HC Deb 20 June 1980 vol 986 cc1937-2035

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Morrison.]

9.35 am
The Minister of State, Department of Industry (Mr. Adam Butler)

We have an opportunity today to look at the industrial situation in the West Midlands. I am certain that hon. Members will use the opportunity to draw the Government's attention to problems in their constituencies. That I welcome.

I fear that a very gloomy picture will be painted. There is a great deal to be concerned about. If one man is put out of work or one company goes bankrupt there is reason to worry—for that man and his family, for the men and women employed by the company and for the people whose savings were invested in it. That is the human dimension of the problem, and we as politicians disregard that dimension at our peril.

However, I do not believe that the picture is as grim as it will be painted. It does no good if exaggerations are made. Certainly it does no good to misrepresent the symptoms or the causes of the disease. That could result in the wrong medicine being prescribed or, if the right medicine is being applied—as it is under this Government—it could lead to misunderstandings about the reasons for it or the purpose of it.

The symptoms are all too familiar—poor order books or low profitability, or both, leading to higher borrowings and cash flow problems. To get away from the jargon and put it more simply, cash flow problems equal not having enough money to pay the wages at the end of the week. This leads to redundancies and factory closures, and thus we come back to the human dimension.

What are the causes of such a situation? It will be argued that they are high interest rates, the high value of the pound, inflation, and the recession in the United Kingdom and other parts of the world. Some will argue that these things are in the Government's control, and therefore they are the Government's fault. The trouble is that, if all the blame is attributed to the Government, everyone looks to the Government to provide the solutions, and clearly that is not the way forward.

The four items that I have mentioned are not all, if any, within the Government's control. In so far as the Government can do anything, we are doing it. We have identified inflation as the single biggest enemy of this country, and we are pursuing it with tenacity and will. Had the present Leader of the Opposition and the former Chancellor of the Exchequer shown similar will and tenacity when they were in power, they would not have fuelled the flames of inflation in the run-up to the last election, and we would not have inherited the legacy of escalating inflation and massive Government over-borrowing.

As we all know, inflation is a long-term problem. It is fashionable, but also correct, to look back 18 months or two years for its causes. I subscribe to the view that the growth in the money supply is a main contributor, and its control is therefore the main solution. I believe that there is a causal relationship between money supply and inflation, with a time lag of 18 months or two years.

Interest rates, inflation and the high pound are immediate direct causes of some of industry's current problems, but the root cause lies much deeper. To encapsulate in a single phrase the causes of our industrial problems, it is simply that we are not sufficiently competitive. We are not price or quality competitive, and we do not always deliver on time. We do not provide the customer with what he wants and we are not making big enough profits by doing so.

Why is that? The high value of the pound is one cause. It is more difficult to sell overseas in competition with other industrial countries when the pound does not directly reflect our industrial competitiveness. In industrial competitive terms the pound is over-valued, which also makes it more difficult to compete in this country. However, the high pound is also a major contributor to our battle against inflation. Many companies in the West Midlands depend on imports for their raw materials, whether cocoa for Cadbury—and we know the trouble that Cadbury has—or wool for the carpet trade. It is a cause for some optimism that commodity prices are coming down, and the high pound contributes to that.

I am not one to attribute all our problems to the fact that we came early into the industrial revolution. If we could not do something to adjust that situation in a century and a half, we should not have started on that road in the first place. However, if we look at post-war history, we can identify a deep-lying cause. We have either not worked hard enough or not put our work to the most effective use. As workers we have taken too great a share for immediate consumption of the rewards of work. We have not left enough for future investment for plant and machinery and to safeguard the jobs of the next generation. We have not encouraged investment, because we have offered too low rewards for savers. In short, too much has gone in wages, and profits and dividends have been too low. To propose to reverse that trend is not to suggest a two-nation philosophy. Today's investors are largely workers and their pension funds. It is estimated that about 17 households out of 20 have an investment in British industry. Those families depend as much on their investment in British industry as on the work that they may do in factories or offices.

With regard to profitability, the most revealing statistic was referred to at our last Department of Industry Question Time—the low rate of return on manufacturing industry, which has gradually declined over the past decade or two but which, from 1974 onwards, has been at a catastrophically low rate.

The Government are determined to reverse that post-war trend. As part of our overall strategy, we are determined to improve incentives to work and save. We are putting the accent on the need for realism in industry, leading to what the Prime Minister calls working with the economic forces instead of working against them. There is a need for everyone in industry to co-operate instead of indulging in conflict. There is also a need to adjust the balance of industrial power. Surely we have at least learnt one lesson—that today's greed is tomorrow's poverty.

Other forces have been at work. The Socialist philosophy has encouraged and developed the attitude to look to the State as the great provider, which has drained the will of the individual to provide for himself. He tends to look to others to do what he should be doing himself : and so it is with industry.

Speeches today will be concerned largely with constituency matters, but I suspect that Opposition Members will tell us of the need to intervene more in the question of prices and wages control.

Mr. David Winnick (Walsall, North)

If the hon. Gentleman believes that Government intervention is so immoral and wicked, he presumably feels that the Labour Government's rescue of British Leyland was wrong, although it saved thousands of jobs in the region.

Mr. Butler

As the hon. Gentleman is well aware, the present Government are also supporting British Leyland, and we acknowledge that there may be cases in which the Government have to become involved.

My point is that the Socialists put the accent on someone else, usually the State, doing for the people of this country what generally they should be able to do for themselves. Wages and price control should be a matter for business and not Government intervention, as should the running of businesses and direction of investment. There will be arguments for the protection of businesses from the only force that can serve to bring about and maintain competitiveness—competition itself. That same creed has prevented the forces of change from operating by imposing on business rigidity and State ownership. We shall also hear more, by implication, of the need to tax efficient businesses in order to subsidise the inefficient.

Most of the symptoms of Britain's industrial problems can be found in the West Midlands—human and business casualties of the present stagnation and recession. We can also find examples there of the deep-seated and much longer-term reasons for the problems than merely high interest and exchange rates. Essentially the underlying problem is a lack of competitiveness.

The West Midlands is heavily dependent on the car industry, which is an example of what I have been saying, and one has to mention particularly British Leyland. We have seen low productivity, a lack of investment, jungle warfare within the company, debilitating strikes, internal disputes and the severe consequences of external disputes.

Even in 1979, when we should have been looking to our own recovery, the lorry drivers' strike at the beginning of the year and the engineering dispute in the autumn did grave and lasting damage to the car industry and those who depend on it. In addition, the steel strike earlier this year had the same horrifying effect.

It is a crying shame that in 1979, when sales of motor cars in this country were at an all-time record level, the production of motor vehicles was at its lowest since 1961. That was not the responsibility or the fault of the Government. It was the responsibility of the industry and those, whether on the inside or the outside, who helped to cause its problems. That is why I say that there is much more to the problem than merely interest rates and the like.

We are righly worried about Japanese imports of motor cars, but in that record total of car sales last year the vast mass of the record number of imports came from the EEC on a free, competitive basis, from factories paying higher wages than we pay. That is a matter of shame and further proof of our lack of competitiveness.

British Leyland and the rest of the car industry are classic examples of the interdependence of industry. The components suppliers in the West Midlands are, despite their diversification, still heavily dependent on British Leyland. The loss of car production in British Leyland alone in recent years adds up to many thousands of tons of British steel that has not been sold to the company and has therefore not been produced. That has contributed to the problems of the British Steel Corporation, and is another example of the interdependence of one company and another.

Fortunately, we can find in the West Midlands signs of the way forward. There are reasons to suppose that British industry can, and will, survive. I do not go all the way with the Birmingham business man who was reported in The Times yesterday as saying that 2 per cent, off MLR would do the trick because confidence would return and the sun would shine. Such action would help, but it is not the whole answer. However, I have some sympathy with his criticism of some of his defeatist business colleagues. He said : I don't go along with the dismal johnnies who are talking themselves into the grave and over-reacting to every piece of economic and market gossip. That seems to be a healthy attitude.

There are some grounds for optimism in the West Midlands. Some sectors are active, particularly the companies involved in high technology and the component companies supplying the aerospace industry. The redundancies in Lucas rightly received publicity because they involved thousands of workers, but there has been no publicity of the fact that Lucas Aerospace is recruiting staff to cope with its hundreds of millions of pounds worth of orders.

Another active sector is the small business sector. There are bankruptcies, but the rate of start-up is high. The evidence for that is the demand for factory units, especially small factory units of under 5,000 sq. ft. and under 2,500 sq. ft. In the Birmingham area, they are often bespoke even before the first brick is laid and certainly before the factory is completed. There is also evidence of business activity in Telford new town. In the year ending March 1980, there were 65 new lettings compared with 28 in the previous year. In one recent month, about 10 new companies set up in Telford.

We have to look closely to find out why some companies, often in the traditional industries, are able to keep their heads above water. Some are even taking on more workers. There are lessons to be learnt from that. The Daily Telegraph of 9 June reported a visit made by one of its staff to Wickman Machine Tools, a part of the John Brown group. That company manufactures traditional equipment—multi-spindle automatic lathes—and gains 20 per cent, of the market in America, not on the ground of price or because its product does anything radically different, but because it delivers ahead of the competition. It is surviving because, as the report said, the company is countering the problems with a mixture of higher productivity and realistic wage settlements. There is over-manning and low productivity and there have been wage increases that cannot be justified in present circumstances. But Wickman's—and there are many other such companies—is the lesson to so many more. It has been able to negotiate with the unions lower wage settlements, with productivity bonuses written in, and that is achieving results. The company is keeping its head above water and is remaining profitable.

It should be noted by all who wonder why some companies are successful while others are not that Wickman's believes in thorough communication between its management and its work force and it says that, if employees have been prepared to take a cut in their living standards in order to keep the company going, they must be the first to benefit when things get better. That is another lesson that we should learn, as is the fact that the top management lays stress on the need for the highest possible professionalism in management.

I have been critical of the history of British Leyland, but I am glad to praise what is happening now. There is a combination of what is needed. There is good management and leadership at the top. The work force accepts the stark reality of the company's position and sees co-operation as the only possible road to success. The company has new products in the pipeline which will put it back with the leaders in styling and performance. It has some of the best facilities in the world.

When we debated British Leyland a few weeks ago, I reported that I had been to Longbridge a few days before to see the new body shop. British Leyland says modestly that it is among the best in the world. I suggest that it may be the best.

The company has the facilities and the products. Indeed, it is expanding where its products compete, such as with the Land-Rover. Sir Michael Edwardes is taking a tough line with his suppliers if he suspects that they have been awarding unnecessarily high wage increases and are trying to pass them on to him. That is the sort of leadership which we want, and I am glad to pay tribute to what the company is doing.

I return to the Government's role. At local level, there is a need for local authorities to recognise that industry and commerce pay for many local services and for the salaries of those working in town halls. Local authorities must take a positive and helpful attitude towards planning applications.

One of the causes of industry's problems about which business men complain to me is the massive rate increases that they have been suffering. It is not a coincidence that throughout England the highest rate increases come from Labour-controlled councils. I say seriously to those hon. Members representing areas where there are Labour-controlled councils that one positive contribution that could be made would be to keep down rates. Rate increases of 30 or 40 per cent, will kill small businesses and add an intolerable burden to those such as British Leyland which are paying millions of pounds in rates.

The Government will maintain the battle against inflation with the weapons that we are using now. We shall go on bringing down the public sector borrowing requirement, which will have its effect on interest rates. This, in turn, will have an effect on the value of the pound. That is the best way forward. We shall stick to it with determination. We shall create the right climate in which business can flourish. We shall encourage and reward effort and leave industry to manage its own affairs.

A paragraph in the Society of Motor Manufacturers and Traders' digest of May 1980 caught my attention. The president, Sir Barrie Heath, was reported as saying that, in the past 12 months, much had changed and we had moved towards greater financial incentives for the individual, reduced Government intervention in industry and greater freedom for industry to determine its own future in the best interests of employees, investors and the nation. Sir Barrie was quoted as saying : I believe that whatever our problems now we are in a better position to deal with them than would have been the case had we carried on as before. That seems to me a good summary.

Nobody pretends that the following months will be easy. They will be rough and tough. There will be more bankruptcies. There will be more redundancies and closures. We are in a recession, and so are other parts of the world. At the end of it, I believe that industry will be in a slimmer and fitter state to compete. There are enough signs of the right things beginning to happen in industry in the West Midlands and elsewhere to have confidence in the future. There is a facing up to reality. A sense of co-operation is developing between management and work force. We are competing in some of the new technologies. There is support for Government policies.

Industrialists do not want us to make a U-turn. Of course, they want interest rates to come down. They look forward to the day when they can stop taking the medicine. But they know, and go on saying to us, that what the Government are doing needs to be done and, in relation to the underlying problems, has needed to be done for a long time. They know that there is no other way, however painful this way may be. In the West Midlands, despite the problems that I have freely acknowledged, and despite the difficulties and the personal hardships that are occurring, I believe that those who work in industry are regaining confidence in themselves. I share that confidence.

