one—when a Member must act as a kind of carrier pigeon for his constituents. I intend to do that.

My general observation is that to some extent the debate is rather unreal, although I congratulate my hon. Friend the Member for Gateshead, West (Mr. Horam) on initiating it. The real decisions affecting the economy as a whole will be taken elsewhere, and will be announced on 30th March when the Chancellor opens his Budget. In saying that, I imply not the slightest disrespect to the Under-Secretary of State for the Environment, who is to reply. But it is a fact that if the economy as a whole is not buoyant, if there is no expansion in it, there is not the slightest point in hon. Members pleading for individual lifeboats to be sent out to their parts of the country. I emphasise that it is expansion in the economy as a whole that we both need and expect. When we get that, many of the problems ventilated here today will probably diminish in importance, even if they will not disappear.

I also emphasise, in response to the hon. Member for Keighley (Miss Joan Hall), that there is no general hostility to enterprise on the Labour side of the House. I do not discuss enterprise with adjectival qualifications. There is public enterprise, there is private enterprise, but what usually produces results is some kind of marriage between the two. I am concerned only with enterprise. My constituency does not give a damn whether it is private money or public money that comes into our area. We are concerned with the provision of job opportunities. I have always made that quite clear in discussions in the House, and generally I have had one or two approving nods from Tory hon. Members when they were in opposition.

It seems to me from the course of the debate so far that there is not very much regional policy, that the Government do not think in the same terms as my party when we were the Government, that regional policy is an inheritance which they do not particularly like and which they want to get rid of as soon as possible. If anything was exposed in the speech of my hon. Friend the Member for Gateshead, West it is that the Government face some regions in a posture of total frontal nudity. This may be exciting in the cinema, but it is most depressing in the House. Such policy as there is is a residue left behind by the previous Government, which the Tory Government want to get rid of as soon as possible.

This is a short-sighted view, because there are two continuing reasons for the existence of strong regional policies. The first is that the location of industry is still far from ideal. We are not in the happy situation of the Federal Republic of Germany, where there is a far better balance between the different regions and where each has its own independent strength to contribute towards the whole. It is a well-known fact that, as a result of this regional strength, while Bonn is the political capital of Germany, Munich is in reality the economic capital.

The second reason why a continuing regional policy is absolutely necessary is that there are social costs involved in all industrial developments. We do not live in the 19th century. We live in a far more complex society than the one in which our great grandfathers both prospered and suffered. Therefore, heavy social costs are involved in enterprise, whether public or private. It is right that they should be borne by the community as a whole, whether by local authority activity and expenditure or national government activity and expenditure.

Those are the two main reasons why there should be a continuing regional policy. Although I should be as happy as any hon. Member to be in a situation where regional policies were no longer required, where no specific aid is needed and each region is as strong as the Lands in the Federal Republic of Germany, we are not in that situation yet.

Having made that general point, I want to perform my function as a carrier pigeon and to talk very briefly about the situation in my constituency, all of which is in the Erewash Valley, an area which has had terrible problems peculiar to itself. Only a decade ago there were 16 coal mines in the valley. Today there are none. This has created not only an economic but a social problem. A coalmine is not merely an industry; it is the centre, the core, the hub of a whole way of life, of a whole community.

I am rather proud that my constituents, instead of whining and moaning and protesting, tried to help themselves. They were praised by members of the last Government for so doing. They did ask for Government assistance, and received it. But they did a great deal to help themselves before it came their way. No less a person than the late lain Macleod, who visited my constituency shortly before his death, paid tribute to the efforts of my constituents to try to solve their own problems, in terms I should have liked to use myself. But my constituents still face serious problems in view of the general stagnation in the economy and the slow working of the system of aid under the Local Employment Act, 1970.

To illustrate precisely what the problems are, I intend first to read a letter I received from the Chairman of the Heanor Urban District Council, a lady of impeccable Conservative views. I hasten to inform the Minister that I am a carrier pigeon for a very determined Conservative lady.She wrote: Following the publication of the Rolls-Royce and associated industries' difficulties, great fears are being expressed about employment prospects in Heanor, it being a town situated only 10 miles from Derby and already experiencing a 6 per cent. unemployment problem. She then points out that that figure relates to male labour, and that the figure for total labour is 5 per cent. She adds: Since qualifying for Intermediate Area status yet another local colliery, Ormonde, employing over 1,000 workmen has closed, and despite strenuous efforts by the local authority new employment prospects are slow to mature. Help is needed urgently to improve the environment of the Erewash Valley"— I heartily agree— so that growth can be attracted. Improvements should include better lines of communication, clearance of derelict land, renewal of obsolete housing, re-development of town centres, etc. She goes on to point out some of the unfortunate side effects of the introduction of the Department of the Environment Circular 2/70 relating to local authority capital programmes generally. I make this plea to the hon. Gentleman in the terms of this lady: The intermediate area authority should be able to clear derelict land, redevelop sites, provide roads, sewers, lighting, etc., and be certain of being able to borrow the necessary funds". I heartily agree, and I hope that the hon. Gentleman has made a careful note of that letter. I will send him a copy if he wishes to have it.

My second letter comes from the Mayor of Ilkeston, and I use it to support a plea that this town should now be considered for inclusion in what is known as the "grey" area of the Erewash Valley. There were doubtless good reasons why it was not included when the legislation was first put forward by the Labour Government, but, as the letter says, the collapse of Rolls-Royce, the fact that several firms are having difficulties and that the Stanton ironworks has this week gone on to short-time working because of the fall-off in demand for spun pipes, leads me to put forward a powerful plea for the town of Ilkeston to be included in the intermediate area of the Erewash Valley and to receive the same benefits and assistance as the other three towns which I have the privilege to represent.

I will not continue in this strain. I merely notify the hon. Gentleman that I intend to descend on his Department, with his full agreement, at some time in the future, with members of the local authority, to present the Ilkeston case as effectively as I can.

Difficulties are now being experienced even in those areas which are beneficiaries of the 1970 Act. I have indicated some of them, and I have allowed my correspondence to indicate others. Apart from the specific plea for assistance that I must make, the general plea which must arise from the House as a whole is addressed to the right hon. Gentleman the Chancellor of the Exchequer. Give us something this afternoon, but for God's sake give us expansion on 30th March.

12.42 p.m.

Mr. Christopher Tugendhat (Cities of London and Westminster)

So far all the speakers on both sides of the House have come from the outlying regions and have tended to argue as if only those regions care about regional policy and the problems of the imbalance of the economy, with concentration in London and the South-East and depopulation taking place in parts of Scotland, Wales and Northern England. I am particularly glad to have been called upon to speak in this debate since it gives me the opportunity, as the Member of Parliament for the Cities of London and Westminster, to assure those hon. Members that we, too, appreciate the problems which exist. To be on the receiving end of the imbalance often creates problems which, as the hon. Member for Gateshead, West (Mr. Horam) pointed out, are just as great as those in the parts of the country which are losing population and industry.

It is important to look at regional policy in a national framework. There is no such thing as regional policy which can be separated out from the rest of national policy. One has to look at the country as a whole and at the regions as part of that. If the country as a whole is prospering, the regions will prosper. If the country as a whole is not prospering, the outlying regions of the Kingdom in Scotland and Wales are the first to feel the draught.

We are now in the early part of this year reaping the benefits, unfortunately, of six years of Labour rule. I do not say that in a deliberately partisan or acrimonious sense. I will support what I have just said by one set of figures. The trouble in the regions is lack of investment and lack of employment. Only industry can provide investment and employment. In the years between 1964 and 1970 the proportion of profits in the gross national product fell from nearly 15 per cent. in 1964 to just under 10 per cent. in 1970. It is not surprising that industry, when faced with this decline, has found it difficult to invest, and that the areas with the least natural advantages at the outset should have suffered most.

Mr. Alan Williams (Swansea, West)

I am intrigued by what the hon. Gentleman is saying and I would like to know how he reconciles it with the fact that in 1968, and again in 1969, more investment was put into factory space in the North, in Scotland and in Wales in each year than in the three years from 1961 to 1963 taken together. Despite the gloomy picture painted by the hon. Gentleman, each individual year was better than three years under his system. In 1969 investment went up by 10 per cent. When we left office it was going up at the rate of 7 per cent. last year, and this year will be the first year in which it has fallen for eight years.

Mr. Tugendhat

If I say that I was intending to come to that point later in my speech, it appears that I am being caught on the hop, but that was my intention. I will touch on the point now just to show that I am aware of this problem. It is possible to redress part of the balance through palliatives; in other words, by bribing companies to establish themselves in parts of the country where they would not otherwise have done so. Under the Labour Government there were some of the most generous investment grants to be found anywhere in Europe, but generosity by itself does not bring economic efficiency.

The Shell group announced under the Labour Government that it would invest £200 million in the North-West, and it was to get 40 per cent. of the cost of this investment. It is difficult to see that the nation is deriving any great benefit from paying Shell 40 per cent. of the cost of doing what it intended to do anyway when Shell is not bringing jobs to that area. The object of encouraging companies to come to the regions is that they should provide employment, improve the infrastructure and benefit the region as a whole. When a great chemical company is expanding its already extensive facilities—and one sees the same with I.C.I. on the other side of the country—merely to pay that company 40 per cent.of the cost does not benefit the unemployment situation or the region to any great extent.

Mr. Dell

Will the hon. Gentleman consider that since the end of the 40 per cent. grant Shell has postponed its proposed developement at Carrington and I.C.I. has cut its investment programme?

Mr. Tugendhat

The right hon. Gentleman is extremely well informed about this industry, and I always listen to him with respect. I am sure he is aware that the German companies of Hoechst, Bayer and Badishe, and the great American chemical companies, have also been cutting back on investment as a result of the great investment boom of recent years and the difficulty of getting markets for the chemicals which are produced.

The right hon. Gentleman may also be aware that a high proportion of investment in the chemical industry comes from oil companies, which have been subject to stringent cost increases in other parts of their activities. So one must look at the position of I.C.I. and Shell bearing that in mind.

To revert to Shell, it is a worrying feature that investment should have depended so much upon the 40 per cent.investment grant if what the right hon. Gentleman says is true. If the investment made sense only if it was based on a hand-out from the Government, it is difficult to see that the investment can be in the long-term interest of the country as a whole when it cannot stand on its own feet and pay for itself out of profits. I had intended to come to this interesting digression later in my speech, but I did not want the right hon. Gentleman to feel that I entirely discounted the activities of the previous Government.

There has been a big decline in company profitability in the last six years since 1964. We have already been faced with inflation, which has been gathering momentum in the last two years. This raises particular difficulties for companies which invest in those parts of the country that are not the most immediately attractive. When companies make a discounted cash flow assessment of their projects, it becomes almost impossible to act in an accurate fashion with inflation running as it has been in the last two years. With the gathering momentum of inflation, companies have been aware as they make their investments that the cost of materials will rise to such an extent that it is most unlikely that they will be able to achieve a better return than by investing in Government bonds at 9½ per cent.

An additional problem has been the bad strike record, which has affected companies of all sorts. We all know the big continental oil refinery at Immingham and the aluminium smelters, all of which are in the development areas; we also know about the chemical investment which has taken place in the North-East and in the North-West, all of which have been considerably delayed because of strikes. An excellent little N.E.D.C. report on the chemical industry was produced about a year ago which pointed out that it took substantially longer to build these plants in Britain than on the Continent and that that in itself meant that it was much more worth while for people to concentrate investment in those areas where they could be sure of bringing their plants on-stream more quickly.

There are three problems which face companies. The first is the problem of declining profitability, the second the problem of inflation, and the third the problem of strikes. There is no answer to these problems simply by giving palliatives and bribes to companies to do what they would not otherwise do. The important thing is that the economy as a whole should be run effectively. No doubt these matters will be dealt with and, I trust, answered in the Budget speech later this month, and I do not expect my hon. Friend in his reply today to produce definitive answers. I feel that the time has come for the Government to begin to think cautiously about reflation in regard to industry. They should begin to encourage industry to reflate, as distinct from pouring more money into the pockets of the consumers. Much as I should like to see more money in consumers' pockets, this does not seem practicable at the moment.

There are several things the Government should do to benefit the regions more than the rest of the country. First, there should he a small further cut in corporation tax. Secondly, it would be desirable for there to be a slight reduction in interest rates. At a time when people can get 9½ per cent.by investing in Government bonds, it is difficult to ask them to undertake risk investments. Thirdly, the Government should take steps to push up the Stock Exchange. I do not say that because the Stock Exchange has fallen rapidly in the last few months, but until there is a rise in share prices it will be difficult for companies to raise money on the market. It is most important after the fall in profitability that companies should be able to raise more money, and higher Stock Exchange prices would help to play a part. If these things are done, then within the existing context the Government's inducements to industry to invest in the development areas and in the outlying regions are sufficient.

There are additional actions which the Government should take. Basically there are two planks in any regional policy. One is the whole question of inducements to go into the regions. The other relates to the conditions of life in the regions themselves. I have great sympathy with hon. Members on both sides of the House who have talked about the importance of improving infrastructure and amenities in the regions. As somebody who lives in London and represents a London constituency, I feel that it would be highly desirable that, instead of thinking in terms of a third London airport, we should be thinking in terms of a second British international airport which should be placed in the North. Instead of placing such an airport in the South so that it would be accessible to the Midlands, we should be thinking in terms of placing it in the North so that it can be accessible to the Midlands. This is the sort of thing we need to think about. There is also a great need for improving road communications in the regions. I am not thinking so much of the motorways and the Al, which are magnificent schemes, but much more about the construction of East-West road links, including the South Humberside with the Al. It is this kind of much less glamorous development which would have an important impact on the regions later. South Humberside and the North-East and the North-West are important areas and should receive consideration on the lines I have outlined.

There is also scope for the Government to devote more effort to improving the quality of housing and of schools in the region. When a company wishes to move from one part of the country to another it is often difficult for the people in the company who have to be moved to find the same quality of housing and schools to which they have become accustomed in the South-East. This is another area in which the Government might find room for improvement.

Perhaps I could take up a point made by the hon. Member for Gateshead, West, that there is scope for regional differentiation in taxation. The hon. Gentleman's proposal for a regional reduction in S.E.T. would bear consideration, and there may well be other forms of taxation which the Government could to some extent deal with on a regional basis.

Mr. Tam Dalyell (West Lothian)

Does the hon. Gentleman, with his experience, not feel that perhaps with regional employment premium we are having the worst of all possible worlds, in that if we say that the premium will be brought to an end in 1974–75 there will he no pressure on business men to invest, given that there are expectations that it will be brought to an end? To carry on this expenditure at present, without saying that it will go into the 1980s, will be counter-productive?

