§ 2.0 a.m.
§ Dr. David Owen (Plymouth, Sutton)
I make no apology for drawing attention to the unemployment situation in Devon and Cornwall, because it is easy to be misled by the presentation of the statistics. The South-West has an unemployment level of 3.6 per cent., below the national average of 3.9 per cent., and it is easy for those in London to think that the South-West has no serious unemployment problem. But our problem is our peculiar geography, unlike that of any other region, and the serious unemployment figures in the peninsula. The unemployment rate in Devon is 5.1 per cent. and in Cornwall 6.6 per cent. In certain black spots it is much higher.
Therefore, my first contention is that unemployment in the far South-West is unacceptably high. These levels in October betoken very much worse to come, because they do not fully reflect the seasonal lay-offs which we expect at the end of the summer. The historical trend is that high October figures in our region are always very much higher in January and February.
I want to highlight this problem now, when remedial action can be taken, rather than bemoan the effects throughout the winter. Nor do I apologise for discussing the whole South-West. Although I am a Plymouth Member, one cannot consider unemployment in purely local or even constituency terms. Since, as a result of the last General Election, I am the only Labour Member West of Bristol, my mail bag is full every day with pleas for something to be done about the severe situation which we face this winter.
Unemployment is a national problem, and none of us in the West Country would ask for special favours. We realise the severe plight of some areas in Scotland and Wales. I am not specially pleading at the expense of already hard-hit areas. But particular areas of 1439 Cornwall have unemployment as black as any in Scotland.
For instance, St. Austell, a very small area with a high unemployment already, now faces the prospect of nearly 800 men being made redundant. Not all these redundancies, announced by English China Clays Limited, will be in the St. Austell area, but most of them will. This will happen in a small area where the only industrial employment is in china clay industry, and it will have a severe effect.
In the Torbay region, it is hard to think back to a time when unemployment was a serious problem. But it is now; it is 5 per cent. and getting worse. Plymouth, the growth area of the region, has an unemployment rate of 4.6 per cent., and I know that the situation in Exeter is looking grim for the winter.
That is the prospect which faces us, and the question is, what can be done? The number of people chasing unfilled vacancies is extremely high. The overall unfilled vacancies in Devon total 2,897, yet a total of 14,167 people are looking for jobs, and there is a similar ratio in Cornwall.
The first thing that the Government must do is to look again at their regional policies, particularly as they affect regions like the South-West. The facts are that we need aid now, and what I ask myself and the House is "What is it reasonable for us in the South-West to ask of the Government?"
I believe that the first thing is that the regional employment premium should be raised. In areas of high seasonal unemployment there is some advantage in having a higher R.E.P. than in other areas, because the marginal choice which an employer might make about whether he can retain his current labour force during the winter months, knowing that it will have employment in the summer, can, I think, in a few cases, be influenced by the impact of an increased R.E.P.
I believe, too, that the boundaries of the South-West development area should be adjusted. We have already seen in Plymouth that intermediate area status, granted by the Labour Government has helped to attract industry, but a bigger incentive is needed if the Plymouth region is to become the growth centre that was 1440 advocated in the South-West Regional Economic Planning Council's "Strategy for the Future". The development area should be extended to include Plymouth. The intermediate area, which now covers only Plymouth and the surrounding area, and which was recently extended to cover Tavistock and Okehampton, should be extended to cover the whole of Devon, which would help the Torbay and Exeter regions.
§ Mr. John Hannam (Exeter)
I endorse the hon. Gentleman's plea for the extension of intermediate area status to the whole of Devon, and certainly to Exeter, because there is not merely a seasonal trend in unemployment, but an underlying trend due to a falling away of the older industries. Intermediate area status would help to attract some of the newer, more labour-intensive industries to the industrial trading estates.
§ Dr. Owen
I am grateful for that endorsement of my plea because, although the argument can be advanced that if the jam is spread too thinly its incentive power is reduced, including the whole of Devon in an intermediate area is justified by present unemployment trends, and the extension of the development area to include Plymouth is also justified.
