§ 12.51 a.m.
§ Mr. Roy Hughes (Newport)I have asked for this short debate calling for development area status for Newport because the constituency I represent at present is losing major sections of its industry. There is, for example, the recent decision of the British Aluminium Company to sack its 450 employees there and to concentrate production at its other plant in Burntisland, Fife, in Scotland. Likewise, there is the proposal of the British Steel Corporation to close the tube works at Newport, which employs some 1,100 men. Here again, production will be transferred to Clydesdale, Scotland. Both of these moves are to development areas. The essential point is that we need development area status 1092 for Newport both to attract new industry and to retain our existing industries.
In order to get a true picture of what has been happenning and the deterioration which has taken place, it is necessary to go back about two years. The picture then was of a prosperous town with a bright future. The cornerstone of the economy of Newport is the great Spencer steelworks, which employs about 9,000 people. In January, 1970, the BSC made an announcement to the effect that there was to be a major investment at the plant, with the provision of a third blast furnace and an increase in the steel-making capacity there from 2 million tons annually to 3.5 million tons. This was a heartening announcement and one that gave great confidence all round.
By the middle of 1970, work had started on the then Board of Trade census offices, which had been authorised in April, 1968, as a result of the Labour Government's policy of devolution of Government offices. This major project was earmarked for Newport as eventually providing some 2,000 jobs and providing the right balance of jobs in an area where there tended to be a concentration of heavy industry.
Early in 1970, the docks at Newport were going well. The Government had rejected the major expansion scheme of the Port of Bristol on economic and financial grounds and particularly because there was already unused capacity in the South Wales ports.
Newport had been granted intermediate status. Following the report of the Hunt Committee in April, 1969, the Government had decided to grant Newport that status.
Other exciting developments were afoot. The flats to the east and west of the town were earmarked as a maritime industrial development area. It was reckoned to be one of the three outstanding sites in the whole country.
Newport and the surrounding areas were to be the centre of the Severnside development. Generally, factories in the area were working to capacity, and it was possible to describe Newport as the Birmingham of Wales. Male unemployment was 1,420 and while we had not reached the millenium with that figure, it was considerably better than the figures generally obtaining in South Wales.
1093 The mood in the middle of 1970 was one of optimism, and that was certainly reflected in my speeches in the House, in the constituency and elsewhere. Comparing the situation then with the situation now makes it clear why I am asking for development area status for Newport.
I have already mentioned the British Aluminium Company and the loss of 450 male jobs. There is also a proposal that Stewarts and Lloyds should close the tube works, which means the loss of 1,100 jobs. It is an unnecessary closure which cannot be justified. The works were established 50 years ago and have always been known as producing high quality products, and they have been profitable over the years.
What is now needed is capital investment. The works have had good industrial relations over the years and are on an excellent site, affording good access by road, rail and sea. Where is the business initiative of the British Steel Corporation? It seems to be giving up the ghost in many world markets. We were told about the new outlets to be found as a result of going into the Common Market. This optimism certainly does not seem to be justified now.
In the tube division particularly, we wonder whether the old private enterprise owners who still seem to be in charge have their hearts in the publicly-owned steel industry. We have a director of the Corporation who is supposed to look after the Welsh interests. How can he justify a decision of this kind? This decision to close the Stewarts and Lloyds tube works at Newport should not be allowed to go ahead. The Minister should intervene.
There are not only these two projects. There have been many other redundancies in the area. Some of us in South Wales are wondering whether there is anyone in the Government prepared to stand up for Welsh interests. Consider the docks. They suffered their first blow in 1970. There was the decision of the then new Government to allow Bristol to go ahead with its major expansion scheme for the building of the West Dock. I felt from the start that this was no more than a vote-catching device in Bristol because, as the Labour Government had conclusively proved, this project could not be justified financially or 1094 economically. It will do immense harm to the South Wales ports and the ports of Severnside generally. Eventually it will result in the closure of at least one port in South Wales.
Worse was to come, because a few weeks ago there was the decision of the Steel Corporation to take the whole of its iron ore trade away from Newport. This was a traumatic blow because, apart from volume, the iron ore trade is highly remunerative. It is now to go by 1974, coinciding with the opening of the new West Dock at Bristol, with all the increased competition flowing from that. One wonders where all the new trade will come from. What was needed at Newport docks was a short-term modernisation scheme to improve the existing ore handling facilities. Then more thought could have been given to the original new iron ore terminal at Eskmouth for which parliamentary approval was obtained a few years ago.
There is no doubt that the great Spencer Steel works will expand considerably over the years and will need a terminal of its own. This works is the cornerstone of the economy of Newport. One of the early decisions of the Government was to hold up the major investment scheme there. There was a delay of several months which considerably undermined confidence, particularly among the workpeople. Today we have the announcement by the Minister for Industry about future investment in the steel industry. It can only be described as the non-event of the year.