Mr. Tugendhat

One difficulty that faces any Government when dealing with any form of taxation or grant which was initially regarded as temporary is that if they do not put a terminal date on it they can never bring it to an end. Perhaps I should qualify that by saying that if the Government bring it to an end without warning, then many people will feel let down and will consider that they are not getting the help which they had anticipated. If a Government are dedicated to a particular line of action, it is important that they should put in a terminal date, and, indeed, should give due warning that such a terminal date is coming. The other disadvantage of the regional employment premium is that it is on a per capita basis. The important thing is to encourage firms and companies to earn profits, because it is the profits which decide whether a company is successful and whether the investment is justified in the first place.

My final point is on industrial development certificates. In the part of the country I represent it is difficult, if not impossible, for companies to expand, and this also applies to other parts of the South-East. One of the difficulties about the I.D.C. system is that when a certificate is refused the company which wants to build does not build at all. Therefore, that investment is not made. I should like to see the Government, after refusing an I.D.C., take a much stronger line to encourage companies to go elsewhere. When an I.D.C. is refused the Government could say to the company, "We cannot let you build in that area, but why do you not go to the North-East or the North-West?", or wherever it may be, where the conditions may be particularly favourable to that company and where there are other companies with which the investing company could tie in. In other words, it would not be a forcible direction of industry but a form of encouragement to companies which could be shown the advantages of going to the regions.

1.0 p.m.

Mr. William Hamilton (Fife, West)

I do not object to the hon. Member for Cities of London and Westminster (Mr. Tugendhat) taking part in this debate. It is good that the hon. Gentleman should put forward the point of view of what might be called the "reception area", by which I mean the more prosperous parts of the country. I endorse his opinion that we should wait until 30th March to see whether we are to get any growth in the economy as a whole. Clearly the expansion of the economy as a whole will overflow into the development areas. But I hope that the hon. Gentleman does not assume from that that this debate on regional policy is irrelevant. I hope, too, that the Government do not hold to that view.

One of the first examples of instant Government that we had was the announcement last October of the change from investment grants to investment allowances, although there had been no evidence of any great research in depth into the relative merits of the one against the other. Since then, we have had a lot of evidence from the C.B.I. and the T.U.C. showing that the allowances will be worse in their effects in the development areas than the grants that we provided.

One could go through the various incentives, grants, loans and allowances which were made by the previous Government and by the Conservative Government before 1964. They did not start in 1964. Neither did inflation start in 1964. It has been a post-war phenomenon which went on continuously under the previous Conservative Government, as did strikes. None of these problems started in 1964.

Mr. Tugendhat

None of these problems started in 1964, but the size of the problems has altered considerably. As I am sure the hon. Gentleman is aware, strikes were 70 per cent. up last year on the year before. They existed before, but the increase has been substantial. The level of inflation for most of the post-war period has been running at about 3 or 4 per cent. It accelerated to 5 per cent. after devaluation. It is now 8 per cent., which is a considerable increase.

Mr. Hamilton

And, if I may say so, they are going up even faster under the present Government. There is no evidence that the present Government have any policies to deal with strikes, inflation and all the rest of the problems that the hon. Gentleman enumerated. This is our complaint. On the contrary, the Industrial Relations Bill is likely to exacerbate the strike position, as the evidence already accumulating suggests. The same is true of inflation. The Government have deliberately gone on record as saying that they want to increase prices. The Minister of Agriculture has said that the consumer is cosseted and has to stand on his own two feet. Indeed, the Secretary of State for Trade and Industry made an extremely abrasive and foolish speech at the Tory Party conference last October. He set the scene. He was cheered there. He has been backpedalling ever since.

The economy has to be planned. The very fact that the hon. Gentleman says that we have to wait until 30th March to see whether the economy will expand is an indictment of his Government, who said that there should be the minimum of interference by Government with market forces. But the Chancellor of the Exchequer will say how much Government interference or intervention there will be and must be to get the economy going.

Some of the speeches to which we have listened this morning have been nonparty. Indeed, some of them have been more non-party than I normally like to see. But it is fair to say that no Government since the war or even since the 1930s have solved the regional problem. For far too long there has been a disparity between the employment rates, the earnings and the emigration rates of the regions, the North-East, Scotland, the North-West, the South-West and South Wales, and those of the prosperous South-East and the Midlands. Between 1964 and 1967, the Labour Government did quite a lot to reduce the gulf between earnings in Scotland and those in the Midlands and the South-East. They reduced substantially net emigration from Scotland to other parts of the United Kingdom. They reduced substantially the gap between the percentage rates of unemployment in Scotland and the North-East and those in the Midlands and the South.

There are now grounds for fearing that these policies will be reversed. People in the development areas must have been appalled by the complacency of the Secretary of State for Trade and Industry when he answered questions last Monday on this very point. He admitted that investment was not as high as he would like. He said that expenditure on regional assistance in 1971–72 would be published "in due course". He did not know what it was. That is one of our arguments. No one knows. That is why industry is not making inquiries in the new town of Glenrothes or anywhere else. The number of inquiries from industrialists wanting to go to development areas must be at its lowest ebb for many years. The reason is that they do not know what incentives they will get.

Last Monday, the right hon. Gentleman said: …the country believes that we are moving into an area of more settled conditions."—OFFICIAL REPORT, 8th March, 1971; Vol. 813, c. 15.] How removed can anyone get from reality? For a Minister of the Crown charged with responsibility for trade and industry to say that is the height of absurdity.

On 19th February, the Daily Record had a front page headline which the Under Secretary of State will no doubt remember. It said: A policy of panic and fear". It went on to comment on the Government's invitation to the House when we moved a Censure Motion on them in relation to their regional policies. Hon. Members will recall that the Government invited the House to applaud the Government on the way that they were running the country. The Government asked us to applaud more settled conditions at a time when the development areas have never been more afraid because of the policies announced last October.

On 18th February, Scotland had the highest unemployment figures since 1963, after 12 years of Tory Government. The figure was over 118,000. For every 11 people on the dole, there was one job. Unfilled vacancies had dropped by 42 per cent. in Scotland in the last 12 months. In February of that memorable year 1963, the last full year of Tory Government, there were 136,000 on the dole, with 17 people chasing every job. We have some improvement now. Only 11 people are chasing every job. However, it is not an improvement about which the Government can boast. Even in the height of the summer of 1963, in August, there were 94,900 unemployed.

In January, 1971, nearly 57,000 in Scotland had been unemployed for over eight weeks, and that figure represents two-thirds of all the men unemployed. The position is certainly worse now. Yet the Secretary of State for Trade and Industry had the nerve to use the words that he did last Wednesday. No wonder the Daily Record on 19th February went on to ask whether the Government have …cynically decided that the only way to control inflation, lacking a sensible economic policy, is to frighten the militant unions by the spectre of worsening unemployment. There is a lot of evidence to suggest that that is exactly what the Government are trying to do. By encouraging massive unemployment and bankruptcies they are hoping to bring the unions to heel.

In December last year the Scotsman—not a Labour newspaper—in an editorial, said: For Mr. Campbell, the Secretary of State for Scotland, the honeymoon is surely over, whether he realises it or not. He is Scotland's voice in the Cabinet, and he will have to start using his voice more loudly. The right hon. Gentleman may say that he is using his voice. Of course he is. The right hon. Gentleman has got gaming clubs established in Dundee and Perth. That was a major policy decision! That will help the unemployed in Scotland!

The right hon. Gentleman has announced a special development area in West Central Scotland, but its impact for that area will not be felt for at least another 12 months, and it is bound to have adverse effects on the whole of the rest of Scotland. Meanwhile, more jobs are being lost at Rolls-Royce and in the electronics industry in Glenrothes. If the Under-Secretary looks at the unemployment figures in Glenrothes and the rate at which they have increased in the last few months, he will probably get a shock. There is a threat of perhaps another 10,000 jobs being lost in the steel industry over the next two or three years unless we get a start with Hunterston—and there is no sign of any decision yet.

On the creation a the West Central Scotland special development area the Sunday Times on 21st February commented that: it looks not so much like a 'growth zone' policy as putting a finger in the dyke. That is all that it is. As has been pointed out, what matters most is, first, getting the country as a whole going—the Prime Minister referred to that when he met the T.U.C. yesterday—and, secondly, getting good communications and good labour relations. I am sure that the Under-Secretary of State, Scottish Office, would admit that communications in Scotland under the Labour Government improved enormously. I do not complain about the rate at which we are getting these communications, although the hon. Gentleman might look again at the need for the Fife regional road which is extremely important for development in the East of Scotland.

The hon. Member for the Cities of London and Westminster talked about an international airport. We tend to look at these matters too parochially and in too small a setting. We should look at them as United Kingdom problems and not think of a third airport in London. There is a good case for not having another airport in London, but a very good case for expanding the facilities at Turn-house, Prestwich and possibly Abbotsinch in Scotland, and perhaps the North-East, too. One ought not always to look at London.

The same point applies to the headquarters of nationalised public concerns. For instance, why should the Forestry Commission's headquarters be in the South of England in Hampshire somewhere? Certainly there are no forestry activities there. Nearly two-thirds of forestry activities in the United Kingdom are in Scotland. Why should not the headquarters be up there?

I have never understood why the headquarters of the National Coal Board should be in London.

Mr. Cordle

I think that the hon. Gentleman ought to be corrected. The Forestry Commission's nurseries in Hampshire are considerable and have been there for some time. A great deal of work has been undertaken in the Petersfield area for that purpose.

Mr. Hamilton

My point is that there ought to be more dispersal of these headquarters into the regions which are suffering most from unemployment. Most of the Forestry Commission's investments —trees—are in Scotland, so there is no reason for its headquarters not being in Scotland.

There is no reason for the Coal Board not being ordered to come out of London and getting at least to a coalfield. There is no coal in London, as far as I know. This kind of decentralisation ought to be stepped up more radically than has so far been done.

To revert to the special development area in West Central Scotland, there is a great fear in Fife, Dundee, the Borders and the Highlands that the incentives in the special development area are much greater than in other parts of Scotland which are still suffering greatly from current policies and that, therefore, they will get even less industry in those places than they have been getting in the past. The brutal fact is that in the last nine months, apart from the announcement of special development areas, the Government have not taken a single decision which is likely to benefit and foster the growth of the national economy. The extent of that failure it magnified many times over in the regions.

It is all very well for the Government to talk, as they did before the election and subsequently, about the need for more spending on infrastructure, but that will be seen as a cynical deceit on the electorate.

Looking at the White Paper on Public Expenditure which the Government produced a few weeks ago—the Minister knows that the greatest social evil in Scotland at the moment and in many other parts of the country is inadequate housing—there is no sign that housing in Scotland will get any better in the next four or five years. On the contrary, it will get worse. There will be fewer houses—inferior quality houses. I defy the Minister to deny that that is enunciated in the figures in the White Paper. If we do not get the houses we shall not get the industry. The one goes with the other. We must assess the facts as we see and know them from published statements.

The Scotsman of last November stated that the root explanation of the decline in Scottish Tory representation in the Commons is the reaction of Scottish electors to the 'failure and disappointment' of Tory rule as it affected Scotland in the 1950s. That is true. There is no evidence that they have learned from those lessons. There is a great deal in the point made by my right hon. Friend the Member for Sunderland, North (Mr. Willey) about the need for public enterprise to play a much larger part in the regions than it has hitherto. We fought the 1964, or perhaps it was the 1966, election on this point, among others. The public bodies—the National Health Service, schools, universities, the Post Office, the National Coal Board, and the gas and electricity industries—are enormous purchasing agents.

Therefore, it seems absurd that they must rely so much on private enterprise which is often situated in the more prosperous areas of the country. If we are to have a planned economy—a Socialist economy—we must say to these nationalised public concerns, "We shall set up factories in the development areas, the peripheral areas, and they will supply you with a lot of the materials, components and machinery which you require for your purposes." We can direct that kind of industry into the development areas. The answer to the hon. Gentleman who earlier asked, "Do you agree with the direction of labour?" is that we have never believed in the direction of labour. We believe that publicly-owned industry can and should be directed to the development areas.

If that happened, we would not only achieve a greater balance in the economy and be able to use our national resources to the greater benefit of the whole nation; we should create more social justice and a greater feeling that the regions are not neglected. There is a feeling in Scotland, Wales and some other parts of the country that London does not give a damn what happens to them. That is probably an exaggeration, but the feeling exists that major policy decisions are taken in London for the benefit of London, and that the regions are just an afterthought.

Much more needs to be done to remove that feeling. Much more financial inducement is required, and much more rigid control of I.D.C.s. Much greater incentives of all kinds must be given to private industry, but, above all, there must be a greater expansion of public industry in the areas about which we are talking this afternoon.

1.21 p.m.

Mr. John Cordle (Bournemouth, East and Christchurch)

I am grateful for being called, because I feel somewhat out of place in the debate, being a Member for the South of England. I have been here since the beginning of the debate and I have found much interest in it. I am glad to be able to say a few words.

The hon. Member for Fife, West (Mr. William Hamilton) castigated the Government because, he said, they had no policy for the regions. I strongly object to that allegation. The Government have a policy for the regions. The Motion, in my view, sums up the situation in the regions that the Government inherited in June, 1970: one in which four years of freeze and squeeze had caused rising unemployment and diminishing confidence; in which stagnation and lack of growth, coupled with soaring costs and falling profits, had choked off the supply of new and expanding industry on which older industrial areas depend for their livelihood; in which Labour policies, excessively discriminatory and at the same time extravagantly indiscriminate, had served to spread problems to grey areas rather than to cure them in development areas; and in which vital service industries had been crippled; and extravagant capital expenditure had been fostered rather than the provision of much needed new employment.

The problem is a national one, and it should be carefully considered by the Government so that the areas in the South and, particularly, in the West have their full crack of the whip. An unemployment problem exists, and it seems likely to increase under the inflationary situation that we face today. That situation has been brought about by the Government which went out of office in June. The policies employed by them have resulted in the freezing and the squeezing of industry, which has made it impossible for expansion to occur.

The hon. Member for Ilkeston (Mr. Raymond Fletcher) said that he believed that the Motion was, in a sense, unreal. I agree. Until such time as the economy is on a much sounder basis it will be difficult to implement an effective policy to deal with the question of unemployment. That is a matter of concern to hon. Members on both sides of the House.

Comment has been made about the need for a third airport. It will not be strange to the House if I suggest yet another site. I put forward the claims of Hurn, near my constituency. An airport which is already in existence, and since it is right by the seaside the noise problem will be greatly reduced. Around the airport large areas could be developed for industrial purposes. There are restrictions in respect of the type of industry that can be brought in, and I hope that that fact will be borne in mind if industries are introduced into the area.