10.3 am

Mr. George Park (Coventry, North-East)

If my hon. Friends and I paint a gloomy picture this morning, we do not do so because we take a delight in painting gloomy pictures. We shall be doing so because we shall be talking about the facts. I am bound to say that the Minister's contribution has not lifted the gloom at all. The hon. Gentleman forecast that the Opposition would be putting all the blame on the Government. Certainly some of the blame must rest with the Govern-ent, but I hope to show that the troubles of the West Midlands go back much further than simply the last 12 months.

The Minister accused us of fuelling the flames of inflation. It is true that there was a time in the West Midlands when wages were above average. But those days are long gone. I suggest that the Minister examines the wages statistics. He will find that we are now below the national average.

The hon. Gentleman accused us of not working hard enough. I invite him to come to Coventry or to visit the Black Country and repeat his accussation to the work people there. He accused us of striking. One thing should be clear about strikes. No one goes on strike for the hell of it. There is always a reason. It is because the attempt is not made to find out why people are on strike and to get down to proper negotiation that strikes often drag on.

The Minister complimented the industry on its high technology. It is odd that, in most cases, this is being done with Government money, not private money. The hon. Gentleman referred to Wick-man's and its success. I pay tribute to Wickman's. It is located in Coventry. But the same conditions, in regard to reasonable wage claims and a labour force that does not strike at the drop of a hat, apply to Alfred Herbert. Alfred Herbert, however, is being told by the new NEB, under the instruction of the Secretary of State for Industry, to sell off its profitable bits and leave itself with the one part that so far does not make a profit. If that is commercial logic, I do not understand it.

The hon. Gentleman paid some tribute to the current situation in British Leyland. He should recognise that there has been a contribution by the trade union movement towards that situation. The hon. Gentleman referred to Wickman's getting ahead of the market. I urge the Government to realise that there are design concepts in British Leyland that are ahead of the market. If a car was now brought on to the market that could do 100 miles to the gallon, there would be no difficulty selling it. But such ventures need funding.

There has been reference to rate increases. I have listened to Government spokesmen talking about their manifesto mandate and how they will carry it out. They should recognise that Labour local authorities have also been given a mandate. When they increase the rates, they are acting in response to the mandate on which they were elected to try to maintain the services against the opposition of the Department of the Environment. The hon. Gentleman said that industrialists do not want a U-turn. We may talk to different sets of industrialists. I can assure the Minister that I have talked to many industrialists who are grizzling in their beards about the actions, or nonactions, of the Government.

I tried on 7 February, on Third Reading of the Industry Bill, to sketch in broad outline the problems of the West Midlands. We welcome the opportunity today to take matters further. We seek a recognition that the economy of the West Midlands has moved in to the same position that other regions are struggling to get out of. The only difference is that they receive assistance and we do not. Since 1966, there has been a greater job loss in the West Midlands county than has been experienced nationally. For every 100 jobs that existed in 1966, there are only 85 left. This stems, as the Minister said, from the over-dependence of the West Midlands county on the metal-based manufacturing industries which account for almost 40 per cent, of total employment. The national figure is 16.8 per cent. Over 14 per cent, of total employment in Britain in this sector is located in the West Midlands county.

Within certain districts, the dependence is even greater. In Coventry, it is 53 per cent., in Dudley, 45.5 per cent., in Walsall, 45.4 per cent, and in Sandwell 49 per cent. It follows inevitably that with the decline in these industries—the main source of jobs—there has been a rapid and consistent rise in unemployment to levels often well above the national average. In some major county areas such as Birmingham, Coventry, Walsall and Wolverhampton, unemployment levels are greater than in places with intermediate area status. At 27 per cent, long-term unemployment is well in excess of the national average.

A further point should not be overlooked, particularly in the light of incidents elsewhere. A total of 22 per cent. of the coloured unemployed in Britain are resident in the West Midlands. In the 16 to 24-year-old group, 40 per cent, are unemployed.

Regional policy under successive Governments has not been sufficiently flexible or selective. That has inhibited the natural processes of diversification and the regeneration of the local economy. As a result we are still too dependent on industries with uncertain long-term futures. The blanket approach to regional policy has led to a major imbalance between firms moving into the county and firms moving out. Between 1945 and 1976, 92 firms moved into the West Midlands bringing 10,500 jobs. In the same period 307 firms moved out with the loss of 103,600 jobs.

The previous Government did not designate the West Midlands, but they introduced schemes to help specific sectors of industry such as machine tools, the ferrous and non-ferrous industries and small businesses. They also gave specific help through the National Enterprise Board to companies such as British Leyland. Chrysler and Alfred Herbert. Such assistance is an anathema to the present Government.

Another constraint is the consistently low level of private investment, in spite of the obvious need if we are to be competitive. The low level of investment is the most probable explanation for the West Midlands now having the lowest average productivity of all the regions in Britain. Surely the objective of regional policy cannot be to undermine the capital stock of the manufacturing heart of the nation. Yet, because there is no official recognition of the economic problems of the West Midlands, it is denied access to the European regional development fund and has only limited access to the social fund and European Investment Bank.

I might be regarded as being over-cynical if I suggest that the 40 per cent, contribution from our Government to agreed schemes is a major factor in the decision not to recognise the problems of the West Midlands. Given the longstanding need for higher domestic investment, I am not convinced of the wisdom of removing constraints on overseas investment. If the "Buy British" campaign is to become more than a slogan. investors must put their money where their mouths are. However, I appreciate the temptation to leave it in the bank, because of the present record interest rates.

Mr. Nick Budgen (Wolverhampton, South-West)

The hon. Gentleman is complaining about the high value of the pound. He should welcome the relaxation of exchange controls because eventually that will have an effect on the level of the pound?

Mr. Park

I have not even mentioned the high value of the pound, although I might get round to it.

There is a temptation to leave money in the bank. Why have all the hassle of business when one can earn high interest rates when sitting back and doing nothing? However, doing that does not produce a single item that can be sold at home or abroad. It adds to the banks' already bloated profit levels and to the ranks of the unemployed.

The manpower research group at Warwick university considered the impact of the June 1979 Budget, with its accompanying expenditure plans, on employment through to 1985. Its projection implies a 4 per cent, fall in employment nationally between 1978 and 1985. That means a decline of 7 per cent, in employment in the West Midlands. Already within the county area there are concentrations of economic and social problems, especially in the inner urban areas, which I have no doubt that my hon. Friends will mention.

According to a review by the centre for regional studies at Birmingham university, in the period 1966–80 female unemployment increased ninefold and male unemployment sixfold. Nationally it increased fourfold. The West Midlands now has almost 10 per cent, of the United Kingdom unemployed compared with 5 per cent, in 1966. The introduction of the Birmingham inner city partnership and the Wolverhampton inner city programme and the designation of Sandwell as an area in need of inner area assistance, was the first recognition by the central Government that parts of the West Midlands face problems and disadvantages similar to those in the cities and towns in the assisted areas.

These small but important increases in the resources available to local authorities provide an opportunity to explore new forms of action, especially in assisting local firms which are capable of expansion to realise their plans and to reclaim derelict land for industrial use to ensure that lack of land does not act as a restraint on industrial development.

About 3,300 acres of land in the West Midlands have been found to be suitable for industrial purposes. However, with the exception of the partnership areas, we receive only half the grants that other areas receive to reclaim such land. That has an effect on development.

We know to our cost that in addition to the figures that I have already given, further substantial job losses have occurred due to major factory closures and redundancies. In the last 12 months 16,000 jobs have been lost. The most serious single blow to employment is the projected cuts in British Leyland. They will lead to a loss at British Leyland in the country of about 11,500 jobs. The jobs were to have been phased between 1979 and 1982, but that programme has been telescoped. When my hon. Friend the Member for Nuneaton (Mr. Huck-field) suggested that there would be "knock on" effects in other industries, his suggestion was pooh-poohed. Now we know that there are to be 3,000 redundancies at Lucas and Dunlop.

Mr. Patrick Cormack (Staffordshire, South-West)

Does the hon. Gentleman agree that the support for Red Robbo by the hon. Member for Nuneaton (Mr. Huckfield) did not exactly enhance British Leyland's prospects?

Mr. Les Huckfield (Nuneaton)

Derek Robinson has been proved right.

Mr. Park

If the hon. Member for Staffordshire, South West (Mr. Cormack) wants to question my hon. Friend the Member for Nuneaton he should do it himself and not try to do it through me.

Of the forecast British Leyland redundancies, 5,000 will fall on the Coventry Canley plant which was Coventry's fourth largest employer.

The decline in the car industry started shortly after the removal of the 33½ per cent, tariff which lasted from 1915 to 1956. The high dividend payments and low investment in new plant throughout the car industry began to take their toll in the 1960s. That started the trend of increasing import penetration. It is not a new phenomenon. Since 1964 the motor vehicle industry has never operated above 75 per cent, capacity, according to the Ryder report.

Coventry's industrial base is narrower than that of any comparable city in England and Wales. The local economy depends heavily on a handful of large firms, many of which are in financial difficulties. The city's 10 largest firms account for 70 per cent, of manufacturing employment. Two-thirds of that employment in the vehicle sector is provided by United Kingdom companies operating throughout Britain and one-third by multinational corporations. The corollary of such a pattern of ownership is that for the city's major employers, Coventry's activities are only a minority interest and the overall development of such companies will be dependent on events outside Coventry.

Coventry city council statistics indicate that since the 1950s each peak in unemployment is progressively higher than the previous one and that the depressions are, correspondingly, lower and that these crises have coincided with redundancies in the motor industry. Little or no change in the overall degree of diversification in employment has taken place since the mid-60s.

That is not a new thing for Coventry. We have been through that situation before. In the 1850s nearly half the labour force was engaged in silk ribbon weaving—protected by tariffs—but, in the sacred name of free trade, Gladstone removed the duty on French ribbons in 1860. As a result the city's economy stagnated for 30 years and there was widespread poverty before we painfully diversified. I hope that we can learn the lessons of history and answer the question of the 1980s which is "What will replace the motor vehicle industry in terms of jobs?"

A recent OECD study confirms the manpower research group finding of a slow rate of economic growth over the next 20 years. Bearing in mind that we shall need an extra 150,000 jobs each year in the West Midlands, well into the 1980s, just to cater for new entrants to the labour market, plus the effects of advancing technology, there can be no doubt that there will be a continuing pre-occupation with unemployment. One might even argue that a regional policy is no longer relevant, though I do not subscribe to that view.

I believe that we should move away from a policy which merely moves industry from one part of the country to another. I believe that we should, instead, examine the constraints which inhibit the regeneration and restructuring of industry within the region, although I appreciate that that cannot be done by adopting the arms length approach of the present Government.

However, if we examined the constraints we might, for example, in the area of new ideas and techniques, call on the universities and the polytechnics to become more involved in providing consultancy and research support for industry. We might establish a West Midlands industrial development institute to help industry understand and use new technology. We might give regional and local institutions greater scope for individual initiatives, as was mentioned by the Minister.

Local authorities have a range of responsibilities and powers which can be, and are being, applied in the context of economic policy. But much more could be achieved if the responsibilities were widened and greater resources were made available. In spite of high unemployment, skills are said to be in short supply. We could aim to make the region self-supporting in skill needs not only in the traditional industries but in those which could be attracted by the supply of a skill pool of labour.

Non-mobility of labour is said to be another constraint. Policies could be introduced which would help employment in the building industry by providing a good housing stock supplemented by a system of transfers of council house tenancies. In this area of mobility there are, surely, improvements that can be made in public transport and there could be greater co-ordination among the agencies concerned with education and training.

I have already referred to financial constraints on land reclamation in the West Midlands. The Department of Industry could take on a social merchant banking role since conventional sources are unwilling to take risks. That would be of particular value to people setting up small businesses.

Disputes could be minimised by an extension of industrial democracy and, in the short term, the Government could consider extending the term of hire purchase agreements on cars from two to three years. These suggestions are not exhaustive, although I know that many of them run counter to current Government policy. The basic aim should be to create a regional economy capable of adjusting to markets, to technology, and to labour and raw materials and which could in time generate its own growth.

Conservative Governments take the view that the main objective should be to leave industry alone to get on with it and that industry would consequently succeed. The reality of the modern world is that if we are in competition with foreign industries which enjoy the support and collaboration of their Governments while we do not, we will normally come out the loser.

In France, Germany and Japan, government and industry work together against foreign competition. If we do not establish such a relationship in Britain we shall always emerge the loser in the battle for world trade. Those are not my words. They are extracted from a speech made by the Minister of Agriculture, Fisheries and Food. Is it too much to hope that those words will be taken to heart by those Ministers concerned not only with the economy of the West Midlands but with that of the country as a whole?

10.25 am
Mr. John Heddle (Lichfield and Tamworth)

I am most grateful for having caught your eye, Mr. Deputy Speaker, so early in this vitally important debate. It is sad, however, that the problems of the engine room of Europe should be debated on a Friday. It is perhaps a pity that a whole day during the working week has not been devoted to the future prosperity of a major region which affects the lives, jobs and homes of so many people.

I shall not dwell upon the remarks made by the hon. Member for Coventry, North-East (Mr. Park)—others more schooled in the arts of this Chamber will do that—other than to make two points. He took us back briefly into history and reminded us that the prosperity of Coventry in the 1850s was based upon the production of ribbon He, of course, has a vested interest in the continued production of ribbon because his Government was a major customer for red tape.

