HC Deb 20 March 1978 vol 946 cc1155-67

12.10 a.m.

Mr. Michael McGuire (Ince)

The purpose of my intervening in the Consolidated Fund debate is to ask how much of the £92 million under this Vote is to be allocated to helping the Wigan travel-to-work area overcome some of its problems, particularly the unemployment problem.

As the Minister will know, the present rate of unemployment in the Wigan travel-to-work area is approximately 9 per cent. We have a total of about 6,579 wholly unemployed. I realise that is the job of my hon. Friend and his colleagues to keep under constant review what type of regional assistance is required as between one area and another and to make decisions accordingly. I know that these decisions have been made from time to time, and as recently as April 1977.

The various changes that have taken place over the past 30 years illustrate that the history of regional aid is one of changes in Government policy, such as I have mentioned. What I cannot understand is why the Wigan travel-to-work area has always been badly treated when, using the Government's own criteria, it should have been better treated.

I should explain that, apart from the new town of Skelmersdale and a small part of my constituency that is in the St. Helen's metropolitan borough, the rest of my constituency lies wholly within the Wigan travel-to-work area: hence my reason for speaking about the needs of the area.

The Wigan travel-to-work area lies midway between the counties of Greater Manchester and Merseyside. If it is to solve its special problems, including the most important, such as unemployment and dealing with social and industrial dereliction, it needs a high level of industrial development. My right hon. Friend the Secretary of State for Industry has power to designate areas as development or special development areas having regard to all the circumstances actual and expected, including the state of employment and unemployment, population changes, migration and the objectives of regional policies". I should like to deal with the general position of Wigan. The borough lies in the heart of the once great South Lancashire coalfield, which is now largely gone. It has completely gone in the Wigan travel-to-work area. There once was a large textile work force. At one time, I think as recently as 1959, it was estimated that coal mining accounted for about 22 per cent. of the work force and that about 17 per cent. of the workers were employed in textiles.

The coal mines have all gone and the number of coal miners who have to travel outside Wigan has been very much reduced. The number of people employed in textiles and clothing is now down to about 3,000. The decline of coal and cotton has meant that thousands of jobs have been lost in Wigan, but Wigan was helped by the earlier regional policies of the post-war Labour Government. I believe that those policies were embodied in the Distribution of Industry Act 1945. By 1960 the position in Wigan had sufficiently improved—about 8,000 or 9,000 jobs had been created to make up for those lost in coal and textiles—and the development area status which Wigan up to then enjoyed was withdrawn.

Wigan has problems of unemployment and industrial and social dereliction. It has far too many old factories. A high percentage of all industrial buildings in the borough were built in the nineteenth century, and a recent survey by the Greater Manchester County Council showed that Wigan was the worst area in the county for obsolescence, with 37 per cent. of all buildings being classed as obsolete and a further 27 per cent. as poor. Of vacant industrial buildings fewer than one-eighth were regarded as adequate.

On mining dereliction, 5 per cent. of the land area of the borough is classed as derelict. Wigan has 2,582 acres of recorded derelict land, which is the third highest figure in the country. If one includes land which by the official definition justifies reclamation, it has the highest total in the country. On the housing front, some 21 per cent. of the housing stock was described in a recent survey as unfit—probably as unfit or substandard, that is, lacking one or more of the standard amenities or having repair costs of £500 or more.

Wigan has a much bigger school population than most boroughs in the country and the largest in the Greater Manchester area. Twenty-six per cent of the population is at school, and that figure is significant in terms of future employment prospects.

All available evidence shows that Wigan is an area of low incomes, with poor services to match, which is not surprising given that it is not possible to create the income needed from within the community, so that standards are less than an energetic and hard-working council can provide. The borough has been shabbily treated by the Government on the rate support grant.

That is the general background to Wigan's position. The travel-to-work area is further handicapped in that it is surrounded by towns or cities that enjoy special assistance of one kind or another. There are four new towns and neighbouring authorities which have been designated as special development areas.