An unemployment problem also exists in the South-West. I hope that it will be seriously considered by the Minister, and will be dealt with by the attraction of industry into the area. It is interesting to note that the component industries which are part of the British aircraft industry in the South are being pressed by other component manufacturers who have been supplying the Rolls-Royce companies. These firms are now after the business in other areas in the South having lost orders from Rolls-Royce.

In terms of the environment, we need additional aid for roads in the South. I am aware of the industrial requirements of the North-West and the North-East, and hon. Members who represent those areas have my sympathy, but there is a real need for better road communications in the South, especially as holiday traffic is increasing from year to year. I trust that the Minister will take that factor into consideration.

The Government should have made more money available for sewerage schemes and the facilities required in seaside and holiday resorts. This is a matter of urgency round our coasts today, where we have a polluted sea. Unless action is taken in the question of effluent, and pollution is dealt with correctly by suitable sewerage schemes, taking the effluent into the countryside rather than out to sea, we shall continue to have the highly distasteful experience of swimming and bathing in polluted waters.

My constituency has an excellent sewerage system which takes the sewage back into the country for disposal through proper facilities. Other areas close by, however, have old-fashioned sewerage systems, and dispose of the sewage in the sea. Responsible local authorities which have undertaken the work properly and take the sewage back into the country are having to face the same old problem when the tides are against them and the winds change, bringing in effluent from the adjacent areas.

I hope that all these difficulties will be taken into consideration. That is all I wish to say at this stage as I am fortunate enough to have the Adjournment debate later.

1.29 p.m.

Mr. Alan Williams (Swansea, West)

I am glad to be called at this stage. I am sorry that I did not rise immediately, Mr. Deputy-Speaker, but you came between me and a glass of pure English water. I am sorry that no Welsh Minister is here today, and I am even more sorry that there are no Welsh Conservative back benchers here. It is most unfortunate that they are so concerned about the situation emerging in Wales that they cannot give up their Friday to listen on behalf of Wales. My right hon. Friend the Member for Sunderland, North (Mr. Willey) said that we had a great advantage in having a Secretary of State for Wales. I can only assume that he has never met the Secretary of State for Wales. The present holder of that office can go to the North as a gift at any time—

Mr. Neil Kinnoch (Bedwellty)

A free transfer!

Mr. Williams

He can have a free transfer. We will even consider making a grant in support of his move to the North. Some of my colleagues are mistaken in their assumption that it would improve his performance. Some have suggested that, being the chairman of the Conservative Party, he should devote more time to Wales and less to the party. I draw the opposite conclusion. If he spent more time serving the party it would be better for us. If he does for the Conservative Party in the next eight months what he has done for Wales in the last eight months, the Conservative Party will be bankrupt.

Mr. Geoffrey Johnson Smith (East Grinstead)

That slur should not go unchallenged. My right hon. Friend has been most generous in the time he has given to his Welsh duties. It is not necessary for anyone to apologise on his behalf. I rise only to say that it is wrong for the hon. Gentleman to suggest that he is neglecting his duties. He is, in fact, fulfilling them extremely well.

Mr. Williams

The hon. Gentleman is dutifully defending his chairman. We represent the people who must put up with the ineptitude which his party's chairman is perpetuating in Wales. The hon. Gentleman obviously does not realise that the Secretary of State is, for example, a party to the decision to sell the Welsh docks to Bristol. He obviously does not appreciate, as I will demonstrate, the degree to which industrial decline has reached in Wales. When the hon. Gentleman has heard the whole story I am sure he will join with me in declaring that Wales would be better off without his right hon. Friend.

I can best demonstrate the problem confronting Wales at an industrial level by considering my constituency, thereby demonstrating the point locally initially and then expanding outwards from that examination. I pointed out in an intervention that under Labour in 1968 and 1969 there was more new industrial square footage created in Wales than in the whole of the last three years of the last Conservative Administration. The trouble is that the Conservatives were at that time pursuing similar policies to those which they are pursuing today.

In my constituency the count, if one can call it that, is dismal. In our early years in office we made Swansea a development area—we gave it that status after the Conservatives had denied it to us for years—brought in a new Ford factory, which is now employing 2,000 men, and Morgan Crucible, employing 800 men, sent the motor taxation office there, which will employ 4,600 people, and expanded industrial trading estates. But in less than a year the Conservatives have reversed this trend.

Many redundancies have been caused as a result of the policies of the present Government. Indeed, in the last three weeks redundancies announced for South-West Wales—they have not yet taken place but they are scheduled to do so—mean that 1,600 jobs will go, 680 at Imperial Smelting, and Alcoa is cutting back on both manpower and investment. Only yesterday we were informed that employment just outside Swansea will be lost because one of the five steel plants to be shut is located there.

This is happening in only one sector of Wales. What is the picture for Wales as a whole? One finds from official statistics that the number of people looking for jobs is up and the number of jobs available is down. The number of potential jobs is also down. Unemployment—this is for the wholly unemployed and it is the underlying rate which matters—seasonally adjusted, has risen in Wales by 11 per cent., as it has in Scotland and the North of England, since last November. This is 35 per cent. more than it has risen in the country as a whole. The figure for Great Britain as a whole is 8 per cent., but it is 11 per cent. for the three development areas I have mentioned. Vacancies have fallen in this period by 11 per cent. as well.

We see that the number of jobs immediately available for those already out of work has fallen. The number of jobs in prospect—jobs we were certain would arise in the near future—has fallen since last June by 13 per cent., which represents an annual rate of 20 per cent.

We have no reason for optimism when looking to the future, particularly considering the number of inquiries from businessmen looking for sites in Wales. The number of such inquiries in the second half of 1970 was the lowest since 1966. The picture is indeed gloomy, and unfortunately it is a picture which is not fully represented by the underlying trend statistics.

The hon. Lady the Member for Keighley (Miss Joan Hall) referred to hidden unemployment, especially in relation to women in the textile industry. We have the same problem in Wales with women who when they become unemployed know that they have no prospect of finding alternative work. These are mostly married women who have not been paying full National Insurance contributions and who do not register as being unemployed. The overall underlying figure is down for this reason.

While I do not in any way impugn the intellectual or academic integrity of Government statisticians, I suggest that the seasonally adjusted total figure this year is false because of the abnormally mild winter. Thus, the number taken from the gross unemployment figure to give the net is probably higher than it should have been. In other words, there has been less of a seasonal impact than the average over the last 10 years.

The result is that this fact, coupled with the administrative factor of non-registra- tion, suggests that the underlying numbers unemployed are higher than the Government are saying. This must be particularly true of Scotland, which suffers more from the seasonal impact than do areas in the South.

We in Wales have a further fear. We have grave doubts about the future of the steel industry in Wales. I have indicated the closure announced yesterday of one plant just outside Swansea. My right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) told the Welsh Grand Committee recently of the concern in Cardiff over the East Moors works. The Government must accept some responsibility for this because, in an article in the last Sunday Times Business News, it was pointed out that as a result of the change from grants to allowances up to £100 mililon of investment grants per year were being lost to the steel industry.

In all the arguments that go on between the two sides about grants versus allowances, there must inevitably be a degree of falsity in that one must generalise. However, by considering specific industries in detail, one can get a more fruitful assessment of the relative importance of one form of payment over another.

Steel by its very nature is a heavy investment industry. It is said that a new integrated steelworks costs about £1,000 million. Moreover, there is a considerable obsolescence race always going on in this industry. We used to speak about this in relation to the aircraft industry. Now, because of the impact of the Japanese on steel, huge investment is needed to maintain the competitive ability of existing plant.

I am depicting an industry which is particularly important to development areas. It is, as I have shown, an industry which must, by its nature, invest heavily each year. But market circumstances dictate that it is cyclical in its profits. Nobody will dispute that the steel industry has some good years and some bad ones. When the bad years are very bad, profit margins are extremely low, but these very bad years must be sustained because they denote that the world's steel plants are going through a lean time. That is just the sort of industry which will suffer from a switch from grants to allowances, because in its lean years it does not have the profit by which to take advantage of the allowances which theoretically are available.

Mr. Tugendhat

The reason why the British Steel Corporation does not at the moment have profits to support the lean years, as it has stated frequently, is that during the fat years when steel prices on the Continent, in Japan, and everywhere else were rising they were not allowed to rise here, but were held down artificially, partly by the Government and partly as the result of the considerable delays attendant on reference to the Prices and Incomes Board. Had the Corporation been allowed commercial independence that it and Lord Melchett had wanted over the years of Labour Government, the Corporation would now be in a very much healthier situation.

Mr. Williams

I respect the hon. Member's point of view, but he should read the speech of his right hon. Friend, now the Secretary of State for Social Services, when the House debated the steel industry about a year ago, in which he attacked the Government for allowing steel prices to go up. Interestingly, by the end of that debate the hon. Member for Bournemouth, West (Sir J. Eden) who wound up for the then Opposition had changed his position. The party opposite argued both sides of the case so that if it suits them they can always get an appropriate quotation from that debate but, equally, so can we. Nevertheless if hon. Members opposite can change their minds in four or five hours I do not put much reliance on their judgment at that stage.

Leaving aside the political cut and thrust, it will be appreciated that there is a real problem facing any industry which is cyclical in its profits but must be regular in its investment.

Having said that, I still think that the Corporation will have to go ahead with a new integrated steel works simply because the pressure of Japanese competition will be so great as to leave no alternative. The Japanese, and here I speak from memory only, have opened an integrated steel works each year for the last five years, and I believe that they will be continuing to open them at the same rate for the next five years. In addition, they have entered into long-term contracts for the supplies of ores, and last year they scoured Europe in search of ten-year contracts for coking coal. It is therefore likely that sheer pressure of competition will force the Steel Corporation, cash difficulties or none, to accept the need for large integrated works.

I urge the Minister, and he will recall that only recently I put down Parliamentary Questions on the subject, to give an assurance that in the event of such a large integrated steel works being constructed it will be constructed in a development area. A works of this kind is such a large chunk of employment potential, that the development areas have a right to ask for it. In addition to their overriding technical labour asset, the deep water facilities needed for the modern bulk carriers are found off the development areas.

In particular, to put in a localised plea for South-West Wales, I draw attention to the fact that the very large chunk of investment represented by the deep water facility at Port Talbot is at present operating to only about 25 per cent. of capacity. Such a very large piece of investment, which would be a very useful adjunct to a new steel works, is available there. The land is available, and the workers are available. We do not care which part of South-West Wales the works comes to —we want the best site to be chosen—but we ask the Government to look seriously at this aspect.

The situation I have described is a matter of considerable concern at the social as well as the employment level. The whole prospect of life for youngsters is altered when jobs are being lost on the scale I have described. Job opportunities for school leavers are not there in Wales: there are 40 per cent. more school leavers unemployed than there were a year ago. Apprenticeships and opportunities for training do not exist. The result is an age-selective social mobility. The Labour Party does not accept direction of labour, but here we have free competition imposing that direction, forcing youngsters from their homes, their families and their backgrounds in search of jobs that are not there available.

Hon. Members on both sides have referred to the mirror effect of allowing this to happen. The depopulation of Wales, of Scotland and the North becomes increasing congestion in London, the Midlands and the South-East. So our inadequacy in terms of industrial investment becomes in London and the South-East inadequacy in terms of social investment—more pressure on schools, more pressure on housing, and on transport. There must be a unity in the House in recognising that when we talk of helping the development areas we are talking also of helping those parts which are not development areas.

The problem confronting the development areas must be seen against what I would call an accelerating difficult perspective. In the Green Paper, "The Development Areas", we said that 300,000 jobs had been lost in agriculture, mining and shipbuilding in Wales, in Scotland and in the Northern Region alone in 16 years. When I ceased doing regional work in the Department of Economic Affairs I was lucky enough to be able to work on the planning document "The Task Ahead". We discovered that although 300,000 jobs had been lost in those three industries in the previous 16 years as a result of technical change and changing market situations, such as mechanisation in agriculture, a similar number would be lost in the next five-year contraction. In the period 1950 to 1966 300.000 jobs were lost, but we are confronted with the prospect of the same number being lost in those three industries alone in those three development areas within the next five years.

It is against that background that we have to consider the weight of the measures which our Government applied to try to help the development areas. It was a mass problem and it was an immediate problem. It is still an immediate problem and, with all respect to hon. Members opposite, I do not believe that they have understood either the weight of the problem or its size or its immediacy. Why have those measures failed? One has to go with hon. Members on both sides and make the point that the fundamental failure is a national policy failure rather than just a regional policy failure. Even if hon. Members opposite had the right regional policy now, and they do not have it, it could not do any good, because there is not the industry to go to the development areas.

The fundamental problem now is that there has been a loss of confidence in industry in the period since last June which is virtually unequalled in any period since the war. When I used to answer Parliamentary Questions on investment, hon. Members opposite constantly told me that it is confidence that matters and, of course, confidence does matter. As I pointed out to one hon. Member, in our last full year of office, 1969, investment went up by 10 per cent. and, again speaking from memory, my last answer on the subject of investment before the General Election still forecast a possible 7 per cent. increase in investment last year. It has been admitted that this year investment might decrease by 2 per cent. Virtually all experts say that the fall is likely to be much greater. For the first time in eight years business men will see the national level of investment falling. This is a disturbing situation for both sides. We have a community of interests, if not an identity of means. We all want to see an improvement.

The lack of confidence is reflected in the fact that machine tool orders have fallen by 42 per cent. and are likely to fall even more unless urgent action is taken. Last year bankruptcies were the highest for 10 years and it has been suggested that this year they will be even higher. So we can understand why there is no confidence in this Government. It is difficult to see how the Government will establish confidence.

As I have sought to show, because investment is falling there will be even less footloose industry than there has been. Therefore, there is less investment that can be directed to the development areas at the very time when the unemployment gap between the development areas and the rest of the country is widening. We cannot be optimistic.

The fact that the regional policy is failing was demonstrated by practice, rather than by verbal admission by the Chancellor and by the Secretary of State for Trade and Industry. Only last October the Chancellor outlined his mini-Budget. I will not indulge in any acrimonious comment on that, because that will not help this debate, which has been exceedingly friendly. The fact that last month the right hon. Gentleman had to announce a variation of policy was an admission that things had not gone as he had expected them to go. As I pointed out in a supplementary to him at the time, such was the sheer irrelevance of his measures that, instead of taking steps to increase the amount of footloose industry, he extended the areas over which that footloose industry had to be spread.

