NORTH-EAST DEVELOPMENT AREA

HC Deb 16 February 1972 vol 831 cc552-65

10.0 p.m.

Mr. Frederick Willey (Sunderland North)

I am fortunate at this comparatively early hour to have another opportunity to call upon the Government to reconsider their development area policy. I do this specifically in relation to the North-East development area because I think that the problem must be dealt with specifically in regional terms. It is significant that, when we first set out on this course Hugh Dalton and the Labour Party's Distressed Areas Commission dealt separately with each of the areas then distressed. I am anxious to raise this matter again because I feel that it is now clear that development area policy has failed—that what Peter Jay the other day called "applied laissez faire" has failed to solve the problem.

This failure is shown clearly enough by the unemployment figures for the post-war period. Despite a steady migration of 6,000 people a year from the North-East Coast, the North-East has endured unemployment consistently well above the national average. It is shown also by the personal deprivation suffered—the fact that the people there have only 79 per cent. of the national average in personal income level. This position is getting worse. Whereas 10 years ago on the North-East Coast we were 25 points below the average of personal incomes in the South-East, the disparity has now reached the startling figure of 43 points. In other words, the disparity between the standard of living of the people of the North-East Coast and of that of the people in the South-East is greater than it is between some countries of Europe.

I believe that our development area policy has failed because basically the approach has been wrong. The system of blanket, rule of thumb, across-the-board financial incentives has not proved effective and it is not of real help merely to go on giving larger and larger doses of the same medicine. That the approach is wrong is illustrated by many factors. One of these is the way in which we have dealt with the basic problem of the older established industries in the North-East.

I take coal mining as an example. In the last 10 years there has been a massive run down of coal mining in the North-East. This has been unavoidable—there is no question of that. But it is equally true that the rundown itself has been conducted without any real regard for the problems in the development area. The way in which it has been carried out may have made sense to the National Coal Board, but it has not necessarily made sense in terms either of national policy or of development area policy.

We are not dealing with private enterprise; we are dealing with a State industry. No effort seems to have been made to relate an element of assistance to the industry to mitigate the rundown against the social cost of sustaining redundant and unemployed miners. There has been no relation to the State cost which is borne either by aiding industry or in terms of social security. There has not been sufficient regard to the fact that miners are just as much public employees as are civil servants.

My complaint is that industrial policy has not been carried out with a sufficient awareness of and co-ordination with the problems of the development areas. The policy has been to build Government factories to provide work. If we disregard the pipe dream, the pipeline figures of potential employment, and look in detail at the actual employment figures in the Government built factories, we find that there is no real relationship between the provision which has been made and the redundancies which have been created in the pits. There has been only a minimal contribution to this basic problem.

For instance, the fact that these factories employ as many women as men means that they are not an effective and economical way of providing employment for unemployed miners. In parenthesis, may I say, that it is unfair and unrealistic to talk about the provision which the Government have made for the building of these factories as subsidies for the development areas. We are not talking about social capital; we are talking about industrial capital. If the Government cannot show a profit on their investment in real properties in the development areas then they have been grossly mismanaged.

I turn now to another basic industry—shipbuilding. This basic industry, which is essential to the development areas, has not had the benefit of any real, deliberate development area policy. It is true that we have implemented Geddes, but we have not tackled shipbuilding as a development area problem. We have put considerable public finance into the development areas, but we have not considered whether, rather than build Government factories for footloose industries, it would be far more sensible to provide financial assistance directly to shipbuilding to provide more employment.

This is what other countries have done. I am not just talking about Japan. Sweden, France and Germany, our continental shipbuilding competitors, have considerably expanded their industries since Geddes. The West Germans and the Swedes are now in the 2 million ton class and the French have got into the 1 million ton class. This has happened against the background of a static shipbuilding industry in Britain.

We ought to have tackled shipbuilding as a development area problem. We should have put money and backing into shipbuilding to provide employment in the development areas. Surely this would have been sensible over the last few years because our competitors' difficulties were largely the lack of skilled labour. We had the skilled labour.

