NORTHERN REGION (EMPLOYMENT)

HC Deb 03 May 1971 vol 816 cc1101-40

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

8.15 p.m.

Mr. T. W. Urwin (Houghton-le-Spring)

Hon. Members will appreciate the extent of my pleasure at being called at this early hour to raise the subject which I have chosen for this Adjournment debate, which is the unemployment situation in the Northern Region, when hon. Members must frequently sit waiting patiently well into the night before being able to raise the subject of their choice.

Last Thursday the House of Commons dealt at length and objectively with the serious question of unemployment. It did so on a national basis. I may he forgiven for suggesting that the voice of the development areas was not heard to the extent that it might otherwise have been heard in the debate. I appreciate, in raising this issue from the point of view of the Northern Region, that the regional picture must inevitably be seen against a national background.

The Northern Region, in common with Wales and Scotland, is always worse hit in times of economic depression. Not unusually, therefore, when we look at the April unemployment figures we find that 72,300 people in the Northern Region are currently without jobs, including 4,906 aged 18, many of them tragically still looking for their first employment. The figures at present are 7.2 per cent. unemployed males and 2.3 per cent. unemployed females, giving an average for the region of 5.5 per cent., almost traditionally only marginally exceeded by Scotland, with a rate of 7.5 per cent.

If we look further into the figures we find that between January and April of this year there was an increase, seasonally adjusted, of about 6,000 people. This increase occurred at a time of the year when one normally expects to see an improvement. In other words, there has been a reversal of the normal trend.

If it had not been for the extremely mild winter through which we have just come, these figures would have been considerably swollen by the inclusion of 2,000 to 3,000 construction workers. Also in the Government's favour is the fact that they are not contending with the dramatic job losses in the coal-mining industry, losses which particularly bedevilled the distribution of industry policies pursued by the Labour Government.

I think of how, between 1964 and 1970, 50,000 jobs were lost in the Northern Region as a result of the recession in the coal-mining industry. When these figures are borne in mind, one begins to get a measure of the difficult problem with which the Labour Government were confronted.

I recall the promise which was made during the last election campaign by the Conservative Party to create a united nation in Britain. It is not for me in this debate to talk at length about the sordid policies which have resulted in the payment of increased school meals and the action that has been taken over school milk—all to finance tax concessions for the rich.

However, I recall their promises in the context of the creation of what we have now, which is an even greater army of unemployed than we had when the Conservatives took office. The worst effects of this are clearly felt in the North and in the other development areas. This developing situation is due largely to the Government's failure to reflate the economy and to provide greater stimulus to industrial investment, which, is woefully lacking.

It is not surprising that there is a great deal of pessimism in the Northern Region, not only about the present but also about the future. This pessimism is felt not only by Labour politicians, but also by many Conservative representatives, especially those in local government. The pessimism is shared by many leading newspaper commentators and industrialists in the region.

I draw attention to the ever-increasing and alarming number of jobs being lost in the region. There is almost daily evidence of another closure or further redundancies as a result of reorganisation. I quote from the Sunday Sun of 25th April: Unions count roll of despair. The paper speaks of one of the blackest weeks ever in North's employment history with 4,000 more workers facing the prospect of joining dole queues. The same newspaper, in its leader column, says this: There can be no doubt that neither the Government's incomes policy nor its regional policy is working. Unless something is done very quickly we shall be in the heart of an economic blizzard by the end of the year. The last sentence heavily understates the position. More than 72,000 people in the Northern Region are already in the icy grip of unemployment, and there is the prospect that many more people will join them.

The assertion that regional policy is not working will not be opposed by many in the Northern Region. To a large extent the Government's unwilling- ness to continue operating the policies which were in train when they came to power is a major contributory factor to the decline in industrial activity in the North. Moreover, sporadic decisions made in advance of the completion of the review of regional policy cause not only confusion but also a diminution of confidence in the future of incentives related to industrial promotion, especially following the abolition of investment grants and the abandonment of regional employment premium by 1974.

I can call in aid no less a person than Mr. Campbell Adamson, Director-General of the C.B.I., a report of whose speech appears in the Newcastle Journal of 17th March of this year under the banner headline— The North-East: the point about a policy is to stick to it. Campbell Adamson rather succinctly made these points: Without certainty, business will have very little confidence in measures of regional policy. Without confidence, business will tend to disregard regional incentives when formulating long-range plans The frequent changes in the designation of development areas are bewildering. Areas are included, then excluded, then added again. The basic trouble now is that uncertainty has caused industrialists largely to discount the value of regional incentives. It has proved highly dangerous to rely upon the continuance of any particular incentive Those words of wisdom are fully borne out by the attitude of prospective industrial developers and especially measured in terms of the number of industrial development certificates and approvals since the end of June, 1970. This is the Government's only real yardstick to measure the extent of development and the only real weapon at the Government's disposal to control industrial development and to ensure that the development areas get their fair share of it.

I refer briefly to the comparison with the first half of 1970, when 13,900 new jobs were expected to arise as a result of I.D.C.s. Had this level of progress been maintained throughout the whole of 1970, we should have ended with a record year in the generation of new employment opportunities in the Northern Region. However, such was the uncertainty that only a meagre 4,400 new jobs were estimated to accrue in the second half of 1970.

The trend continues in 1971. The tempo of new job provision has not quickened appreciably. In the first quarter ending in March of this year only 2,720 new jobs are expected to arise. This is the lowest figure since 1964 when the Labour Government first began to give additional impetus to the problems of the development areas. This number represents a 24.8 per cent. decline over the same period of last year and is a staggering 50 per cent. less than the figure achieved in the same period in 1969.

Under the present policies, in totality 38,000 jobs are expected to accrue from I.D.C.s, compared with 42,700 jobs from I.D.C.s to the end of April, 1970. This represents an 11 per cent. reduction in gross and a 12.9 per cent. reduction in male jobs. Contrasted with the rapid erosion of existing jobs the present situation does not augur well for the future of the Northern Region.

What is clearly needed now in the Northern Region is a strengthening of the diversified industrial base bequeathed to the Tories by the Labour Government in June of last year. A great deal of progress has been made and the region ought not to be placed in jeopardy now as a result of the uncertainty which has been created.

I concede that the bestowal of special development area status to Tyneside and Wearside must be helpful, but S.D.A. incentives in themselves do not and cannot assist indigenous industry. It has been estimated that 83 per cent. of new jobs accruing in the region are now due to the extension of existing industry, the remaining 17 per cent. arising from incoming firms.

Even in an expanding economy the development areas must continue to rely heavily on financial incentives. Inevitably, unless the same economic plateau already attained by the more prosperous regions is reached by the Northern Region, it must benefit last from any such reflation. In these circumstances, and as the struggle to capture a decreasing amount of mobile industry intensifies between the development areas—now the intermediate areas—increasing emphasis must be placed upon the expansion of existing industries.

It is, therefore, in this context that I ask the Minister and the Government urgently to re-examine the regional policy. We have been told that no further changes are to be made following the sporadic announcements that we have had in the House, but I would remind the Under-Secretary of State that the Government ought not to continue to be inflexible in their approach to this matter. In a rapidly changing and possibly worsening situation there is an outstanding requirement to be continually looking at regional policy for refinements and improvements.

I would also remind the hon. Gentleman that in the last full year of the Labour Government the direct Government investment in the Northern Region was well in excess of £300 million. I urge him to consult his colleagues to ensure that the full amount of money continues to be invested on an annual basis in the Northern Region as occurred under the Labour Government, and, with a determined effort, to treat it on the most urgent basis; and to devise new methods of assistance to established industry on which we clearly have to rely so much in the future.

8.30 p.m.

Dame Irene Ward (Tynemouth)

Mr. Deputy Speaker, am I right in assuming that this Adjournment debate can continue until 10 o'clock?