The fact that the measures had failed was demonstrated when about a fortnight ago the Secretary of State for Trade and Industry announced that his Department was accelerating by three months the payments of the investment grants. I will avoid the obvious comment, "Thank God you have got our investment grants with which to dig yourselves out of trouble".

Hon. Members must realise that what is being given to industry three months early will not be there three months later. It is a seed corn situation. Unless something is done in the Budget, the situation has merely been postponed. The decline in cash availability will be slightly alleviated when the payments are made, only to be worsened later when the money is no longer available.

Mr. Speaker

I hope the hon. Gentleman will forgive me. I am getting a little worried about the time. There are quite a number of hon. Members who want to speak.

Mr. Williams

Mr. Speaker, I was intuitively drawing to the last few points that I desired to make.

I want to deal a little further with the question of investment grants. The examples which have come to light in the last few weeks of the importance of the grants to industry must be brought home to the Minister. I have mentioned the example of steel. As regards oil and chemicals, I.C.I. has announced that the change from grants cost it millions of pounds and it has therefore cut back its investment in Britain but not its investment abroad. Shell is delaying, and perhaps completely postponing, a £200 million project.

It is not merely a case of the investment which is not taking place. It is the consequential ordering of equipment which is not taking place. There is the multiplier effect every time one of these orders is lost.

All too often the sort of industry which has been adduced as an example of an industry which does not need an investment grant is a multi-national one like chemicals or oil, or even like the car industry, which is not restricted to building in Britain; it can switch its investment to various world sites, which is what has been happening.

Perhaps on another occasion I shall have the chance to develop the statistical arguments that we are capable of growth. I will not attempt to do that now, out of deference to Mr. Speaker and hon. Members who wish to speak. It can be demonstrated that Britain could accept 2 per cent. to 3 per cent. more growth without seriously damaging the balance of payments. For this reason, the Chancellor of the Exchequer will be judged on whether he does anything in the Budget to produce that growth. The future of the development areas depends upon his taking the appropriate action.

1.56 p.m.

Mrs. Elaine Kellett (Lancaster)

Unlike some hon. Members, I do not come from either an inaccessible or an unattractive part of the country. As you yourself will know, Mr. Speaker, I come from one of the loveliest parts of the whole of England: it is in the Vale of the Lune and on the edge of the Lake District. We have the advantage of excellent road and rail facilities.

In addition, we have not sat back and simply clamoured for help. The city council, in alliance with Morecambe, has gone all out to attract industry by preparing most useful industrial sites and servicing them so that industries would be happily settled once they got there.

In fair competition we could certainly hold our own in attracting industry. We desperately need to attract new industry, because we have an unemployment rate of 5.3 per cent. What concerns us perhaps even more is that one-fifth of our employed population is concentrated in the vulnerable sectors of textiles and floor covering. This gives us a very narrow industrial base.

But competition is not fair. We are squeezed geographically by the Northern development area and the North-East Lancashire intermediate area. Unlike some hon. Members, we were delighted when the Minister announced that the regional employment premium is to be phased out, because it weighted the scales heavily against us. However, this measure will take time to have effect.

My part of the world needs a pump-priming operation now. We are convinced that if we can once attract a sound nucleus of companies to come to us as a sort of magnet, they will settle down there happily and spread the attractions of Lancaster abroad. We believe that their executives will attend their association meetings throughout the country and in London and tell their colleagues what a tremendous relief it is to get to a part of the world which combines delightful amenities, an exceedingly co-operative city council to smooth their path, excellent communications, and workpeople of skill, diligence and great traditional loyalty.

We had the opportunity yesterday, for which we were most grateful, of putting our case to the Minister, and I am sure that he was impressed both by the fairness of our case and by the clarity with which it was presented. I know that he is keeping our problems under review, and I hope very much that he will listen to our plea and remove the bias against us by equating us with our neighbours.

2.0 p.m.

Mr. Eric G. Varley (Chesterfield)

First, I should like to join hon. Members in congratulating my hon. Friend the Member for Gateshead, West (Mr. Horam) on his good fortune in the Ballot and on his excellent speech. His Motion is direct and to the point. He is quite right when he emphasises the diminishing confidence in the regions. I approve particularly of the wording in the Motion: due not only to Her Majesty's Government's general economic policy but also to its inadequate and misleading statements on regional policy. There have been many misleading statements on regional policy, and I shall deal with those in a moment or two. My hon. Friend is absolutely right when he implies that the Government have handled the situation in a ham-fisted manner and in a manner which is unbelievable to many hon. Members. If someone had told me nine months ago, when the Government assumed office, that they could have mucked up regional policy quite so quickly, I would not have believed it. But the position is deteriorating, and at a disastrously rapid rate.

I do not have the most up-to-date figures that I would like, but the position in mid-February, as the House knows, was like this: not only were there over 700,000 unemployed throughout the country but in the regions of Britain from August last year to February of this year the percentage rise in unemployment had gone up as follows: in the Northern Region 19 per cent.; in the North-West 26 per cent.; Yorkshire and Humberside 26 per cent.; Wales 28 per cent.; Scotland 37 per cent.; and the South-West 40 per cent.

I must say that when I look at the figure of 40 per cent. representing the rise in unemployment in the South-West between August of last year and February of this year, I am absolutely astonished that no hon. Member from the South-West is present on the other side of the House to take part in this debate. [Interruption.] I make one exception. I was referring to back-bench Members from the South-West. They have left all the responsibility to the Under-Secretary of State for the Environment, the hon. Member for Tavistock (Mr. Michael Heseltine), who will be intervening on behalf of the Government.

I remember the hon. Member taking part in a debate on the South-West in 1967. Had I realised that he would be intervening in today's debate on behalf of the Government, I would have taken the opportunity to read what he said in that debate. I am sure that I could have found quite a few choice quotations. However, I have slipped up on that point.

Let us consider what has happened since mid-February. Daily there are announcements of redundancies throughout the country. This week, for example, we have heard of 4,000 redundancies at Rolls-Royce. Yesterday British Steel Corporation announced 2,500 redundancies. These will take place over the next few months. Who knows, there will probably be more to come if the RB211 contract is not renegotiated, and I sincerely hope, as do my hon. Friends, that it is renegotiated. However, that is the sort of thing that could happen—a daily declaration of redundancies.

Anybody who claims, as the Government are pretending, that business confidence exists in the regions must be crazy. I shall show in a moment how the lack of confidence has been brought about. First, however, it is worth placing on record briefly what the position was prior to the Conservative Government coming to power. Preferential aid to development areas was progressively built up from the inadequate sums of the last Conservative Government in 1964 to over £300 million last June. But it was not until 1967 that assistance began to bite. It was becoming clearer all the time that industrialists were beginning to understand the advantages of locating expansion within the development areas. In the two years immediately before the General Election, there was clear evidence that, relative to Britain as a whole, the position in the development areas had improved. It was only a small improvement, but there was evidence of this improvement. In 1963 the unemployment rate in the development areas was more than double the rate for the rest of the country. By 1970 the differential had been narrowed slightly and it was down to 1.75 times the national rate. That has got to be looked at against a background of what was happening in key sectors of the economy in the traditional industries.

But, more important, when one examined the number of new manufacturing projects for the period 1965–70 judged by industrial certificate approvals, one found that over 300,000 new jobs were in prospect in the development areas. The figure was also given by my hon. Friend the Member for Swansea, West (Mr. Alan Williams). Again, the stringent industrial development certificate policy imposed showed that of all approvals throughout Britain, the development areas got more than one-third, though only 20 per cent. of the working population lived in the development areas. This took place against a background of massive loss of jobs due to market changes and rationalisation within the traditional industries.

But there was absolute and incontrovertible evidence that the position in the development areas in relation to the rest of Britain was getting better. In fact, I would not pretend that the problem was solved, and we never did pretend that it was solved. It was a question of having the right sort of incentives. But there was nonetheless evidence that the position was getting better. In fact, the House need not take my word for it alone. I refer to two articles which appeared in The Times in January, written by Mr. Peter Jay, the economics editor. The Under-Secretary seems to smile at that, but Mr. Peter Jay is a respected economics journalist, and I do not see why the hon. Gentleman should make fun of that.

Mr. Jay said this in his article on 22nd January: An antidote to the way in which the fashions on regional policy ebb and flow in London is to visit the development areas. Last summer I visited industrial South Wales. On the face of the global statistics it seemed that huge amounts of government money and effort had achieved next to nothing. But first-hand experience showed that sufficient had already been achieved to warrant continued and intensified effort. To do otherwise would be to surrender a war that was three-quarters won. In the second article on 27th January, Mr. Jay wrote: The scale of effort put by government into reviving the northern development area has exploded by more than sixfold over the past six years. Yet in the past several months—mainly since the election—"— I repeat, mainly since the General Election— a new crop of doubts and anxieties have beset the region. This is particularly hard on the North lust when it seemed to be surmounting the problems of poor communications, radical industrial transformation and pit closures in recent years. Mr. Jay is absolutely right, and so are my hon. Friends. The uncertainties and doubts have been brought about by the present Government.

It would be an advantage to take a look at what the Tories said on this subject when they were in opposition. To listen to them before 18th June, one would be forgiven for believing that they were in favour of regional policies. In fact, some of them gave the impression that they were so much in favour of regional policies that they wanted to make the whole country a development area. That is the impression that they tried to give.

I well remember the right hon. Gentleman the Member for Leeds, North-East (Sir K. Joseph), now Secretary of State for Social Services, saying on the Second Reading of the Local Employment Bill on 5th November, 1969, in relation to industrial development certificate policy: We do not agree with the Hunt recommendation that I.D.C.s should be automatic up to 10,000 sq. ft. because we think that there is a lot of valuable industry, expanding or built below that level, which should at least be told about opportunities in development areas."—[OFFICIAL REPORT, 5th November, 1969; Vol. 791, c. 1042.] That was the Secretary of State for Social Services, then principal spokesman for the Opposition on trade and industry matters.

What happened? A few weeks after they came to power, the Conservative Government did exactly the opposite. They accepted this policy. It was probably their very first broken pledge.

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

The hon. Gentleman is being completely unreasonable when he ought to be approaching this problem seriously. It has been made perfectly clear by me and by other Ministers, and is well understood in the regions, that the extension of the limit which we made was merely for administrative purposes. There had been no refusals below that limit even under his own Government.

Mr. Varley

I am being absolutely fair. Just over a year ago, from this Dispatch Box, the principal Opposition spokesman on trade and industry matters said that he did not agree. We had a long debate on this matter in Standing Committee on the Local Employment Bill, and the hon. Member for South Angus (Mr. Bruce-Gardyne) moved an Amendment with the object of raising the limit in just this way, to the limit which is now accepted, but the official Opposition would not vote with him. His hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), now Under-Secretary of State for Trade and Industry, did not support his hon. Friend's Amendment.

Mr. Grant

I do not want to labour the point, but the hon. Gentleman might explain why his own Administration did not refuse I.D.C.s under this limit.

Mr. Varley

I thought that the hon. Gentleman would have started to understand the problem by now. Being conscious of the time, I shall not go into it at length, but the point was that if one had a limit as low as that one could do the sort of thing which the hon. Member for the Cities of London and Westminster (Mr. Tugendhat) was suggesting. At least, it was a point at which one could go, or the officials of the Ministry could go, to firms and say, "This project will probably get through, but let me know about your future expansion plans. Let me draw to your attention the financial incentives and the advantages of location which would accrue if you were to go to a development area."

That was the advantage of the formula which we had at that time. As I say, it was abandoned straight away. I do not want to labour it, but I am sorry that the hon. Gentleman does not understand these matters.

Mr. Grant

Not does not understand —does not agree.

Mr. Varley

I should love to have a long debate on the industrial development certificate question, but this is not the moment for it. What I am pointing out is that 12 months ago the principal Opposition spokesman on trade and industry matters said, "I do not agree", and then, when the Tories came to power, they immediately abandoned that policy.

The Conservatives said something else in opposition. One page of their manifesto was devoted to regional problems, under the heading, "Prosperity for All Areas", and right in the middle of it there was this sentence: We will initiate a thorough-going study of development area policy as was recommended by the Hunt Committee. In some respects, it would not have been a bad thing to initiate a thoroughgoing study. I hold the view that once one has decided on a range of financial incentives and administrative controls one ought to give them a run. There ought not to be chopping and changing. To achieve long-term self-sustaining growth in the weaker regions, it is not good to keep changing, swapping and prodding around. It was a question of seeing how far one could let the measures have a good run.

Nobody would deny a new Government proper opportunity to commission a study of regional policy. They could have commissioned a study of the cost-effectiveness of investment grants. They could have commissioned a study of the regional employment premium. They could have looked at the criteria for controlling I.D.C.s. They could have done all those things. But before the general election, before any review or "thorough-going study", they had made pretty plain that they would get rid of investment grants and phase out the R.E.P. Who can blame their industrial friends for believing them? They did believe it, and confidence began to go immediately the Tories were returned to power.

Even then we were told by the Government that we should have this thoroughgoing review of regional policy. On 27th October, however, as my hon. Friend the Member for Gateshead, West has said, we began to know the worst. The Chancellor of the Exchequer ended investment grants, as was promised—"at a stroke". I have reread the statement of 15th June issued on behalf of the Prime Minister. Apparently, there was a misprint; it was not prices which were to be reduced at a stroke but investment grants which were to go at a stroke.

But still the pretence was kept up that there would be a thorough-going study of regional policy. On 27th October, talking about the Local Employment Acts, the Chancellor of the Exchequer said: We have thought it right to set these measures in train now, and we are, of course, continuing with our review of longer-term regional policies."—[OFFICIAL REPORT, 27th October, 1970; Vol. 805, c. 48.] Again, still maintaining the pretence of a review, the Secretary of State for Trade and Industry said at Question Time on 9th November: As I said, I am conducting a major study into all aspects of regional policy". He said it again at that same Question Time: This will form part of an extensive and continuous study that we are making of our regional policies …".—[OFFICIAL REPORT, 9th November, 1970; Vol. 806, c. 3–13.] People could have been forgiven for believing that a proper review was taking place and that it would take some logical pattern and order. But no cost-effectiveness studies have taken place. In fact, the review—we now know that it is concluded—has been a complete shambles, and hon. Members opposite know that it has. It has not been a review at all. It has certainly not been the "thoroughgoing study" referred to in the Tory manifesto.

Matters have proceeded in this way. On 27th October investment grants were brought to an end. On 7th December, by a planted Written Answer, we were told that I.D.C. control was weakened and the limit raised, as I have said, to levels which were rejected twelve months earlier.