What further action can be taken now to help the situation as it develops, not just over the winter months, but all through 1972? There is no doubt that the South-West region is an attractive area for office development, particularly areas such as Torbay, Exeter, Plymouth, Falmouth and Camborne. There is there a sufficiently popular base to justify the Government's exerting pressure to locate offices in these areas.
As that programme will take some years to carry out, one asks what can be done now that will improve the situation? The winter works programme, two bites at which have been announced in recent months, does not give sufficient to the South-West. It is difficult to determine the grounds on which the Government allocate winter works programmes. I suspect that it is always bound to be a fairly ad hoc decision, but in the West Country there was a feeling during this summer and early winter that the chunk of winter works programmes allocated to the far South-West was not sufficient, and did not sufficiently bear in 1441 mind the problems that we face there. While we appreciate that there are problems elsewhere, we ask for this problem to be looked at again.
What other immediate steps can be taken for our area? Of particular concern to me are the school leavers who are still finding difficulty getting a job. I wrote to the Secretary of State for Employment urging him to extend the training facilities in Devonport Dockyard, and, frankly, I do not believe that the cost of this should be borne by the Ministry of Defence.
In any event, my suggestion, which was made six or seven weeks ago, resulted in my receiving a disappointing reply today. The Minister points out in his letter that the number of young school leavers in Plymouth still seeking jobs has dropped. This is a hopeful sign. He also points out that not everyone seemed to be as keen as one might have thought to take apprenticeships in the dockyard.
But the principle at issue is that Government establishments have remarkably good training facilities. In times of high unemployment, especially when it seems that the level of unemployment will remain high for many months, if not years, there is an onus on the Government to expand their training facilities, and meet the extra cost on the budget of the Department of Employment.
I accept that measures such as these will not be able to guarantee jobs for every apprentice in the dockyard, but at least these youngsters will leave school and go on to learn a trade, and when a better economic and employment climate appears, they will have served an apprenticeship and, hopefully, go out on to the labour market with a skill which will, we hope, give them a better opportunity than they would otherwise have. I hope that the Secretary of State will consider this matter again, not only in the dockyard context but nationally.
What other help can we in the West Country be given. Above all, we need a picture of stability for the future. One of the most damaging decisions made in the whole sphere of regional policy was to announce that R.E.P. would end in 1974. I have written to the Chancellor of the Exchequer urging him to consider adopting a scheme similar to that operating in Italy, by which in certain regions 1442 the employer is paid a contribution by the State, either in part or in full, towards the employer's contribution to social security benefits. This is almost identical in principle to R.E.P.
Almost every practical proposal that is put to the Government in an attempt to solve the problems to which I have been referring meets with not outright rejection but certainly no action. The time is fast approaching when we must have special incentives and initiatives to attract jobs to the West Country and to keep industry there once we have got it there.
I recognise that the most effective regional policy is overall economic growth, and we accept that the prosperity of the far-flung regions depends to a great extent on the prosperity of the nation. But there are regions, and the South-West is one, which face peculiar problems. We have a geographical problem and our lines of communication are long. We are grateful for what has been done to improve our communications and we welcome the promised improved road links with the Midlands and London. These are beginning to appear and they will help in the future.
But we need more help, and the only way to get it is to make industrialists believe that strong regional policies will be pursued beyond 1974, and that the time is fast approaching when some new initiative, a new policy to replace the regional employment premium which is apparently to be abolished in 1974, must be announced. The industrialist at present looking at the question of factory location policy sees the end of regional employment premium and wonders what will replace it. He has already seen the change in investment grants, a change which has damaged investment and has not helped the attraction of industry.
We must have a period of stability. The instability of new jobs was critically shown up a few weeks ago when the Prime Minister wrote saying that 2,500 jobs were in prospect over the next four years. I think that it was only two days later that the announcement came that a firm had postponed a decision to site a factory in the area, and overnight the new jobs prospect was reduced to 1,700. It is this kind of change in regional policy which can cause a dramatic reduction of the prospects for the future that 1443 face young school leavers hoping to stay in the region, to remain with their families and to live in the region in which they were born.
