HC Deb 06 April 1976 vol 909 cc387-98

11.5 p.m.

Mr. Bruce George (Walsall, South)

I am pleased to have been successful in securing an Adjournment debate so soon after my last, on Walsall's housing need. It is my intention to raise on the Floor of the House at such intervals as the ballots for Adjournment debates will permit the considerable and fundamental problems affecting Walsall.

The industrial decline of the town is inextricably entangled with the decline of the West Midlands. In 1907, Lloyd George told the Walsall Chamber of Commerce that, on the whole, it had a greater variety of trades than almost any other town in England. The character of the industry has not changed all that much since. It is characterised by a preponderance of metal-manufacturing and metal-using firms and a small proportion of service industries.

Historically, the town has developed with a large number of small firms and a small number of large firms, like Rubery Owen, F. H. Lloyd, Tube Investment.

To an extent, the numerous indices of decline in the region and the town of Walsall are a reflection of the national situation and the ultimate solution will have to be nationally determined.

But the crisis in the West Midlands is more deep-rooted and derives from basic structural defects, and these will not be remedied by tinkering or short-term palliatives. The signs of decay could be discovered more than a decade ago, but it is only in the last few years that the cries of anguish have been so loud and there has been a stream of authoritative reports and studies emanating from bodies in the region showing the industrial decline in absolute terms and the decline in relation to other regions. These studies include the West Midlands County Council's "A Time for Action" the joint monitoring steering group's "A Development Strategy for the West Midlands" and the West Midlands Planning Authorities' Conference's "Current Developments in the Economy of the West Midlands Region."

Representations have been made by hon. Members, a number of trade unions, chambers of commerce, the West Midlands CBI and the West Midlands Economic Planning Council. This growing crescendo did not go unnoticed by the Government and I welcome very much the meetings between the Government and various spokesmen, elected and non-elected, from the region, culminating in the meeting on 22nd March with the Secretary of State for Industry. I applaud the spirit of co-operation which has been manifestly exhibited. It bodes well for our future recovery.

That the halcyon days of the 1950s and 1960s are over is incontrovertible. The area that was for so long the powerhouse of the economy is slipping down the industrial league table. Our primary objective must be to halt and reverse this decline. The West Midlands can and must regain primacy, not just for the advanage of our own inhabitants, but for the economy as a whole.

For the moment, all is not well. The deterioration in employment vis-à-vis other regions has worsened significantly both in absolute magnitude and relative to the national experience. The region's economy is distinctive in its heavy dependence on metal-using industries and, of course, vehicle manufacturing. Most of our dominant industries are based on nineteenth century foundations and there has been regrettably little development of newer products such as electronics, plastics and chemicals. Some have argued that the policies of successive Governments are responsible for this lack of diversity and over-concentration. My own town is characterised by over-dependence on certain basic industries.

Output has plummeted. The poor record of the economy in the growth areas would not be so significant if there were adequate development in other sectors. We are largely dependent upon vehicle manufacturing, engineering and the metal industries, and the immediate prospects for these industries are not good.

The area is receiving a declining share of almost all types of investment. The region is characterised by low ouput, low investment and high unemployment. It is regrettable that, in addition to high unemployment, one-quarter of the country's work force on short time is in the West Midlands.

In Walsall a number of the larger firms have been shedding labour—Rubery Owen Holdings, Tube Investments, BRD and Crabtrees. Only last week the "Servis" washing machine factory announced a large number of redundancies. It is not just the big boys who are shedding labour. Many smaller firms are also doing so. Many of our "traditional" leather companies and companies making locks in Willenhall have gone out of existence, with a consequent loss of employment. We hope that the shedding of labour has somehow levelled out, but there has been no increase between 1961 and the present day in the number employed in the manufacturing sector in Walsall. That is indicative of the position in the region as a whole.

What is being done? A great deal is being done by the Labour Government to combat the industrial stagnation of the country, particularly in manufacturing. I welcome the new approach to industrial strategy. I welcome the National Enterprise Board and the Industry Act. I reiterate the view of the "TUC Economic Review, 1976" which is as follows: The main thrust of the industrial strategy is to give greater priority to, and to improve the performance of, the sectors of the economy—principally in manufacturing—which should have the biggest contribution to make to the solution of Britain's industrial competitiveness. I also welcome the rescue operation of British Leyland, Alfred Herbert and Chrysler, without which the economy of the region, at the moment serious, would indeed have been desperate. Many people in the West Midlands are directly or indirectly employed in these firms which have been saved. I am pleased by the encouragement being given by the Government to the modernisation of the machine tool industry and foundries—there are many foundries in Walsall. I should like to ask the Minister how many companies in Walsall have applied for assistance. Perhaps the answer to that question can be given in writing.