Mr. Park I think that the hon. Gentleman should look more closely at the history books. The outstanding ribbon produced by Coventry then was called Coventry Blue.

Mr. Heddle

I am grateful to the hon. Gentleman for extending my meagre knowledge of the history of Coventry. However, I can assure him that Coventry Blue will come again in even greater measure than the one-quarter of that great city being represented at present by one of my hon. Friends—the Member for Coventry, South-West (Mr. Butcher), wearing a Coventry Blue rosette.

The hon. Gentleman quite rightly touched upon the issue of the construction industry. Some hon. Members and some of my hon. Friends are much more experienced than I am in the problems of the motor industry, the clothing industry, the process plant industry and the machine tool industry, all of which have suffered a severe slump over many years. They will, I am sure, make valuable contributions to the debate.

Before I deal specifically with the problems of the construction industry, may I bring to the attention of the House an article written by the right hon. Member for Orkney and Shetland (Mr. Grimond) in a national newspaper earlier this week. He said, among many other wise things : In our own country difficulties arise not from a year of Conservative Government but from many years of the creeping blight of bureaucratic socialist measures and the pressure of bureaucratic organisations for money. That, surely, is not more true than in the West Midlands.

May I remind the House of remarks made only two days ago by the general secretary of the TUC. He said, unwisely in my opinion, at the NATSOPA conference in Southport : While prices continue to increase … unions will seek matching pay rises. That sort of negative, sterile and wooden attitude will not give the West Midlands the breath of fresh air that it so richly and rightly deserves if it is again to become the workshop of the world and the main artery of the industrial bloodstream of Great Britain.

Before I refer to the problems of the construction industry, I should like to pay a particular tribute to my right hon. Friend the Minister of Transport. In his "Policy for Roads : England 1980", published a fortnight ago, he and the Government gave the West Midlands the opportunity to be put on a direct route to Europe. I refer particularly to the M5-M50 extension, the M54 to Telford——

Mr. Cormack

My hon. Friend must allow me to place on record the fact that there are divergent views about the desirability of the M54. Many feel that it would be a scandalous waste of public money.

Mr. Heddle

I am grateful to my hon. Friend for that intervention. We in our party always agree on principle, unlike the Labour Party ; we just sometimes disagree on detail. My hon. Friend gives me the opportunity to invite him to agree that the main thrust of the White Paper so far as the West Midlands is concerned is that the M42 will now by-pass Tam-worth in my constituency. It will unblock the TIR jugular vein and allow my part of Staffordshire and my hon. Friend's part of Staffordshire a direct route to the East Coast ports so that industries in South Staffordshire can expand and move the goods that they make to the market awaiting them across the water in Europe.

Mr. Julius Silverman (Birmingham, Erdington)

Will not the road, when it is constructed, also allow European manufactured goods to come into this country?

Mr. Heddle

I am always pleased to listen to the hon. Gentleman's views. Although he sits on the Opposition Benches, the hon. Gentleman, who is a much respected Member, is a constituent of mine. I am delighted to have the privilege of representing him.

Mr. Percy Grieve (Solihull)

Perhaps the hon. Gentleman will vote for my hon. Friend.

Mr. Heddle

Coming as he does from a Socialist family whose political philosophy is not necessarily now the dominant political philosophy of his party, the hon. Member for Birmingham, Erdington (Mr. Silverman) knows that healthy competition from Europe will be stimulating for the West Midlands, which was founded upon free enterprise and healthy competition with Europe.

I am sure that all hon. Members on both sides of the House have received a letter from the Birmingham Chamber of Industry and Commerce from which I should like to quote the following : Investment intentions are holding up well in the circumstances, which means that firms still have reasonable expectations that the general economic situation will brighten in the not-too-distant future. Time is clearly a critical factor in this respect because, unless there are early signs of stabilisation, not to say improvement, in the economic climate, then investment intentions will suffer". There are still signs of optimism that there will be an upturn in the economy in the West Midlands and thus in the job prospects for all hon. Members' constituents.

My hon. Friend the Minister of State highlighted the policies being pursued by the Government, which are the only policies likely to succeed. We know, by a process of deduction, that all other policies have failed. I challenge Opposition hon. Members, if they wish to be the architects of other policies that they have not yet put upon the drawing board, that they should do so.

I come to the problems of the construction industry. After the motor industry, it is the second largest employer of skilled labour in the West Midlands. A slump in the industry means higher unemployment. If fewer houses are built, fewer carpets are made, fewer curtains are produced, less furniture is made, and there is no market for kitchen equipment and other domestic appliances. Other industries suffer, and homelessness increases. If the construction industry in the West Midlands is not built upon a firm foundation, the region's economy wallows in the shifting sands of depression.

Mr. Les Huckfield

That has to be the quote of the year.

Mr. Heddle

I am obliged to the hon. Gentleman. He has said many things none of which would rank as the quote of the day.

The work load in the construction industry in the West Midlands in the decade 1972–82 is projected to have dropped by 20 per cent. That is the Government's sad inheritance.

I invite hon. Members opposite to commit themselves today not to include in their manifesto for the next election a threat to nationalise the building industry. There is no doubt that that threat hanging over the industry before the last election knocked a great deal of the confidence of major contractors before that election, and damaged their forward planning.

I invite hon. Members opposite also to bear in mind that their own Government's Development Land Tax Act 1976 did nothing for the confidence of the building industry in the West Midlands. I invite the hon. Member for Nuneaton (Mr. Huckfield), when he winds up——

Miss Betty Boothroyd (West Bromwich, West)

I shall be winding up for the Opposition.

Mr. Heddle

Not only is the hon. Member for Nuneaton not to wind up for the Opposition, but he seems to be lost for words.

I invite my hon. Friend the Member for West Bromwich, West (Miss Boothroyd)—I count her as a friend—to agree that there are certain sections of the Development Land Tax Act as yet unrepealed that require repealing. I refer particularly to deemed disposals and the fact that windfall gains are taxed in the same way as development profits. This benefits speculators and not building contractors.

Mr. Gwilym Roberts (Cannock)

Without developing this partisan historical attack, will the hon. Gentleman look at the construction industry's immediate problems and agree that the biggest single problem that is devastating the industry at present is the public expenditure cuts made by his Government?

Mr. Heddle

The hon. Gentleman, who represents a neighbouring constituency, makes the fatal mistake of assuming that the foundation of the construction industry is the public sector. It need not be and should not be.

As my hon. Friend the Minister said, there is a strong demand for nursery units, for 2,500 sq. ft. starter accommodation for young people to start up in business on their own account and employ one person, two, four or 20—the seed corn of the West Midlands and of free enterprise. The demand exists. The only thing that is missing, unfortunately, is the finance. I hope that we shall hear at the end of the debate that the Government will provide finance—risk capital, venture capital, a small business equivalent of the Industrial and Commercial Finance Corporation—to enable young entrepreneurs to start up on their own account and so relieve the West Midlands of the present unemployment problem.

Several Hon. Membersrose——

Mr. Deputy Speaker (Mr. Richard Crawsbaw)

Before I call the next speaker, may I say that 23 hon. Members have not only indicated a desire to speak but are present. Any speeches lasting more than 10 minutes will mean that many of them will not be able to speak.

10.39 am
Mr. Andrew Faulds (Warley, East)

It was entertaining to listen to the hon. Member for Lichfield and Tamworth (Mr. Heddle) in his somewhat knockabout turn. If he is not a member of a union, I shall do my best to see that he is entered into the lowest level of the variety department of Equity. I think that we could spare him a ticket. To improve on Ernie Bevin, we had from the hon. Gentleman a clutch of clichés, the like of which the House has not heard for some time——

Mr. John Patten (Oxford)

Since the last time the hon. Gentleman spoke.

Mr. Faulds

It is always, of course, the courtesy of the House. [Interruption.]— some of our weaker Members have to answer the call of nature—to listen to new Members with some regard, because this will be a rather rare occasion. That particular hon. Member will disappear at the next general election into the anonymity which is his better and more fitting background.

Smethwick, which lies at the heart of my constituency—and which I have had the real pleasure and honour to represent now for 15 years—is a most historic place. It appeared in Domesday Book when it was a simple village of the plain. But it became nationally—and, indeed, internationally—significant when, by the combined accidents of geography and resource availability, it developed as one of the cradles of the Industrial Revolution in Britain. It became a hive of——

Mr. Heddle

I am grateful to the hon. Member for giving way. He took the liberty of making a few comments at my expense. May I remind him that the difference between politicians and actors is that politicians speak their own words and actors read the words of others?

Mr. Faulds

This particular actor changed his profession rather dramatically some years ago and he has been in the forefront of a number of developments in political affairs in this country, where he saw the light a long time before most Members on the hon. Gentleman's Bench did. We are not now discussing foreign affairs, so I shall not pursue that. But the House will still have the benefit of my views when that particular gentleman has disappeared.

Smethwick became a hive of early industrial activity in the latter decades of the eighteenth century, when Murdoch and Boulton and Watt all worked in the area. That successful story of industrial activity, very largely in metal working, continued strongly throughout the nineteenth century and long into the twentieth century, but in the last few years there has been a marked decline in that activity.

The whole area around Smethwick, in what is now the borough of Sandwell, is heavily dependent on manufacturing in metal. Half of all employment in the borough in 1975 was in metal manufacturing compared with a national figure of 17 per cent. Most types of employment throughout the borough of Sandwell have shown losses—a drop in employment, that is—in the years from 1966 to 1975. The exception was in public and other services, which showed a marked rise in employment opportunities. But losses in metal manufacturing employment in those years from 1966 to 1975 accounted for 57 per cent, of all job losses and were three times as great as the increases in the public and other services sector, which I mentioned a moment ago. Those figures of job losses are now much greater.

I want to examine what has happened as a result in specific cases in factories in my constituency. Mansil Booth and Company, a leading manufacturer of hot brass stampings, declared on 9 June a programme of short-time working, a three-day week for half its work force, and the redundancy of 61 people out of its work force of 590—a cutback of one-tenth. The company cited as the main factors which led to this action the following : first, a sharp reduction in demand ; secondly, high interest rates, inflation and the damaging effects of the 1979 engineering dispute ; thirdly, the effect of the strong pound on the company's ability to remain competitive in both the European and American markets. The Government cannot disclaim responsibility for three of those factors—high interest rates, rocketing inflation and the maintenance of a damagingly strong pound. But, for whatever the reason, 61 people, mostly my constituents, have lost their jobs.

Birmid Qualcast has a number of subsidiaries in my constituency. In May 1979, the company announced the closure of Dartmouth Autocastings No. 1, the largest of three foundries, which made a range of grey iron castings for the motor car industry and whose closure the company had decided upon for the end of June last year. The closure actually became effective on 20 July, when 660 men lost their jobs.

There was understandable concern among the work force at both Dartmouth Autocastings No. 2—where work was heavily dependent upon the tractor industry in the United Kingdom—and at No. 3, where the main product lines were iron crankshafts for the United Kingdom market. Subsequent developments have, sadly, justified some of those fears. In September 1979, the closure of Midland Motor Cylinders, in Roebuck Lane, was announced as taking effect from 23 May 1980, and that has led to 300 job losses there. And yet a further 330 have been made redundant at Dartmouth Autocastings No. 2. Those redundancies are job losses for hundreds of workers who are my constituents.

This month Chance Propper, a glass producer in Spon Lane on the very edge of my constituency, has gone on short time, and the workers are receiving the short-time working premium to compensate for the one day off a week they have to take.

Albright and Wilson, the chemicals combine, lies within my constituency. It is now engaged on a major restructuring of its United Kingdom operation. In its announcement of the reorganisation, Albright and Wilson makes the statement : We must therefore seek a large improvemet in productivity through a reduction in the number of people employed. This reduction will be sought in the first instance by restraint on recruitment, early retirement, natural wastage and voluntary redundacies, but we believe that further redundancies will regrettably be necessary. So it is quite obvious that there will be fairly substantial job losses there, too. The declaration by the company that We will work to effect the changes as sympathetically and humanely as possible is not much consolation to those in my constituency and in the region who are the job losers.

Then there is Avery's, the leading weighing and measuring manufacturers in Britain. This company has, sadly, in my view, been taken over by GEC after a decision by the Monopolies and Mergers Commission which turned down the representations made by both management and trade unions, and which were strongly endorsed in an Adjournment debate last year, in which I and a number of my colleagues argued the case in detail against GEC's takeover.

I warned then that the results would be both job losses and the likely closedown or selling off of the traditional mechanical weighing and measuring manufacturing. The job losses have started. Up to 13 June, 24 employees have left under voluntary redundancy. Between 16 June 1980 and April 1981, another 80 redundancy volunteers are wanted. It is not yet clear what the company will do if those 80 volunteers are not forthcoming.

Although the hiving off of the mechanical manufacturing has not happened yet, my suspicion that GEC wants to keep only the electronic activities going may yet materialise. Meanwhile, it has been announced that the testing machine department will cease production in January or February 1981, with further job losses in such skilled trades as fitters, lathe hands, millers, grinders and borers. Needless to say, the works are already on a three-day or four-day working week—another casualty of the Government's economic and industrial policies.