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Yes, I think the hon. Lady is quite right.

Dame Irene Ward

That is all right. That gives me an opportunity to say something. I should not like to intervene in a debate, important though it is, which has been initiated by the Opposition, if we were restricted to half an hour. I congratulate the hon. Member for Houghton-le-Spring (Mr. Urwin) on having chosen this subject because we in the North feel that the situation requires very serious examination.

Before I raise one or two matters in which I am particularly interested and on which I have been fighting a battle for some time—I must say unsuccessfully—I wish to place on record the fact that I gladly support what was said by the hon. Member about money going into the area during the time of the Labour Administration, although, of course, a great deal of the work in the establishment of a regional policy originated with the Conservative Party. It is as well to have that on the record.

If essential money continues to be put into our region, we must have value for that money. What is so disturbing—and this is no fault of either Administration—is that the money that has been put into the region does not seem to have developed the region in providing full-time employment as we would all have wished. It should also be stated that unless we can get profitability from what is being done in the region, before long we shall not be able to have money which the Government can tax for the provision of development in our regions.

I missed the opening remarks of the hon. Member for Houghton-le-Spring, but it should be pointed out that a great deal of unemployment has been created in our region through numerous dismissals. I am not arguing for or against the one-man bus service because I do not know how efficient that service is, but we must take into account the fact that the introduction of the one-man bus service—with one man driving the bus, taking the fares and carrying the whole responsibility for running the bus—means that a large number of conductor and conductresses have been put out of work.

That is an example of the problems which must be faced. There is a great desire to have the highest possible standard of living, not only in my part of the country but generally, but the result of what has been done by the transport undertaking which is running our services has certainly not been to run the buses as well as they were run in the old days before the Transport Commission, or whatever it was on Tyneside, was taken over. In fact, the service is bad, and, as for making improvements in productivity, what has been done has made productivity less likely to improve, for the regularity of the services has been much impeded. Nevertheless, the fact remains, as I say, that the introduction of one-man buses has resulted in many men and women being put out of employment.

There are other decisions taken in the North-East which have had an impact on employment. A good many porters have been deliberately sacked by British Rail. I am very close to the men and women who work on the railways and I know what happens. I have lived there all my life, and I have been a Member of Parliament for 34 years, so I know a great deal about our railways and the men who work on them, many of them absolutely first-class individuals.

The Railways Board conducts its affairs on the basis that they must be run at a profit. We cannot go on running everything in this country at a loss because in that way our economy would collapse. It is a fact, nevertheless, that, in pursuit of that end, British Rail has sacked a good many men, with resulting inconvenience to passengers. Porters are now doing duties which they never had to do before, and hundreds of men in the Northern Region have been sacked

Mr. Urwin

I am most interested in the argument which the hon. Lady is developing. She has claimed credit for the Conservative Government for instituting a regional policy. That will be strongly refuted by us on this side, and, what is more, no Conservative Government did anything like as much for the Northern Region as Labour did both before 1964 and since. However, will the hon. Lady, having taken that credit for the Conservative Government, also lay the blame for the massive redundancies on the railways at the door of the Conservative Government who appointed Lord Beeching to do exactly that and denude the Northern Region of thousands and thousands of jobs?

Dame Irene Ward

I am taking up what the hon. Gentleman said, and I hope that he will be fair. I have been in the House for very much longer than he has, and I know—[Interruption.] Perhaps the hon. Member does not like it, but, fortunately, people in the North do. It is untrue to say that the regional policy was not developed by the Conservative Party. The instigator of it was Mr. Stanley Baldwin. In the time of high unemployment arising from the economic crisis after the Labour Government of 1929–31, Mr. Baldwin instituted his inquiries and, before the outbreak of the last war, our regional policy was started by the Conservative Government of the day.

I remind the hon. Gentleman of what is said on the plaque at the Team Valley Trading Estate and the Treforest Trading Estate in South Wales, the first two trading estates, and both started under Mr. Baldwin's aegis. Also, at the West Chirton Trading Estate in my constituency, there is a plaque which shows that International Formica, a very important industry in our part of the country, was begun before the outbreak of the Second World War. Therefore, it is completely untrue to say that it was not the Conservative Party's idea, and I resent it.

The present Lord Chancellor, my noble Friend, Lord Hailsham, went north at the time of the then Conservative Government and set in motion a much improved system of regional development. We are both realistic and intelligent people in the North of England, and we follow what happens. It is ludicrous for the Opposition to refute what the Conservative Party did, and it is not right to say what has been said.

Having got that off my chest, I return to British Rail. The sacking of porters was a decision not of Lord Beeching but of the present British Railways Board. I take great exception to this. We have a very good south-north and north-south service, but the only people in whom the Board is interested are the business community. It has no thought for the elderly, those who have had operations, or women travelling with children. One cannot get a porter for love or money unless one is very lucky. Some very nice police officers at Newcastle Central found me a porter the other day, but there are not enough porters to do the job. Talking to them, one finds that porters have been sacked or taken off to do jobs that they never had to do in the past. This creates more and more unemployment.

There is a similar situation in the service industry. Hotels have reduced their staff to an absolute minimum, partly because of S.E.T. There is very good and dedicated service in many hotels, but the employees are run off their feet. It is very difficult for hotels which hope to attract the tourist trade, because they have had to sack so many workers as they cannot make ends meet. Exactly the same thing is found in shops, where the staff have to work—and by Jove they do!—twice as hard as they ever did. The shops cannot afford to keep the same number of staff as they had in the past. Therefore, when we are discussing these matters we must remember that other factors arising out of Labour Party policy have had their effect on employment.

I have kept on saying, and I repeat, that my idea is to have a fair day's work for a fair day's pay, and then if there is a profit in the big industries that we have on the North-East Coast, it is equally fair that those who are part of the labour force should share in that profitability. But that is not the Opposition's approach. They never say anything like that. I do not know whether the hon. Gentleman has any news about what has happened on the Tyne, where there was a strike of fitters.

Mr. Urwin

They go back to work tomorrow.

Dame Irene Ward

They may be going back tomorrow. I certainly hope so. Swan Hunter is a very good firm which have been losing on the ships it has been building. Certainly its balance sheet did not give much cause for comfort. In my division they closed down the ship-repairing yard, with consequent loss of employment for men from both sides of the river. I am glad to say that the hon. Member for South Shields (Mr. Blenkinsop) and I fought very hard, and managed to get the old ferry restarted, and a new ferry is being built.

The workers' representatives who have been arguing with the directors of Swan Hunter's said that they would not go back even if it meant 11,000 men being out of work. It is about time we had a Measure such as the Industrial Relations Bill. I am in very good contact with people—not necessarily voters of mine, but people who talk to me. I know what they think about 600 men saying they would prefer to close the yard, thus throwing 11,000 men out of work than compromise.

I only wish that hon. Members opposite, as well as some of my own hon. Friends, would argue the realities. For instance, I believe that it is regrettable that when firms make good profits they do not at once give bonuses to the workers who have helped to make those profits. I could say a great deal about industrial relations and what I think is good management for good workers. But nothing like that is ever said by the Opposition.

All hon. Members opposite do is take credit for things they have never done, and deprive us of the credit for anything that the Conservative Party does.

Again, voluntary absenteeism loses money, not only for the firm concerned but for the country; that might not interest hon. Members opposite, but it should interest those who work. To ensure a good return for wages, so keeping us alive in a competitive world, would be very much better, not only for the country's economy but for the men's standard of living, but nothing like that ever emerges from the Opposition.