Our attack on inflation is slowly succeeding, and that will be of immense help to the industrial recovery of the West Midlands, but much remains to be done. Success will not be achieved merely by the Government alone. The remedy for our inadequate industrial performance lies, too, in the hands of both sides of industry—employers and employees.

For some reason industries in the West Midlands seem to be unable or unwilling to invest to raise productivity. I sympathise with manufacturers about some of the difficulties they face, but if we are to recover we must invest, and we cannot wait too long for that investment to be forthcoming. When the upturn in the economy comes, the danger is that investment will come too late and manufacturers will be unable to capitalise on the boom that will undoubtedly occur.

My advice to manufacturers is: invest, have faith in our future, be optimistic. We must get funds to invest because our future depends on investment. I hope that adequate funds will be forthcoming from conventional private financial sources, but if sufficient funds do not come forward, alternative sources may have to be tapped.

Productivity must be raised. We are indebted to the work of Professor Dudley of Birmingham University who has shown many ways in which existing machinery can be improved to achieve a 100 per cent. increase in efficiency. It is vital not just to improve existing machinery and the efficiency of labour but to replace the antiquated machinery and plant which are often to be found in the West Midlands by plant more in keeping with the twentieth century.

I have been around the plants and foundries in my own and other constituencies, and often it is like going back into the middle of the nineteenth century. Our industrial recovery will hardly be strengthened by the continuation of the use of obsolescent machinery. I believe that when the economy picks up, we shall have, inevitably, great pressure on skilled labour. Any impetus we might have will be destroyed if the demand is not able to be met. There must be a more positive programme of retraining by both Government and industry. We must enable the labour force to adapt to the needs of new industry.

I turn now to the question of industrial development certificate policy. The arguments are well known. I welcome the statement in a parliamentary answer yesterday by my right hon. Friend the Secretary of State for Industry in reply to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). My right hon. Friend said, referring to his valuable meeting on 22nd March: I took the opportunity to make it clear that industry in the West Midlands should not be deterred from applying for industrial development certificates for specific projects in the region, and I shall do everything practicable to assist the West Midlands to overcome its current problems."—[Official Report, 5th April 1976; Vol. 909, c. 7.] There has been a great deal of criticism of IDC policy. I do not object to the policy in principle, but there are arguments that it should be applied selectively and, indeed, sub-regionally.

The regional policy is a blunt instrument and could be refined to distinguish areas with the economic planning regions. Difficulties have been concealed by the regional average unemployment rates. There is a desperate need to develop industry. Industry in my area is too over-concentrated. There is a great need to introduce new manufacturing industry to the towns and the region as a whole.

An important part can be played by local authorities, both the metropolitan district councils and the West Midlands County Council. They can play a particularly important part in the provision of land suitable for industry, for advance factories and industrial estates. The local authorities can help significantly in dealing also with the problems of industrial dereliction and poor environment. In many parts of the Black country—my constituency in particular—there is heavy dependence on the metal industry. This has often produced a most uncongenial and unsatisfactory environment in which to work and live. Many of the more technologically advanced companies have left the area, leaving as a legacy nineteenth-century obsolescent plant and sites. These sites and such plant are not conductive to modern industrial development.

People have been left behind as a result of more advanced industries moving out, and often the skilled or semi-skilled people are the least able to cope with the vagaries or our economic climate. It is vital that the environment should be significantly improved. We must not neglect improvement of housing, social services and health services in developing infrastructure. That will have an impact on industrial performance. Manufacturers will feel much more able to extend and embark on growth if they and their work forces can see a more favourable environment.

Walsall Council believes that the prosperity of the region must depend to a large extent on self-help, which can do a great deal to facilitate industrial growth. We are endeavouring to develop co-ownership factory schemes. This experiment in setting up small firms in socially deprived areas is commendable, and I look forward to the response of the National Enterprise Board to the schemes.

There are those who believe that industry should be left to its own devices to solve the problem by internal means. Conversely, there are those who believe that the solution will be exclusively in the hands of the State. I believe that neither extreme is feasible. We need an efficient, publicly-owned sector and an efficient, dynamic, responsible private sector—both working together for the common good and in liaison with the Government.