I am not saying that people will not have to move. Some measure of mobility is inevitable in society, probably for good in Britain. No one can expect that everyone will be able to find employment in their place of birth. But the depopulation of the South-West, of some of the youngest and best people of our community, has been continuing for far too long.
Many of us hoped that the regional policies pursued from 1964 to 1970 would do much to redress the imbalance in the regional structure of the far South-West. They achieved much, but there are signs that that progress has been eroded with every month as the unemployment figures rise, as the prospects of new industry lessen and as the general mood of uncertainty continues.
Overall, nationally and in the regions, investment depends on overall economic prosperity and confidence. But at present industrialists do not have confidence in the regional policies likely to be pursued by the Government. I urge the Government to look at this problem with extreme urgency. Some very practical suggestions have been made, endorsed by the hon. Member for Exeter (Mr. John Hannam). We in the far South-West have the right to expect the Government to take action. We urge upon them that that action will have to be taken within the next few weeks if it is to have any impact on the rising unemployment.
In some areas the present unemployment figures are the worst since the winter of 1940, and those were in the extraordinary circumstances of war. We have to go back to the 1930's to see the same or parallel figures in some parts of our region.
We are a small region and do not have many voices able to raise our problems. I beg the Minister to recognise that in the far South-West our problems are severe and need urgent action.
§ 2.18 a.m.
§ The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley)
I am glad that the hon. Member has raised this important question of unemployment 1444 in the South-West. It follows the concern felt by my hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers), who received a long letter from my right hon. Friend the Prime Minister setting out the many things done by the Government to try to help and ameliorate the situation. I know that this concern for the problem, which is very serious, is shared by my hon. Friend the Member for Exeter (Mr. John Hannam) and many hon. Members who represent the constituencies of the far South-West.
It is true that there is a slack level of manufacturing activity, a low interest in new investment and new projects in that part of the country and a migration of the younger people, and that there are very much higher unemployment rates throughout the area than any of us would like to see. In the South-West development area the present rate is 4.8 per cent., representing 6,475 people. In the intermediate areas it is 4.7 per cent., representing 4,952 people. The numbers are not large compared with the problems in the North and in Scotland, where the totals are far greater. It may be as black as it is in those areas, but it is not as big. I am the first to recognise that unemployment is a personal tragedy. However, although the numbers do not lessen the impact upon the individual, they are a factor which must be taken into account in deciding policy and trying to administer it.
I utterly reject the hon. Gentleman's implication that in some way the situation has been created by the Government. There have been three major infusions of new money into the economy since this Government came into office. They will amount to £1,100 million extra in circulation in 1971–72 and £1,400 million in a full year 1972–73. This has all been done by way of tax reductions, many of which were designed to help the regions and to increase industrial activity generally.
It is wrong to blame anything except the world recession. That right hon. Member for Battersea, North (Mr. Jay) referred earlier to "the devastating effect a recession can have" upon these areas. This is the problem we are up against. English China Clay's most unfortunate shedding of workpeople is caused by the very slack demand for its products at home and, more especially, abroad. The 1445 country as a whole is suffering from the world recession.
Everything that the Government have done has been designed to help and not in any sense to impede the recovery of the regions. If I quote what has happened in the South-West, it will be seen how real the Government's concern is and how much has been done. The South-West development area is now able to benefit from the substantial improvements we have made in assistance under the Local Employment Acts, a 10 percentage point increase in building grants, more flexible use of loan powers, and more money for basic services. Free depreciation is now available for all immobile plant and machinery for use in the development area. As investment grants were paid on a much more restrictive basis, this will be of particular value to the services sector, as will be the temporary increase in the first year allowance to 80 per cent. to the rest of Devon outside the development area. Our decision to maintain the first year allowance for building at 40 per cent. after the national rate reverts to 15 per cent. next year will also widen the differential in favour of the development and intermediate area.