It has been announced that £90 million is to be invested in the Spencer works from 1970–71 to 1973–74. This is a nebulous way of putting it, particularly bearing in mind that the major part of this investment was authorised in January, 1970, which is nearly 2½ years ago. The Spencer works is at a serious competitive disadvantage compared with the other steel works in South Wales, at Port Talbot. The latter is already in a development area and, in addition, it has its iron ore on the doorstep, so to speak, whereas the iron ore for the Spencer works is to be conveyed 60 miles overland, with all the technical and other difficulties that this could involve.
In Newport and Monmouthshire generally there is a serious unemployment 1095 situation. The figures speak for themselves. In Newport, in June, 1970, male unemployment was 1,420. In April, 1972, it was 2,672—an increase of 88.2 per cent. In Monmouth as a whole, there were 4,533 unemployed in June, 1970. Now there are 8,423—an increase of 85.8 per cent. In June, 1970, in the country as a whole, there were 459 young persons under 18 years of age unemployed. In April, 1972, the figure was 984—an increase of no less than 114.4 per cent. The latter figure is perhaps the biggest scandal—the fact that young people coming out of school have no jobs to go to. Is it any wonder that there is an increase in juvenile delinquency?
Mr. John Long, the Town Clerk of Newport, wrote to me a few days ago pointing out that intermediate status had not succeeded in bringing any new industry to Newport and that, indeed, there was a positive encouragement to move out. Now the benefits of intermediate status are even less due to the following Government proposals. First, intermediate areas have been extended, especially to the north of Birmingham. Secondly, the amount of building grants is to be reduced. Thirdly, tax allowances are to be made available throughout the country. The disadvantage of not being able to offer advance factories with concessional rents will apparently continue.
I want the Government to face the fact that Newport is the centre of a subregion in South Wales which must be recognised as an economic and geographical entity. Each day 18,300 people travel to work in Newport, so that when Newport loses industry much of Monmouthshire suffers, too. According to the Secretary of State for Wales last Monday, I was doing the electors of Newport a disservice by spotlighting these difficulties. I wonder what I am supposed to do, whether to clap my hands or to go out and celebrate, when I see all these people being made redundant and put on the dole.
I have tried tonight to describe the deterioration that has taken place in the economy of Newport over the last two years. If we ask ourselves what has changed, the answer is that there has been only one significant event in the last two years, and that was a General Election and the return of a Conservative Government under a Prime Minister who had 1096 promised to reduce unemployment at a stroke. We see today the result of that promise. If the Government have any conscience or principle left they must tackle this situation in Newport, and one of the first things which they should do is to give it development area status.
§ 1.10 a.m.
§ The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant)I have listened with great interest to the account of the hon. Member for Newport (Mr. Roy Hughes) of the situation in Newport, and I congratulate him on obtaining a debate on this important area. I was not quite certain whether it was an account of the situation in Newport as I understand it, or a party political speech. No one could possibly quarrel with the hon. Gentleman's right to express concern about the problems of his constituency, but I hope that when this debate is reported the emphasis will be on Newport's many positive attractions rather than on the general picture of gloom and depression which the hon. Gentleman at times seemed to be presenting.
As the hon. Gentleman said, my right hon. Friend the Secretary of State for Wales told him in the House last Monday that descriptions of that type are not only inaccurate but do a disservice to the area. Of course the hon. Gentleman is entitled to make his point, but I ask him to remember that if he wants to attract industry to the area of Newport the kind of speech that he has just made is not calculated to encourage it to go there. I shall not, in my speech, avoid dealing with the problems which the hon. Gentleman has mentioned, but in doing so I shall mention the many positive advantages which we see the town to have.
The question which we are here to consider is whether Newport should be awarded development area status. The hon. Gentleman argues that the situation and prospects of the area are such as to justify a development area scale of assistance. In our recent review of regional policy, culminating in the White Paper on Industrial and Regional Development, we gave full consideration to the situation and prospects in Newport and decided that we would not be justified in making the change to development area status. Clearly, therefore, our view of Newport's situation differs from 1097 the hon. Gentleman's. It will help to clarify our decision if I explain why.
First, the unemployment rate in the Newport travel-to-work area is 5.2 per cent. I agree with the hon. Gentleman that this is unacceptably high. I do not, however, agree that it justifies a development area scale of assistance. The rate is, however, below that for Wales as a whole, which is 5.7 per cent. and well below the rate in the Welsh Special Development Area, of 6.8 per cent. in March. It is also slightly below the average for intermediate areas in the country as a whole, which was 5.5 per cent. in March. To stress the positive, as I hope to do on each aspect, 70,000 people are in employment in the Newport area, nearly half of them in industry. The hon. Gentleman may think those figures irrelevant, but I believe that it is important to stress that there is a thriving local economy with a strong industrial base.