Hon. Members opposite speak of all the jobs they claim to have created, but I can only say that unemployment on Tyneside and in Sunderland is higher than it ever was in the previous Conservative era. We had begun to make some progress, and the trading estates had been built up magnificently. I was only too delighted when the Labour Government went on helping in the regions, but the fact is that, at the end of their time, with all the money that they spent, unemployment had doubled. I do not understand how that can be very well received on either side.

It is very much better for the regions for us to talk realistically, and to try to explain in no uncertain terms that there would be a great deal of support for increased wages if we were to get a fair day's work for those wages, and a reduction in voluntary absenteeism.

That is all I have to say on that subject. I have given a lecture, but I have been longing to get this off my chest because I get tired of hearing about what the Labour Government did when, in fact, when they left office, the situation was worse than when they took office, despite all the money spent on trying to develop our region.

I want to ask about the Local Employment Act. I do a lot of unpleasant writing behind the scenes. I wrote many unpleasant letters to Labour Ministers and I often write unpleasant letters to Conservative Ministers. I must say that Ministers of both Governments have been very good in the way in which they have replied—although action has not necessarily followed. But I have been in this House for a long time, and I have come to realise that it takes about ten years to win a battle. It gets won in the end, however.

The Government are now using the Local Employment Act for the purpose of tourism. But the Act is couched in perfectly ridiculous terms for such application. This has nothing to do with the large grant which was given towards the building of new hotels and which came to an end on 31st March. The Act says that a grant can be given for service industries and the building up of tourism, provided the project carries an undertaking that a certain number of jobs will be found. That is a ridiculous provision in relation to tourism. The Act was not designed to help the tourist industry. The tourist industry is one of our best financial earners for the country. Indeed, it has saved us from going on the rocks.

We have beautiful scenery in our North-East countryside. It is absurd not to have proper hotel accommodation. I do not mean necessarily those ghastly cement blocks which I loathe. I would not stay on the ninth floor of some of them for all the tea in China. What we want in some of the lovely parts of Northumberland and Durham is a little more accommodation for tourists. We have so much to offer. No part of this country has more to offer in scenery and history.

But it is very difficult for tourists who want to visit our part of the country to find accommodation. Yet, the more we can offer, the better it is for the country's economy, for tourism helps enormously to stabilise the economy and to protect the balance of payments. There are delightful little inns and pubs all over Northumberland and Durham. What many of them want is just a couple of extra bedrooms. I have stayed in dozens of these places in my lifetime. The people running them do not want to have to engage additional staff, for they are perfectly prepared to do the work themselves and to see that tourists are properly looked after. They are very pleasant to tourists. Northumbrians and the people of Durham and Cumberland are delightful and co-operative. All they want is a few extra bedrooms to put up people motoring through or tourists who apply through advertisements urging them to come and see the beauties of the area. It is ridiculous that the small inns and hotels should not be assisted by the Local Employment Act.

I resent the Department's attitude, because it is trying to interfere with the commercial judgment of those who apply for grants in order to make additional accommodation available. The Department knows nothing about the little inns of Northumberland and Durham, or the delightful pubs of the kind which can be run by a man and his wife. If a man and his wife who are running a pub want to add a couple of new bedrooms to it, there may not be the people in the local village for them to employ. The Government constantly asks for greater productivity and yet will not provide the tools for it. This approach is so silly that it nearly drives me mad.

The Under-Secretary is having a private conversation with the hon. Member for Houghton-le-Spring. I should like him to listen to what I am saying and I shall wait until he does so.—[HON. MEMBERS: "Oh."] I am addressing my remarks to my own Minister and it would be a jolly good thing for the Opposition to listen to what I have to say. [HON. MEMBERS: "Oh."] I shall sit down when I am ready. If I want, I can go on until half-past nine.

Mr. David Watkins (Consett)

On a point of order. Is it in order for an hon. Member to attempt to intimidate other hon. Members by threatening to filibuster in order to prevent them from speaking in the debate?

Mr. Deputy Speaker (Sir Robert Grant. Ferris)

The—

Dame Irene Ward

I am not filibustering.

Mr. Deputy Speaker

Order. I am quite capable of dealing with the point of order myself.

The hon. Lady is entitled to be heard by the Under-Secretary and hon. Members should not stop the Under-Secretary from hearing what has to be said. I do not consider the hon. Lady to be attempting to filibuster. The hon. Lady is entitled to put the point of view of her side of the House. I am sure that she sees the clock and knows at what time the debate has to end, and I know that she would not wish to take more time than she would like to give to any hon. Member opposite.

Dame Irene Ward

I am coming to the end of this argument.

I had a letter from my right hon. Friend the Secretary of State for Trade and Industry to say that the Department was considering this point. Within days I had a letter from the Under-Secretary to say that it had been decided that no alteration would be made. That is not the kind of thing I expect from a responsible Department.

We have a tourist board in the North-East which is doing its best to attract tourists, and it is getting little or no help from the Government. Although the official concerned has no idea about it, I know that a letter went from Welbar House—I have not seen it, but I have a good grapevine—making exactly this point. Yet no attention has been paid to it. This is intolerable. I did not know how I could raise the matter, and I am grateful to the hon. Member for Houghton-le-Spring for giving me the opportunity.

In the North-East we must have new industry, more employment, more expansion. There is a feeling that most industrial development comes from firms already in the area. It gives me great pleasure to hear from people who have taken jobs on the North-East Coast, and from their wives, too. The North-East Development Council has said that people who want to expand in the North-East do not have the same advantage as new industry entering the area. Is this matter being considered? I am not at all satisfied with the two Ministries, the one dealing with Trade and Industry and the other with the Environment. They each have different responsibilities and I would rather there was one Ministry so that we could get at it. I do not like the present position. I have written to the Prime Minister and I believe that I have a Question down tomorrow.

I want to make it perfectly plain to my Government that I am not at all satisfied that everything that could be done is being done. I hope that I shall be given a sensible answer to my question about the Local Employment Acts and about the point of view put forward from the North-East Development Council. I recently attended a meeting of the council with a large number of my Labour colleagues. I do not know whether this is or is not a possibility—the alteration of the whole scheme. Now that we have a Conservative Government reasonably concerned with these problems, they must carry on the great tradition established by Mr. Baldwin. Are they examining this alteration in the system? I do not know whether it is right or wrong, I am not a technocrat, I only try to use what brains God has given me and what experience I have gained through having had the honour of representing my area for so long in this House.

I hope that I will get a sensible answer, otherwise I shall continue to harry the Government until I get someone in the Department interested, someone who will examine the proposal without giving ridiculous answers. If anyone cares to come up on a tour with me and look at some of the things that need doing, he is welcome. We spend enough money on keeping a tourist board there, we ought to be able to do something to help the inns which need more beds. I am grateful to the hon. Gentleman for initiating the debate and glad that such a lot of time has been spent on the subject. Something must happen, and soon.

9.4 p.m.

Mr. Ernest Armstrong (Durham, North-West)

I promise the Minister that I will certainly not make such a long speech as his hon. Friend the Member for Tynemouth (Dame Irene Ward). I congratulate my hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) on initiating the debate. I want to put one or two considerations to the Minister, which are not cheap political points but deal with very serious human problems in the Northern Region. This is a continuing and difficult problem to which there are no slick answers. This problem has existed throughout my lifetime. I want to present the situation and say what I think ought to be done in future.

In the Northern Region, among industrialists, representatives of local authorities, whatever their political colour, trade unionists and industrialists who have come to the region in the past decade to whom most of us have had an opportunity of talking, there is a growing lack of confidence and considerable apprehension about the future.

At the outset, I want to deal with a couple of myths which have been repeated tonight and which always come from the Treasury Bench. The first is that my right hon. and hon. Friends did not get value for money when they injected massive resources into the region. That is said over and over again. No one can deny that, during the time of the Labour Government, there was a massive injection of resources into the Northern Region. But we are told that the changes in regional policy have come about because we were not getting value for money.