Wigan cannot compete with that on fair terms, even though the travel-to-work area has intermediate area status. My colleagues and I have been particularly angered by the replies to recent Questions, which have highlighted how badly the Wigan area has been treated. My hon. Friend the Member for Wigan (Mr. Fitch) has lead many deputations to Industry Ministers and other Ministers pressing the claims for Wigan. I have been privileged on several occasions to join in, as has my hon. Friend the Member for Westhoughton (Mr. Stott). On every occasion an irrefutable case has been put forward for Wigan. We have always been given—I will not say that they were anodyne answers—the usual replies saying that the case was being considered, that an immediate response was not possible, but that we would be contacted. But always the claims for Wigan have been turned down. I cannot understand why.

Recent answers that we have been given show why the way in which Wigan has been treated cannot be understood. There are 144 districts, areas or towns in the country that enjoy a higher standard of grant aid than Wigan does either of special development areas status or development area status. Sixty-four of them have a lower rate of unemployment, many of them a considerably lower rate, than Wigan. Only four of the 64 have a higher number of unemployed. Wigan's total is 6,500. There are a further 80 areas with an unemployment rate as high as Wigan's or higher, but only six of those have a higher total of unemployed, and all six enjoy the highest form of grant aid.

To sum up, 144 areas enjoy a higher form of grant aid than Wigan, in only 10 of them is there a larger number of unemployed, and seven out of those 10 are designated as special development areas. This appeal is not for special development areas status, although a substantial claim could be made and has been made. This claim, like the claim made last June, is for development area status. The case is irrefragable. I hope that my hon. Friend the Minister will tell me that our case has been made and must be met.

Wigan has a marvellous labour relations record. It is renowned throughout the area. Industrialists have no hesitation in nominating it as one the areas to which they would go if they were given the extra help, and many of them would expand within the area.

There is no shadow over the ability of the people of Wigan to deliver the goods if they are given the chance. It would give a fillip to the area, an area which believes that it has been badly done by in practically every form of Government assistance—industrial development aid, regional aid grants, rate support grant and inner urban grants. It feels that its claim has been consistently and shamefully overlooked.

Development area status for Wigan would give a fillip to the area. It would encourage development, because despite its good name, Wigan cannot compete with areas that enjoy the higher form of regional development aid. Wigan has consistently made a case over the past two years for being given this higher form of grant aid.

I hope that my hon. Friend will not advance the argument we have heard so many times—that there is only so much jam to be spread around by the Government and that if they concede its case to every area that makes a claim, we shall finish up spreading the jam so thinly that there will be hardly any taste in it and it will do no one any good. I realise the special problems of the neighbouring area of Merseyside. I have not suggested that it does not have special problems. That is why I said that I am not making a claim and Wigan is not making a claim that it should be treated on a par with Liverpool. What we say is that we need special help to deal with our special problems.

There are many areas which do not have the same total unemployment or the same rate of unemployment and moreover do not suffer some of the problems of social and industrial dereliction that Wigan has, largely as a legacy of history, but which receive better treatment. If 65 areas whose claims are not as pressing as the claims of Wigan can be given special help in the form of special development status, Wigan's claim should be conceded. The case has been proved, and I hope that my hon. Friend will not seek refuge in saying "We cannot spread the jam any more thinly."

Wigan can be a greater growth area if the Government would concede its claim. Wigan's great advantage is that it is recognised as a communications centre and as having an outstanding work force. With a little extra help it could consolidate and become a greater growth area, and that would help areas which have a question mark hanging over them at present.

I hope that my hon. Friend will state that the figures disclosed in parliamentary answers as recently as three weeks and one week ago prove that Wigan's case is unanswerable and that that was just the information for which the Government were waiting. I hope that I have shown that if any region or travel-to-work area needs special help, it is Wigan. I look forward to a favourable reply.

12.27 p.m.

The Under-Secretary of State for Industry (Mr. Bob Cryer)

I congratulate my hon. Friend the Member for Ince (Mr. McGuire) on raising this subject, which he has pressed on a number of occasions. His zeal on behalf of his constituents is well known to members of the Department of Industry.

My hon. Friend will appreciate that he has raised a number of matters which are not the direct responsibility of my Department. I shall draw those matters to the attention of the relevant Departments. For example, the Department of the Environment is responsible for the rate support grant and for the clearance of derelict land. I understand my hon. Friend's representations, because the level of unemployment, in Wigan and elsewhere in the country, is a matter of serious concern to everybody and the Government are very alive to these matters.

