EMPLOYMENT (NEWCASTLE UPON TYNE) (Hansard, 20 March 1978)

§ Mr. Mike Thomas (Newcastle upon Tyne, East)

I raise at this late, or early, hour—however one likes to see it—from one Newcastle to another, the subject of the employment policy and programme of the Newcastle upon Tyne City Council. I am grateful to the Minister for occupying the Front Bench at this time of day.

I shall first paint a little of the background of the unemployment problem in the North of England and in Newcastle and Tyneside. In February this year the total unadjusted number of unemployed in the Northern Region was about 121,000, or 8.9 per cent. of the working population. That compared with the United Kingdom average of 6.2 per cent.

For men, the situation was rather worse. The rate for men was 10.3 per cent. compared with the United Kingdom rate of 7.4 per cent The Northern Region has a higher rate of adult unemployment and has experienced a higher increase in unemployment than any other region. To put it in perspective, compared with where we now stand, in London, in the middle of the most prosperous part of the country, unemployment in the Northern Region is double that in the South-East, and it might well be double that in the other Newcastle.

One of the real fears that we have is that the upturn which we all hope will come in the world economy and which is beginning might not help us much. Lord Glenamara, the chairman of the North of England Development Council, speaking on 10th March, said Unemployment in the North is deeprooted and still growing. In common with the rest of the country—indeed, the rest of Europe—the 1290 region is suffering from the present business recession and the decline of employment because of technological change. It is a sad fact that while the national economy can be expected to improve during the next twelve months the more fundamental problems of the assisted areas, such as the North, will not be resolved as part of the general improvement. Indeed, general expansion may actually accentuate the difference between regional unemployment rates in the months to come. I turn to the problems of Newcastle and Tyneside. The statistics make grim reading. In February this year, male unemployment on Tyneside was 11.1 per cent. On Wearside it was 14.8 per cent. In Newcastle, 13,633 people were unemployed, 10,374 of whom were men. In pockets of central Newcastle, particularly around the riverside, unemployment was probably 15 per cent. or more.

I am glad to say that the position for school leavers was a little better. We were worried at the time that the summer term ended, because in July 1977 10,000 school leavers were unemployed in Tyne and Wear. By December the figure had dropped to 3,000. We can be encouraged slightly by that, although we wish that the figure was zero.

An interesting study in North Shields has shown that of the unemployed school leavers a large proportion—more than two-thirds—had no qualifications to speak of. The Minister knows the problems well. Traditional job centres are declining, and look as if they will continue to decline. In the shipbuilding industry we have had to face over 1,100 redundancies. No one can explain readily some of the problems relating to the Polish order and the industrial relations circumstances that surrounded it, but lack of orders is a serious problem in the industry. There is a desperate need for the order for the third through-deck cruiser. One of the first two orders has been placed with Swan Hunter. I hope that we shall receive the next order, too.

In heavy electrical engineering the pattern is similar—one of decline. At Parsons, in my own constituency, there have been 500 redundancies over recent months, but the order placed for the Drax B power station and the temporary employment subsidy that has been made available for 500 of the work force has enabled that factory to stabilise at 5,000, and we can see that carrying on for two 1291 or three years provided that work starts to come from other sources, too. We must be clear that without that aid—both the TES and the Drax B order—Parsons would now be on its way down to about 2,000 employees.

As well as the problem of job loss in the traditional industries, we face a number of other problems. I shall raise them briefly and not dwell on them. The rate of new company formation, the rate of entrepreneurial activity in Newcastle on Tyneside, is low. There seems to be a lack of product diversification within existing firms. I know that strenuous and successful efforts have been made at Parsons, for example, to get into other areas of business, but if a firm has large machine tools that are designed to do one job and cost perhaps £500,000 it is difficult to diversify into other products.

There is a skill problem in the work force. Although we have high unemployment, we also have shortages in some skilled areas. There is a predominance of branch plants which tend not to be well integrated into the regional system and tend to be a little on the periphery of the central management psychology of some of the companies involved, and, in general, investment levels in the region have been extremely low.