I dare say that all hon. Members, including the hon. Lady, have had dealings with the old Board of Trade over the past 10 years. When an industrialist made an inquiry in our region, the local authority became aware of the inquiry. Unfortunately, the beginning of the new project was held up because the Board of Trade was awaiting a judgment from B.O.T.A.C. on the firm's viability. Sometimes, I felt that it was being over-careful in making sure that the firm did not receive public money and, after a short time, move out of the region because the project had failed. My experience in West Durham is that the Department has been completely scrupulous and very cautious before paying public money to a new firm coming to the region. But I have had some painful experiences of the natural irritability and impatience of people in the locality because it took the Government so long to ensure that the money that they were spending was well spent.

No firm which has been encouraged to come north has come there with the idea of continuing for long without making a profit. One of our complaints about the new structure is that not enough time is given to firms to establish themselves in order to take advantage of the changed incentives which are now offered.

The other myth is that the resources that we poured in did not have the effect in the region that they should have had. No one can deny that in the past five years we have so transformed our communications that we now have one of the best road systems in the whole country. That has been made possible by the injection of Government money and resources. It was money very well spent.

No region in the country had suffered more from the rapid rundown of basic industries. Durham, especially, has suffered greatly from colliery closures. To achieve a standstill, there had to be a massive injection of Government resources and the creation of new jobs. In the past five years, 86,000 new jobs have been created. The difficulty has been that, due to the rapid closure of pits, that has not meant a substantial increase in job opportunities. What has happened is that there has been a radical transformation in the basic structure of industry in the region.

When my predecessor came to this House in 1955 there were 26 coal mines. Today there is only one. The number of miners employed in West Durham aver the past seven years has been reduced from 15,000 to 2,000. Looking at the overall structure of the Northern Region, it will be found that the majority of men—indeed two-thirds—are employed in the new developing modern industries. This represents a great transformation.

The trouble with Government policy today is that it is based on saving money. I do not object to the slogan which is so often repeated about value for money, but I should like a commitment from the Government that they are prepared to inject into the region the same percentages that we were injecting during our six years in Government. If they would give that commitment, they would have all the assistance they required from both sides of the House, from industry, and from the trade unions to see that we were getting value for money. But the Government's objective—announced during the election campaign—was to cut public expenditure, and one sector where public expenditure was to be cut was in aid to the development regions.

We are now suffering because of the Government's obsession with the market forces—that Government intervention is always the dead hand of intervention and that we should leave it to the market forces. This discussion is taking place tonight because the situation in the Northern Region was created by the operation of the market forces. Most of us have seen direction of labour from the north with people moving south to earn their living. We on this side of the House believe in a Government com- mitment and then in Government intervention.

I should like to mention the development of the new regional policy, on which I should like an answer from the Minister. It was widely reported that on 2nd November last year the Secretary of State for Trade and Industry gave an assurance to a North-East Development Council deputation that the Government would be announcing a second stage to their plans for the development areas. All that we have heard since has been the extension of special development area status. Certainly nobody on that deputation and nobody who knew what was, going on thought that this detailed review which was taking place would end by merely extending special development area status to other parts of the region.

In the Northern Echo and The Sunday Times we had one of the familiar leaks from the Department of Trade and Industry. I shall not read the whole report. On 26th January this year the headline in the Northern Echo was, Secret report shocks Heath's plan for the regions. On 24th January The Sunday Times carried the headline: Whitehall slates Tory regional plan". Both articles declared that the Government's major proposals had been condemned in a secret report by the civil servants who had been asked, when the Tories took office, to conduct a review.

My great complaint is that the Government decided their policy before they had a look at the Northern Region. They changed from investment grants to allowances before they had time to examine the situation, and that has had disastrous effects.

The North-East Development Council estimates that the change in incentives means a net loss to the Northern Region of £36 million annually. I should like the Minister's comment on that assessment by a specialist body which is not party political in any way.

Mr. Urwin

That is for the North-East only.

Mr. Armstrong

That is for the North-East only. I thank my hon. Friend for that interjection.

Let us look at the present situation. In a reply last week from the Department, we were informed that in February there were 1,250 redundancies, and that in March there were 2,850. These men were not all railway porters, hotel servants, or people in those categories. They were in the industry which means a good deal to the North and, indeed, to the nation.

In reply to my hon. Friend the Member for Chester-le-Street (Mr. Pentland), on Thursday or Friday of last week, we were told that this summer 24,000 youngsters would leave school. We know what a tremendous human problem arises when a youngster leaves school. The mark of becoming an adult is to get a job, and if a young man cannot get a job when he leaves school he often drifts into a pattern of life which makes it difficult for him to start work when the opportunity to do so presents itself.

The other day I received some figures from the Department of Employment relating to West Durham. Unemployment among males in the Bishop Auckland area is running at 9 per cent. I was shocked to learn that in the whole of West Durham, and that includes the constituencies of Consett and Durham—as the Minister knows, it is not possible to get separate figures for one's own constituency because an employment area often extends over two or three constituencies—46.8 per cent. of the men unemployed are 55 years old or more. We all agree that these people present a tremendous human problem which it is difficult to solve. Most of them have worked for 30, 35, 40 or 45 years in the mining industry, and when a man has worked underground for so long, undergoing retraining, or doing any other regular work, presents a tremendous difficulty.

The only hope is for this area to be given special consideration. When we talk about extending special development area status to other areas, we are not contributing to solving the kind of problem that I have outlined. The decision to extend S.D.A. status to the whole of the Tyne and Wear area was a panic decision, and I challenge the Minister to justify it. Including Washington New Town, Peterlee New Town, the whole of Tyneside, down to Tynemouth, North Shields, and so on, in the S.D.A. area, and to leave out Aycliffe and other parts of the region cannot be justified on economic, human or social grounds. There is no argument for it. It was a panic decision.

We know that S.D.A. status was conferred on areas like mine because of the particular problems caused by the closure of pits. The extension of the idea has made nonsense of the original concept. Other incentives are now necessary, because the result of the Government's policy is that industry, which in any case is not footloose, and which is not inclined to move because of the changes in incentives, is merely presented with more places from which to choose. Because of what the Government have done, our area is not getting any extra industry.

I want a firm commitment to regional policy, with the guarantee that aid will not be diminished. I want some consistent policy, not the chopping and changing which we have had under the hon. Gentleman's Department, and an understanding of the real problems. Unemployment in the Northern Region has caused tremendous concern and I can find no one with any confidence that the present Government's policies will help at all.

9.21 p.m.

Mr. Edward Milne (Blyth)

My hon. Friend the Member for Durham, North-West (Mr. Armstrong) mentioned the 20,000 additional school leavers who will be seeking employment where prospects are bleak. This situation has faced school leavers in the Northern Region for a long period, but it is greater at the moment because, in the traditional areas of high employment, the Government's policy has resulted in one of the highest unemployment rates which the country has faced for some time. The prospect for school leavers is of leaving their own area to other parts of the country, where employment has become increasingly difficult. I am not arguing against people seeking employment elsewhere, but what we object to is that they are forced to do so by the prevailing economic forces.

This debate has shambled and wandered into many fields, one of which was the pre-war situation. I want to confine myself to post-war developments. The unemployment figures of the region, until the mid-fifties, were much the same as the national figures. It was only in the closing stages of the fifties that they accelerated. We were told that the policies then set in train would be useful, but the experience of the last six or eight years shows that even the existing policies are inadequate to deal with the mounting unemployment.