Perhaps it would help the House if I were to explain briefly the eligibility for regional development grants. They are available, first, towards capital expenditure incurred in providing new buildings or works—other than mining works—and adaptation of existing buildings, on premises used wholly or mainly for qualifying activities in special development, development and intermediate areas. They are available, secondly, towards capital expenditure incurred in providing new machinery or plant for use in premises used wholly or mainly for qualifying activities in special development and development areas.

The qualifying activities concerned are the manufacturing activities described in Orders III to XIX of the Standard Industrial Classification together with certain repair activities specified in the Industry Act 1972 and varied by the Regional Development Grants (Qualifying Activities) Order 1976. The rates of grant are 22 per cent in special development areas and 20 per cent in development and intermediate areas.

As the House will recall, following a recommendation by the Public Accounts Committee, there has been a review of the rules under which the scheme is operated. As my right hon. Friend the Minister of State explained in a Written Answer to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) on 27th February—this is Vol. 945, col. 15—this review has been completed.

Given the automatic and responsive character of the scheme as prescribed by Part 1 of the Industry Act 1972, it would not be practicable to introduce new rules which would reduce its scope further. Nor are the Government prepared to alter their application in ways which put at risk important objectives of the industrial strategy. Accordingly, apart from some minor administrative changes, no alteration to the rules of the scheme as it is currently administered is envisaged.

The amount of regional development grant payable to firms operating in a particular assisted area depends on the area's assisted status. There are three classes of assisted areas in Great Britain—the special development, development and the intermediate areas.

As my hon. Friend has already pointed out graphically, part of his constituency lies within the Merseyside special development area and the remainder within the North-West intermediate area. We all recognise that there is bound to be some feeling of resentment in those places which lie just on the less favoured side of a boundary, but boundary lines have to be drawn. The difficult task of Ministers in the Department of Industry is to determine as fairly as possible where the boundaries of the assisted areas should be drawn. My hon. Friend has pointed out absolutely accurately the criteria which the Secretary of State has to bear in mind under the Act in making those decisions and therefore I need not repeat them.

The geographical unit used for designating assisted areas is the employment office area or, where a number of employment office areas are grouped, a travel-to-work area. These areas are defined by the Employment Services Agency in the light of data from the periodic censuses of population about the pattern of journeys to work in the areas concerned. Statistics of employment, unemployment and of unfilled vacancies are normally available each month for such areas.

It would not be reasonable to expect local labour markets necessarily to correspond precisely with local authority areas and the lack of coincidence between assisted area and local authorities boundaries is not of itself a reason for alter-ting the boundaries of the assisted areas. There are several examples of this lack of coincidence on the borders of the Merseyside special development area. A similar argument was advanced by the hon. Member for South Ayrshire (Mr. Sillars) in a recent Adjournment debate on the assisted status of the Doon Valley.

As my hon. Friend has explained, the metropolitan borough of Wigan, in which a substantial part of his constituency lies has been pressing for some time to be made a development area instead of an intermediate area. Indeed, my hon. Friend, together with my hon. Friend the Member for Wigan (Mr. Fitch) took part in a deputation to the Department of Industry on 16th June to press Wigan's claims. My right hon. Friend the Minister of State for Industry wrote on 27th September explaining the reasons for not making the Wigan travel-to-work area a development area.

My right hon. Friend explained that during a recession—the worst world recession since the 1930s—when rates of unemployment are high in many parts of the country, the Government are reluctant to make changes in the coverage of the development areas unless there are compelling reasons for doing so. My hon. Friend has put forward some reasons, to which I shall reply subsequently, which he regards as being of considerable importance.

The Government introduced certain changes last April and to balance these changes—for reasons of public expenditure and to maintain the effectiveness of regional policy—several areas whose relative prosperity no longer justified the continued provision of assistance on the previous scale were made intermediate areas. Before those decisions were reached the position of every other area was reviewed.

The Government then concluded that, although unemployment was high the Wigan travel-to-work area did not face problems as serious as those of the areas upgraded. Furthermore, the Government then considered that the other measures that they had introduced on a national scale to promote investment in employment were the most effective way of helping Wigan. This remains our view.