There is nothing, therefore, in the current unemployment statistics to suggest that Newport is being unfairly treated with reference to other parts of Wales and the country as a whole. But the hon. Gentleman rightly argues that future prospects must be taken into account. We did so in our review. The negative side is represented by the closure of the BSC Tube Works, which I shall come on to deal with later, and the closure of the British Aluminium Plant. These decisions were matters for the commercial undertakings concerned and are not something on which Government can or should intervene. But such moves naturally give rise to local concern and it is right that we should, as we did, take their effects into account in making decisions on Newport's status. The first point that needs making is that calculations which add prospective redundancies to current unemployment figures invariably prove exaggerated. They ignore the fact that a proportion of the workers concerned will be successful in obtaining jobs elsewhere, either within the area or outside.
They ignore also the fact that there are prospective new jobs in the area which, although there are not as many as one would like to see, will provide significant opportunities for those unemployed now as well as those faced with future redundancy. The outcome of the situation 1098 may, therefore, not prove to be quite as serious as the hon. Gentleman suggests. More particularly, such calculations are short term and make on allowance for the effectiveness of Government incentives over a longer period.
In pressing for development area status the hon. Gentleman recognises that our new system of incentives is a valuable weapon in creating new jobs or maintaining existing ones. It is not clear to me whether he has fully considered the very major regional measures that are now available to encourage industrial investment in the area. As a result of the Budget announcements, firms in Newport will be able to take advantage of free depreciation on all investment in machinery and plant. Previously they were eligible only for a first-year allowance of 80 per cent. of such expenditure.
As far as buildings are concerned, the initial tax allowance of 40 per cent. for new industrial buildings will still apply, and, added to that, qualifying firms will be able to receive the new regional development grants towards expenditure on new buildings or adapting existing premises. These grants will not be taken into account for tax purposes. Unlike their predecessors, these grants will be available to existing industry in Newport, as well as to newcomers.
The new system of grants will certainly encourage industry in the area to undertake modernisation schemes with a view to future competitiveness. As well as these measures, selective assistance will in principle be available in Newport, as an intermediate area, and industrial development certificates will generally continue to be freely granted for new developments.
I hope that this brief outline of the incentives available will make it clear that Newport's intermediate area status is a potential source of major benefits and not something to be underestimated.
Steel is, of course, a vital industry for the Newport area. I well understand the concern in Newport over the coming closure of the British Steel Corporation's Newport tube works and the anxiety of those who will be affected. The Corporation has a very difficult task in carrying through a programme of rationalisation anticipated by the Labour Government, 1099 involving the closure of old uneconomic plant throughout the United Kingdom steel-producing areas. This is essential if our steel industry is to meet on equal terms the strong competition it faces from overseas competitors.
The BSC is very much aware of the regrettable consequences of closures and makes great efforts to mitigate the hardship caused. In particular, the Corporation sets aside a period for consultation with employees of works it intends to close, but these decisions are, of course, the responsibility of the Corporation and the Government cannot intervene.
In the case of the Newport tube works, I am sure it considered most carefully the well-argued points put forward by the Works Action Committee against the closure. It is not for me to comment on these; they are for the Corporation to judge. However, I understand that, as a result of these representations, the BSC agreed to defer the closure for six months so that it would take place at a time when alternative employment would be more readily available.
On the question of steel generally, BSC investment approved in the past two years has been at an historically high level and the hon. Gentleman will know that about one-third of the £265 million programme approved for 1972–73 is in Wales and Monmouth. The substantial Llanwern C development to increase output of hot-rolled coil will help ensure the town of Newport a secure role in the future of United Kingdom steelmaking.
The decision to concentrate iron ore imports through Port Talbot is primarily one for the Corporation and the British Transport Docks Board. I understand that the British Transport Docks Board is confident that there will be no adverse effect on employment in Newport Docks 1100 as there are new traffics in prospect. This measure will enable the Corporation to make full use of its investment at Port Talbot and thus lead to substantial savings.
To summarise how we see the position, we acknowledge that Newport is faced with real problems. This is why it has intermediate area status. The question whether development area status is justified cannot possibly be considered in isolation from other parts of Wales and the rest of the country. Our evaluation of the situation in Newport and the prospects for the town in that context has led us to conclude that development area scale of assistance is not justified. The unemployment rate in the Newport area is typical of the intermediate areas as a whole and significantly below the rate experienced in development and special development areas. The basic point is that Newport can offer substantial inherent advantages as an industrial location.
Geographically it is very well situated. There are excellent road links via the M4 and M5 motorways to London and the Midlands. There are well-developed port facilities and there is land available for development.
Newport County Borough Council has been alert and active in its efforts to attract new developments. I have with me a copy of the excellent brochure which it has produced. I am sure that industry will realise the attractions of the area and that the Council's efforts will be rewarded. I am confident that, despite the speech of the hon. Gentleman, Newport has a viable future and that this will be ensured by the measures we have taken to assist the area.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-one minutes past One o'clock.