Unemployment in Sandwell rose from 1.1 per cent, in 1974—we have been very lucky in that area—to 5 per cent, in 1980. We have been fortunate heretofore that levels of unemployment in the borough have been about 80 per cent, of the national average figure. In 1977–78, they rose to above the national figure and are currently just a little lower than the national average.

The number of unemployed makes depressing reading. The figures rose from 1,800 in 1974 to 7,900 in 1979, and the latest figure for May 1980 is 9,400. But the figures for unemployed young people are even more depressing. The total of young people has risen from last year's figure of 2,333 unemployed—that is an appalling loss of young aspirations and expectations—to the even larger number this year of 2,463 ; yet more hopes vanished.

But the unfilled vacancies figures are the real barometer of this personal tragedy for the young people. Last year's unfilled vacancies totalled 239. This year there are unfilled vacancies—that is, possible jobs for these young people—of only 67. And there are 2,463 youngsters wanting and looking for jobs.

The decline in available vacancies, particularly for opportunities to obtain apprenticeships or training posts for the better-qualified school leavers, is a matter of profound concern. The result is that well-qualified school leavers are being forced to accept jobs well below their capabilities, and the consequence of that is that the job opportunities for the less-qualified school leavers are even fewer and employment is even more difficult to find. The education authorities in Sand-well are deeply worried about that and have made representations to the four hon. Members for the area. We share, of course, that deep concern.

Mr. John G. Blackburn (Dudley, West)

The hon. Gentleman has referred to one aspect of unemployment. Does he agree that many of my constituents who have been employed by the Sandwell authority for many years, practising their skills and arts as craftsmen, have now lost their positions because of the implementation of the closed shop by that authority? They are now in the queue of unemployment entirely because they do not hold a union card. Is not that a contributory factor?

Mr. Faulds

I admit that there may be a fractional argument in what the hon. Gentleman says, but that is not the issue, about direct labour departments, that we are discussing today. There may be some, and I have the greatest sympathy with them, who have suffered from that practice, but it is not anything like a prime factor in the unemployment figures in Sandwell.

The problem in our area is worst for the ethnic minorities. Some of them are less well qualified for understandable reasons of education and background, though that is by no means the rule. Some of them, sadly, encounter the obscenity of racial rejection by potential employers, who thereby, Sir, impoverish themselves in more profound ways.

The policies of Government that lead to the tragedy of youth unemployment in an area of a mixed community provoke the prejudices and stoke up the dangers of disappointed expectations, which can only increase the social strains of economic decline. This is an actually damaging and potentially dangerous situation. Much of that—apart from the inevitable decline in metal manufacturing, which one has to admit—has been the conscious intention of this Government's policies. Bleeding the patient is an outmoded treatment. Monetarism and economic determinism show little care and no compassion.

It is the more astounding, Sir, that the Prime Minister had the effrontery to quote St. Francis on the steps of No. 10 after her victory. The irony is that even Saatchi and Saatchi—who no doubt conjured up the quotation for her—would have received that compassionate saint's blessing. I do not believe that the British electorate, given half a chance any time from now until the term of this appalling Government, will be quite so forgiving.

10.53 am
Mr. Percy Grieve (Solihull)

The House, and certainly those who represent West Midlands constituencies, will be grateful to the Government for enabling us to discuss today the quite appalling problems that face industry in the West Midlands.

The House has listened with interest to the hon. Members for Coventry, North-East (Mr. Park) and for Warley, East (Mr. Faulds). They made sober and informed speeches. I believe that they drew their statistics from precisely the same source as most other hon. Members. That gives me one advantage in seeking loyally to remain within the time allotted to me, namely, that I shall not have to refer to statistics because they have been discussed at length.

What horrifies me is that the lessons that those two hon. Members sought to draw—wittingly or unwittingly I know not—from those statistics are so appallingly wrong. The problems of the West Midlands are caused by two inter-connected features in past economic policies. They proceed from the same sources and for the same reasons as the economic problems of the remainder of Britain. The industries and the workers in the West Midlands have been bedevilled by strikes for far too long, and also by under-production and over-manning. The hon. Member for Warley, East speaks of the ruinous effects of the policies of the present Government, but he should speak of the ruinous effects of past errors in our economic and industrial policies.

Two years ago I visited the great Triumph works in my constituency when the new Rover car was about to come off the assembly lines. I was horrified to find that many of the lines were not working because of a strike, for some trivial reason, by the manufacturers of a small component in West Bromwich. One of the things that bedevilled the motor industry was the way in which, dependent as it was on the manufacture of components, a strike in one area was all too often—I do not want to make sweeping generalisations—compared with the utter necessity of keeping the motor industry going, trivial and wrong. That has been the history of the industry.

In addition, the industry in the West Midlands has not only suffered from those matters that have affected the whole of industry in Britain but has been bedevilled by the regional policies of past Governments. I take leave to doubt the extent to which it is right for Governments consciously to direct industry, through investment, away from the areas in which they will naturally produce to other parts of the country to shore up employment.

The West Midlands has suffered appallingly from two main features of Government policy. One was industrial development certificates, which directed industry away from the West Midlands to the North, Scotland and Wales, where frequently labour relations were extremely bad. When parts of great factories, such as those in the motor car industry, have to operate in Scotland, South Wales, the North-East or the North-West while the industry is based in the Midlands, it vastly increases the expense of running the industries.

I am glad that the Government are not now following those policies to the extent that they were followed in the past. They were factors in the rundown of the great industries in the Midlands.

Secondly, over many years use was made of the motor industry as a factor in reducing national demand. In the days of purchase tax—and the motor industry still suffers from that today, as it has suffered for many years—key British industry was made a yo-yo by successive Governments of all political colours—and I say that advisedly—who at one moment were encouraging production and at the next were discouraging it with all the means in their power through increases in purchase tax and by other regulations.

These are the two root causes of a great many of the troubles of the West Midlands. There are national troubles—strikes, paying ourselves more than we earn, under-production and over-manning. There are then the problems peculiar to the West Midlands which have been created by the policies of successive Governments, mostly Labour.

Mr. John Sever (Birmingham, Ladywood)

I thank the hon. and learned Gentleman for his courtesy in giving way. Does he agree that the merest handful, if indeed a handful, of applications was ever turned down?

Mr. Grieve

IDCs have been a constant source of complaint from industrialists living in my constituency who see in the use that was made of them one of the factors leading to the rundown of the industries of the Midlands. I do not have the statistics at my fingertips. I can only say—I believe this view is shared by my hon. Friends—that the feeling of Midlands industrialists was that the industries of the Midlands were being penalised in an attempt to shore up other regions. I understand why that should be done, but it is a policy that should be followed only with the greatest possible caution. It is a factor in the suffering of the Midlands today.

During last year's general election campaign the workers in the motor industry in my constituency—there are 12,000 of them at the great Rover works—were almost unanimous amongst those who condemned the policies of the Labour Government and who indicated their support for the Conservative Party, many of them for the first time. They saw, as we in this House must continue to see, as if by a blinding light, that the country in general and the West Midlands in particular could not carry on with the whittling away of Midlands industry that was being caused by strikes, some of them politically motivated and many of them trivial.

Therefore, the Government's industrial policies are well founded. The process is bound to be painful. The hon. Member for Warley, East spoke of the thinning down of the industries in his constituency. It is a necessary process, and when it is completed industry will be far healthier.

I end on an optimistic note. It comes to me from the directors of BL. The hon. Member for Coventry, North-East spoke of his regret that the Triumph part of that great motor works is leaving Coventry. I understand his regret, but the move is part of a rationalisation that is necessary for the survival of British Leyland. I am happy to say that the first TR7 will be coming out of Solihull in the near future. The transfer from Canley will be completed by September.

The news on the labour front in BL is good. In 1979 the number of man hours lost dropped by 57 per cent, over the previous year. In the first quarter of 1980 the number of man hours lost as a result of industrial action dropped again by 30 per cent, over the corresponding period. These are good tendencies and they show that the lesson is being learnt that deliveries must be effected on time. I recall, Mr. Deputy Speaker, when you and I went to Malaya in the early 1960s. While we were there I heard complaints from many quarters about late or non-delivery of the Land-Rover. One heard that sort of complaint all over the world.

The directors of BL estimate that the efficiency of the Rover Triumph plant in Solihull increased by 100 per cent, in 1979. The new BL package of wages and conditions of employment has gone smoothly into operation at that plant. The Land-Rover expansion programme is on target. The first phase in Solihull involving a capital expenditure of £30 million has been completed, and the £220 million further expenditure at the North works will be completed by next March.

These figures show that the policies of Sir Michael Edwardes and of the Government are winning through in the Rover works at Solihull. I have confidence in the future of the motor industry in this country. I know that this is not a maiden speech—neither was that of the hon. Member for Warley, East, but he referred a great deal to his constituency—but I should like to take this opportunity of saying that I am proud and happy to represent a constituency which contains the Rover works, which is making such a great contribution to British exports.

11.7 am

Mr. Peter Archer (Warley, West)

I was somewhat startled to hear the hon. and learned Member for Solihull (Mr. Grieve expressing the thanks of the region to the Government for providing the opportunity for this debate. I was under the impression that the request for it had come from the Opposition side of the House and that it was taking place in Supply time.

The Minister predicted that we would hear some gloomy contributions. He was right. It is a dismal story that we have to tell. I can remember at the end of the war when the problems of the West Midlands were those of what the economists called an overheated economy. They were the problems of an area whose industrial growth was too robust. Had time permitted, we might have looked at some of those problems to see where they have led to today.

The economists and the Whitehall mandarins spoke of the West Midlands syndrome. It came as something of a shock to some of us when in 1974 the authors of "Time for Action" pointed out that the prosperity of the area per capita was increasing less quickly than for the rest of the country. In the recession of 1971–73 the West Midlands had slumped further and taken longer to recover than the remainder of the country. The authors of that report queried whether perhaps we were over-geared to one or two specific industries, and those the old industries.

Since then those statistics have revealed themselves in people's daily lives, and there has been scarcely a day in the past 12 months when we have not seen that trend exemplified.

But the West Midlands is not a homogeneous area. The hon. and learned Member for Solihull said that some contributors to the debate had spoken of their constituencies——

Mrs. Renée Short (Wolverhampton, North-West)

Why not?

Mr. Archer

Why not indeed. We are talking about the parish pump.

Since the war there have been high-wage areas in the West Midlands, but the Black Country has traditionally been a low-wage area. I do not think that the Black Country complains unduly about that. People have been content to be in work. There are advantages in working close to home. For a substantial part of his working life, my father came home to lunch and walked it both ways. In an area such as that a factory is an essential part of the local community.

In my constituency there are no mammoth factories. The larger employers are what we normally term medium-sized companies, or sometimes companies the majority of whose processes are carried on elsewhere. People know one another. They usually know the managers. There is a strong team spirit. People are proud to say that they work at so-and-so's. Perhaps in the evenings in the public houses and clubs they make their contributions to resolving the problems of the production process. Often generations within a family have worked at the same place.

There may be better ways of organising industry, there may be worse ways, but that is our way, and the names of those companies are part of the vocabulary of their respective trades throughout the country and in many cases throughout the world : Accles and Pollock in tubes ; Albright and Wilson and BIP in chemicals ; Burton Delingpoles and Joseph Shakespeare in drop forgings ; Benjamin Priest and T. W. Lench in industrial fastenings ; Danks of Netherton in boilers ; Ham Baker in hydraulic equipment ; Woodhouse in chain making. There is scarcely a language in which those names are not spoken. Until a few months ago, they seemed eternal. A world without them would have been unthinkable. Now I am not so sure. I hope that there never will be a world without them. If there is, Britain's position in the world of engineering and metal working will vanish with them, and the economic desert will extend far beyond the Black Country or even the West Midlands.

But most of them have problems, and they are not the problems of lame ducks. It is not that they are uncompetitive in making and selling. It is not that they fail to keep to their delivery dates. It is not that there are complaints about workmanship. It is not that the unions create industrial trouble. They say almost without exception that the unions are cooperating to the full both in production and more recently, unhappily, in work sharing, early redundancies and reorganising working hours.

The problems arise from factors which are largely beyond their control. I have to be brief, and I shall not elaborate on them, but perhaps I may refer briefly to one or two.

The world as a whole is making too many tubes and too many industrial fasteners. Some countries are dealing with that problem by exporting their surpluses to this country. If the matter rested there, there would be no complaint. But they are exporting at prices which must include a substantial element of subsidy.

The companies in my constituency do not normally ask for barriers to international trade. They live by it. But that must be based on the assumption that like competes with like. They cannot survive in a world where other Governments are subsidising products while the United Kingdom has a Government who believe that they have no obligations to industry. Reluctantly, I have reached the conclusion that selective import controls will be necessary in industries where there is no genuine international competition.

Mr. Grieve

Surely the right hon. and learned Gentleman realises that, if we start putting up barriers and import controls, other countries will do the same.

Mrs. Renée Short

They are doing it now.

Mr. Archer

I have been using precisely that argument for a long time. But that depends on everyone playing the same ball game. If others are not playing that game, that argument disappears.