Wigan is at least fortunate in that it has been spared, because of its industrial history and its geographical location, some of the problems that face other areas as a result of the well-known problems of such diverse industries as shipbuilding, steel, motor assembling and fishing. Moreover, Wigan continues to benefit from the national measures that the Government are taking to counter recession. For example, my right hon. Friend the Secretary of State for Employment last week announced the extension of the small firms employment subsidy to the intermediate areas. That will now apply to the Wigan area. What is more, the small firms employment subsidy, which is a very valuable measure introduced by the Department of Employment, was introduced as a pilot scheme for the special development areas and, therefore, the differentiation in that respect between even the special development area and the intermediate area and the development area has now been ended.

I conclude by demonstrating the sincerity of the Government's great concern for the problems of unemployment in Wigan by giving a few examples of recent help to the area under the many schemes of assistance which are available there. My hon. Friend said that he regarded Wigan as being very badly done by on every aspect of Government assistance. I thought that that was unfair, although I understand my hon. Friend's strong feelings in presenting the case so capably on behalf of his constituents. Nevertheless, the Government have been diligent in putting forward schemes of assistance, and in this context Wigan has not been badly treated.

There have been 24 offers of selective financial assistance to companies in the Wigan travel-to-work area under Section 7 of the Industry Act 1972. Assistance of some £1.2 million has been offered towards problems, which will safeguard about 1,600 jobs and provide some 1,100 new jobs.

The area has also benefited from the national schemes of assistance under Section 8 of the Industry Act 1972. The accelerated projects scheme has enabled two offers to be made, amounting to £267,000, towards project costs of some £2.1 million. My hon. Friend will see that such a scheme produces some incentive to private enterprise to invest considerable sums of money. A further three projects have been offered assistance of £21,000 towards project costs of £53,000 under the clothing industry scheme.

Five advance factories have been allocated to the Wigan travel-to-work area since July 1974. Of these, three, each of 10,000 sq. ft., have been constructed and allocated with a potential for 95 new jobs, while work is about to commence on a fourth unit of 10,000 sq. ft. The fifth unit, of 25,000 sq. ft., is currently available and several companies have expressed interest. Additionally, the Department holds a further 12 acres of land for future development and is considering other sites for future land acquisition programmes. Quite clearly, with this sort of background, Wigan is bound to be considered seriously for inclusion in future programmes of advance factory building.

I refer now to a specific item which my hon. Friend brought to our attention when he said as a background to his case that Wigan had many old buildings. The Department of Industry is currently examining a pilot scheme for the conversion of old mills into modern, up-to-date premises. We have not made a decision on this, but a pilot study has been carried out in Calderdale, because, like Wigan, other areas have the same problem of old premises which are not attractive to people to move into. We are looking at this scheme to see whether it can be incorporated at lower cost in the new advance factory building programme. If it can be of value and advantage and if it can be put forward at a cost which will be no greater than that of a new advance factory, it will equally apply to Wigan as elsewhere.

A number of measures which have operated nation-wide also apply to Wigan and give advantages. The 100 per cent. tax allowance on plant and machinery, which is a direct tax inducement to invest in new plant and machinery, applies to Wigan as it does to the whole of the country.

The employment measures which have been announced by the Secretary of State for Employment—and I have already mentioned the small firms employment subsidy—specifically referred to the textile industry. The Secretary of State said: We shall introduce new arrangements to support short-time working in the textiles, clothing and footwear industries. … In addition, we have decided that firms in the textiles, clothing and footwear industries which have exhausted TES in the past or will do so in the period to 31st March 1979 should be eligible for a further six months' support for short-time working where redundancies would otherwise occur. We estimate that a further 40,000 workers will benefit for a period of six months each under this further proposal.—[Official Report, 15th March, 1978; Vol. 946, c. 441–2.] As my hon. Friend knows, textiles and clothing still represent some part of the work force in his constituency, and 55 applications have been approved under TES, involving 3,381 jobs in the Wigan area. The Secretary of State has negotiated extremely vigorously with the EEC Commissioners and has managed to preserve the essentials of the TES scheme and negotiate some extensions which will save many jobs. These measures apply to the Wigan area as well as anywhere else.

When the Government embark on international and national negotiations that might appear to have little relationship to Wigan, the benefits of these negotiations often spread down into the constituencies.