If we had a basic development area policy we should have at least expanded it as much as other countries have been able to achieve. Incidentally, this would have made us better able, if we had done it, to persuade British shipowners to put more of their orders, as they should have done, into British yards. This is the crux of the problem.

I should like to emphasise two further points about the provision of employment in development areas. We should make much more specific and tailor-made provisions for the needs of the region. It should depend much more on decision and judgment.

I have argued since the end of the war that what we need in Sunderland more than anything else is a large-scale industrial complex. This might have made enormous financial demands and have meant risk-sharing, but it would have attracted ancillary industries without any other financial inducement. In the same way, shipbuilding is an assembly industry and a generator of employment. Every man employed in the yards probably supports the employment of three men in the supply industries. If we had dealt in this way with Sunderland's problems, many of the other difficulties would not have demanded financial support from the Government.

When considering the development areas, we should consider the character, the scale and the risk sharing. This would all be a much more effective and sensible use of public finance, and would get away from this rule-of-thumb, across-the-board, blanket provision of financial incentives. We should be much more flexible. In many cases, this would have been much cheaper and more effective. We could have done this and we could still do this for example by giving a firm a guaranteed run of Government orders, rather than providing incentives in the way we do.

My other point on provision of employment is that we are not concerned only about manufacturing industry. Equally important in the development areas are the service industries. The other day, I got some interesting figures from the Secretary of State for Employment when I asked for the five industries which employed the greatest number of people in the Northern Region. Among this surprising list was educational services which in fact employ 25,000 more people than the coal mines and—equally important—34,000 more people than they did ten years ago.

This is part and parcel of tackling the unemployment problem. This gives real point in the case that I have argued repeatedly—that we should have parity in the provision of higher and further education in the North-East as compared with the other regions. This gives real force to an argument that I used to deploy, that we should have had a differential raising of the school leaving age—raising it in the North-East before the rest of the country.

These service industries are important not only in providing employment: their provision makes the region much more attractive to new industry. This is equally true of public investment. I concede at once that there is a considerable improvement in recent years in the provision of public investment in the North-East and I recognise the importance of the recent emphasis on the infrastructure. But again, we should have a more realistic recognition of the importance of development area policy. Effective policy should be at the source. It is when Whitehall draws up the annual plans of public investment that development area policy should be effective. We should write in an amount for the North-East among other areas, so as to write off its present disparity over a term of years.

This should be more regional than it is and I will give an illustration to show why. We welcome the fact that in Sunderland we have the new town of Washington. This development is important to the North-East. However, this is bad planning because we do not need satellite towns in the North-East.

Satellite towns were a concept for containing growth in London. We have had it in the North-East simply because of a Whitehall bureaucratic translation of the concept to the North-East. We needed something entirely different. We wanted dynamic, vigorous urban renewal. The whole of Wearside should have been considered.

We needed something to revitalise Sunderland and recognise it as a commercial as well as an industrial centre. If a small part of the money that has been spent on Washington had been spent in Sunderland it would be a town as attractive as any in the country.

In pleading for a plan for the North-East, I am arguing, first, that there should be designated a proper Ministerial responsibility. We want either a Minister for the North or a Minister for the Development Areas. I have argued in the past for a Minister for the North, and I mean a Minister with a separate Departmental responsibility for the North. However, I would prefer a Minister for Regional Development backed by a Department. This is essential because I know from experience that it is no good having a Minister unless he is backed by a Department.

At the same time as providing this central Ministerial responsibility, we want regional responsibility for implementing policies. We want deliberately to move away from blanket incentives and bureaucratic overall generalised formulae, which have proved ineffective and wasteful.

A recent example of this has been R.E.P. I remind the House that this payroll subsidy was introduced on an explicit forecast that it would narrow the gap in the unemployed differential between development areas and the national average. We were told that in three to five years the gap would be reduced to 1 per cent. This has not happened. In terms of its expectation, it has failed, I have argued that if we were thinking in terms of such a subsidy, it would have been more effective to have given a straightforward wages supplement, which would have done something directly to offset the disparity, we suffer from the fact that our personal incomes are only 79 per cent. of the national average. I recognise at once that one cannot argue for the removal of R.E.P. To remove it would have serious consequences.