As I say, there are other reasons. I have heard stories of British steel being sold to overseas competitors of these British companies at prices lower than the British companies themselves are being charged. I have heard stories of the export credit scheme being denied in the only cases where it mattered. Where due payment by the overseas customer is certain, there is no need for the export credit scheme.

But probably the greatest single problem is the one to which the Minister referred. It is the collection of difficulties arising from high interest rates. I illustrate what I mean by relating the recent history of BSR. That was the great success story of the last 30 years. The company makes sound reproduction equipment, and it can sell in Japan more cheaply than the Japanese themselves. The company is a highly successful exporter to America. It was so successful that, when it was sought to select a company to receive a visit from my right hon. Friend the former Prime Minister, BSR was selected as the outstanding success story.

Then came the present high interest rates, and they led to the exchange rate of the pound creeping up against the dollar. It became increasingly difficult to sell competitively in America and, of course, that was not helped by the American recession.

But the company did not run for cover at the first sight of the problem. It wanted to keep its labour force together so that, when times were better, it would have a work force assembled. So it continued to accumulate stock. It diversified. It went into vacuum cleaners. It could have survived a bad patch, but the patch went on too long. It might have wrapped up more money in stock which it is confident it could sell one day. But that money is costing too much at present interest rates. So the company simply had to reduce its work load.

The company approached the unions, principally the General and Municipal Workers Union, and it received total cooperation. Everyone agrees about that. The unions agreed to early retirements and to some part-time working. I would be less than fair if I failed to say that it was facilitated by the temporary employment subsidy. But now it appears that the company cannot wait any longer for an upsurge. One of its three factories may have to close. When the upturn comes, all that ground will have to be recovered before the company can take advantage of it.

This is a company which has done everything right in the past. For good or ill, its fortunes are part of Britain's future.

One after another such companies are losing markets which it will be difficult to regain. They are losing work teams which were brought together over long periods of years. They are losing skills which were part of the upbringing of the people in the area, and when they are needed again there may be no one to teach them.

The worst aspect of all this is the one mentioned by my hon. Friend the Member for Warley, East (Mr. Faulds)—the problem of school leavers. They are entering adult life with a feeling of not being wanted and not belonging. In the past year there has been an increase of 46 per cent, in Sandwell among unemployed young people and a decrease of 60 per cent, in the vacancies available for them. At the last count, there were 99 vacancies and 1,386 unemployed. My hon. Friend also spoke of the tragedy among the ethnic minorities, and I shall not take up the time of the House by repeating that.

With a £3 million cut from the budget of the Engineering Industry Training Board and at the very time when the companies themselves are having to prune their own budgets, it means fewer apprentices and fewer sponsorships, so that those vital skills are becoming more rare in this generation than in the last and are likely to be even more rare in the next. The skilled workers of the Black Country are becoming an endangered species.

I agree that it is important to overcome inflation. I am not persuaded that the Government have chosen the most effective methods of doing it. But if that were the only issue this would not be the occasion to debate it. Yet, even assuming that in time the Government's methods would be effective in beating inflation, do they aim to see the country without inflation but without industry? If the price of the conquest of inflation is lost markets, many of them irrecoverable, loss of skills, many of them for ever, and the loss of Britain's place in the technological race, then even if the Government succeed in dealing with inflation, they may have to report that the operation was totally successful except that the patient died.

It is not too late. But, as someone once said in another context, it is five minutes to 12.

11.18 am
Mr. Esmond Bulmer (Kidderminster)

There is agreement on both sides of the House that the problems of the West Midlands are deep seated. We are disproportionately dependent on vehicles, metal manufacture, metal goods and mechanical and electrical engineering. One-third of our engineering depends in turn on vehicle assembly, and the importance of British Leyland needs no underlining from either side of the House. But we say to those who work in British Leyland "We are trusting you with a great deal of public money. We look to you to respond."

If the British motor industry was as strong as it is weak, the United Kingdom would have no balance of payments problems. Nor, I think, would the West Midlands have the significant problems that it experiences today. We have higher unemployment than the average level in the United Kingdom and, apart from the North-West, we are the only region with fewer jobs than we had 10 years ago.

The reasons for failure are many and varied. Obviously we have lost out to overseas competition. Some countries marketed more successfully and invested more. They have certainly been more reliable in terms of delivery. We have failed to invest partly because, over at least a decade or more, the return on that investment has been far too low. Even now, it is at best 2 per cent., if one discounts inflation. If one is looking to industry to produce large sums, against current levels of inflation, that return is far too low.

As my hon. and learned Friend the Member for Solihull (Mr. Grieve) said, we were disadvantaged because of the way in which different Governments previously operated IDC policies. We have an ageing capital stock partly because what might have been the new capital stock was exported. In places such as Speke, Linwood and Bathgate, that has not been an obvious success.

I should like a firm undertaking from the Minister that the Government will not seek to inhibit companies in the West Midlands from expanding there or seek to deter any overseas investor who might wish to invest in the West Midlands.

My constituency is a microcosm of the West Midlands. We are disproportionately dependent upon the carpet industry, which was struck a body blow by the huge increase in the price of energy in 1974. The industry has suffered from the interaction of structural and cyclical problems. A third of the town was dependent, directly or indirectly, on the industry 10 years ago. That figure is falling, and falling fast.

We have enough good companies to ensure that there will be a carpet industry in future, but we must do all we can to encourage existing companies to expand and to foster the small business. Despite the present difficulties, there is still a healthy small business sector, and vacant sites which are offered on reasonable terms are taken quickly.

However, there is much that local planners can do to facilitate the introduction of new business, and much that local government can do, as the Minister said, in holding down rates. But what has to be done to invigorate our industry overall? There seems to be a consensus among industrialists in the West Midlands. It is generally recognised—this should include most trade union leaders—that inflation is the great destroyer of jobs and social cohesion. The more realistic recognise that Governments of either party would have to pursue monetary policies.

Interest rates are clearly critical to the speed with which we can generate fresh investment. If they stay high because the Government have to maintain increases in public sector wages, I hope that the Minister will consider short-term measures—for instance, lower interest rates for export orders or for specific manufacturing investment. Clearly, once we can get interest rates down, that will have a spin-off effect on the value of the pound, which is something else that many industrialists would regard as helpful.

There is a general welcome for what the Government have been able to do in removing controls. The freedom to price, to reward and to invest where the interests of the company demand are all regarded as highly valuable. There is a welcome also for lower rates.

However, there is concern about energy costs. If the benefits of the North Sea cannot be passed on directly, I hope that the Government will consider predicating some part of them to research and development and to training. Many people will lose their jobs, after all, through no fault of their own, and we must be seen to do everything possible to help them.

It is recognised also that small and medium-sized business represents the best hope of job creation. I know that the Government recognise this, but I ask them to look at the West Midlands Economic Planning Council's development strategy, which contains a number of helpful ideas, particularly for small and medium business.

Many of our problems are not susceptible of local solution. Some companies want protection. I believe that is negative, hard on the Third world and not in the overall interests of this country. However, we need to take effective action against unfair competition. In the carpet industry in Kidderminster, we have found that we are losing market share because of the way that the United States has been using energy subsidies to compete unfairly. I know that the Secretary of State for Trade is well aware of the problem and that he has sought to persuade the French and the Germans to act under GATT, so far without success.

Unfortunately, the British market is much more attractive to the Americans because we speak the same language and use the same measurements, but I hope that the Minister will each week consider the figures. As soon as the unacceptable damage which we feel is being inflicted can be shown without argument to the French and the Germans—or even with argument—I should like the Minister's early assurance that that will be done.

There is a belief that we become disadvantaged because we play by the rules and others do not. My hon. Friend might like to consult the Department of Trade on whether there is a case for setting up what I would call a "cricket committee", drawing on the expertise of relevant Departments and of the CBI and the TUC, perhaps through the sector working parties. Such a committee could consider the complicated scene of subsidy and of official and unofficial practices. It could discuss what might be done to respond—officially and unofficially. Such a body could also prod national and local government on procurement through British companies, and certainly through specifications.

Typically, the French were able to prevent the import of a significant number of trucks by producing 30 changes in the specification necessary for import clearance ; and some hon. Members will be aware of the issue that the Japanese made of bleeding tail lights. A good deal of this goes on and we want to be more sensitive to our own interest.

More broadly, we have an effective retail chain which could do more to buy British. Marks and Spencer has given a lead which I hope other companies will follow. All of us as consumers have to think where our best long-term interest lies.

We inflict the greatest wounds on ourselves in industrial relations. How many orders, how many jobs, have been lost by unofficial action, strikes, pay increases which bore no relation to the long-term self-interest of those who want a secure job in their company? Eighty per cent, of stoppages are still unofficial. The engineering strike cost us £2 billion of lost output. I do not know how many of those orders have been lost for good and how many people abroad have simply struck British companies off their list of tender. We must be more aware of where our own interest lies. Those who would castigate the Government for the unemployment which is rising around us cannot ignore those self-inflicted wounds.

As the Minister has said, all the hostile trends now developing were apparent 12 months ago. In addition, we have the poisoned chalice of the Clegg Commission. I hope that Mr. Murray will think again about what he said to wage bargainers yesterday. Surely the experience of last year shows that enough is enough, that there has to be more enlightened self-interest, more recognition that if one extracts more than one's company can pay while maintaining investment it can only mean the loss of jobs. The same applies to the public sector ; the result is fewer hospitals, roads, schools, even books.

School leavers will not be helped if wage bargainers pursue the course on which the general secretary of the TUC seemed to set them. I hope that he will think again. I was encouraged that the right hon. Member for Bristol, South-East (Mr. Benn) said in his Guildhall speech that it should now be clear that high wage claims do not necessarily improve working class incomes. I hope that that message will be got across by the trade unions and even by those on the Left of the Parliamentary Labour Party.

Surely one thing stands out in recent years—the success of Germany in securing a higher standard of living through taking less. Should we not consider also the other relevant part of the West German experience? It is ironic that the Labour Government, with the guidance of the TUC, introduced a system of industrial relations there that is the envy of Western Europe. We must give more encouragement to people to work together. We must educate and involve. If we can do that and eschew the self-inflicted wounds, we can help industry and help ourselves.

11.31 am
Mr. Terry Davis (Birmingham, Stechford)

In the West Midlands there is an industrial crisis on a scale which has not been seen in my lifetime. It would be very easy to continue the list of companies, given by my right hon. and learned Friend the Member for Warley, West (Mr. Archer) and my hon. Friend the Member for Warley, East (Mr. Faulds), which have declared redundancies. It is a list which sounds like a roll call of industry in the West Midlands. It should be enough to remind the House that since the Conservative Government took office unemployment in the West Midlands has risen to the highest level since they began to keep records 30 years ago.

In May 1979 unemployment in the West Midlands totalled 117,000. A year later it has risen to 145,000. In percentage terms, when the Conservatives took office, unemployment was about 5 per cent, in the West Midlands—less than the national average. Today it is more than 6 per cent.—higher than the rest of the country and still rising. In the Birmingham area it is even higher. The Government's own figures show that unemployment in the Birmingham area is 6.9 per cent. In the city of Birmingham it is estimated that it is even worse—about 8 per cent.—and in the central areas of the city it is as much as 10 per cent. Since 30 per cent, of people who are unemployed are not registered, there are parts of Birmingham where unemployment must have reached 14 per cent. In those areas one out of every seven people who are fit to work and want to work cannot get a job.

Of course the situation will get worse. This week the Birmingham Chamber of Industry and Commerce issued the preliminary results of its quarterly survey of companies in the Birmingham area. It described their figures as the most gloomy set of results in the history of the survey. It found that 45 per cent, of companies had reduced their work force in the last three months and 48 per cent, said that they would do the same in the next three months.

That is not surprising. Home orders are falling, export orders are falling and investment is falling. The hon. Member for Lichfield and Tamworth (Mr. Heddle) quoted from the letter from the Birmingham Chamber of Industry and Commerce to the effect that investment intentions were holding up well. He should have taken the trouble to look at the figures attached to that letter. He would have seen that 18 per cent, of those companies are reducing their investment intentions and 80 per cent, have not changed their intentions. That is the basis for the statement that intentions are "holding up well". If the hon. Gentleman looks at the figures for the previous quarter, he will see that in March 18 per cent, of companies revised their investment intentions downwards, and another 18 per cent, had done so in December. If such figures are revised downwards so that there is no investment, it is hardly surprising that investment intentions hold firm. There comes a point when one cannot take them any lower.

When the Birmingham Chamber of Industry and Commerce asked firms whether they thought that things would get better, more than half said that they expected their turnover to fall even further in the future. More than three-quarters said that profitability would go down, and that is the most important point of all, because there is not only a crisis of unemployment in the West Midlands. A year ago nearly seven out of 10 firms in the Birmingham area were working at 80 per cent, capacity or more. Today it is fewer than two out of 10. That spells disaster for manufacturing industry. As companies work at lower and lower levels of capacity, productivity falls and unit costs rise. Therefore, their prices are forced up. With a high exchange rate there is more competition from imported foreign goods and fewer export orders are obtained. The result is catastrophe.

The reason why we are seeing only redundancies today instead of more and more factory closures is that the banks are pumping money into manufacturing industry in the West Midlands in order to enable firms not to invest but to pay their bills.