I should like to give two examples from my own area. In 1959 Northumberland County Council, then Labour-controlled, decided to create two new towns in south-east Northumberland. Those two new towns were denied any form of Government grant but with tremendous courage the county council went ahead and laid the foundations of Cramlington and Killingworth. This work was not carried out under the New Towns Act but on the initiative of the county council itself. It was not until 1962–62 that the now development areas of the North-East began to be created. The creation of development districts was given great impetus by the return of the Labour Government in October, 1964.

Let us examine the present situation and the means of securing new jobs. At present by far the greatest number of new jobs is created by the inflow of new firms. Bearing in mind the new firms which have developed in south-east Northumberland in the 1960s, I am certain that if the Government were now to make a close examination of the possibilities of expansion and were to set in train financial incentives to deal with the firms already established in the area, a considerable number of new jobs could be obtained within the existing firms. That is one way of dealing with the situation.

There has been a fairly comprehensive diversification of industry and a number of industries unknown to the area have moved in during the period we have been discussing. However, even greater diversification is needed; the pattern of industry in the modern world does not stand still and new industries are appearing. It is true that we have seen the introduction of aluminium smelters, the chemical industry and factors of that kind, but more diversification is still to be desired.

I hope that the hon. Gentleman in his reply will give some indication that in the forthcoming expansion of the motorcar industry in Britain, some attention will be paid to the question of siting a major car plant in the North-East, with its ancillary industries. This would give us a real stake in one of Britain's growth industries. It is to be remember that the aluminium smelter at Lynemouth will be moving into production very shortly and, in view of the increasing amount of aluminium being used in the production of motor cars, the question of siting a car plant in close proximity to the aluminium industry is a reasonable step to take for the future.

Mention has been made by some hon. Members of the contribution of tourism to the prosperity of various areas. I yield to nobody in my admiration for what has been done in developing the tourist potential of Northumberland and Durham. Northumberland has great potential, but at the moment it lacks a shop window in which to place that potential before the nation. I suggest that the Government should consider the possibility of siting a major conference hall in Northumberland, somewhere between Blyth and Whitley Bay. This would not only afford an opportunity in the area to cater for major conferences which are held in Britain every year, but would also provide a shop window to attract tourists and visitors to that area.

We should do our best to bring the beauties and facilities of Northumberland to the attention of tourists. There are many inaccessible tracts of land which could be opened up for the benefit of tourists and others seeking recreation. Indeed, the whole question of the ownership of land should be examined. For example, I have never felt sure that the resources of the Kilda Forest have been properly identified in terms of ownership and potential, and considering the high unemployment levels, not only in the industrial areas but in towns like Amble and Berwick, something should be done to make sure that these places enjoy the benefits of the areas in which they are situated.

We have talked a lot about the reorganisation of local government and development areas. I now want the Minister to consider the constructive suggestions that have been made and take action to reduce the number of unemployed in this part of the country. He can certainly consider immediately the siting of a major motor car plant in the North-East, where we have all the necessary transport facilities, with the harbours and ports of the North-East Coast. A good case could be made out for linking the industrial potential of South-East Scotland with that of North-East England to make a large industrial complex based on attracting modern industries.

We do not need more plans, surveys and schemes for the North-East. We have been littered with them for the past three or four decades. Indeed, surveys have been undertaken since the dawning of the industrial revolution. No Government need be told about the wants of the Northern Region and no Minister needs reminding that the workers of the region are the most adaptable to be found anywhere.

The people of this area have proved their adaptability in both world wars, apart from the way in which they have adapted to the decline of the coal mining industry and other major industries associated with it, like the ports and the railways. The workers have transferred to the new towns about which we have spoken. If ever there were an opportunity for providing full employment in this part of the country, that opportunity is now. The manpower is there to take up the demand and I trust that we will now see action.

9.33 p.m.

Mr. David Watkins (Consett)

My hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) has performed a public service in initiating this debate on the unemployment problems of the Northern Region. It is both his and our good fortune that the business of the House terminated rather earlier than might have been expected. This has resulted in this valuable debate taking place.

The high level of unemployment in the Northern Region is not new. For a number of years, irrespective of the political complexion of the Government in power, its unemployment rate has consistently been double that of the national average. Despite the greatest drive in regional policies ever to be inaugurated by a Government, the obstinate unemployment problems of this area pertained even when the Labour Government were in power. Even with that tremendous national drive unemployment level obstinately remained at double the national average.

It is not new for the House to debate the high level of unemployment in the Northern Region. What is new is that we now have a Government who have a specific policy of rising unemployment. Amongst the policies of the Government which have contributed to that end has been the policy of replacing investment grants by investment allowances. Investment allowances do not provide the incentive which is necessary to persuade companies to establish themselves in an area of special difficulty. This measure above all amongst the measures introduced by this Government is bound to worsen the situation.

My hon. Friends have said that those of us who represent constituencies in the Northern Region know only too well that all the drive which used to exist in the development of new industry and in the increasing of employment in the Northern Region has virtually disappeared. In large measure this dates back to the measures introduced last October by the Chancellor.

On 19th February the House debated the Northern Region on a Private Member's Motion which had been tabled by my hon. Friend the Member for White-haven (Dr. John A. Cunningham). I sat all through that debate without having the opportunity of catching Mr. Speaker's eye.

The debate was notable, first, for the filibustering engaged in by hon. Members opposite, who made a calculated attempt to prevent hon. Members on this side, who represent the overwhelming majority of the people in the Northern Region, from contributing to the debate. The debate was notable, second, for the announcement by the Secretary of State for the Environment of the extension of the special development areas. This was a panic measure announced on the eve of that debate. Having announced the measures, the Secretary of State disappeared from the Chamber.

The announcement boiled down to nothing less than a desperate attempt to retrieve something from the wreckage of the Government's policies as a result of the measures introduced the previous October and did not merit the lavish praise showered upon it by hon. Members opposite. The Tories had consistently claimed that the criterion was to be whether we were getting value for money. It was said in October that we would get better value for money as a result of the measures then introduced.

Although in October the Chancellor had announced measures to reduce expenditure in the development areas, the Secretary of State for the Environment in the debate on 19th October spoke about measures to extend the special development areas, but that did nothing more in terms of Government expenditure than to restore the position to the pre-October position.

The extension of the special development areas in the North-East has done nothing in terms of firms which had gone there and provided employment and in terms of jobs created. It has disadvantaged certain areas which had formerly enjoyed special development area status and which because of their special problems of communication and geography need to be advantaged as compared with Tyneside. All the advantage which was formerly enjoyed by such areas was wiped out by the extension of special development area status.

Having said that, I now want to refer to the situation in my own constituency which is in the area of North-West County Durham. I was interested, incidentally, to hear the statement made at an earlier period of the debate that it was the Conservative Party who originated regional policy. I shall not delve into the days of Stanley Baldwin, or even Neville Chamberlain who said he thought that the problems of mass unemployment could never be solved. But, with specific reference to my own constituency, I would refer to the Cmnd Paper which is popularly known as the Hailsham Plan, produced by the right hon. Gentleman who is now the Chancellor of the Exchequer, which has been cited again and again in this House as having been the starting point for modern regional policy—

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

Mr. Watkins

The hon. Gentleman may shake his head, but we have listened to this so many times.

Mr. Grant

The hon. Gentleman means the Lord Chancellor, not the Chancellor of the Exchequer.

Mr. Watkins

I beg pardon. Of course, I meant the Lord Chancellor. It is rather confusing when one looks at the grey mass on the opposite side of the House and in the other place. I accept the correction. I meant the right hon. and learned Gentleman who is now the Lord Chancellor, who produced a plan which has been repeatedly cited in this House as having been the starting place for modern regional policies. That plan wrote off my constituency completely. It wrote off the whole of North-West and West Durham. There are specific proposals in it that these would become nothing more than dormitory areas and that the people employed in them would have to travel down to Tyneside to find employment. I hope we can once and for all get rid of the idea that that was the start of regional policy.