On 3rd February this year, in desperate trouble, the Secretary of State for Scotland went to his right hon. Friend the Secretary of State for Trade and Industry and other Government colleagues and asked, "Please give me something to use in the debate of Scottish affairs." What happened then? He announced that West Central Scotland would have special development area status.

On 18th February, in response to a censure Motion by the Opposition, the Chancellor of the Exchequer pulled four things out of the hat, as it were, talking about other special development areas, and announcing a few new intermediate areas, all, incidentally, as far as I understand, returning Tory Members to the House. On 19th February, in response to a critical Private Member's Motion moved by my hon. Friend the Member for Whitehaven (Dr. John A. Cunningham), the Secretary of State for the Environment talked about infrastructure. On 22nd February the right hon. Gentleman, having assumed responsibility for this non-review, announced in a Written Answer; … no further changes in … regional industrial policy are planned at the present time."—[OFFICIAL REPORT, 22nd February, 1971; Vol. 812, c. 42.] So that was the review.

We have had no statement to the House. Every piece of information has had to be dragged out of the Government by censure Motion or Private Members' Motions. We are told that there will not be a White Paper. We have had a review announced by planted Question, by a terrified Secretary of State for Scotland, in response to an Opposition Motion, and an announcement in reply to a Private Member's Motion. Over the four months of this so-called review, this thorough-going study of development area policy, we have had meddle, muddle and total confusion, as the Government know. Yet the Secretary of State for Trade and Industry had the brass neck the other day to accuse us of causing panic within the regions.

As far as I can see, not one independent reputable organisation will give the Government any credit for their regional policy. Not a single development association in the regions has a word of praise for their overall approach to the matter. The C.B.I. in the regions is extremely despondent, and the T.U.C., in its recently-published Economic Review, is highly critical of regional policy. Hardly a serious financial or economic journalist has anything favourable to say about the policy for the regions.

Mr. Anthony Grant

What about Dr. Reid?

Mr. Varley

The hon. Gentleman talks about the Chairman of the North-East Planning Council. Dr. Reid should be questioned about the ending of investment grants and the discontinuance of R.E.P.

Mr. Grant

I can understand the hon. Gentleman's being angry that the Government have done something to help the regions, because he has a vested interest in seeing it fail for party political purposes. He should not misrepresent the views expressed. Dr. Reid, as was made quite clear in the previous debate, said that he was absolutely delighted with the news.

Mr. Varley

The question has not been put to him about the ending of investment grants and the discontinuance of R.E.P. My guess—it is no more than that, and the Minister can only guess on this—is that he is not very happy about that.

My attention was drawn the other day to an article in the Financial Times headed: U.K. asks about jobs in Germany". It started: The Department of Employment, in response to a German initiative, has asked Germany for an indication of what kind of vacan- cies there might be in West Germany for unemployed Britons. Procedure to deal with British workers looking for work in Germany is also being examined by the German and British employment Ministries, the German Embassy said today. What a situation we have come to when a Department of State talks officially to the German Government to see how far we can export our unemployment!

The position in the regions, as has been demonstrated by my hon. Friends today, is desperate. It continues to deteriorate rapidly. Industrial development certificates are down to a very low level, and manufacturing investment is running at totally inadequate levels. The position in the regions, unfortunately, will get worse, and everyone knows this. The Government are doing nothing to restore badly-needed confidence in the regions.

We are told that there are about 70 ex-public schoolboys in the Government. We cannot expect them to know very much about unemployment problems. My advice to them is to get out of their Whitehall offices and into the regions to discover what is going on, and then do something to help.

2.25 p.m.

The Under-Secretary of State for the Environment (Mr. Michael Heseltine)

The rather ill-considered challenge by the hon. Member for Chesterfield (Mr. Varley), that members of the Government should get out into the regions to find out what is going on could not have come on a more appropriate day than a day when three Ministers of my Department and my right hon. Friend the Prime Minister are in Newcastle.

Mr. Garrett rose—

Mr. Heseltine

I hope the hon. Gentleman will forgive me for not giving way. I have a remarkably wide debate to try to cover. [Interruption.] My statement was perfectly correct. There are three Ministers from my Department in Newcastle. There have been 16 visits by Ministers of the Department to the Northern Region alone in the past eight months. If that is not meeting the hon. Gentleman's challenge I do not know what is. It is extraordinary that Labour Members ask us to go but that when we do they are not satisfied. This is a typical example of their destructive opposition. They are interested not in our doing what they suggest but in criticising for the sake of criticising.

Mr. Kinnock rose—

Mr. Heseltine

I must deal with the debate so far, and many hon. Members still wish to speak.

The hon. Member for Gateshead, West (Mr. Horam) took a very wide canvas on which to paint the picture. In opening the debate he dealt with the entire question of the Government's regional policy. He will not expect me to deal with that policy out of the context of the broad economic policy. It is possible to make a speech of great length on this subject. I shall try to answer the points made in all the speeches I was able to hear.

The hon. Member for Gateshead, West raised two particular points. First, he said that Government policies are causing a grave deterioration in the outlying regions, and second, that the Government do not seem to care about regional planning. I should like to deal with his first point as I come to one or two other speeches, but I must say that I was surprised that he started his general introduction at the date of the last General Election and took no account of the underlying economic trends of the past few years. I will deal with his second point when I come to what was said by the hon. Member for Ilkeston (Mr. Raymond Fletcher).

I was disappointed that in what was in many ways a broad and descriptive speech the hon. Gentleman should have misled the House in referring to what has been said by my right hon. Friend the Secretary of State for the Environment. Talking about the road announcements by my right hon. Friend, he said that my right hon. Friend gave an impression which he knew to be contrary to the truth. That is a most serious charge. I see that the hon. Gentleman nods his head, so I am in no way misrepresenting him. When I deal with the Government's record concerning roads in the Northern Region and make the position clear, I believe he will be forced to agree that far from misleading the House my right hon. Friend presented the situation exactly as it is, which is a good deal better under this Government than under the previous Government.

First, in the review of road strategy which we are carrying out, regional needs will be taken fully into account in the general expansion of the road programme to which we are committed, and priority will undoubtedly be given to road improvement schemes. The Government are reviewing an inter-road strategy and hope to announce decisions in the White Paper in the late spring.

Particular attention is being paid to the importance of good communications within the regions and between the more distant regions and the rest of the country. To deal specifically with roads in the Northern Region, the Secretary of State recently announced that he planned to spend £150 million on major road building in the Northern Region in the five years to 1974–75. We have looked at this figure again, and my right hon. Friend was able to announce in Newcastle today that the figure has been revised to £160 million. This is to be spent on motorways, trunk roads and principal roads. This is exactly the support which hon. Gentlemen opposite like to see going to the Northern Region. This figure takes account of the accelerated work and spending in the current year. When the Labour Government left office the estimate for 1970–71 was £35 million. The figure actually spent will be £45 million, so there is an acceleration under this Government of £10 million.

Perhaps the single most important fact for the hon. Gentlemen opposite is that nearly £200 million worth of schemes are planned to start in the five years to 1974–75. That is a substantial increase on the preceding five years. In the five years between 1965–66 and 1969–70 the spending on major roads was about £129 million and about £150 million worth of schemes were started. So there is an increase in the rate of starts from £150 million in the preceding five years to £200 million in the subsequent five years.

Mr. Horam

The point is not that the absolute amount to be spent is greater in the five years now starting than in the preceding five years. As the hon. Gentleman knows, public expenditure is accelerating and the road programme is accelerating. The point is there has been a deceleration in the rate of road spending in the Northern Region. That is the point I was making, and what the Minister has said is contrary to the facts.

Mr. Heseltine

It is patently obvious that the hon. Gentleman, having been presented with a substantial increase in the rate of starts in his area, is determined for narrow party reasons to fly completely in the face of the facts. The facts are completely clear: £150 million over the last five years, £200 million in the next five years. If that is not what he is looking for in his region, I am at a loss to understand what he wants.

Mr. Horam

Does the hon. Gentleman admit that this is a deceleration of the rate of road spending in the Northern Region?

Mr. Heseltine

I am delighted to hear the hon. Gentleman completely changing his emphasis on this point. The hon. Gentleman fully understands that in the road programme, which includes specific roads, there will be variations from year to year as the contracts are entered into. The total benefit can only be measured over a five year period where there is a steady trend. There is to be a substantially increased amount to be spent in the North, and I have given the figures again today to prove that beyond shadow of doubt.

Another important facet of the road programme concerns the South-West Region, which is of particular concern to me. We have also been pleased to announce, since we came to power, that in the five years to 1974–75 in the South-West Region approximately £200 million will be spent. This is more than twice the amount spent under the Labour Administration in the last five years. Much of this will be on the M5/A38 spine road and the A30, and this is of major importance to the development of the area at the end of these roads. £200 million of major schemes are planned to start between 1971 and 1975.

Mr. David Owen (Plymouth, Sutton)

Will the hon. Gentleman express this increase in constant prices? He inherited a road programme up to 1973–74. Has there been any increase in constant prices for the four-year period inherited road programme for the South-West Region?

Mr. Heseltine

Those figures are expressed in 1973–74 constant prices. It is not enough to say that the Labour Government produced a White Paper saying what they would do over 15 years or over five years. As we know from the Labour Government's record, it is not enough to announce intended figures of public expenditure. Time and time again the Labour Government reviewed and slashed their public expenditure forecasts at the drop of a hat. It is not enough to say they published figures, because those figures are no more than good intentions, and the Labour Government were notorious for breaking their good intentions.

I turn to another area which was mentioned by several hon. Members, including my hon. Friend the Member for Cities of London and Westminster (Mr. Tugendhat). There are major programmes for East-West roads in the Northern Region. There are new works planned between the A1 and South Humberside, the M62 and other improvements between Liverpool and Hull, schemes for the A66 (A1 to Scotch Corner), the A69 Newcastle-Carlisle road. These are planned, and there are others as well.

Mr. Horam

The hon. Gentleman is not saying that these are additional to the schemes included in the £150 million or £160 million?

Mr. Heseltine

I am not saying that they are, but these are schemes which we are dealing with and I named them because I thought they would be of interest to the hon. Gentleman since I was asked about the schemes which are in hand.

The hon. Member for Gateshead, West went on to make several suggestions of what he would like to see. He made some eight proposals. I do not think the region would have been exactly galvanised into action if his proposals had been put forward as a party policy. There are two points which I should like to take out of his long galaxy of policies. He spoke about the central machinery and referred to the existence of the Department of Trade and Industry and the Department of the Environment. His view was that there should be a coordinated central machine with responsibility for the totality of matters affecting his region. No Government has been able to find, or has even set out to find, a way of dealing with this problem, because so many facets would be included within one Ministry that the Ministry would be totally unmanageable. One is left with either giving special responsibility to a member of the Cabinet, which is what my party did in its previous Administration and which his party did not—the Minister for the North was not in the Cabinet—or to have someone in the position of my right hon. Friend the Secretary of State with special responsibilities.

This is not in any way a party point, but one argument that must not be lost sight of is the benefits that come to a region such as the North—and the other regions—from having a concentration of power in the hands of one person in the Cabinet knowing that he has a total departmental responsibility, and the capacity and the powers that go with it to implement the policies for which he is responsible. The precedent set by the Labour Government of creating overlords was not a happy one. I do not believe that there was the power implicit in the arrangement to make it stick. In the Department of the Environment we have found—and I am sure this is true in the Department of Trade and Industry—that we have the capacity and, perhaps even more important, we have the voice in the Cabinet where the discussions are taking place. So co-ordination has already been brought about by the Government, and the benefits have already been seen.

The hon. Gentleman also raised the question of the effect of the present state of the policies of the Government on his personal decision about the Common Market. I can only put to him this view, regardless of any decisions which he might want to take in the light of the terms that are negotiated, and that is this. Britain's decision to join the Common Market would open up investment possibilities, both money flowing in and new opportunities for British exporters abroad, that would have a galvanising effect on the regions. I suggest that that is a thought which must lie in his mind when he comes to make his decision. He will be aware that the Common Market countries pursue regional policies, and there is nothing in the Rome Treaty to prevent us pursuing the regional policies to which the Government have committed themselves.

My hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) raised several important constituency and local points. To deal first with the question of the Government's interest in the Mersey Tunnel, as he will be aware, we have decided against a grant because in the long term it is our view that the tunnel should be able to pay its way. The Government are making a substantial loan towards the cost of a second tunnel. It is now up to the tunnel Joint Committee to make proposals. The Committee has already proposed a new toll schedule which the Secretary of State is considering. There will be discussions about this, and we shall be able to see our way forward as a result of them.

My hon. Friend then referred to the question of derelict land in the area and outlined the scale of the problem. He said that in his area there were about 10,000 acres, approximately 16 per cent. of the national problem. This is a matter on which the Secretary of State has spoken specifically in a recent Adjournment debate. We are particularly concerned that the matter should be given careful consideration and attention. We understand that in 1969 about 400 acres of derelict land were cleared in Lancashire at an expenditure of about £50,000. In 1970 about 500 acres were cleared at an expenditure of about £300,000. The estimate for 1971–72 is that £½ million will be spent.

Mr. John Roper (Farnworth)

Is the hon. Gentleman satisfied that the Lancashire County Council will be able to continue to carry out its programme of clearance of derelict land in view of the new arrangements made by his Department for capital grants?

Mr. Heseltine

That is a matter for discussion between ourselves and the county council. We appreciate that in our intention to continue the derelict land programme we have to reach partnership agreements with the local authorities. It is our intention to do so. My right hon. Friend the Secretary of State has committed himself to visiting the regions with the greatest problem of derelict land to see that the programme is carried out in the best way possible. The hon. Member is, however, perfectly correct: it is a subject on which we have to reach agreement with the local authorities, and we intend to try to do so.

Hon. Members, I am sure, appreciate that I cannot speak on the views which have been expressed about Speke Airport when my right hon. Friend the Secretary of State is deeply involved in the Roskill considerations.

The right hon. Member for Sunderland, North (Mr. Willey) appeared to take a different view from that of his hon. Friend, because his first and typically generous approach was to welcome the creation of a special development area to meet his problems. It is precisely because of those problems that the Government, having seen and analysed them, created the special development areas.

The right hon. Gentleman was also generous enough to pay tribute to our work on derelict land training grants and the like. Perhaps I have dealt in general terms with his points about a Minister responsible for the North—

Mr. Willey

I was trying to drive home a practical point. We all know that when the Cabinet discussed these matters, the two Secretaries of State sat there. I appreciate that the Secretary of State for the Environment is in a stronger position because he has specific responsibility. The trouble is that he puts forward something as a Departmental matter. The Scottish and Welsh Ministers then argue their own special pleas. I know from experience that our great disadvantage is that we have no similar voice.