In all of this the Government are vitally important. I list one or two of the things that have mattered to us. There is the shipbuilding intervention fund and the general assistance given to shipbuilding. There have been naval orders. I have mentioned power plant. There is the construction industry, which accounts for a large proportion of our unemployed. For the Tyne and Wear area we received about £1¾ million of the March 1977 £100 million announced by the Chancellor of the Exchequer. Newcastle and Gateshead will get an initial £5 million construction money from the inner city partnership. We benefit from the regional development fund. We benefit from the various forms of regional selective assistance and from some of the NEB's activities. We welcome the formation of the Northern NEB.

Turning from the Government, my central point today is to say that local authorities are also important, and I hope that my hon. Friend and his right 1292 hon. Friend and hon. Friends will bear that in mind. In 1977, Tyne and Wear Council lent about £1.6 million to industry and created 750 new jobs as well as safeguarding existing jobs in that process.

It is against that background that Newcastle City Council, under the leadership of Jeremy Beecham and Councillor Walter Wilson, who is the chairman of the committee, launched its first employment policy and programme in November 1976. That is now to be updated each autumn. In December 1977 the 1978 programme was approved, and it has been provided to my hon. Friend.

I want to quote briefly from that programme, because its purpose is admirably described on the first page, where Walter Wilson says: If the erosion of the employment base continues at the rate that Newcastle has experienced over the last 10–15 years the community itself is in danger: selective migration will continue, unemployment among those that remain will rise, the need for community support services will increase while the ability to provide them will diminish. The employment policy and programme has had some success. In its first year it saved or created about 1,650 jobs. It has about 11,000 square metres of new factory and workshop space almost completed, and this has been a considerable achievement of the city, working with Tyne and Wear County Council and the English Industrial Estates Corporation.

There are critical problems which the employment policy and programme is trying to play its part in solving. First, there is the general problem of unemployment and its specific nature in the Newcastle area. Let me give two sets of statistics which make the point. First, seven out of 10 of the unemployed in Newcastle are manual workers, and yet at the moment—and it looks like being the trend for the future—only one-quarter—and it is going down all the time—of the jobs available in the city are in manufacturing industry. That is a terrible disparity. Secondly, 45 per cent. of the unemployed—nearly half—are under the age of 25, and nearly one-quarter—about 23 per cent.—are construction workers, so there is serious unemployment and serious disparities and focuses within that unemployment.

1293 The second critical problem is the simple loss of population and jobs. Since 1961, 44,000 people have left the city, and we have been losing jobs at an even more rapid rate. At the moment, we are losing people at a rate of about 1 per cent. of the population a year and jobs at a rate of about 1.5 per cent. of the jobs a year.

The third critical problem relates to the availability of development sites. This is partly in the nature of things in a crowded, congested inner city area, but there are two needs—modern factories—we appreciate the help that is being given through advance factories—and nationalised industry land. The largest tracts of available land for industrial development in Newcastle upon Tyne are owned by nationalised industries and they appear reluctant to release them. The Government should help in this.

The last problem to which I wish to refer is the shortage of skills. Too many young people leave school with minimum qualifications or without qualifications at all. That is an important factor in attractting industry into the area and getting the employment rates up again.

The city has been trying to make a cooperative approach to the problem. We have been using the term "inner city partnership" in our discussions on the Inner Urban Areas Bill and the Secretary of State for the Environment's programmes and Newcastle's approach is that unless we bring together trade unions, employers, the Manpower Services Commission, the National Enterprise Board, local authorities and the Government to work in partnership, there is no way in which the problem can be solved.

We are also promoting the city to make clear through promotional and marketing activities that Newcastle upon Tyne is the regional capital of the North-East and that 45 per cent. of the jobs there are filled by people who live outside the city boundaries. We are going out to attract new firms and enterprises, keep existing firms and encourage growth and diversity of the city's economy. A major step will be taken on 4th April when our programme to promote and sell the city with more vigour will be launched in London.