In the Consett, Stanley and Lanchester travel-to-work area which covers my constituency and part of the constituency of my hon. Friend the Member for Durham, North-West, on 8th June, 1970, which is the date nearest to that at which the present Government took office, and for which the figures are available, there was an unemployment rate of 5 per cent. It is now substantially over 6 per cent. and it is increasing month by month. There has been an increase of substantially more than 20 per cent. in the period since the present Government took office.

In the General Election which put the party opposite into power, the Tory Party made a great issue of unemployment in the North-East of England. I well remember that the Conservative candidate in my constituency, in his election address, referred to the record unemployment which existed in the constituency, and he achieved a great deal of publicity being photographed speaking to those who were unemployed at the exchanges and clearly implying that the election of a Tory Government would provide more employment in the area.

I invite the Under-Secretary to explain to the House what has happened, and furthermore I invite him to come to my constituency—I will accompany him if he wishes—and go to those same employment exchanges and explain why there are hundreds more people seeking unemployment benefit than there were at the time when his party made its specious promises to reduce unemployment.

If I may digress briefly, perhaps the hon. Gentleman will at the same time explain the extraordinary statement recently made at the annual general meeting of Consett Conservative Association, as reported on the front page of that powerful organ of public opinion, the Consett Guardian-Chronicle dated 8th April, 1971, as follows: Consett workers hear of new jobs for old in Germany. Perhaps he will also say why it was that a gentleman who was invited to address that organisation and received great publicity for so doing said that when we joined the European Economic Community the people who were unemployed in this country would be able to go to Germany and look for work. Is this the sum total of the policy of the Government?

All the drive has now gone out of regional policy as it affects the North-East. There is in the region a situation of stagnation and growing hopelessness. I hope, though without great expectation, that the Under-Secretary of State will have something constructive to say.

9.45 p.m.

Mr. Ted Fletcher (Darlington)

I echo the sentiments expressed by my hon. Friend the Member for Consett (Mr. David Watkins). There is in the North-East a feeling of stagnation and hopelessness. I have lived in the region for 25 years and I say without hesitation that there is a general feeling of depression and hopelessness there such as has not been experienced since the end of the war. Hardly a week passes without one reading in the Press of redundancies at this firm or that, and we know that there is the possibility of more redundancies, particularly in the steel industry on Tees-side.

We have to press the Government to find out what their regional policies are, if they have any at all. The Labour Government pumped financial assistance into the region against a background in which thousands of jobs were being lost in the coal industry, the railways were contracting, and we faced a time of possibly mounting unemployment. But we did at least hope during that period that, by 1973, we should have climbed over the hump and be able to say that we had unemployment at a level equal with that in the rest of the country. Now, however, because the present Government are intent on saving £100 million at the expense of the region, it seems that unemployment is bound to rise.

It is not too early to warn the Government that we want a winter programme in the North-East. As things are going, it seems likely that there will be one million unemployed before the end of the year, and 100,000 of those in the North-East. We want the Minister to tell us specifically what measures he has in mind to bring employment to the North-East.

Now that the special inducements provided by the Labour Government have been withdrawn, employers in the Midlands and the South are understandably reluctant to transfer their industries to the North. There is no special inducement for them to do so, and they know that they can now expand in their present territory because of the Government's I.D.C. policy. In these circumstances, the Government have a duty to tell us what steps they intend to take to reduce the high level of unemployment in the North-East.

Let me suggest some specific ways in which that could be done. It was announced in the Budget that the Government intend to introduce a value-added tax. I shall not open a discussion on whether I find that acceptable or not—in fact, I disagree—but it is estimated that, if such a tax is instituted, another 10,000 civil servants will have to be employed at a central office to administer it. I put the question directly to the Minister, and I hope that he will answer: could this office be sited in the North-East?

I could put in a special plea for my own constituency of Darlington, which is geographically centred on the Al, is near an airport, and has all the facilities for such a centre, but I do not intend to do so. If that centre could be sited anywhere in the North-East, it would bring additional jobs to our area. Although I disagree with the imposition of the tax and shall do my best to fight it, I hope that the Minister will make representations to his right hon. and hon. Friends to see whether the office can be sited in the North-East.

Second, what about a programme for public works in the North-East? For example, there is a great need for a road between the A1 and Peterlee, which is an expanding town. Have we any programme of winter relief to build the road? What is the projection of Government expenditure in the North-East during the winter, when we shall face even more formidable problems of unemployment than we do now?

Third, what is the Minister doing to induce more Government Departments to release their office allocation in London and to site their offices in the North-East? The cost of office space in the North-East is one-sixth of that in the London area. Anyone concerned with providing jobs in the North-East should be concerned with transferring highly-priced Government offices from their present location in London to development areas such as the North-East.

Those are three practical proposals that the Government could implement in an endeavour to bring employment into the North-East. We are facing a particularly serious problem—not only the continuing problem of the close-down of mines and the contraction of employment in the railway industry but also the possibility of wide-scale redundancies in the steel industry. This will be a problem, particularly on Teesside.

We need answers to our problem, which is to provide employment for our people in the North-East. For too long we have had to rely on the general prosperity of the country. In spite of this, over the past decade unemployment in the North-East has been twice the national average. The feeling of depression because we are being left out of consideration is not confined to working people. Industrialists to whom I have spoken are also not very optimistic about the future.

We have condemned the Government's parsimonious attitude to the grants, to the withdrawal of the assistance given to the area by the Labour Government. This withdrawal has made a big impact on the number of applications from employers to site their factories in the North-East. These are real, human problems for our people, and particularly, as my hon. Friend the Member for Durham, North-West (Mr. Armstrong) said, for school-leavers, many of whom are condemned in their teenage years to face not months but years of unemployment. These problems will be accentuated if the country enters the Common Market, because the region that is remote from Europe stands little chance of attracting new industries.

These are formidable problems. I have cited certain avenues that the Minister could explore to bring new jobs into the region immediately. I hope that the Minister will give some indication that he intends to get on with the job of bringing employment to an area which has suffered for so long from the fact that it is a region where older industries have been established which are passing from existence. The immediate task is to bring in new industry. We want to know what the Government are doing to bring new jobs to our region.

9.55 p.m.

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

The hon. Member for Darlington (Mr. Ted Fletcher) thought that the voice of the North was not heard, but this cannot be the fault of the procedure of the House because I can recall four debates on the subject, and certainly two of them have been unexpectedly early Adjournment debates. There has, therefore, been a very full opportunity. Nevertheless, I welcome this present debate, and I am very glad to be able to reply to it.

The hon. Member raised the specific point of the V.A.T. centre, if it were to come about, or other Government offices being sited in the North-East, and we are actively pursuing the dispersal of offices. I know that my right hon. Friends will have carefully noted what the hon. Gentleman had to say about the attractions of the North-East as a site for offices. Moreover, in the White Paper on machinery of Government we announced a searching review into this matter.

But if the hon. Gentleman wishes to attract private industry to the North he must not say that there is no incentive to go there. Such a statement must be corrected. There are very substantial incentives to go there, and incentives on which we spend much time and money advertising in order to encourage industry to go there. To say that there is no incentive to go to that area is quite wrong. I know that later in the month I shall be meeting a deputation which the hon. Gentleman is bringing from his constituency, when no doubt we can continue that debate.

As a result of our completing Government business rather earlier this evening, a number of hon. Members have had an opportunity to speak, and I am very glad of it. I have listened carefully to what they have had to say. However, as I was expecting to reply only to the hon. Member for Houghton-le-Spring (Mr. Urwin) I know that they will not expect detailed answers to any specific points. Without necessarily agreeing with what they said, we shall study most carefully their comments.