Mr. Heseltine

Obviously, there is a constitutional difference between the Principalities and England, and this is reflected in the administrative situation. I believe, however, that within the context of the Government's Cabinet framework, the North has an extremely articulate voice in the Cabinet. That voice is backed by the real powers in many areas, particularly concerning roads, derelict land and housing. The man who actually has the powers represents the North. I believe, therefore, that it is a more satisfactory arrangement than we have had in recent years.

My hon. Friend the Member for Keighley (Miss Joan Hall) touched upon, for the first time, the important point, which has to be made in this debate, that unemployment is simply not a phenomenon of the regions. It is not something that happens in the outlying areas and is an unknown problem at the centre. It is a disappointment that hon. Members opposite, in trying to contribute to the debate, have seen it as something that we must discuss as from the date of the General Election last year and not make any serious attempt to say what the Government should be doing, or what they would do if they were in power, about the major problems of getting investment flowing, creating business confidence once again and finding ways in which the national economy can contribute to the outlying regions.

Mr. Gerald Kaufmann (Manchester, Ardwick)

Surely the hon. Gentleman has read his right hon. Friend's statement of 16th June in which his right hon. Friend, from the Conservative Central Office, said that he agreed with the National Institute that there should be a modest reflation. The National Institute now says that there should be a £500 million reflation. Does the Prime Minister agree with the National Institute now, as he did in June?

Mr. Heseltine

I appreciate that the hon. Gentleman was not here for the debates in large measure and he will, I think, understand that I am dealing with the lack of a positive contribution from hon. Members opposite, almost an unwillingness to accept that this is a long-term problem. It is something which flows widely over the last few months.

The fact is that it did not start on Election day, 1970. It is the central problem of low growth, low investment and lack of confidence. Without the slightest doubt, the legacy from the last Government is a major part of the discussion which we should be having about this problem.

The hon. Member for Ilkeston (Mr. Raymond Fletcher), who has had the great courtesy to explain to me that he could not be here to listen to my reply, made the point that the debate had been rather unreal simply because it concentrated on special pleadings without concentrating on where the real problems were. [Interruption.] That was what the hon. Member for Ilkeston said. If the hon. Member for Gatehead, East (Mr. Conlan) looks at HANSARD, he will find that I am right. I took careful note of what was said.

The hon. Member for Ilkeston was perfectly right. He went on to say that the real decisions will be taken by the Chancellor, because it is my right hon. Friend the Chancellor of the Exchequer who is responsible for the broad strategy which must affect the problem. The House will appreciate that I cannot in any way anticipate or comment upon what my right hon. Friend will have to say in his Budget.

The point made by the hon. Member for Ilkeston was that the present Government have only got the policies of the preceding Government and our intention was to get rid of those policies at the earliest opportunity. That was when I felt that the hon. Member did less than justice to his contribution, because the only thing that one can coherently say about regionalism and regional policy is that in the broad need for it, it is a totally bipartisan approach. Several hon. Members opposite—I was not able to be present to hear all of them, but I have been told—paid tribute to the fact that everybody understood the needs of the problem. Everybody realised that there were things that the Government could, and should, be doing. The only difference between us is not whether we should do it, but the way in which we do it.

I have obviously looked carefully to see how the historical pattern was built up. It is difficult to know where to start. Taking, however, the decade which has immediately ended, the first Act of 1960 created the development districts. That was under a Conservative Administration and it was the beginning of the present special development areas, the intermediate development areas and the development areas. They owed their immediate precedence to the Local Employment Act, 1960.

From there we saw the building grants, grants for machinery and working capital and the rest. There was also the Government's decision at that time to encourage the establishment of the B.M.C. factory at Bathgate and the Rootes factory at Linwood. That was part of the regional policy of a Conservative Administration.

Nineteen sixty-three saw probably the most dramatic intervention of regional- ism. The Lord President of the Council was made Minister with special responsibility for the North-East. Everybody will accept that what he did at that time has had a considerable and permanent effect in the North-East. It is perfectly arguable, if hon. Members opposite want so to argue, that more should have been done. Nobody can deny, however, that that was a magnificent gesture of regional policy and that it had very considerable benefits for the region.

Mr. Ronald Bray (Rossendale)

I think that I am correct in saying that the policy of the Conservative Government in 1964 was greatly appreciated by the right hon. Member for Cardiff, South-East (Mr. Callaghan) in April, 1965, when he said that the regions were absolutely booming ahead, I am glad to say. Scotland, the North-East, the North-West and Wales are all doing fine, investments going ahead very fast.

Mr. Heseltine

I am grateful to my hon. Friend for making the point from the lips of a right hon. Member opposite. How more effectively it could be made. I do not know.

That was the 1964 position, followed by another Local Employment Act, which produced standard rates of assistance in development districts as of right, financial incentives in productive industry and free depreciation in the Finance Act of that year. By 1964, we moved on to the industrial training boards and the 1964 Act.

That was the position of the first two or three years when the problem began to be politically sensitive, and it was the Conservative Administration at that stage who therefore set the pattern. In many ways, it would be difficult for hon. Members opposite, in all honesty, to say that there has been a difference of principle on many of the proposals introduced by them in the following half decade.

The development areas and intermediate areas were a direct inheritance from development districts. The approach grew from Tory initiatives. We can come later to the amount of the approach, but the approach was much the same in principle.

Mr. Alan Williams

I am sure that the hon. Gentleman does not wish to mislead the House, but will he have in mind that in the immediate years after the war the regional policy was introduced which put a large proportion of new industrial development into the development areas, and that it was following the return of a Conservative Government in 1951 that that policy was watered down and the proportion going to development areas fell?

Mr. Heseltine

The hon. Gentleman will be aware that the Conservative Government in the 1950s introduced one of the fastest rates of economic expansion this country had ever seen. It was that initiative that made the need for regional policy much less necessary at that time. It was in the early 1960s that we saw a running-down of some of the traditional industries. Immediately that happened, the Conservative Government took the initiative.

Then the previous Administration came into office. I do not suggest that they were not interested, or did not care, or shirked their duty. To say that would be to discredit the value of language in this House. Everybody knows that hon. Members on both sides of the House join in feeling that we are trying to solve much the same sort of problem. Everybody is now bored by the suggestion that we are shirking in our duty, or lacking in care, or that because of our educational background we do not understand the problems. To talk on those lines is to use the language of the 'thirties.

Mr. Willey

Could we take this matter out of party politics by going back to Hugh Dalton and the ideas put forward by him during the war years? Some hon. Members have made the principal principle point that we had a development area policy even pre-war. The result is that we still have the development areas. This calls on the need for new thinking. The second point the Minister mentioned was the speech of my hon. Friend the Member for Ilkeston (Mr. Raymond Fletcher), who referred to Germany. Germany has its own development area policy and we should consider what happened in other countries, too. This matter is largely a question of the machinery of Government. We have not the organisation of Government to deal with provincial questions.

Mr. Deputy Speaker

Order. I would draw to the attention of the House the fact that many hon. Members have been waiting throughout the debate in the hope of having an opportunity to put their point of view.

Mr. Heseltine

I will not respond to the right hon. Member for Sunderland, North, but I must say that the idea of taking this matter out of party politics by going back to Hugh Dalton stretches one's imagination beyond its capabilities. In the latter half of the 1960s the Labour Government introduced a range of continuing programmes designed to help the regions. We can accept that and do not need to dispute it.

When the present Government came into office in 1970 we extended with different emphasis certain of the grants for certain specific regions. The emphasis was changed as was the nature of support. There were three things we did. On 27th October we published a White Paper on investment incentives; we changed the system from grants to allowances; we announced on 18th February our policy on new special development areas. In other words, the programme was continued. It is unthinkable that anyone seriously should suggest that either the present Government or the Labour Government do not care, or that we are trying to get rid of development areas. The sooner we can get rid of that idea the better, since it is irrelevant and completely inaccurate.

The hon. Member for Ilkeston made a number of points about his own constituency, which I shall be delighted to deal with if he sends me the letter to which he referred. We are particularly concerned with the housing situation he mentioned and we are negotiating with the local authorities on the introduction of legislation to switch support to the areas he mentioned where old and rundown houses are in need of more support. We also have in mind the need for a further improvement grant campaign. The figures are impressive. Already in the year 1970 we have spent some £42 million on improvement grants through local authorities as opposed to £31 million in 1968; and on privately-owned houses £114½ million in 1970 as opposed to £83 million in 1968. We intend to put a great deal of Ministerial effort behind improvement grant schemes. We are having a massive campaign to help improve these figures. We believe that it is important to try to save and reinforce the houses as well as to rebuild and replace them.

My hon. Friend the Member for the Cities of London and Westminster brought the debate back to the central argument which relates to the task of industry. He mentioned the importance of the economy. I do not wish to comment on what he said about the Budget; I am sure that his remarks will reach ears other than mine. I hope that he has been heartened by what I have had to say about housing, about the roads programme and our attitude to derelict land.

When I listened to the speech of the hon. Member for Fife, West (Mr. William Hamilton) I wondered whether he was genuinely in the House trying to solve the problems of his constituency, or whether he was trying to analyse the problems in that part of Scotland, or whether he was trying to make a positive contribution in bringing the necessary help to certain areas. I wondered whether his real interest was to advocate narrow party points, to create the maximum degree of uncertainty, to raise doubts and difficulties where they may not exist, with the major result of doing a disservice to his constituency.

I would ask the hon. Member whether he would be better employed trying to explain to some of his constituents—who might be taking a fairly liberal view on strike action, or who are bidding-up the wage rates with the consequent effect on prices and employment possibilities—what are the consequences of their actions to this country, as opposed to his going on endlessly in this House trying to cause dissension and division when that is the last thing that will solve our problems.

Mr. William Hamilton

Does the hon. Gentleman dispute any single statistic I gave in the course of my speech? Does he not understand that the workers in my constituency whom he has just chastised are among the lowest-paid in the United Kingdom?

Mr. Heseltine

I said nothing about the statistics he used. We all know the use that can be made of statistics. What I am questioning is whether he serves the best interests of his constituents by his negative and nebulous approach to every policy put forward on this side of the House.

The hon. Member for Chesterfield in intervening on behalf of Her Majesty's Opposition made play of the unemployment figures. There was a certain amount of righteous indignation in his remarks, but I wonder whether he realised the full implications of what he said. He was saying that the position in terms of unemployment relative to the country as a whole was getting better under the previous Labour Administration. That was his general point. However, he failed to point out that this position had been brought about because the level of unemployment in the country as a whole had dramatically worsened under the Labour Government. The figures are clear. To take the unemployment figures before 1965 we find that the combined Scotland, Wales and Northern Ireland percentage was 4.4, whereas the national unemployment percentage in Britain was 1.6. If we move to February, 1971, we find that the unemployment position in Britain has deteriorated from 1.6 per cent. to 2.7 per cent., but that the combined position for the outlying regions has deteriorated from 4.4 per cent. to 4.7 per cent. So a major switch has come about, not because of a dramatic improvement in the outlying regions but because of the worsening situation in the country at large, and that is a situation which has already come to be appreciated.

There is a wide measure of agreement about the need for policy in the development areas. There is a need for support in those areas, and there is a total comprehension of the real genuine human hardship, and the opportunities which exist are appreciated as much by my right hon. and hon. Friends as right hon. and hon. Members on the benches opposite.

We all know the historical economic phenomenon which brought about the present situation in the development areas. Recent years have seen the decline of the traditional industries like coal, shipbuilding, cotton and steel which had brought prosperity to those areas. The difficult situation has been aggravated by the flight from agriculture following the introduction of additional mechanisation. Everyone in this House understands and cares. That is the first fact that we have to take on board if we are to get any successful solution. Those hon. Members opposite who consistently pretend that they have a monopoly of conscience do themselves a disservice and make no contribution.

All Governments pursue policies which they consider to be likely to help towards the solution of the problems. I have already dealt with the policies which were pursued in the 1960s. There was the choice of making industrial and economic contributions or making environmental contributions with special emphasis on infrastructure.

This Government inherited a gravely deteriorating economic situation from the previous Administration. We have determined our approach, and we are prepared to justify it. We have said what we are trying to do for the regions and why we believe that our policies have a lasting contribution to make. The policies of the last Administration resulted in high wage inflation, industrial uncertainty, the loss of markets due to rising prices and an extremely sluggish domestic economy. Our approach is to deal with the first of the problems, which is the very rapid cost-push inflation, in the way that we have made clear. We have said that we will concentrate the emphasis on specific aid where it is needed. Increased grants will be given to firms which are prepared to move, and we have created additional special development areas. The emphasis is to be on profitability. The companies that we want in the regions are the profitable ones which are likely to stay there and expand and which are likely to have profits which they can use to create further investment in the regions once they are there.

I am sure that hon. Members will not expect me to try to deal with the Budget strategy which my right hon. Friend the Chanceller of the Exchequer will produce.

On the question of infrastructure, there will be major Government initiatives to change the housing policy and to bring help where it is required. We shall push the improvement grants. We shall operate the primary school programme already announced, and the trunk road programme will continue at an expanding rate. In partnership with the local authorities, we are taking the derelict land programme extremely seriously. Finally, the creation of the Department of the Environment and the Department of Trade and Industry represents a major administrative initiative. There is to be a continuing review of the help which Government Departments can give in the regions, and this will ensure that, whenever future policies are announced, the full regional implications will have been taken into account.

Our policies are relevant and carefully designed. I believe that they justify my asking the House to reject this ridiculous and narrow party Motion.

The Clerk at the Table informed the House of the unavoidable absence of Mr. SPEAKER and The CHAIRMAN OF WAYS AND MEANS.

Whereupon Miss HARVIE ANDERSON, The DEPUTY CHAIRMAN OF WAYS AND MEANS, took the Chair as DEPUTY SPEAKER, pursuant to the Standing Order.

3.3 p.m.

Mr. Edmund Dell (Birkenhead)

My original intention was to try to make a speech about the present situation in the Merseyside development area and the effect that will be had there as a result of the creation of special development areas in other areas but not in Merseyside. However, what the Under-Secretary of State has said requires some reply.

The hon. Gentleman has laboured under one difficulty. Unlike his right hon. Friends the Secretary of State and the Chancellor of the Exchequer in earlier debates in which regional policy was the theme, the hon. Gentleman has had no news to announce. He has been forced to repeat what his right hon. Friend the Secretary of State is evidently saying today at a political conference in Newcastle. Nothing that the hon. Gentleman has said today gets away from the fact revealed in the Public Expenditure White Paper, which is that expenditure on roads over the next few years will be lower than that projected in the Labour Government's last Public Expenditure White Paper. Nothing that the Minister has said denies that. It is no use the hon. Gentleman saying that this is what we projected and not what we did. Governments make forward projections. The hon. Gentleman's projections are lower. The Government cannot live at once on the thesis that they are cutting the rate of increase of public expenditure but that each individual item of public expenditure will be increased.