The third aspect on which the employment policy and programme is focusing 1294 is development. We want a revitalised inner city and an improved environment. The Inner Urban Areas Bill, which I hope will soon become law, and the Tyne and Wear Act are important steps.

We want to make the best use of existing industrial sites and buildings. We have declared three industrial development areas and we want to develop new sites. The city's target is 60,000 square metres of new factories or workshops by 1981.

Lastly, I wish to refer to the question of matching skills to jobs. We attach importance to training, particularly for unemployed young people, and to retraining, particularly for unemployed manual workers. These are critical areas for us. We need local support and co-operation—I am not suggesting that it is not there—and support too from the Training Services Agency. I hope that my hon. Friend can give assurances on that point.

We feel that there is a great need for co-operation with the Government. That is important to us. The sort of approach that we have in Newcastle upon Tyne, with the bringing together of all sorts of different groups, as we have done with the priority areas programme, could be usefully applied to the drive to solve the employment and economic problems of the city.

The general distribution of responsibilities between local authorities and Government Departments on economic development policies are confusing and, at times, counter-productive. Even if we understand them, it is plain that they are not clear to those whom we wish to take advantage of the available aid—whether an individual unemployed person or a new firm that is starting up.

We believe that the planning agreement process needs to be revitalised and we should like to see built into it a provision that a firm that closes a factory in an inner city should not be allowed to develop in a green field site somewhere else without doing something for the city where vital jobs may be lost and never replaced.

It may be that the Tyne and Wear Act and various pieces of private legislation, together with the Inner Urban 1295 Areas Bill, do not provide a comprehensive enough set of powers to give assistance to manufacturing and service industries. There may be a need for legislation to tidy up this situation.

I am grateful to the Minister for his tolerance at this late hour.

§ The Under-Secretary of State for Employment (Mr. John Golding)

I am grateful to my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Thomas) for the eloquent and persuasive way in which he has put the case for his city. I say "city" because I represent the Loyal and Ancient Borough of New-castle-under-Lyme. Therefore, it would be difficult for me to say just Newcastle through this debate with any sense of meaning. I shall use the term "city" instead.

I have twice visited the North-East within the last six weeks. I shall visit it again shortly because we in the Department of Employment realise the very great problems of employment and training that are faced in the North-East. I was received very well on my recent visit to Newcastle upon Tyne and was delighted to meet the Lord Mayor, Councillor Collins, who himself spoke very eloquently of the problems facing the city.

I read with great interest the report to which my hon. Friend has referred. It shows great enterprise on the part of the local authority to prepare such a detailed and overall plan for employment, because I believe that local authorities generally have ignored the employment implications until very recently.

I do not agree with all the figures that are given in the report. For example, I am told that since 1966 there has been only a small decrease, of about 1,488, in the numbers working. Indeed, Department of Employment figures show that between June 1971 and June 1976 total employment increased by more than 1,000. I am not interested however, this morning in nitpicking about the figures. The report is so important, I do not want in any way to understate the problem or to draw attention from it.

The problem is very serious. In February in the city alone 13,633 people were unemployed, of whom 10,374 were 1296 male. Most seriously, 46 per cent. had been unemployed for more than six months and over a quarter had been unemployed for more than a year. That is a disaster. More than half were under 30 and in the city itself there were still 2,338 school leavers unemployed—youngsters who had been given no chance or opportunity at all with regard to work or training since leaving school last year.

Let me say that I regard the bulk of the remedies in the city's report as practical. Let me begin by saying to my hon. Friend that I would welcome close co-operation between the city and the Training Services Agency, because the North-East has traditionally been the home of skill. I recognise how worrying it is that the opportunity for apprenticeships and skill are thought to be diminishing in the North-East.

My attention has been drawn to the TOPs courses in the city which are many and valuable but which are mainly non-manual. There is room for talks with the Training Services Agency and I assure my hon. Friend that as a result of his representations I shall ask the Agency to get in touch with Walter Wilson.