Indeed, I wish to make it clear that I am not pleading for any relaxation of the financial aid that is being given to the development areas. I am not pleading for any lessening of that aid. Indeed, I think it should be increased. I am pleading that we should make it more effective and that we should be more cost benefit conscious of the forms of financial assistance that we give to the regions.

I am convinced that this demands new machinery, and that is why I have argued for the past 20 years for a new agency, a North-East Development Corporation. We should recognise that industrial promotion is not a suitable job for Whitehall officials. We should also recognise that industrial promotion in the development areas demands, if it is to be done effectively, responsible judgment and risk-sharing. It cannot be left merely to the application of a generalised formula.

In short, I again argue that, above all, we need this new agency. Like my hon. Friend the Member for Stockton-on-Tees (Mr. William Rodgers), though in another context, I believe that it should be a small, compact, executive body, highly professionalised, but, unlike him, I want it to be local. It should be located in the region to, among other reasons, give dynamism to regional development.

In short, any plan for the North East Coast demands first the recognition of central responsibility. That probably ought to be Ministerial. But surely the application of the policy should be fairly and squarely placed in the regions. I am encouraged by the fact that I know that the Government are considering a Northern Ireland Finance Corporation. I am hopeful since we know that the Government are giving the whole question of development area policies their serious consideration. Whether we get it tonight or not, I hope that we shall have an announcement of policy from the Government soon. As for the North-East, it will depend upon those two essential points, which are vital to any development area policy.

10.20 p.m.

Sir Harmar Nicholls (Peterborough)

I wish the right hon. Member for Sunderland, North (Mr. Willey) the best of luck with his plea. He always does his homework and puts his case effectively. I know that he will allow me one minute to lay my egg on his nest, like a cuckoo He was arguing for the North-East. He mentioned the new town of Washington, near Sunderland. I want to remind my hon. Friend the Under-Secretary of the Peterborough new town.

There we had a prosperous town developing quickly from a market centre to an industrial centre. In order to help Peterborough's London neighbours, at the behest of the Government Peterborough accepted the new town procedure. This has turned the traditional cathedral city upside down. It is now in all sorts of a mess because of the change, and the promises that were indicated when Peterborough was asked to take on this task, about the help it would get, do not now seem to be forthcoming. As good neighbours we have had the city turned upside down. I am told that it is not a development area and, therefore, cannot have the financial help given to the area mentioned by the right hon. Gentleman. I have been told that Peterborough can expect only second priority. In terms of help, however, that second priority has so far turned out to be nothing.

I beg my hon. Friend and his Department to see that they do what is right by Peterborough. Peterborough has been a good neighbour, accepting all this upset and change to help London and the nation. At the moment it is not having the help it ought to receive. I know the economic problems that have, perhaps, made some of the promises of earlier days difficult to fulfil. I hope that my hon. Friend the Under-Secretary will be able to say that Peterborough is not forgotten and that the new town contribution it is making will be recognised in a form that will make second priority something tangible which will help it.

10.22 p.m.

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

I know that my hon. Friend the Member for Peterborough (Sir Harmar Nicholls) would not expect me to follow his remarks in more than general terms. Of course, I shall look carefully at what he has said and see that my right hon. Friend the Secretary of State for Trade and Industry is also aware of his comments.

I am very pleased to have the opportunity to respond to the right hon. Member for Sunderland, North (Mr. Willey). The whole House will appreciate the deep knowledge and sincerity he brings to bear on this particular subject. Certainly over a very long period he has brought a constructive approach to the very serious, deep-seated problems that have beset Governments of all persuasions.

This is an issue that I think we would all agree has been the subject of considerable attention in the House recently. As my researches show, we have had three debates recently, when the right hon. Member for Workington (Mr. Peart) raised the subject of development areas in England on the Adjournment on 7th December, an unemployment debate on 24th January, and when the hon. Member for Stockton-on-Tees (Mr. William Rodgers) moved the Regional Development Corporation Bill on 11th February. So various ideas are continually being put forward and the problems are now very well understood, although people may have differing views on the way in which we should tackle them.