I refer to the renegotiation of the Multi-Fibre Arrangement. These negotiations were entered into with a strong conviction of their importance to the textile industry, and that arrangement gives further benefit to the industry. The main advantages of the arrangement include the establishment of "global ceilings" for the eight most sensitive products within the EEC. This means limits—both for the EEC as a whole and for individual member States—in imports from all low-cost sources. I know that my hon. Friend has been vigilant about low-cost imports affecting his constituency.

Other advantages include more comprehensive quota coverage of other products and more comprehensive coverage of exporting countries' lower annual growths with rates ranging inversely to market penetration; more realistic base levels; a safeguard mechanism for products not immediately under restraint; no carryover of under-used 1977 quotas into 1978; new and more precise product categorisation; and stricter monitoring of all imports.

These measures are important because they are designed to preserve jobs in the textile industry, which has been extremely badly hit, particularly in the MFA negotiated and introduced in 1973.

Mr. McGuire

I am grateful to my hon. Friend for outlining the many benefits conferred on the Wigan travel-to-work area by the measures that the Government have announced, and those that have sprung from Wigan's enjoying intermediate areas status. However, would he not agree that many of the arrangements that he has mentioned—certainly those relating to the MFA—will apply to all textile areas? They are available on an almost nation-wide basis to all areas that enjoy assisted area status. I want the Minister to deal with the special problems of Wigan because it is surrounded by new towns or those areas enjoying special development areas status. He has not answered that.

Mr. Cryer

I was making the point that there are national measures which are selective in their application. Regional employment premium has been abolished and therefore is no longer available in special development areas or development areas, so that even if Wigan were granted development area status, the differentiation has been narrowed because REP no longer exists.

We were strongly criticised for abolishing REP. On the other hand, we have produced the temporary employment subsidy, which has applied nation-wide. The MFA was particularly helpful to areas such as Wigan, because the North-Western textile industry was the most badly hit. Therefore, on a national measure, Wigan has derived a much greater proportion of benefit than any of the areas which are not textile-manufacturing areas.

It is true—and I accept it—that the points I have been making about TES apply to any assisted or non-assisted area. On the other hand, my hon. Friend's point about Wigan being surrounded by areas which receive much higher levels of assistance is not entirely reflected as being a solution to the problem. Merseyside, in a special development area, has more unemployment than Wigan. Another area in my hon. Friend's constituency, Skelmersdale, has suffered difficulties through the closure of Courtaulds and the Thorn factory for making colour television tubes. Therefore, development area status or special development area status is not of itself a solution of the unemployment problem.

On a percentage basis, a number of intermediate areas have more unemployment than Wigan—for example, Southport 9.8; Ormskirk, 11.7; Mablethorpe, 14; Skegness, 12.9; Hemsworth, in South Yorkshire, 11.2; and Rhyl, 15.2. Some development areas have considerably higher levels of unemployment than Wigan—for example, Cardigan, 16.8 per cent.; Tenby, 18.5 per cent.; Wrexham 12.5 per cent.; Newton Stewart, 16.4 per cent.; Ilfracombe, 194 per cent.; Helston, 19.5 per cent.

Taking absolute figures of unemployed people, although not entirely irrelevant, is an extremely dangerous argument to advance. On that basis, Leicester, in January this year, had an unemployment figure in the travel-to-work area of 11,462. The figure in Wolverhampton was 8,811; in Torbay, 7,684; in Luton 7,272; and so on.

The Secretary of State has to take into account many factors in deciding the development area, special development and intermediate area boundaries. It is often a difficult and invidious task. It is made all the more difficult by the fact that there is universally a level of unemployment which is far too high, and the Government are using their best endeavours, during the worst world recession since the 1930s, to reduce it. We must work for a resurgence of international trade and on the lines announced by my right hon. Friend the Secretary of State for Employment, through the Section 8 schemes and through the assistance which the Government do their best to distribute as fairly as possible.

As the Secretary of State for Employment pointed out last week, only higher and sustained economic activity in this country and in the world economy will solve the problem of general unemployment. The aim of the Government's policies is to solve it.

I appreciate the strong representations made by my hon. Friend and I am sure that he will appreciate that the Government are doing everything they reasonably can at regional, national and international level to solve the vexed problem to which he has drawn attention tonight.

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