We have as a region and a nation enormous assets, not the least being the resilience, skills and industry of our working force. The future is not as bleak as many people portray it. With good fortune, planning, hard work and cooperation we can bring an end to our problems and enjoy prosperity in the West Midlands as well as in the country as a whole.

11.22 p.m.

The Minister of State, Department of Industry (Mr. Gregor Mackenzie)

We are all grateful to my hon. Friend the Member for Walsall, South (Mr. George) for raising this important topic—not only because the West Midlands is a large and important region in its own right, but because it contains a vital part of Britain's industrial heartland.

Matters affecting the West Midlands, its industries and its employment affect the whole country. My hon. Friend will know that we all share the genuine concern which he has expressed tonight. I have been in contact with local authorities in the region and have met representative bodies there. We are all genuinely concerned about the points which he has made tonight with such great force.

One mark of the concern we feel in West Midlands affairs is the number of meetings that I and other Ministers have had with representatives of the region. In addition, I have paid several visits over the past few months to different parts of the West Midlands. On 15th and 16th October last year I spent two days in the region meeting representatives of the West Midlands County Council, Coventry Metropolitan District Council, the West Midlands Planning Authorities Conference, West Midlands Economic Planning Council, Birmingham Chamber of Industry and Commerce and others. This was followed by a further meeting here in London on 22nd March, when my right hon. Friend the Secretary of State for Industry and I met representatives from these bodies.

The Secretary of State and I found that meeting most helpful and I am sure that the representatives of the various bodies also appreciated the usefulness of the exchange of views which then took place. My right hon. Friend said on that occasion that he thought the region was perhaps fortunate to have such a number of articulate, thoughtful and well-briefed spokesmen. The Department of Industry and other Departments have seen and studied with great care the various documents produced by the Planning Authorities Conference and others and referred to by my hon. Friend tonight over the past year or so. We may not always agree with the conclusions of these reports but, nevertheless, we appreciate the care and hard work that have gone into their preparation.

Mr. Reginald Eyre (Birmingham, Hall Green)

Only today I received details of the closure of Renold Limited, Power Transmission Engineers, Birmingham. This will result in the redundancy of 350 men and women. This is part of the frightening pattern that is developing in Birmingham and the West Midlands. I congratulate the hon. Member for Walsall, South (Mr. George) on securing this debate tonight, but would it not be a good thing if points raised with the various deputations could be considered in the Standing Committee on Regional Affairs so that hon. Members could put their constituents' problems to Ministers?

Mr. Mackenzie

I understand the concern expressed by the hon. Gentleman about that constituency matter. He will know that my colleagues and I are ready at all times to meet representatives from the regions—and indeed we have done so often—to discuss problems. Discussions in the Standing Committee are the province of my right hon. Friend the Leader of the House. I am sure that he will note the hon. Gentleman's comments. We are all concerned, as I have already said, about the effect of these matters on the West Midlands.

I am sure that there is a genuine concern about the present levels of unemployment and all of us believe that they are far too high in the West Midlands as they are in all other parts of the country. This situation has come as a particular shock in the West Midlands, which has largely been spared the scourge of unemployment in the period since the last war. Unfortunately, there is no solution to the problem for the West Midlands in isolation. The unemployment which exists there is associated with the recession in world trade and the solution can be found only in an upturn in world demand for the type of goods that this country produces and that it can then sell competitively.

My hon. Friend the Member for Walsall, South was good enough to mention the Government's industrial strategy. It is generally recognised that there is a need for a new approach to industrial strategy for the country as a whole. Our concern about the decline in manufacturing employment, the performance of British industry and the prospects for the years ahead lay behind the new initiative taken at the Chequers meeting of the NEDC last November. The aim of the strategy is to reverse the decline of our manufacturing industry, relative to our competitors, which has been going on now for many years. The emphasis is firmly on manufacturing, because that is the main source of our wealth as a nation and because manufacturing has been at the heart of our indifferent economic performance.

The Government's proposals were endorsed by the CBI and the TUC and studies of the 30 or so industrial sectors chosen for the first round of the operation are now going ahead. Of course, our acceptance of the central importance of manufacturing industry lay behind the White Paper on Public Expenditure and behind the remarks of my right hon. Friend the Chancellor of the Exchequer in opening his Budget in the House this afternoon. The plans set out in the White Paper illustrate the Government's determination to give priority to industrial development over consumption or even our social objectives.

We hope that this strategy is going to provide a framework within which individual elements of Government policy—the National Enterprise Board, planning agreements, selective financial assistance and so on—can be used in a coherent and efficient way. Most important, we hope that the strategy will help both management and unions to tackle industry's own problems more effectively and thus foster a growing realisation that common action to solve problems is vital for the future prosperity of Britain—and of individual regions such as the West Midlands.