The Government have made absolutely clear, and I repeat it now, that they will consider very carefully all constructive proposals put forward to deal with regional problems which have proved particularly difficult and persistent until now. Certainly in that spirit the speech of the right hon. Member will be very carefully considered by my colleagues and myself when we have time to read it in HANSARD.

I should like to comment on some of the problems that the right hon. Member has raised. There is very little difference between the attitude of the Government and the attitude of the right hon. Member in the analysis of basic problems. There has been a rundown in the basic industries based on coal and iron, and there is need for extensive and continuing restructuring of industry. Certainly, it has been proved beyond any shadow of doubt that this is not a matter where party politics has added a new dimension to the problems.

Successive Governments have sought with varying degrees of partial success— I cannot put it more strongly—to deal with the problems. Considerable progress has been made in restructuring regional economies, but the full needs of the Northern Region brought about by the decline of the traditional industries have not yet been met.

My right hon. Friend the Prime Minister in opening the debate on the Address said: The regional measures that we are using today are not a complete answer and we are now studying the alternative options open to Us."—[OFFIC1AL REPORT, 2nd November, 1971; Vol. 825, c. 45.] My right hon. Friend the Secretary of State for Trade and Industry made it clear in the House on 3rd November that the aim should be both the simplification and more direct means of tackling the problems of industrial areas. He also explained that the study was not a short-lived affair. It is a progressive, continuous and wide-ranging operation.

I can understand that hon. Members wish to bring pressure to bear upon the Government to reach their conclusions on the matter and make an announcement of those conclusions. But problems like this which everyone accepts are extremely deep-seated and require time if we are to carry out the very detailed examination that is necessary to try to find satisfactory solutions. While we are carrying out the long-term policy review, however, it would be wrong to overlook the various measures taken by the Government to stimulate demand and increase investment in the area we are discussing. It is fortunate that there are encouraging signs. I do not want to overstate the claim, but there is an improvement on the way.

The miners' strike has undoubtedly created a very serious setback. It is not for me to judge how long that industry will take to recover and to what extent it will be possible to recover from the harm that the strike has done.

Sir Harmar Nicholls

It will be a long time.

Mr. Heseltine

It would not be profitable to go into the details of that subject. There has already been a great deal of discussion about it in the House this week. Any forecasts about the future of the coal industry would not be very meaningful at this stage. What we need is an early resumption of work for the benefit of the entire community, in which I include the miners and their families.

The right hon. Gentleman referred to the shipbuilding industry, which is extremely important and has been the subject of debate in the House in recent weeks—indeed, as recently as 31st January. Briefly the position is that the industry has a merchant ship order book worth about £680 million. Although there is a slight deterioration in this order book, there is sufficient work for two years for the major yards and some substantial orders after that. Naval orders are worth about £400 million, including the £80 million warship programme specially authorised last autumn specifically to give a boost to employment in the development areas. This is of particular benefit to Swan Hunter, which has secured orders for two destroyers and two small fleet tankers. The Government's aim is to promote the ability of the industry to compete in world markets, and we shall continue to keep a very close watch on this whole field of work.

Last March the right hon. Gentleman made a plea for greater recognition of northern needs in infrastructure programmes, particularly for urban renewal. We have responded. I cannot say that it was precisely because of the right hon. Gentleman's demands. It was because they coincided very much with our own attitudes on the matter. There has been a very real response by, among others, the Department in which I am a Minister. About a third of the total additional expenditure of about £53 million by way of grants for housing improvement as a result of the Housing Act, 1971, will be spent in the Northern Region, whose share of the increased expenditure of £164 million authorised for infrastructure works will be about £31 million.

The right hon. Gentleman raised a number of points with which I do not have time to deal now. But I have listened very carefully to what he said and I shall take an early opportunity to write to him about the points with which I have not been able to deal so that he can have a full disposition of the Government's views.

The right hon. Gentleman ended on the possibility of having a specific Minister for the North. It is the Government's view that my right hon. Friend the Secretary of State for the Environment is perfectly capable of doing that job with all the resources at his disposal in a more effective way than is possible if a Minister is created for the job on a fragmented form of Government. We do not think that would be anything like as successful as the way in which we are already doing it.

Question put and agreed to.

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