I was delighted that my hon. Friend the Member for Tynemouth (Dame Irene Ward) should, with her vast experience, have brought such a sense of historical perspective to the debate. We all know what a tremendous fighter she has been for the Northern Region during her time in the House. She referred to a matter which I do not believe constitutes a disagreement between herself and my Department. There has, perhaps, been a misunderstanding as to what the Local Employment Acts are about. They are designed, and have been continued under successive Governments, for the specific purpose of providing employment. They are not designed specifically to aid tourism.

That is where I think the confusion has arisen. I have written to my hon. Friend as clearly as I can in response to her latest complaint and, if she is dissatisfied with that reply, or feels that the position is confused, I shall be only too delighted to see her, and perhaps some of my colleagues would wish to see her as well.

It is right not only that we should debate the Northern Region but also that we should try to conduct the debate as objectively as we can. I am sure that that did not happen tonight, for hon. Members opposite made their points fiercely but not necessarily fairly. But at least I do not think that they imputed any lack of sincerity in those who may not be in political agreement with them. No party has a monopoly of concern about the need of the people in every region to have open to them a range of job opportunities.

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

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

Mr. Grant

I was referring to a range of job opportunities, since the subject of the debate is employment and not simply unemployment. I want to dwell on this for a few minutes. I am sure hon. Members agree that it is all too easy when quoting job figures to slip into the habit of thinking only in numerical and not in qualitative terms. It is all too easy to forget what a changing employment structure, such as we have in the Northern Region, means in human terms. For the man who has been used to strenuous open-air work or to work calling for physical strength—and often considerable physical courage—the change to the routine of modern factory life may not always be easy. Nor do I think we can forget that our overall job statistics frequently disguise the extent to which not all new employment generated is suitable for men who have been in recent years those most affected by structural change.

I do not wish in any way to diminish the importance of providing more jobs for women in areas such as the Northern Region. After all, a lower activity rate represents a feature of unemployment, or, rather, under-employment. But my point can be illustrated by the fact that of the 18,700 jobs estimated to have been created in the Northern Region last year 6,000 were for women.

Nor in discussing employment can we overlook the need to create a proper spread of jobs. Without doubt there is an urgent need for new jobs in manufacturing industry, but it is also important in the Northern Region, as in other development areas, that there should be an adequate supply of jobs in the service sector. The service sector is the one which in modern economies holds out most prospects of growth. The last Government took the view that it was right to discriminate against the service sector. When selective employment tax was introduced the right hon. Member for Cardiff, South-East (Mr. Callaghan), then the Chancellor of the Exchequer, referred to making labour available from the service sector to the manufacturing sector.

In the Northern Region, where there were not enough jobs in the service industries or in manufacturing industries, such a policy was thought to be nonsensical. The present Government also believe that this and other measures introduced by their predecessors to discriminate against the service industries were nonsense, and we are doing something about it.

The hon. Member for Houghton-le-Spring and others uttered harsh words about the Government's regional policy. But they know as well as anyone that there is no recipe for instant success. I remind the hon. Gentleman that when the Labour Government came to power in October, 1964, unemployment in the Northern Region was 40,000; five years later, it was 62,000; and during the following months when the hon. Gentleman was Minister with special responsibility for the North it rose to 69,000 in April, 1970. In relation to the situation in Great Britain as a whole, the Northern Region has suffered an increase in unemployment which is less severe than national trends would lead one to expect.

Mr. Urwin

I am sure that the hon. Gentleman does not wish to be unfair, or even to seem to be unfair. I said that the job of the Labour Government in terms of the generation of new employment and the redistribution of industry was bedevilled largely by the heavy job losses in coal mining, which amounted to 50,000 between 1964 and 1970. In addition, there was the heavy decline in agriculture and in British Railways because of the economic policy in respect of the latter. Those were far greater problems than anything which has yet confronted the hon. Gentleman.

Mr. Grant

Of course I appreciate that, but unemployment is unemployment if one is on the dole, whether it arises from the decline in coal mining or ship building, or the steel industry, or any other industry which is changing over a period.

As Labour Members are not slow in drawing attention to the figures for unemployment under the present Government, I am entitled to quote the figures when they were in office.

Mr. Ted Fletcher

Will the hon. Gentleman quote the figures of unemployment for 1963, when the Tories were in power and which were an all-time record until recent months?

Mr. Grant

I am not going back that far, but I shall go back a long way.

I was saying that the Northern Region had suffered an increase in unemployment which was less severe than the national trends would lead one to expect and when compared with the rest of Great Britain, and I am concerned with the whole of Great Britain. I draw no comfort from statistical comparisons of this kind, but they demonstrate the falseness of the assertion that the Government are neglecting regions such as the North.

The hon. Member for Darlington referred to the steel industry. He knows that the British Steel Corporation announced plans which have been gestating for a considerable time. It was announced by the Corporation as early as January, 1969, that it aimed to reduce its labour force by 50,000 in the period up to 1975. It is not only the coal industry job losses which have an impact when an industry is rationalised.

The right hon. Member for Barnsley (Mr. Mason) took a much more sensible view than that taken by hon. Members recently when he was Minister. He shadows me in the House and I have a considerable respect for him. On the Second Reading of the Iron and Steel Bill he said: As a trade unionist myself, I hope that the unions will respond to the need for rationalisation."—[OFFICIAL REPORT, 8th May, 1969; Vol. 783, c. 683.] That is a sensible point of view and that is precisely what is going on, and I commend the right hon. Gentleman's words on that occasion to hon. Members opposite. It is important to see this matter in perspective.

Certain figures relate to job losses amounting to more than 2,000 in the Tees-side area, but actual redundancies are likely to be fewer and spread over a period. There will be a natural wastage and the Corporation will redeploy wherever possible. Some of those affected will no doubt secure other employment without registering. It would be wrong to suggest that these losses will have an immediate and marked effect on unemployment on Tees-side. Naturally, I regret the need for some of the decisions of the B.S.C. as much as do hon. Members opposite, but they know as well as I do how important it is to secure a firm foundation for a modern and effective steel industry.

Of course the Government are concerned about redundancy, but some of the indignation which I heard this evening from hon. Members opposite almost gave the impression that redundancies did not occur when they were in power. I remind them that in the Northern Region between 1967 and 1969 some 46,900 redundancies were notified, figures which do not include notified redundancies in the shipbuilding and construction industries.

What is important is that policies should be implemented which are relevant to the needs of the Northern Region. I was asked to be specific about the Government's plans. First, it is evident that the pattern of area coverage which we inherited in taking office in June last year did not reflect the realities of the situation, realities which have been evident for some time had hon. Members opposite cared to look. In 1966 when male unemployment in the region was 2.4 per cent., the rate on Tyneside, Wear-side, Peterlee and Hartlepools was 2.7 per cent. In 1967 the gap widened. Unemployment in the region jumped to 4.6 per cent. but in the older industrial areas of the North-East, which contain almost half the working population, it rose to 5.3 per cent.

By June, 1970, the gap was even wider—5.8 per cent. in the region but 7 per cent. in the older industrial areas. This situation developed during the time when hon. Members opposite were in Government and the hon. Member for Houghton-le-Spring was Minister with special regional responsibilities in the D.E.A. and later a Minister for the North. Was he aware of what was happening? I find it hard to believe that he was not, when Tyneside and Wearside Members persistently in the last Parliament drew attention to the problems of that area. If the Government knew about it then, why did they not do something about it? Hon. Gentlemen opposite must admit that this deteriorating position of the older urban areas was unsatisfactory.

Mr. Urwin

The hon. Gentleman surely recognises that special development area status has recently been bestowed on Sunderland, Wearside and Newcastle, but that of itself does not make any contribution to the economic problems of that part of the region. It downgrades the rest, it spreads thin resources over a wider area. It is simply not "on" to suggest that it is an improvement to do that.