The banks are funding industry in order to enable it to survive from day to day. But the money has a price. Eventually the interest will have to be paid, and we all know that interest rates have reached an extortionate level. As the banks increase lending, ironically the money supply increases and interest rates remain high. Thus the mad merry-go-round of monetarism goes faster and faster and more people are thrown off into the dole queues. That is before the school leavers who do not even get on the merry-go-round.

I am not suggesting that it is all the fault of the Tories. There are deep-seated problems in the West Midlands, but the Conservative Government have not done anything about them. The Conservatives say that they need time for their policies to work. That will not wash because they did not say that a year ago. That is not what Ministers in the Department of Industry were saying a year ago. That is not what they said in the House of Commons this time last year. Then Conservative Ministers were boasting that results would work through in the second half of 1979, with more to follow later. They were certainly right about that. This Conservative Government have presided over the biggest collapse of industry since the Flood, and the people of the West Midlands think they are just as big a wash-out.

11.38 am
Mr. John Stokes (Halesowen and Stourbridge)

I welcome the opportunity provided by this debate today, as the West Midlands is the industrial heart of this country. I begin by saying how much I agree with the remarks my hon. and learned Friend the Member for Solihull (Mr. Grieve) about the damage done in previous years to the West Midlands by excessive cosseting—particularly by Labour Governments—of other parts of the United Kingdom to the detriment of the West Midlands.

I represent a constituency which is wholly industrial. Almost everyone in it earns his or her living through industry and commerce. I am lucky to represent these people because they are hard working, down to earth and patriotic. They seldom complain. Labour relations are generally very good, particularly in smaller factories which are often managed by the owners, and there is a close bond of interest between management and employees.

Much of West Midlands industry—at least one-third—is dependent on the motor industry. I know that the British Leyland plant at Longbridge has a sorry history, but that is not all its own fault ; and under Sir Michael Edwardes a new and better spirit is growing up, not only in Longbridge but throughout the group. Many Longbridge employees live in my constituency. I know many of them, and many of them voted for me in the last election. They are not the bad people that the press and others sometimes make out. They may have a few black sheep among them, as in any community. However, with proper leadership and management, and given the fullest information, there is no reason why the labour force at BL should not be as good as any other in the country.

British Leyland needs to make and sell good cars which people want to buy and which are well engineered and designed, carefully inspected before despatch and delivered on time. That is the answer to the crisis in the motor industry, not the defeatist call for import controls.

The country's economic difficulties have affected all of us with seats in the West Midlands. Private steel producers, for instance, have additional problems. They have to try to sell against BSC, which, they tell me, is often selling below market price in order to regain old customers. I am surprised that the Government, with their devotion to private enterprise, should tolerate that and be prepared to see the ailing BSC ruin the hitherto thriving private steel sector. I hope that when the Minister replies he will give me an answer to that serious and well-founded complaint. Private steel companies also have to absorb the higher gas and electricity charges, which they tell me their competitors in Germany do not have to pay to anything like the same extent.

The main point of the non-complaining firms in my constituency is that the Government seem to be looking to them to pull their chestnuts out of the fire for them, in particular in respect of wages and employment. They see very high wage settlements in the public sector, sometimes over 20 per cent., which makes it very hard for them to get their unions to settle for less. They see over-manning in the nationalised industries. They see the scandal of the enormous charges by the water undertakings, which appear to act as if they were responsible to no one. They see the cuts promised in the Civil Service very slow to come. They say that the Government talk a lot, but they wonder whether they do enough. I have some sympathy for their point of view. As I said in a parliamentary question, the Government must not expect industry to do their dirty work for them.

Local industry feels that cuts in Government expenditure were slow in coming and should be accelerated. I agree. Local firms also expect the Government to be tough on spendthrift local councils whose high rates are such a burden on industry in the West Midlands and elsewhere.

Many industrialists appreciate that a high rate for the pound is inevitable when there are high interest rates. However, the high rate for the pound has been held since last November. Industrialists are dearly hoping for a reduction soon, as I am. I am against bringing the rate down too soon and then having to increase it again, but 17 per cent, is a crisis rate, and one cannot live for ever with a crisis rate. On the other hand, we must never forget that good, well-managed companies are still exporting satisfactorily. Exports have held up remarkably well. The export effort from my constituency, often from small firms and sometimes very small firms, is worthy of the highest praise, and it is not mentioned enough.

One of the great benefits from the Government's measures is the change of attitude taking place among management and employees. There is much greater realism. The need to contain costs is everywhere appreciated. There is no wish to strike. After 35 years of what I can only call "softly, softly" Governments, whether Labour or Conservative, people are beginning to realise that a profound change is taking place. This island has to earn its living in a hard, competitive world. The days of unearned handouts are over, and should be over for ever. The Prime Minister has put that across to everyone in simple and telling words.

Many of my constituents are trade unionists. I believe that one reason why so many of them voted for me was that they wished to put an end to the appalling strikes that the nation suffered during the winter before last. After a year of this Government, they expect determined action against abuses of union power over the closed shop, picketing, secondary, tertiary and "quartiary", or whatever the word is, blacking, and so on. We shall never get the agreement of some trade union leaders to the steps that the Government must take, but I do not believe that that matters, provided that we have the agreement, as I believe we have, of the ordinary trade unionist on the shop floor. He above all is most critical now of the attitudes of some trade union leaders. If the Government do not firmly grasp the nettle now, and if there are similar strikes next winter, the Government and not the unions will be blamed. That is my serious warning to the Government and the Minister concerned.

I hope that the Government will do even more to help the self-employed and small business men. We have many small businesses in my constituency. Much has been done to help them, but more remains to be done. There is still too much form filling. Greater simplicity is required. Taxation, even after the reductions of the Budget, is still too high. Those who risk so much—often their all—to set up a new business expect a better net reward.

I hope that the banks are lending wisely and well. In my view, the service that they provide to the ordinary customer continues to decline, but bank charges continue to increase, and the banks make large profits that they have done nothing to earn. I hope, however, that they are taking seriously their duty to help the small man. We do not want money from the Government. Where the risk is genuine, we want it from the banks.

In general, in spite of these problems, I am hopeful. I believe that in the next few months we shall have seen the worst, and by this time next year there will be a marked improvement in morale in industry and commerce. The country's huge, successful export effort shows what we can do. As we know, the country is stiff with brains. We have an excellent work force, provided that it is properly led. We still need to attract some of the country's best young people to industry and commerce, and perhaps reduce the numbers going into the Civil Service and the professions. We must hope that the shake-out of employment from the larger and, I am afraid in some cases, less efficient firms must be taken up by the smaller firms and self-employment. The Government should do all that they can to encourage that trend.

Above all, we need a revival of national pride. I believe that there are already signs of that. When I was a young man, the sign "British made" was a hallmark all over the world for the excellence of our products. We must return to that situation. Our standard of living depends on the efforts of those engaged in industry and commerce, and that includes most of my constituents. I hope that neither I nor the Government whom I am proud to support will let them down.

11.49 am
Mr. John Forrester (Stoke-on-Trent, North)

Many hon. Members have reminded the House that not long ago the heart of the West Midlands was one of the prosperous areas of this country and was on a par with the South-East. That is no longer the position. Over the whole region, industry has been diverted away by the policies of successive Governments which have led to a decline in job prospects—a situation which, unfortunately, continues.

One of the major aspects of IDC policy was that firms were discouraged from applying to set up industries in certain areas. The statistics that show that no one had applied are false when set against the firms that might have wished to go to a particular area. There is a growing fear in many parts of the West Midlands that, unless remedial steps are taken soon to restore this once prosperous area, it will need special development area status within a few years.

In view of the short time available to us, I make no apologies for dealing primarily with a constituency problem. North Staffordshire and Stoke-on-Trent have never been part of the once prosperous, affluent, car belt. Our industry had to come to terms with the facts of competition and survival and we are proud that we were doing quite nicely, thank you, along those lines. However, like all industries, the pottery industry, which is the major employer in Stoke-on-Trent, suffers from the five evils that have been identified in the debate—inflation, a high MLR, a strong pound, foreign competition, which is often unfair, and high energy costs.

The Government often blame the high rate of inflation on excessive wage demands, but, having rejected restraint of any sort and opted for free collective bargaining, perhaps they have made that rod for their own backs. The workers in the pottery industry have traditionally been moderate and realistic in their wage demands. One can hardly say that a 16 per cent, wage deal this year is excessive, in view of an inflation rate of nearly 22 per cent, and average wage settlements of 21.2 per cent.

I have no doubt that the moderation of the pottery industry has been responsible in no small measure for the industry remaining buoyant in past years. It has also helped to keep the rate of unemployment below the national average.

In many ways, the pottery industry was a model industry. It had all the virtues of moderation in wage settlements, it kept abreast of technological advances, it modernised factories, it had an impressive sales record and, perhaps most important, it had a contented labour force. The industry exports about 35 per cent, of its total output—an achievement of which we are proud. Some factories export up to 90 per cent, of their output. I can tell the Minister that the industry had the right goods of the right quality at the right price. But, unfortunately, all that is dramatically and rapidly changing for the worse.

We have consistently had unemployment at below the national average. Last month, we had 5.1 per cent, of our working population out of work, compared with the national average of 6.2 per cent. But our percentage is creeping up. It represents 12,000 out of work and they are 12,000 personal tragedies hidden by the statistics. With redundancies being declared almost weekly, our figures are bound to continue to rise and next month may take us at least up to last month's national average.

A total of 3,000 workers have lost their jobs in the pottery industry in the past year, on top of 1,500 lost jobs at the Shelton steel works. Short-time working in the industry is at the worst level for 30 years, with 6,000 workers affected. As more redundancies are announced, our unemployment figures are bound to rise. There is nothing to stop that.

It is not slimming in order to make an industry more competitive ; it is the shedding of labour because industry cannot remain competitive in the climate which has been created and which is outside its control. Whatever the Government's policies may do in other areas, they are resented in the Potteries because they have changed confidence to apprehension about the future.

This time last year, we had 1,300 young people looking for work. This year, the figure will be double that. I pay tribute to industry in North Staffordshire, to the Manpower Services Commission and to the work done by my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) when he was a Minister. They have all taken steps to find jobs for young people in the area and last year most of those youngsters were absorbed. This year, however, the task will be daunting in the present climate of declining job opportunities.

The pottery industry has invested heavily in plant and buildings to improve efficiency and to keep abreast of technological advances, but it has to face unbearable interest rates which affect profitability. As profit margins are traditionally low, such interest rates can mean the difference between survival and extinction.

The value of the pound against the dollar has made necessary a 20 per cent, increase in the price of pottery. The high value of the pound has resulted in more imports, particularly from Taiwan, Korea and Japan and the prospect of even more from mainland China and Eastern Europe.

We have been able to withstand competition in the past, but if it is to be subsidised by other countries, those in our industry will take a different view. The pottery industry has managed to reach agreements with Taiwan and Japan to regulate their imports—with some slight success—but, even so, 60,000 pieces of pottery from Taiwan each month is an awful lot of pottery.

It will not be easy for large exporters such as the pottery industry to advocate import restrictions, but voices are beginning to be raised in the area and pressure will grow for the Government to take action if the situation is allowed to continue to deteriorate.

The other great inflationary factor affecting the pottery industry is the price of gas. Having committed itself almost exclusively to the use of gas—the industry uses 80 million therms a year and is one of the top three users—the industry's fuel costs represent 11 per cent, of production costs. That is a burden that is directly attributable to Government pricing policy and it is having a crippling effect on the industry.

Many misguided people much as myself thought that North Sea oil and gas could be used to give a competitive edge to our home industry. It should not be beyond the realms of possibility for special arrangements to be made to recognise the problems of massive consumers of fuel.

The pottery industry has never produced the massive wealth that is produced by some industries, but it has made a significant contribution to the well-being of the area in which it is situated and to the economy of the country as a whole. We have always needed to win export markets and to remain competitive, but there is a great fear that if we are to be overtaken by unfair, low-priced foreign competition, because of costs that are beyond its control, the pottery industry could become another textile industry. The warning signs are already out.

The Government may feel that some parts of industry need big spoonfuls of stringent economic medicine in order to bring them to reality, but, even if that is true, I suggest that the pottery industry is one of the innocents that are being made to suffer for the guilty.

I suggest that it would be ironic if the guilty recovered by the use of the medicine that the Government are inflicting but all the innocents were killed in the process. In North Staffordshire, industry and local authorities look to the Government to recognise the problems that have been created and to adjust their policies to stop the slide into disaster before it is too late.

12 noon

Mr. Hal Miller (Bromsgrove and Redditch)

The twin themes, common to the debate so far, that I would put before my hon. Friend the Minister of State—we are pleased to have him with us—are the unique dependence of the region on a very small number of industries and the onset of recession.

I have listened with great sympathy to the many hon. Members who have spoken of the rise in unemployment. We need, however, to get the matter into context. A world-wide recession is taking place. There are already more than 300,000 motor workers laid off in the United States. In Germany, Ford has one-third of its work force on short time, and Opel has a similarly large number of people out of work. The experience is world wide. It should be put into context, while we try to understand the problems of our industry.