The great news produced by the hon. Gentleman today, duplicating what his right hon. Friend is saying in Newcastle, in an attempt to answer my hon. Friend the Member for Gateshead, West (Mr. Horam), who made an excellent speech, does not help his case at all.

The Minister went on to make the suggestion, which is, unfortunately, all too customary among Ministers of this Government lacking any policy of substance, that hon. Members on this side of the House, by referring to the actual situation as they experience it in the development areas, create a lack of confidence, as though my hon. Friends' speeches describing the facts in the development areas are likely to create a lack of confidence, compared with the actions and the effects of those actions of this Government. One has to mention the use of that kind of argument, but I do not think that I need speak of it further as it is so obviously nonsense.

The Minister at certain stages in his speech—when he was not concerned to make partisan attacks on my hon. Friends —said that it was important to have a bipartisan approach to the problem. The hon. Gentleman said that it was a longterm problem. Indeed, it is. Our difficulty is precisely that it is a problem deeply embedded in the economic structure of this country. That is the nature of the problem. It is a situation which it is difficult to change. It requires strenuous measures over a long period if there is to be any hope of changing it.

The bipartisanship of this Government was shown when they destroyed every major measure introduced by the Labour Government in an attempt to deal with this deep-seated problem. The investment grant system has gone. The regional employment premium is going. There is a projected increase in Local Employment Act expenditure. This is another increase in expenditure without an increase. As was admitted by the Financial Secretary to the Treasury when we discussed these matters in the debate on public expenditure, the rate of increase of Local Employment Act expenditure under this Government will be less than under the Labour Government. But even there, where they claim, with greater selectivity, to be improving the situation, they are doing less than we were doing. It is this absence of a bipartisan approach which is producing the disastrous effects in the development areas and which creates concern on this side of the House.

I should now like to comment on one point which has been mentioned by my hon. Friend the Member for Ilkeston (Mr. Raymond Fletcher) and by the Minister. It is an important point, but I wish to differ, at any rate to some extent, from the Minister. The hon. Gentleman said that this is a problem which the Chancellor of the Exchequer will settle on 30th March. Undoubtedly, if the Chancellor on 30th March says something encouraging to economic expansion in this country, that will be beneficial to the development areas. But the whole nature of the problem is that what is done centrally on a national basis does not rescue the development areas from their long-term situation of relative disadvantage.

The Labour Government's measures in this sphere, despite the national policy which the then Chancellor of the Exchequer had to conduct to achieve this great transfer of resources into the balance of payments and despite the rapid rundown which was going on in the traditional industries achieved a relative improvement in the development areas, to which my hon. Friend the Member for Chesterfield (Mr. Varley) referred.

The Under-Secretary said that that took place when there was a higher general level of unemployment. It did. But that higher general level of unemployment was due to two main factors. The first was that my right hon. Friend the then Chancellor, in order to transfer resources into the balance of payments, had to keep home demand down, and that had an effect on unemployment. The second was that there were certain changes in the social security and redundancy payments arrangements which had an effect on the unemployment level.

Therefore, despite that increase in the general level of unemployment, it was important and significant that this relative improvement took place. Nevertheless, for a Minister of this Government to talk about the level of unemployment is an extraordinary act of bravado. The level of unemployment in my constituency is substantially higher than it was when the Labour Government went out of office, and the prospects are that it will become even higher—subject to what the Chancellor does on 30th March. I hope that he takes measures to deal with it. The general situation in respect of unemployment in the development areas is not something that the Government can boast about.

The Minister said that the great problem was how to increase the level of investment. Of course that is the great problem, first, because it affects the national interest and, secondly, because only by increasing the level of investment shall we be able to get enough mobile industry to move into the development areas. It is a fundamental problem—but what are the Government doing about it?

The hon. Member for the Cities of London and Westminster (Mr. Tugendhat) said that the one thing that the Government should do is to push up the level of shares on the stock market. That is a good idea; but I wonder why the level of shares on the stock market is low. Is it because investors on the Stock Exchange have great confidence in the Government? Is it an expression of the universal delight of investors at what the Government have done in the last nine months? If that is evidence of confidence created by this confidence-creating Government, they had better start thinking about the problems again. Everything that the Government have done has undermined confidence, with the effect that industrial investment programmes are being cut back or reassessed. We have the prospect of the first decline in investment for eight years.

What else have the Government done to create the prospect of higher investment? They have changed the investment grant system to a tax allowance system. I find their argument on this point rather odd. Sometimes a Government should have regard not just to the theories which fill their minds but to the practical effects that they are likely to have. There is no doubt that whatever may be the relative advantages of the investment grant system on the one hand and the tax allowance system on the other—and this is a theoretical question that we could discuss at some length—the one thing that is absolutely certain is that if investment incentive systems have any effect at all, to change from an investment grant system to a tax allowance system at this time is bound to have an adverse effect on investment, for precisely the reasons that hon. Members opposite have been talking about. The proportion of profits to gross national income has fallen.

The hon. Member for the Cities of London and Westminster suggested that despite that fact, it was sensible to change from a system of grants to a system related to profits. What other effect do the Government expect such a change to have? Investment will obviously be adversely affected.

Some hon. Members opposite say, "At any rate, in this way we shall get better investment, higher quality investment, and competitive investment." But the practical situation is very different from the theoretical imaginings of hon. Members opposite. The investments that are being cut back are the sort of investments that we need if we are ever to increase our rate of growth. When I intervened in his speech, the hon. Member for the Cities of London and Westminster said that the chemical industries in America and Germany were also cutting back. This country needs investment to be made profitablex2014;artifically, if necnecessary—so that we can command a higher proportion of world markets. That was, in fact, part of the thinking behind the investment grant system. But now to throw up one's hands and say "We must have more investment" and yet to have taken the precise steps that were likely to cut investment seems an extraordinary policy to pursue.

One of the troubles with this Government is that one never knows what they are saying, mainly because every now and then their theories come up against facts. They say that grants are bad, but then they come up against the facts and grants are, in fact, paid. For example, Northern Ireland is, generally speaking, in an unfortunate position, but in this respect it is in a fortunate one, It has its own Government at Stormont, and they were confronted with the fact that the investment grant system was being abolished here. They then introduced investment grants on plant and machinery in Northern Ireland, presumably with the consent of the Westminster Government. Apparently investment grants are regarded as being sensible for attracting good quality investment in Northern Ireland but are not sensible for attracting it in the rest of Britain. What is the sense in this?

Mr. Roy Bradford, Minister of Commerce, made an announcement on 16th February which the Financial Times reported the following day. Speaking, evidently, with great joy in his heart, he was reported as having said: At the moment investment grants were abolished in the rest of the United Kingdom, yet in Northern Ireland for plant and machinery they could offer a minimum of 25 per cent. up to a maximum of 40 per cent. They could not look on this in isolation from the tax allowances. There was no evidence to show that the total package they could offer as incentive was less attractive than that offered south of the border, that is, the Irish Republic. Northern Ireland's differential had been maintained and they were much better off than other areas of the U.K. Those are not Mr. Bradford's actual words but the Financial Times's summary of them. We abolished investment grants but they are maintaining them. Apparently investment grants produce bad quality investment in this country but good quality investment in Northern Ireland.

We must not forget that we are taking this step at a time not only when investment grants have been shown to be suitable in Northern Ireland but when the grant form of aid is being introduced on the continent of Europe. We are, therefore, putting ourselves in an uncompetitive position compared with many other European nations.

My remarks in the public expenditure debate have not been contested, so I will not repeat them. However, the subsequent comments of Ministers on the state of affairs revealed by the public expenditure White Paper have been both extraordinary and contradictory. Anything politically convenient has been said, even if it is directly contrary to what the Treasury says officially and what was stated in the White Paper.

Ministers at least have the protection in making these extraordinary statements —this is one consequence of the change from the grants system to the tax allowance system—that a great deal less information will in future be available. Presumably they will protect themselves by saying that insufficient information is available to show the practical results.

Thus, when the Under-Secretary of State for Trade and Industry says, "The cash flow into the Northern Region will be broadly the same as it was before," who will know whether he is right? The figures will not be available. Obviously, the total figures will be less, and no doubt that will enable him to say, "I cannot say whether or not hon. Gentlemen opposite were right because, owing to the change of system, we cannot produce the figures retrospectively."

I said earlier that I would speak about Merseyside, but because I have spent so much time answering the remarks of the Under-Secretary, my comments on this subject must be brief.

With the great courage normally required by back benchers when attacking their own Government, the hon. Member for Liverpool, Wavertree (Mr. Tilney), in an eloquent speech, said that all sorts of things should be done about the Mersey Tunnel, which the Minister has already said cannot be done. The Government will not take over the tunnel, nor will they give a grant. They think that it will be profitable, though at what level of tolls it will be profitable we have yet to see.

One Minister wrote to tell me that even at these higher levels of toll the tunnel would be a cheaper method of crossing the river than would driving 30 miles upstream to cross the river at the nearest bridge and then returning to Liverpool. If one is travelling from my constituency to Liverpool, that is true, and I am interested to find that this is some comfort to the Government. It is of no comfort to my constituents. They have been told that they are to go into a new Merseyside county council area, yet they will be divided from the larger part of that area by tunnels for the use of which they will have to pay tolls.

My constituents feel that as the Government have promised additional infrastructure expenditure to compensate for reductions in direct expenditure on assistance to industry, one method that could be employed would be to give assistance with the tunnels. The only way of crossing the Mersey from my constituency that does not cost money is to swim—a curious situation in a proposed Merseyside county council area.

The Government have announced the creation of certain special development areas but have indicated that Merseyside would not have any of them. That means that at a time of rising unemployment and increasing redundancies Merseyside will be at a disadvantage compared with other development areas. I contrast this fact with the Conservative Party's statement at the General Election that Merseyside would remain a development area. Formally, that promise has been carried out. Merseyside remains a development area—but a downgraded development area. It is a curious way of fulfilling that promise to reduce the level of assistance to the Merseyside development area and to give a rather higher level of assistance over very large parts of the country. The effect can only be to divert to other development areas industry that might have come to Merseyside, and this will greatly damage us at a time when we need additional industry and employment.

I am afraid that Government policies in this sphere will have a more serious effect on Merseyside than on other development areas. For these reasons this Motion commands my support and, I am certain, that of my hon. Friends.

3.24 p.m.

Mr. John Spence (Sheffield, Heeley)

It has been said several times today that the problem of regional development has been with us for some considerable time —in other words, that it is an old chestnut —but not only in this debate but in several recent debates we seem to have used the problem as an opportunity to wallow in regional self-pity, and to try to pass off our regional responsibilities to the Government of the day, whatever their political complexion, without fairly and squarely asking ourselves what we in the regions can do by way of self-help in order to avoid the worst impact of regional unemployment and difficulty and, at the same time, make the very best of the situation within the framework of any particular Government's regional policy.

I believe—and in this belief I am supported by the findings of some recent reports commissioned by local authorities —that the regions themselves have a major part to play within the framework of Government policy. My region is the Yorkshire and Humberside Economic Development Area, within which there is the West Riding Industrial Development Association, consisting of 55 local authorities. My references will be to the activities within the area and, on occasion, to the activities of the West Riding Industrial Association.

The regions themselves can, first, recruit the full force of public opinion in aid of the objectives of the regional development authorities. Too often the regional authority is endeavouring to act against the interests and opinions of the public—or, perhaps I should say, to act contrary to public opinion instead of recruiting it in its aid.

A recent example of this is the recommendations of the Roskill Commission in respect of Cublington and Foulness. It is extraordinary that Roskill is now imposing a decision: from the public opinion point of view, Roskill's decisions are being imposed, whereas I believe that it will be necessary to get public opinion on our side if Commissions like the Roskill Commission are to produce any good.

It is extraordinary, too, that Roskill was not commissioned to examine regional policy considerations in relation to the recommendations it made. This is all the more remarkable when it is remembered that in fixing the site of a major airport we are speaking about 100,000 jobs, not only in relation to the airport itself but in relation to its future development and the fringe industries.

Many other people represent areas which have claims in regard to the siting of the airport, but I will emphasise something from the point of view of public opinion. There is a strong public feeling at Thorne in the Goole area of South Yorkshire in favour of an airport at Thorne Waste. This matter is well worth examining with a view to seeing what effect the siting of an airport could have on the whole economy of not only South Yorkshire but the whole eastern seaboard.

The next thing that the regions can do for themselves is to go out after business. Sheffield is the very first city to have at the Royal Exchange in the City of London an exhibition of all its wares, its social background, the major engineering works which have been undertaken in the city, its housing development, and so on. It has been a most successful exhibition. I was instrumental in bringing a mini-part of it to the House last evening which was visited by many hon. Members.

This is the first time that any city has come as a city to the City of London to exhibit not only its manufaucturing capacity but also itself as a place in which to live. We showed all the aspects of our city—its rejuvenated appearance, the recent major civil engineering works, its housing amenities, and its industrial development opportunities. Other cities would do well to follow Sheffield's lead.

Still dealing with the Yorkshire and Humberside area, I want to mention a most important report which has received very little publicity and which supports the comment which an hon. Member has made; namely, that the problem has been with us for many years and it will need a change of attitude if we are ever to solve it. The report is of a study conducted by McKinsey & Co. Ltd., which is of international repute, in relation to the City of Hull, which is in the Yorkshire and Humberside area. The report is entitled "Stimulating Economic Development."

The significance of this report is that it shows how little is being done by the local development authority despite the fact that it has got very great power and opportunity within the confines of Government policy. The report says this about Hull: The picture is bleak, revealing a stagnant local economy. Firms are closing down or leaving the area at the rate of about 25 a year, and 124 employers left the area between 1963 and 1968. I hope that it will not be wasted on hon. Members opposite that the period 1963–68, when 124 firms left Hull, was also the period during which hon. Members opposite were in power.

The consequences are developed in the report as follows: These economic 'facts of life', in our Judgment, lead to an inescapable conclusion for the citizens of the City—and, therefore, their Council and officers: the commercial and industrial foundation of Hull are being eroded. This is the situation in which the city finds itself.