We have also recognised the difficult and anomalous position of Tavistock and Okehampton by giving them intermediate area status to help them to overcome their particular problem of living under the shadow of the nearby development area and the Plymouth intermediate area to the South.
The hon. Member raised the question of the winter works programme, as he called it. The Government works programme is in two parts—the £150 million from infrastructure and the £46 million for housing, all of which are extras and which will be of particular benefit to the South-West. Indeed, there has been a very good response from the South-West in relation to the extra money for housing, and private landlords and local authorities are coming forward to take up their share more strongly than is the case in other parts of the country. It is not true that the South-West has not had its allocation of these extra sums.
I also rebut the hon. Gentleman's criticism about training. We attach the greatest importance to the provision of adequate training and retraining facilities. My right hon. Friend has constantly 1446 reviewed the arrangements, and we fully accept the need to provide for any retraining needed by redundant workers. On 20th July my right hon. Friend announced measures to improve and extend the retraining facilities for unemployed workers. These will apply just as much in Plymouth and the South-West as in any other part of the country.
I think that one of the most important things that will help the region is communications. It is good news that the new spine road through the South-West should be complete by 1975. From my experience of other development areas, I believe it is essential that the road communications in particular should be there, or should be seen to be coming there, before one gets the response from industrialists that one would like to see.
The hon. Gentleman suggested some moves on the front of R.E.P., and I should like briefly to deal with them. We have honoured the seven-year commitment to keep it till 1974, and what happens at that time must, clearly, be decided in the light of the circumstances, but the Government are firm in their decision that they will not continue it, and nobody should think that that position has changed. It is not a satisfactory form of regional incentive. I can illustrate that argument in relation to the South-West.
In the whole of the counties of Devon and Cornwall there are only 25,800 people engaged in manufacturing who are eligible for the R.E.P. That is actually only 20 per cent. of the population of the South-West development area. So this cannot be a major factor in the economic life of those two counties. Furthermore, it is, as the hon. Gentleman knows, only paid to manufacturers, so I cannot see how this could affect the situation even if it were doubled in the way that he suggested, because manufacturing industry is not seasonal and the problem in Devon and Cornwall is largely seasonal due to tourism and other industries which shed labour during winter months. This will not be the case in general with manufacturing.
The hon. Gentleman asked about office building, and I will draw his remarks to the attention of my right hon. Friend the Secretary of State for the Environment, whose responsibility this is. I would counsel the hon. Gentleman not to be 1447 too depressed by the figures because neither in the development area nor in the intermediate area in the Torbay and Exeter sub-division has the rise in unemployment been as great as the national average. It has been a good deal less than in many badly-hit parts of the country. There are hopeful signs, particularly in the very great increase in tourist activity and mining activity in these areas.
The hon. Gentleman asked me about changes in the boundary status. I think it is a bad idea to be continually talking about boundary changes, and the Government would not lightly make any. We very much want to concentrate the amount of mobile industry that there is on the areas which really need it most. To extend continually the boundaries of development to the intermediate areas will water down the effect that such incoming business as there is will have on the particularly severe problems in those areas.
I should like to end on one bright note, and that is the Royal Dockyards. Prospects in the Royal Dockyards at Plymouth look brighter. These are currently employing about 11,000 people. As my right hon. Friend the Prime Minister said 1448 recently in his letter to my hon. Friend the Member for Devonport, they have a very full programme of work in the foreseeable future. In fact, the Royal Dockyards' programme as a whole is so full that it was necessary recently to place the refit of the submarine "Otter" to private contract. The Government are taking urgent steps to improve the efficiency of the dockyards and to raise the productivity of the labour force. The southern yards will continue to build small craft, and the Government will keep under review the possibility of building certain kinds of larger vessels, taking into account the value of the experience that the dockyards derive from such work, the comparative contract costs and the situation in the shipbuilding industry.
The Government are acutely aware of the seriousness of the problem—
§ The Question having been proposed after Ten o'clock on Monday evening, and the debate having continued for half ail hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at half-past Two o'clock a.m.