Many hon. Members have cogently pointed out that the West Midlands is the manufacturing heart of the country. Birmingham has always been known as the city of 1,000 trades. But great damage has been done to our region. One reason why we are so dependent on so few industries is that the regional policy of successive Governments has not only deterred new firms from coming in and prevented existing firms from expanding but has taken firms away from the area. I could quote the example of Typhoo tea which was taken away to premises in Cheshire, built with the help of Government grant. That is a ludicrous situation.

I greatly welcome the Minister's restatement of the Government's priority to defeat inflation. This must be a precondition for any return to growth. I believe that there is widespread support in the region for that priority by the Government. We remember how inflation led to the downfall of BL and the rescue in 1975 and also to the Chrysler agreement. There is not time to develop the argument fully of how inflation attacked the profits of the companies and reduced the working capital and how costs got out of line with the competition world wide. But the differential rates of inflation that have obtained in this country and in others is one of the main reasons for the sharp increase in imports about which so much concern has been expressed today.

I would part company with my hon. Friend over some of his remarks about the competitive position. I must explore further the conditions under which our industries are trying to compete with imports, starting, perhaps, with the question of fuel prices. It is ludicrous that we in this country, with our indigenous supplies of coal, oil and gas, are paying higher prices for those products than our competitors in Europe. I have a wealth of evidence in support of that statement.

The largest drop forging industry in Europe, which is situated in my constituency, is now expected to pay 26p a therm for gas compared with 10p a therm to be paid by its competitor in West Germany. On taking this matter up with the Department of Energy, I was told that energy costs were not a significant factor in the cost structure of many firms. I have news for the Department of Energy. I give an example of another well-known large international group. Its energy price increase for gas this year is 65 per cent.—no less than 33⅓ per cent, of its available profit for the past year. This is a very significant factor in a large number of industries. I must ask my hon. Friend the Minister to take the point on board. We are fighting with our hands tied behind our backs through our own deliberate act of policy.

Other speakers have raised the question of the fairness of competition. I would refer to the foundry industry where imports are beginning to cause widespread concern. The cost structure of the raw materials available for the foundry industry differ widely between our country and our principal competitors in Europe. Reference has been made to the Third world. I am not arguing about Third world imports. I am talking about imports from the EEC. In Germany and this country, for instance, there are significant differences in the prices of coke and pig iron. The price of coke in Germany is about £84 a tonne compared with £95 a tonne in this country. There are similar wide differences in pig iron prices.

I shall not deal with the situation in Spain, but the position has now been reached where for typical castings for agricultural machinery or for the motor industry, a well-known, strong, international goup, purchasing about £5 million worth a year in this country, can obtain the same quantity from France for £4.2 million, from Spain for £3.8 million and from Germany for £4.1 million. What purchasing director, at a time of high interest rates and tight money, can possibly resist those competitive pressures?

Time is short, but these points have to be made. They have not been brought out in detail. I move swiftly to my conclusion that there has been, and still is, widespread support for the Government's policy of attacking inflation. But companies in the position I have described are very alarmed to see that pressure on the public sector has not equalled that to which they have been subjected. It is the private sector, rather than the public sector, that is taking the squeeze to ensure the success of the policy being followed by the Government.

The cuts in the public sector are directed towards capital investment programmes instead of towards the recurrent services. This makes the situation of manufacturing industry even worse. At this rate we shall end the year with the public sector accounting for a higher percentage of GNP than at the time of the election. We were elected to reduce that percentage ; and my right hon. Friend the Prime Minister is valiantly committed to doing so. The Prime Minister gave all of us hope when she said that the refund from the EEC would be used to reduce the public sector borrowing requirement and thereby bring about a reduction in the interest rate. Hope was increased when that was immediately followed by a fall in the exchange rate.

Those are the policies to which the industries in the West Midlands are looking. They support the Government. They accept the priority, but they are looking for a reduction in interest rates. If that is not achieved, the cry for import controls will be impossible to resist.

12.11 pm
Mrs. Renée Short (Wolverhampton, North-East)

The debate began with a lethargic and uninspired speech from the Government Front Bench. We are tired of Ministers refusing to accept responsibility for the results of their actions. A severe recession is developing everywhere. Output is declining. It is forecast that output will be reduced by 5 per cent, this year. That is serious. All industries are affected. When output is down, employment prospects are also down. The present situation contrasts severely with that before the general election.

The Department of Employment figures published this week show that unemployment in manufacturing industry rose by 37,000 a month between December last year and March this year. That contrasts with an average monthly figure of 5,000 in the two years to the middle of 1979.

For some time we have been alarmed at the developments in the West Midlands as a whole and in our constituencies. When I asked the Department of Employment about the number of redundancies in the Wolverhampton area for the 12 months since the election I was told on 9 June that there had been 4,034 redundancies in 67 firms. Closures and loss of jobs are not new to Wolverhampton. Many famous firms are closing down, including Norton Villiers, Henry Meddows, Courtaulds, C. & B. Smith, Integral, Desoutter Lang, and Phoenix Glass. Over 6,000 jobs were lost as a result of those closures. The most serious closures were at Norton Villiers and Courtaulds where 1,600 and 1,400 jobs were lost.

The Norton Villiers case was a bitter pill for Wolverhampton. I took a deputation to see my own Ministers to try to get limited help and a small injection. We got nothing except encouraging words. The market was handed to the Japanese. Had Norton Villiers been allowed to continue, who knows what would have happened. With the rise in the cost of petrol more and more people are turning to motorbikes. Norton Villiers might now be a thriving concern. There were massive redundancies at Star Aluminium, Rockwell Thompson, ECC Wolverhampton Diecasting, Laystall Engineering, Willenhall Radiators, British Steel—including Bilston Steel—GKN plastics, John Thompson, Goodyear, Decca, Jenks and Cattell, Ever Ready and many others.

When Courtaulds closed, with the loss of 1,400 jobs, and Ever Ready closed, with the loss of 1,100 jobs, most of the people involved were women working full or part-time. Women are severely affected in the present economic climate. The prospects for girls and boys are bleak. In the 12 months since the election, unemployment in Wolverhampton in the 16 to 18-year-old group increased by 18 per cent. In April this year, 1,149 young people were unemployed—an increase of about 16 per cent, over April 1979.

In addition, 724 young people in the Wolverhampton area are engaged in the youth opportunities programme, so the total unemployed in that age group is 1,873 compared with 1,588 in 1979.

The closures and redundancies to which I have referred mean that there are fewer vacancies for young people and fewer opportunities for apprenticeships. More young people will rely on the youth opportunities programme, but what will be their chances of work after that? I want a categorical assurance from the Government that the youth opportunities programme in the West Midlands, and in Wolverhampton in particular, will be expanded and that more resources will be made available to help young people.

Last week we debated the construction industry. I suggested how we might improve our exports of building materials and components and how we could reduce the level of imports of such items. An effective approvals system would improve the situation. Will the Minister examine that possibility and talk to his right hon. Friend about it?

The Government's monetarist policies are hitting the building industry hard. Local authorities are denied the resources to build or modernise houses, schools and other buildings. Firms are unlikely to embark on new building schemes in the present climate.

On 20 November I asked the Secretary of State for Education and Science what the allocation for school building in Wolverhampton would be for 1980–81. I was told that it would be £399,000. On 10 December I asked the Secretary of State what he thought the local authority could do with that princely sum. He said that £160,000 was earmarked for energy conservation and that it was for the authority to decide how to use the balance of £239,000. I was told that it could build places on a permanent or temporary basis, that existing buildings could be replaced, remodelled or improved—or a combination. I was told that for that sum the authority could build 150 secondary or 250 primary places. Because no general needs allocation has been made, for the first time in years local authorities can use their allocations only to do odd remedial jobs on some old schools. No new building will be done this year.

What are the Government planning to do to revitalise the industry? The industry can prime the pumps and help many others to get on their feet again.

Mr. Heddle

The Government's policy of improvement and repair is to revitalise existing housing stock which is cheaper than building new houses.

Mrs. Short

The hon. Gentleman has not taken the point, because local authorities are not able to carry out modernisation schemes, because of Government cuts One of the problems in my constituency is that a large scheme has had to be cancelled because of insufficient resources. Hundreds of families are therefore condemned to live in houses built in the 1930s which are far from adequate.

How long do the Government intend to sit back and do nothing while many thousands of skilled men and women idle the rest of their lives away—not because they will not work, as many Members assume, but because they cannot get work? What plans do the Government have to inject resources into new industries in the West Midlands? We need them. We have the skills. We have men and women who can be retrained in new skills. When will the Cabinet decide to provide the £25 million investment in Inmos—or is that to be another sell-out to America and will we have to be dependent on someone else's manufacture and imports? Is Britain to have a stake in cheap integrated circuits? The market is now dominated by the Japanese and the Americans.

The Japanese receive massive support from their Government who provide at least £5 million in support of the microelectronics industry. Inmos has good results with its first wafer, but what is to happen now? Is it to be lost, or will the work continue? Where will the United Kingdom plant be built? Why not bring it to the West Midlands where we have the skills? That would bring 2,000 to 4,000 jobs into an area which badly needs them.

We want to know whether the Secretary of State is going to back Inmos. Will he back research and development in industry generally? The signs are that the monetarists will win again and that that area of important work will be cut back. We are in a serious situation. The Government have it in their power to revitalise this most important region where the skills and the long traditions in industry exist. In May the regional unemployment rate crept above the national average to 6.2 per cent. A year ago at the time of the general election it stood at 5 per cent. That was below the national average.

In Wolverhampton in May the unemployment rate was 7.5 per cent.—well above the national average of 6.1 per cent. I want to hear what the Government propose to do to help this region.

12,20 pm

Mr. Richard Shepherd (Aldridge-Brownhills)

I cannot think of a more important debate that I have attended since being elected to the House last year. To that extent I am grateful to the Opposition for putting this debate forward. However, it is a matter of great disappointment to me that the Government are not represented in the debate by the Secretary of State for Industry, inasmuch as this debate affects the manufacturing heartland of our country.

I am privileged to be able to follow some of the distinguished contributions made by previous speakers, and I wish to concentrate on an area in which I believe the Government can offer help and hold out hope to industry and companies in constituencies such as mine.

Aldridge-Brownhills is, as the Minister of State knows as a result of a visit to my constituency, the most dynamic part of the West Midlands. In 25 years its population has increased threefold. The area is now a significant contributor to the economy of the metropolitan borough of which it is part and to the West Midlands as a whole.

Industry in my area is formed, primarily, of small new companies dependent upon the resources, energies and abilities of those who founded them. It is to such companies that our country looks for its future. It is obvious that older companies in decline are experiencing difficulties. We are aware of that. Therefore, we should be doing all that we can to help them through this transitional decline. At the same time we should be stimulating those areas where there is opportunity for growth and job creation.

I believe that the Government have it in their power to help. I wish to concentrate on those ways in which we can try, to some extent, to reduce the cost-push in a time of diminishing markets. To my mind the crisis facing the country is not one of inefficient production but one of declining markets. That is a trend throughout the Western world. Our duty it to try to ensure that our companies can hold as much of the market as they are able.

There are certain cost-push factors over which the Government could exercise control or which they could influence. I begin with interest rates. They have now been at 17 per cent, for the longest time in our history. They represent an appalling difficulty for British industry to cope with and to try to overcome while remaining competitive in the face of overseas competition. I believe that the Government should move as soon as possible to bring down the high interest rates.

We were pledged to reduce inefficiency in the public sector. All my life I have heard of the growth in the public sector. In a distinguished contribution to the Budget debate my right hon. Friend the Member for Taunton (Mr. du Cann) listed some of the comparisons—to which I shall return—with our major competitors in Europe. Suffice it to say that Walsall metropolitan borough employs over 13,000 people either full or part time. I received a letter from Walsall Chamber of Commerce—the fourth largest in the country—which pointed out that in the Walsall employment area there are 108,000 jobs. It is an intolerable burden on companies and ratepayers that they should be supporting an army of people—to the tune of 13,000—when the total work force is 108,000.

I quote those figures merely as an observation because people in public sector employment are doing the best that they can in difficult times. I also appreciate that if we make a substantial reduction in public sector employment we shall create a further burden of unemployment. But unless we grasp that nettle we are putting a burden upon manufacturing and commercial industry in this country which will reap for us a poor harvest.

I have spoken of the size of my local authority. I should also mention that the terms and conditions of employment of most people in the public sector are much better than those enjoyed by many in the private sector. For example, were the chief executive of my authority to retire this year, within four years on an inflation-proof pension his income would be greater than that of the man who would now replace him. No business man in the constituency of Aldridge-Brownhills can look to a return and reward such as that after a lifetime in manufacturing industry. The balance is wrong. I have mentioned interest rates and the general burden of rates. I believe that the Government, by allowing energy prices to increase faster than the rate of inflation, have imposed unnecessary additional burdens on industry. I believe that it is within the power of the Government to hold back the rate of energy price increases.

I have quickly dealt with three areas. That is because of the short time we have left and because of the distinguished speeches that preceded mine and that touched on similar points.