The report goes on to say that it is not good enough for the city to blame the Government. It then outlines the weaknesses at local level which hinder and prevent commercial and industrial development in that city. This is repeated in the development areas all over the country. The report gives as an example, first, The lack of a positive and dynamic approach by the Corporation towards commerce and industry. It goes on to refer to the Overlapping responsibilities for economic development and of the Fragmented responsibility for managing Corporation land and property. Each one of these headings is examined and developed in an intelligent and scholastic way. Time is too short for me to go into them in detail, but I am sure hon. Members will wish to have a copy of the report, to study it, and take it to heart, for there is nothing party political in what I am saying. We are genuinely interested in the solution of our economic problem, and I believe that it is only a change of heart and of attitude which will bring it about.

We have had the problem and the recommendations, and now we have the solution. The solution, according to the report, is local self-help. I emphasise "local self-help." This is what one can do in a region for oneself within the ambit of Government policy. The local self-help to which the report refers is to create a directorate for commerce, industry and property; secondly, to do something completely new—to involve local industrialists directly in the Corporation's efforts. It is reported in our Sheffield newspaper today that the industrial development officer for Barnsley attacks the proposals which are being made in relation to Barnsley's development. According to the newspaper he went on to say: I … suggest that instead of concentrating so much on development status which we are unlikely to get, we might be better employed arranging trade delegations from European contries and forging links with their industry. This is another example from Yorkshire of industrial self-help.

The third point is implementation. No plan is really worth anything unless there is a section devoted to implementation and unless that implementation is studied. In this report—again in the American style; I have seen many such things in North America, and they all follow the same pattern, being very useful, practical and much appreciatedߞin the section on implementation the various steps are set out. The first thing that must be done is that there must be a reorganisation committee which should appoint a five-member sub-committee to advertise the position and screen candidates, subject to the approval of the Finance and Establishment Committee"— that is, for the appointment of a director— The sub-committee, with assistance from the consultants, should request some five to seven leading industrial figures to form the Industrial Advisory Group"— that is, people from private industry and from industry in the city.

It goes on: The sub-committee and the Reorganisation Committee should make their recommendations to the Council. Fourth, On taking office, the Director and the Chief Land and Property Officer should set up an officers' working party to complete detailed organisation planning. It goes on to develop that. In other words, they should really integrate themselves with local industry and with those who can make it their business to exploit and advertise the amenities of the city.

This sort of thing can be done not only in Hull and in Barnsley—the quotation I made a minute ago shows how thinking is going there—but in many other cities and towns in our development areas. We have responsibilities of our own in the regions. As I said, it is not good enough to try to shuffle those responsibilities off on to the Government.

I truly believe that the organs within the regions now are not fulfilling their responsibilities. The report to which I have referred—there are one or two others which one could equally well cite —clearly shows that the regions are not exploiting the resources which they have and they are not properly deploying their own forces in their own self-interest. Until they do, we shall not get the best out of the Government assistance which is available.

I ask my hon. Friends in the Department to set down criteria by which we can judge the achievement of local regional industrial associations. We should set down some sort of blueprint setting the minimum of self-help which we can expect from them. By admonition, by cajoling, and sometimes, perhaps, by a little use of the stick, we may get them to live up to those minimum standards.

We in the regions are not, I believe, doing anything like as much as we ought to be doing for ourselves. I commend that report to hon. Members. I hope that they will read it, and the other reports which can go with it. For I believe sincerely that it is effrontery if hon. Members come to the House from the regions and lay all the blame on the Government of the day irrespective of their colour. Self-help is open to us in the regions, and the sooner we grasp it the better; but that requires a change of attitude.

3.38 p.m.

Mr. W. E. Garrett (Wallsend)

I had hoped to hear comment from Ministers on one subject which has been touched on by my hon. Friend the Member for Gateshead, West (Mr. Horam) and by the hon. Member for Liverpool, Waver-tree (Mr. Tilney), who unfortunately is not in his place at the moment. I refer to the question of moving Government Departments into the regions. This has always been a successful policy of successive Governments. Thousands of civil servants have moved out of the Metropolitan area into the various regions. They settle there. They are happy. It is a success story, and I should have liked to hear a re-emphasis of it this afternoon from the Government Front Bench.

I hope that the Under-Secretary of State will take note of this point, for there is still ample space in the provinces for well-established Government Departments. The regions have had a fair share so far. I give credit to the Tory Administrations in the immediate post-war period from 1951, and up to 1964, for initiating this movement. Unfortunately, the Land Commission in Newcastle closed, so we lost a few hundred jobs. Would the Minister consider pressing upon his colleagues the use of that office space for another Government Department?

I was disappointed by the lack of reaction on the Conservative benches to the decision to abolish the rural development boards. Two had been set up, and now they have gone. The North Pennine Rural Development Board had a successful beginning, and in its way would have made a contribution to regional development. It is possible that in two or three years' time the Minister of Agriculture, Fisheries and Food may be able to influence his colleagues to have a change of heart on this matter.

We have talked a lot today about the development of roads in the regions. Will the hon. Gentleman at least press upon his colleagues the need to develop the Al at Gosforth in my constituency? I have been pressing this for several years, with no joy. It is one of the bottlenecks in the North-East. If the hon. Gentleman can only do something about that the debate will have been worth while.

3.41 p.m.

Mr. Geoffrey Johnson Smith (East Grinstead)

I can well understand why the hon. Member for Wallsend (Mr. Garrett) makes a plea like the one with which he concluded his speech. Three or four by-passes are much needed in my constituency, and I feel like the Queen of England who said that when she died she would be found to have the word "Calais" imprinted on her heart. I have "By-pass" imprinted on mine. We see great results on the roads from the policies of past Governments in the North-East. In the South-East we are threatened by congestion.

I am not crying for the moon because I know that I will not get it from this Government or any other. Many other areas have greater priority. It is only too easy to assume that the whole of the South-East is a sort of fatted calf, parts of which can be sacrificed to help make improvements in other less fortunate areas. But in some parts of the South-East we already face unemployment problems. I am thinking of the North-East coast of Kent. We already bear a higher cost for housing, and our road congestion is probably the worst in the country. Although there is no shortage of employment in the rest of the area, I hope that it will be understood by Labour hon. Members representing constituencies which I fully admit have very serious unemployment levels, that it does not make sense to urge any Government to take steps which would weaken the power of well-established companies in the South-East to compete not only in our internal markets but also abroad, by asking them to bear a disproportionate share of company taxation. I think that many hon. Members have already got this point.

The truth is that the prosperity of the South-East helps other regions as well. That is why I so much agree with other hon. Members that the problem must be looked at overall, in the national context. It is vital to the national prosperity that the South-East should continue to remain prosperous, because it has to cope with the challenge offered by the Common Market. It is a natural jumping-off ground for the Common Market, and it has a considerable burden in the shape of the growth of population expected in the area. With that comes the cost of providing better roads, sewerage and so on, all the things that are essential if an area is to develop harmoniously.

I would particularly draw to the attention of my hon. Friend the Under-Secretary of State the Report of the South-East Joint Planning Team, the strategic plan for the South-East. It envisages a considerable growth of population over the next 20 years and considerable industrial and commercial development to meet the needs of the area and the nation. If those needs are to be met, the Government will have to review their I.D.C. system. I make no complaint about the system as a whole. It is important that industry should be induced to go to the areas in the North which suffer from unemployment, which restricts industrial development in the South-East, but I would argue for a rather more flexible approach to the granting of certificates for industrial development in the South-East. Certainly, if we are to contemplate the growth envisaged in the Strategic Plan for the South-East there will have to be a radical review of the I.D.C. system.

When my right hon. Friends look at the Strategic Plan for the South-East, I ask them to give close attention to the cost implications of the plan. In the opinion of many of my friends in my constituency who have looked closely at the plan, it is extraordinarily imprecise about the cost implications. It is no good being asked to take seriously a plan which may on closer inspection turn out to be one which we cannot afford. To be fair, the joint planning team admitted its difficulties. I will take roads as an example of how imprecise the team was on the question of cost implications. On page 49, in paragraph 6, the report says, referring to roads: Provision of capacity has lagged behind demand On page 55, still on roads: Driving conditions in 1981 are not expected to be unsatisfactory, provided the scale of investment invisaged by the team is achieved That is begging a large question. As the report admits, already the development of the cities has outgrown the road pattern and in some the situation verges on the chaotic. To develop the area further, as proposed by the plan, in advance of solving this problem, or making a better stab at it, would be imprudent, especially since, as far as we can see, there is no apparent possibility of improvement to cure the present situation, let alone provide for a future demand, having regard to the limited amount of money available.

I emphasise to my hon. Friend the need to ensure that competitive profitable enterprise in the South-East is sustained. It is only out of the wealth produced by industry already there that we shall ever have any hope of taking advantage of the situation that is being developed in the South-East which would enable us to cope with the challenge which I mentioned at the beginning of my speech. I could give other examples, but I know one or two hon. Members want to speak, and I must give them time.

I turn to a second point on the Strategic Plan which should concern my right hon. Friend. One of the advantages of the new Department of the Environment, because it has the right administrative structure to do it, is that it will concern itself closely with the ways and means of phasing or controlling under planning legislation the development proposed in the plan. It has often happened in the past that in an area scheduled for development private house builders have moved in—I make no complaint of this—and then there arises the cost of putting in the infrastructure, the provision of school places, widening roads, extension of sewerage works, all of which places a considerable burden on local authorities. Frequently the development gets out of phase, and industry comes almost last.

Unless development is phased, I fear that many local councils will find it difficult to meet the public service needs of a growing community. I know that it is argued that new development brings with it new money, but the rateable value of a new three-bedroomed house is perhaps £100, and if a family with one child moved in about £300 is added in respect of education. This is one reason why I bring this point to the attention of my hon. Friend.

To sum up, although I realise the difficulties, I ask the Government to adopt as freely as they possibly can a less rigid i.d.c. policy. There are some highly technical electronics firms, for example, which need a modest expansion but find it difficult to move in the South-East. I therefore ask the Government to consider as soon as possible adopting a less rigid i.d.c. policy for the highly technological firms which would allow profitable commercial and industrial development to take place.

Secondly, I ask the Government carefully to study the cost implications of the plan. Thirdly, I hope that they will also bear in mind the need to co-ordinate the phasing of planning applications to avoid undue financial strain upon the local authorities.

3.50 p.m.

Mr. George Wallace (Norwich, North)

I am glad to have the opportunity of speaking for one of the important areas of England which has been completely overlooked today, namely, East Anglia. We have heard a great deal about Scotland, South Wales, the South-East, the rich Midlands, and so on, but seldom do we get any reference to East Anglia and seldom do we get assistance.

I speak today because I am extremely worried and concerned about present developments in the area. I am not the only one who is worried. Many others, on all sides of opinion in the region, are also very concerned. In the Norwich region alone, there has been a 50 per cent. increase in unemployment. What is also very worrying, and not generally known, is that there is great difficulty among undergraduates from our university, having gone through their courses and obtained their degrees, in obtaining suitable employment. In recent discussion with some of the university tutors, I have found them to be gravely concerned.

Not only is there increasing unemployment in the area, but a number of firms are closing down. One large firm of builders in Norwich has closed down because it was bought out by a large concern which itself "went west", and the receiver has ordered that the firm should go out of business. Three hundred good workers are out of work as a result. There are many other examples.

Consequently, I put down a number of probing Written Questions to various Ministers to obtain information, not only for myself, but for other people in all quarters who are interested and involved in the problem. Yesterday, I received what must have been the most classic answer that any hon. Member could ever have received for the lack of information that it gave. I am glad that the Minister involved, whose name appears on the Question, is present.

I asked the Secretary of State for Trade and Industry

1. "(1) what plans are in hand or projected to increase the industrial potential of East Anglia and in particular North Norfolk;
2. (2) what steps are being taken to deal with the increasing unemployment in the Norwich and Norfolk area"

The classic answer was: The Government's economic policies are designed to provide a sound basis for industrial development. The area should benefit as these policies take effect."—[OFFICIAL REPORT, 11th March, 1971; Vol. 813, c. 167.] All I can say is that after nearly 12 months, the situation is now worse than it was before.

I am not saying that the former Labour Government did all that they should have done in this respect. I frankly admit it. It is said that they could have done more, and I entirely agree. Something was done, however. The region was divorced from the South-East and made into an economic planning region of its own. In addition, there was reasonable freedom in the granting of industrial development certificates. One can, therefore, say that something was done, although in my view we should have been classified as a grey area. But instead of the certain progress that was made under the Labour Government—I do not say that it was enough to satisfy me—the situation is now going backward instead of forward.

Self-help in all these affected areas is vitally important, as has already been mentioned. I can quote examples since in the city of Norwich there have been tremendous efforts by the city council in the past in attracting industry to the area, including one Government Department. At present because of the deteriorating situation consultants convened by the city council are now taking place with industrialists, including all the different party leaders, to see what they can do to help themselves. An even better example is referred to in yesterday's Press in relation to Kings Lynn in which a number of industrialists in the area are making a film in efforts to attract more industry to the area. This is a positive bit of self-help.

It is all very well to quote examples, but a great deal more needs to be done. What is needed in an area of low wages is industrial expansion to redress the balance. To quote the figures up to 30th October, which were given to me in a Written Answer, it would appear that the average wage in the United Kingdom is £28.05, in the South-East £29.05, and in East Anglia £25.90. It must be remembered that those figures cover a very large area.

My biggest problem is in trying to discover the average wage for Norfolk County itself, but I am unable to obtain statistics. Since East Anglia covers a wide area and includes some reasonably prosperous industrial areas, it is obvious that in some parts of Norfolk the average wage is extremely low. This is not necessarily because of the large number of farmworkers in the area. This point is often made, but it is neither accurate nor valid. In fact, my information is that there is a steady and continual drift away from the land. Industrial expansion within an area, particularly a low wage area, will help the wage problem by providing competition for labour. This competition can help to increase wages, but I admit that the trade union movement could do a great deal more to assist the lower paid worker in maintaining a national average wage or at least could concentrate a little more on the lower paid workers, although the Government's policy in the public sector does not help matters.

Another vital matter is the question of road communications. We need good road links from East Anglia to the Midlands and to the South-East. It is no good attracting industry to an area unless roads are adequate to meet need.

A point that worries me is the fact that there is a large redundancy among women workers in the area. One food firm has put off a lot of its women workers in the Yarmouth and Gorleston areas. In an area of low wages it is necessary for the woman in the home to go out to work because her husband's pay is insufficient. We hear a great deal about the basic wage, the average wage, and so on, but what counts for the woman in the home is her husband's take-home pay after deduction. This is why people like postmen and others have a great job to make ends meet on the basic take-home pay rather than the gross pay the husband earns. We must in future pay more attention to this matter.

I am the only Labour Member left in Norfolk, Suffolk and Cambridge—

It being Four o'clock, the debate stood adjourned.