On my recent visit I was delighted to see the job creation project at the Hancock Museum. I was also interested in talking to the dedicated careers officers in the city. On my visit I learned that over 6,400 workers have benefited from the Government's special measures. TES has preserved 1,461 jobs. The job creation programme has helped 2,585 people, and 287 people have been given work experience. The youth employment subsidy has placed 1,135 youngsters, and the recruitment scheme for school leavers 591. Less important, perhaps, has been job release of which 415 people have taken advantage. Community industry has been very important, providing 150 places for youngsters who would normally find it difficult to obtain work.

We hope that full support will be given to the new youth opportunities programme. I am certain that the people of Newcastle upon Tyne will give that support, because they have the interests of their young people at heart.

We realise that many of our schemes are only an alternative to unemployment, but they are a worthwhile alternative. As a Government we are dedicated to provide increased work for the people. We 1297 hope that the increase in the amounts we shall pay under the job release scheme will be helpful because we think that the £35 which will be payable on 1st July to a man of 64 or woman of 59 with a dependent spouse will be attractive for them to leave work a year early. We also believe that the increase to an upper limit of 200 for the small firms employment subsidy will bring jobs to the city. In an effort to provide opportunities, the Government have also made £41 million available for training. It is important that the city should talk to the industrial training boards to make sure that sufficient skilled apprentice and technician training takes place. We are very concerned that the North-East gets its share of the money that the Government have poured into maintaining skilled training during the recession.

But of course we want jobs to which those who have been trained can go. That is why Tyneside has had so much help from the Department of Industry and why it has had special development area status. That is why £10.2 million has been offered under Section 7 of the Industry Act to save 5,000 jobs and create 12,000 new ones. That is why there have been 12 offers under Section 8 totalling £2.8 million, which has been used for modernisation. It is why, since July 1974, four advance factories have been completed and allocated and six finished, with 15 still under construction. That is why the blocks of small units have now been authorised. When all these factories are completed and occupied, they will provide 1,900 jobs.

I appreciate the importance of land, and my right hon. Friend the Secretary of State for the Environment has written to all the statutory authorities asking for details of unused land in the cities. But as a result of my hon. Friend's representations I shall ask my right hon. Friend whether more urgency can be attached to this question in the case of Newcastle upon Tyne. In the meantime, there is the Tyne and Wear Act, which my hon. Friend mentioned. The Local Employment Act is also available to assist.

1298 The Government have taken the situation in the North-East seriously. Under the dispersal policy they have allocated 500 Department of Health and Social Security jobs to Newcastle upon Tyne, The headquarters of British Shipbuilders has been sited there. That is right, because of the presence there of the shipyards to which my hon. Friend referred.

We have been involved in job creation. We have also been concerned to defend existing jobs. I am already referred to the importance of temporary employment subsidy. My hon. Friend mentioned Parsons and Drax B. I represent workers who work in GEC, Stafford, I have had to tell them of the problems of Tyneside. There was competition for that work, but the Government determined to give assistance to an area so badly hit. The Government have been active in the shipbuilding industry to give all the assistance that they could.

For the future, much depends on the partnership arrangements. I pay tribute to my hon. Friend for the way in which he pushed the claims of his own city and of Gateshead to get partnership arrangements. I pay tribute to the part he is now playing on the Inner Urban Areas Bill Committee to ensure that it does the job that the Government hope it will, to help revitalise some of our cities.

The policy has already been effective An extra £5 million for construction was allocated to the city last year. There will be an extra £1¾ million for 1978–79 and £7 million a year from 1979 to 1980 money which is much needed in the city to bring about the necessary revitalisation. We in the Government look forward to the inner city programme, which we hope will be ready in July.

I appreciate the importance of this subject. The Government realise that Newcastle upon Tyne is a city that has played a great part in the history of Great Britain, and we look forward to its playing a full part in the future.