I am aware from my discussions with the representatives of West Midlands' interests, as well as from many of the questions put by my hon. Friend and other hon. Members, that there is a body of opinion that considers that the regional policies followed by successive Governments since the war have deprived the West Midlands of its fair share of the new technological and science-based industries and that, in particular, the operation of the industrial development certificate control has worked to the disadvantage of the region and its industry. We have studied these arguments most carefully, and I do not think that so far the arguments are conclusive.

It has been argued that in the present economic climate the use of industrial development certificates should be suspended in relation to any development taking place in the West Midlands. But this argument does not take into account the considerable period of time which must elapse from the start of a project until its completion. The IDC system is a part of regional policy which is a long-term policy. To abandon it in an attempt to mitigate immediate short-term problems in one region or another would not make sense. I am firmly of the view that the purpose of the present regional policy is to deal with long-term, deep-rooted unemployment problems rather than with cyclical downturns in industrial activity.

This is not to say that there are no steps that can be taken to deal with the present exceptional levels of unemployment in this most important industrial area of the country. I am pleased to see that there has been an increase in IDC applications during each of the last six months, and in fact the total of 49 applications in March was the highest monthly total since mid-1974. I should, however, like to see a further increase in the number of IDC applications in the West Midlands. I can give an assurance that these will continue to be examined with the fullest weight being given to the requirements of the individual company and the prospects for employment in the area where the proposed development is to take place.

I can reiterate what was said by my right hon. Friend in answer to a Question—namely, that no firm in the West Midlands should be deterred from applying for an IDC in the mistaken belief that it is certain to be refused. Only the smallest proportion of all applications throughout the West Midlands was refused during 1975. I hope, too, that industry in Birmingham and the surrounding conurbation will take advantage of the changes in the IDC control, which I announced to the House an 26th February, to permit the issue of IDCs for the replacement of obsolete factories in urban areas.

I turn to more positive policies. It is important to remember that by no means all Government measures are regional in content, or restricted to the assisted areas. There has already been an encouraging response from industry in the West Midlands to the schemes introduced by the Government which encourage the modernisation of the ferrous foundry industry. My hon. Friend has stressed the importance of that industry to Walsall. The machine tool industry is also of importance. To date there have been 39 applications from West Midlands firms under the ferrous foundry scheme, and six in respect of the machine tool scheme.

A further scheme, the accelerated projects scheme, is designed to encourage industrialists to bring forward investment which has so far been deferred as a result of the current recession. So far 33 projects under this scheme have been submitted by West Midland companies, and it is interesting to note that 25 per cent. of the applications under this scheme have come from companies in the region.

The assistance under these schemes is, of course, additional to the very substantial sums of Government money which have been made available to British Leyland, Chrysler United Kingdom Ltd., and Alfred Herbert. I remind the hon. Member for Birmingham, Hall Green (Mr. Eyre) that had it not been for this assistance, unemployment, especially in the Birmingham area and in Coventry, would have been very much higher than it is at present.

My hon. Friend has mentioned the importance to his area of small companies. My right hon. Friend the Chancellor of the Exchequer has been careful in the preparation of his Budget to take cognisance of the problems which are faced by small companies. My hon. Friend has properly referred to the encouragement that the Government want to give to them.

My hon. Friend has referred, very properly, to his concern at the number of recent redundancies and closures of firms in his own area. I fully appreciate and share his concern, and I agree that unemployment in Walsall, although it is marginally below the average level for the West Midlands as a whole, is still un-acceptably high. But I repeat that the level of unemployment there, and the redundancies reported, reflect the generally low level of activity throughout the country, and the solution must lie with national policies—namely, with the success of our policy to bring inflation under control and in implementing our industrial strategy.

With the upturn in demand—and I believe that there are some small but encouraging signs of this within the West Midlands now—Walsall and the West Midlands as a whole should benefit. The general trend, I would say, is for the number of redundancies in Walsall and the West Midlands generally to fall. Since January this year there have been only three significant instances in Walsall, involving a total of just over 300 people.

I recognise that there is still a great deal of concern in Walsall, and throughout the West Midlands, and I am grateful to my hon. Friend for raising the matter. I can assure him and other colleagues in the area that the problem will continue to be watched closely. We recognise that the prosperity of this very important industrial area is of major concern to the economy of the country as a whole.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes to Twelve o'clock.