Mr. Grant

It is implicit in any regional policy that there must be discrepancies and differences—if one likes, unfairness—between one area and another. That is what regional policy is about. I am surprised if the hon. Gentleman's suggestion is to do away with regional incentives, which is the implication of what he says.

Mr. Urwin

No.

Mr. Grant

Then the hon. Gentleman cannot have it both ways. Faced with the situation, about which the previous Government did nothing, faced with this widening gap in the older areas and the unemployment situation, the steps which the Government took, which caused irritation to hon. Gentlemen opposite—because I was present at the last debate and it rather took the wind out of their sails—gave considerable satisfaction to those who have to deal with the problems in the North-East as opposed to merely debating party political points in the House. It is extraordinary that it was left to a Conservative Government to take action to try to reverse the deteriorating situation in these areas.

Mr. Eric G. Varley (Chesterfield)

Part of our case has been that there has been a rapid and marked deterioration since last June, and loss of confidence began when the Government announced that they would change incentives. If the hon. Gentleman will direct his attention to the answer given to me by the Secretary of State for Trade and Industry he will see that, based on any comparison for any quarter over the last 15 months, the position has deteriorated.

Mr. Grant

I will study that answer carefully. What I am not prepared to accept for one moment is that the change from investment grant to investment allowances has caused a lack of confidence among that section of industry we most want to encourage—namely, the profitable section. The Government have greatly strengthened the package of measures of preferential assistance to industry to give greater weight to the provision of employment and to stimulating enduring and profitable investment. That is the point I am making.

The new pattern of special development areas which we have created to deal with the problem and the worsening position of the older urban areas of the North will benefit from our decision to increase operational grants from 20 per cent. to 30 per cent., those grants being linked to the salary and wages bill of incoming projects to help them in the critical early years of operation.

The hon. Member for Houghton-le-Spring referred to the problems of the indigenous industry and said that the special development incentives in some way worked against industry which is already there. This is the purpose. The purpose is to attract and bring in new industry. That is why special incentives are necessary. New industry coming in has additional costs to bear which do not have to be borne by industry which is already there. It has also a free choice of where to go. That is the reason for the special incentives.

Dame Irene Ward

But my hon. Friend should not ignore the North-East Development Council, which is asking for an examination. Policies cannot remain static. They have to alter to meet changing situations. I hope that my hon. Friend will not just say that this is the position and not look at it again.

Mr. Grant

Certainly we shall not be inflexible. We shall look at the situation carefully and study the report of the Development Council. The last thing that I want is for regional policy to be rigid. This applies to the areas themselves, although there must be a period of stability. Hon Gentlemen opposite have criticised us for chopping and changing. But we have done it only once. Industry must have a period of stability and certainty. I can assure my hon. Friend that her point will be looked at carefully. Development area status is not holy writ, and areas will be kept under constant review.

As for investment grants and free depreciation and their merits or de- merits, hon. Gentlemen opposite and I will just have to differ. We on this side of the House are convinced that investment grants were wasteful and indiscriminate. They subsidised investment for its own sake and gave an especially heavy inducement to firms in development areas to substitute machinery for men. Whether we have grants or allowances, plant and machinery are only part of a firm's investment. I cannot believe that hon. Gentlemen opposite seriously question that the substantial improvements that we have introduced under the Local Employment Acts or the extension of the S.D.A.s themselves are right, or doubt whether the steps that we have taken will be of real help to regions such as the Northern Region. They are very substantial.

A former Member of this House and a one-time Labour Minister for whom I have considerable respect observed on a number of occasions that these indiscriminate grants could have the effect of actually reducing employment since they were given to capital-intensive firms which did not need them and whose location decisions were not influenced by them. It would be an absurd situation if the taxpayers' money which was poured into the regions under the last Government had the effect in many cases of reducing employment. However, it is clear from the figures that that has been the precise effect.

I return to my earlier point about the service industries and employment. The previous Administration thought it right to discriminate against service employment. We believe that it was a mistaken policy to try to damp down the growth of service employment, and we have taken steps which will benefit the growth of service industries in the Northern Region. We have widened the scope of free depreciation to include plant and machinery used for industrial purposes in the service sector, and we have halved and will abolish the selective employment tax which has borne so heavily on service employment, not least in hotels and tourism generally.

Hon. Gentlemen opposite have sought to show that these policies have not worked. They must know that incentives do not create jobs instantly. If we have as long a period in office as the last Administration and our record is as bad, then it will be thoroughly disgraceful and deplorable. But my forecast is that the effect of our new measures and incentives will achieve what was manifestly a failure under the previous Administration—namely, to provide the right sort of investment and employment in the regions and development areas.

We inherited a situation in which unemployment in the Northern Region had risen relentlessly since 1966. The hon. Member for Houghton-le-Spring referred to I.D.C. figures published last month for the first quarter of 1971. I do not read too much into figures for one region for one quarter. However, I point out that the January/March, 1971, figure was the same for the comparable period in 1970. I also point out that since July, 1970, the development areas have substantially increased their share of the total for Great Britain as a whole. In that period July, 1970, to March, 1971, the Northern Region had 7.1 per cent. of the Great Britain total, whereas in the period July, 1969, to March, 1970, it had only 6.9 per cent. of the total.

Mr. Urwin rose—

Mr. Grant

I think that I must get on. I need hardly say that I.D.C.s are an important and valuable weapon. They gladden the heart of the Treasury because they are inexpensive for the Government to operate for regional policies. I.D.C.s will be operated with a view to encouraging industry to go to the assisted areas where they will be freely available.

Mr. Urwin

Surely the hon. Gentleman agrees that it is nonsense to talk about the numbers of I.D.Cs allocated when the important factor is the numbers of jobs accruing from them. The hon. Gentleman's figures, given to me on Friday, show seven I.D.Cs for the Northern Region in March with a total of 510 jobs. The total for the whole of the quarter is 3,620 jobs for only 37 I.D.Cs. It is the number of jobs which we finally get from I.D.C.s which is important.

Mr. Grant

Numbers of jobs generally stem from the square footage involved. If the hon. Gentleman studies the matter closely, as we have—I have not time to engage in an arithmetical computation—he will find that in square footage, which is the usual test, the development areas' share of I.D.Cs has increased. In what I accept is a bad situation, they have done very well. There has been a lack of mobile transport, but the development areas' share of I.D.Cs has been extremely good.

We shall administer the I.D.C. policy firmly with a view to assisting the development and other assisted areas. Hon. Gentlemen opposite know the constraints under which any Government operate in selecting the priorities for assistance to areas of need. Too many priority areas simply means spreading the effort and reducing its effectiveness. I know of the disappointment on Tees-side that we have not made it an S.D.A., and we are watching the position very closely. But despite the setbacks, it cannot be said that Tees-side's problems are as severe in scale as the hard-core areas on Tyneside, on Wearside or in Central Scotland.

I have tried to show that the Government are aware of the problems of the Northern Region and are taking energetic steps to deal with them. Hon. Members opposite and I have our differences, but we both want to see progress towards the substantial reduction of regional disparities. The hon. Member for Darlington would like to see a big car plant in the region. So would we. No doubt the Scots and the Welsh might have something to say about it but, if that were available, no one would be more pleased than I.

But I wonder whether hon. Members opposite, in uttering pessimism or denigrating our measures and in the general gloom which they spread, are helping to further our common objectives. They have to make constituency and party political speeches, but I hope that they will hesitate before denigrating the substantial assistance which is being given and will not take their own areas and constituencies out of the market. I hope that they will play their part in encouraging industry to take full advantage of the help available and avoid undermining confidence in a region which I believe has a promising future.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes past Ten o'clock.