However, one particular burden which has not been sufficiently analysed and recognised for what it is, is the burden produced by the common agricultural policy on the wage rate demands of this country. When we entered Europe I do not think that any of us realised what the cost would be to our people. We changed from a system of cheap food to one of dear food. I would willingly return tomorrow to deficiency payments and allow the British public to buy food at world cost. This would, I believe, produce a significant reduction in the retail price index. That could only be in our interests as a manufacturing country.

I would like to see the Government look much more rigorously at ways in which we can bring participation in the CAP, which by default, damages our manufacturing capacity, to an end. I urge my hon. Friend the Minister to urge that course upon his colleagues in the Government.

I return to my first point.

Mr. Adam Butler

Because this is a specialist point I am sure that my hon. Friend will realise that if we were able to revert to a system of deficiency payments we would have to find additional revenue of at least £1,000 million.

Mr. Shepherd

My hon. Friend the Minister is wrong about that. Deficiency payments can be paid and would amount to no more than we pay across the exchanges to Brussels at the moment. A return to a system of deficiency payments would enable the British people to buy their food in the world markets at substantially lower prices than at present. We would benefit from that. That would affect the rate of wage bargaining in our economy. Anything that we can do to reduce the level of wage bargaining must be in our interest. I urge such a system upon my hon. Friend.

Finally, I must say that I consider it a grave discourtesy to the major manufacturing area of the country that my right hon. Friend the Secretary of State for Industry is not here today.

12.28 p.m.

Mr. Gwilym Roberts (Cannock)

I was sorry that the debate was begun by the Minister on a partisan note. But I am glad that many of the subsequent speeches moved away from that partisan tone. I believe that the problem of unemployment will be with us for many years and that it merits more than a partisan approach from either side of the House.

I will spend the few minutes at my disposal talking principally about the problems of the Cannock Chase area. In doing so I will echo most of the problems raised by other speakers. On Cannock Chase, of course, we have all the problems of the West Midlands conurbation and a great many others besides.

My hon. Friend the Member for Wolverhampton, North-East (Mrs. Short) gave us a roll call of factories that had become redundant in her constituency. Almost every closure will have caused unemployment on the Cannock Chase. The simple statistics show that our problems are greater.

The average unemployment in the Cannock Chase area in the first quarter of 1977 was 40 per cent, above that in the West Midlands as a whole and about 75 per cent, above the Staffordshire figure. By the first quarter of 1977 the comparable figures were 50 per cent, and 90 per cent., and our unemployment is now nearly 10 per cent., which is more than double the Staffordshire figure and nearly double the West Midlands figure. Not only have we increasing unemployment, but the differential between us and the whole of the West Midlands area is increasing.

There are three basic problems. The first is the lack of growth in mining jobs. Unlike the great bulk of the West Midlands, we still have about 21 per cent, of our employed population in primary industry, mainly mining. There has been no growth in this industry. Indeed, in the long term there has been a big decline. Even in recent years, contrary to popular belief, the numbers in mining have not increased. The Cannock Wood colliery closed in fairly recent years, and there is a great danger for the jobs of another 800 miners in the West Cannock colliery.

Secondly, there is the general decline in engineering, which is a reflection of what is happening in the West Midlands, and the car industry in particular. Another substantial source of employment for Cannock Chase these days is the car component firms. There were 1,000 redundancies fairly recently when Fafnir Ballbearing in Hednesford closed. We now have about 3,000 to 4,000 people on the unemployment register, and fewer than 100 unfilled vacancies.

Contrary to what the Minister said, a particular difficulty is that many of the firms that come to the area are small firms, which are particularly vulnerable in difficult economic times. This is also true of the building industry.

Our great problem, which does not affect many other areas, is that of population growth. I agree that it applies also in Aldridge-Brownhills. In about 20 years the population has virtually doubled. In a sense, the West Midlands conurbation is exporting its problems to us. We are now trying to house the families of people who moved to us 20 years ago. The Government have decided that the Cannock Chase district council cannot build between 400 and 500 houses this year but can build only about 50. This will have a serious affect.

We have the same problem in education, but it is particularly serious in employment. If the present position continues, we must foresee our becoming a vast unemployed dormitory.

What can be done to alleviate the problems? It would be unwise to suggest that they can vanish overnight. Unemployment did not arrive with the present Government. We should not talk foolishly in such terms.

The first thing that can be done is to go ahead with more jobs in the mining industry. Expansion within local pits would greatly help. I am sure that the right hon. Member for Stafford and Stone (Sir H. Fraser) will forgive me if I say, although the pithead is in his constituency, that it is vital that the National Coal Board goes ahead with the planning application for the new Park colliery. It would provide 1,400 new mining jobs and give a new feeling to young people in the area that mining is growing.

Secondly, we need to revitalise the West Midlands as a whole. The revitalisation of Cannock Chase depends on that. We need new major growth industries. I am not sure about microprocessors, to which my hon. Friend the Member for Wolverhampton, North-East referred.

An outstanding industry that comes to my mind is the robot manufacturing industry, which is associated with the area. We need it for the development of the car industry. The British robot manufacturing industry is almost non-existent. It seems ideal for the car-dominated West Midlands to have such developments.

I should also like the NCB to consider developments associated with the coal industry—the movement to chemicals, fluidised beds, the growth areas in the industry.

It is important also to have Government research centres. Cannock Chase is a desirable area, ideal for Government research centres. The sad fact is that the West Midlands has virtually no research centres. The centres, which are mainly in the South-East, act as nuclei of high-technology growth.

I know that the Government can do little about the real need, which is to deal with population growth, but I ask the Minister to discuss with his colleagues in the Department of the Environment the structure plans put forward by counties. Talk of thousands more people with no jobs and no future sounds desperate.

The Government have said that they believe that the previous Government's mass regional approach involved spreading the jam so thinly that it helped nobody in the end. I think that the Government are absolutely right. It is clear to everyone that under those regional policies the jam was so thin that the policies did not work.

The Minister says that there are areas with particular problems. If the Government are serious in what they say, and if the hon. Gentleman is to look at areas with particular problems, will he look not only at the inner cities but at other areas of growing population on the borders of conurbations, areas such as the Cannock Chase, with the type of major problems that I have tried to describe?

12.37 pm
Mr. Ivan Lawrence (Burton)

There are two factors above all that have contributed to the decline of industry in the West Midlands. The first is the world recession, and with it the decline of much of the traditional large industrial manufacturing base. The second is the Labour Government's inability to pursue the economic policies that would at any rate have kept us in line with those of our competitors. Time will tell whether we are succeeding, but one fact is clear beyond doubt—that Labour failed.

There is not much that we can do about the world recession, except so to order our economy that when the recession ends we shall be in a position to take advantage of the upturn. The most important thing that we can do about the economy is to get the inflation rate down, so that we do not price ourselves out of the world markets that we are still in and we give ourselves a chance to take advantage of the world markets that we can enter.

Mr. Russell Kerr (Feltham and Heston)

Can the hon. Gentleman tell the House, because it is an important point, when he and his ministerial colleagues date the world recession from?

Mr. Lawrence

The world recession has been going on for some time, but it has been getting worse in the past 12 months.

The Government's policy must be to seek to achieve over the short term, and perhaps even the medium term, the reduction of public expenditure, if necessary by painful cuts, and a reduction of the growth of money supply, by high interest rates.

The Government's problem is to decide at precisely what moment those reductions will have achieved their maximum result, so that more harm would be done to the future of the economy by keeping on the restrains than by relieving the pressure, and allowing an increase in spending and a reduction in the interest rate. The coward's way is always to give in, and that is why it was so important to have a change of Government. But the time is now fast approaching when it must be necessary to relieve the interest rates.

The next most important action to get the economy right is to stimulate productivity, and that can be done only by making it more worth while for people to work. This is achieved partly by controlling inflation and partly by reducing the burden of taxation ; and that the Government axe determined to do.

A third most important necessity in getting the economy right is to achieve good and sensible industrial relations. In this respect, Burton is in a unique position and may have lessons for others elsewhere. At a time when unemployment in Staffordshire has grown by 84 per cent, over five years, from 3.1 per cent, in April 1975 to 56 per cent, in April 1980—a faster rate of increase than in the region, which increased by 69 per cent., and in Great Britain as a whole, which increased by 62 per cent.—Burton's unemployment has risen by only 35 per cent, and is currently now well under 4 per cent. It is a much lower level of unemployment than elsewhere in the West Midlands and in many other parts of the country. I am always slightly embarrassed at joining in debates of this kind when others are suffering far more than Burton.

When I am asked why this is so, my answer that it is partly the result of the presence of the breweries, although they account for under 4,000 of the 38,000 work force in Burton-on-Trent. The relatively high wages paid by the breweries is to some extent a factor in high wages elsewhere in Burton, and that means a much more satisfied work force. The breweries will continue, human behaviour being what it is, until the last.

It is so also partly because of the existence of such large and diverse firms as Pirelli, Marmite-Bovril, JCB and Adams Foods, which appear to be extremely well run. But mainly it is due to the many small engineering, construction and other diverse manufacturing companies. These small businesses are the backbone of Burton—and I include farming.

Incidentally, in Burton we have one of the examples to which the Minister referred of more demand for small factory areas than there is supply. I pay tribute to the Conservative-controlled East Staffordshire district council and Staffordshire county council for their determined and successful efforts to get the infrastructure of the Hawkins Lane industrial area developed, and also to keep down the rates.

The industrial relations position in Burton is, in my view, the greatest contributor to the relative stability of the town at a time of recession. Why is this so? The first reason is that in the larger companies in Burton the unions are responsible, and restrictive practices are not rampant. The second reason is that most of Burton's industry is not unionised, and the best industrial relations often exist where there are no unions—where management and workers work together on a personal basis without conflict or ill-feeling. The result is a happy work force, high productivity and more work being made available when markets expand.

There are lessons here as to the importance of peaceful industrial relations in the large factories where there are unions—and where there is a great sense of responsibility shown by the work force—and in the smaller companies which are not unionised.

In only one part of Burton recently has there been disaster—a disaster which might have been averted with more realism from the unions. I am talking of the closure of Bamford Agricultural Limited in Uttoxeter, with a loss of over 500 jobs. Even as the company sank out of the industry, the Transport and General Workers Union was calling upon the workers to take industrial action over a totally absurd wage increase. The company was losing money hand over fist, was obviously unable to grant any wage increase at all, and yet the TGWU representative called for industrial action for a claim of 30 per cent.

The lesson has at least been learnt that the more wage increases workers demand of a failing company, the quicker their jobs go. Now that 500 people in Uttoxeter are without work, I ask the Government to give some urgency to their consideration of what help they can give in the way of opening up opportunities for small businesses in the Uttoxeter area so that we might relieve the misery of that hard-working and delightful town.

There is another factor about Burton's industry that ought to be borne in mind. There is still a high level of job vacancies in the skilled sector, which means that the Government should redouble their efforts—this was mentioned by the Opposition Front Bench spokesman—not only to develop retraining, but to ensure mobility of labour. That is not only by the computerised job placement schemes being tried out in London and elsewhere—and which are to tried out in the West Midlands—but also by computerising council house exchanges. If people will not move their homes to areas where jobs are available, it is a substantial factor in the unemployment level.

The potential of the West Midlands in general, and Burton in particular, as the engine room of Britain is obvious. Burton's message to the Government is "Be resolute in your policy to reduce inflation and to encourage small businesses". Burton's message to the unions is "Be reasonable in your wage demands and match them to the company's capacity to pay". Burton's message to the nation as a whole, and especially to the hon. Member for Feltham and Heston (Mr. Kerr), is "Keep drinking our beer".

12.46 pm
Mr. Bruce George (Walsall, South)

Having just listened to the full back of the House of Commons football team, the hon. Member for Burton (Mr. Lawrence), may I say that I rely more on his judgment on the football pitch than on his ability to provide a sophisticated analysis of the economic decline of Britain.

Mr. Lawrence

I score more goals in the House than I do on the football field.

Mr. George

The hon. Gentleman's goals are mostly own goals—both on the football field and in the House.

The times are bad, but it would be wrong to adopt a too simplistic approach and place blame on one group or another. We must all accept a portion of the blame for Britain's industrial decline. It does not help to pour scorn on one group while denying that another has made any contribution. Obviously the decline in Britain did not begin on 4 May 1979. The Friedmanite policies of the Government have exacerbated the crisis and deepened the decline that Britain and our region are experiencing.

The slump in the West Midlands has not suddenly happened. Anyone who has diligently read the reports during the past 15 years will recognise that the crisis has been observable for a long time. Although reports have been published, action upon them has been very restricted. We are now in a powerful industrial nose dive. The Minister's words will be remembered. He said that industry would emerge slimmed down. Rather than "slimmed down", the description should be anoretic—slimming is voluntary while anorexia is not. If we are to emerge with reduced inflation, I wonder who will be left to take advantage of improved world conditions.

The hon. and learned Member for Solihull (Mr. Grieve) apologised for raising a constituency issue. While we have a responsibility to recognise problems at an international, national and regional level, I say unashamedly that I am here to espouse the cause of my constituency and the borough that I represent. Unemployment in Walsall has always been below the national average, but the figure now stands at nearly 7 per cent, of the work force, which is above the regional and national average. The number of vacancies available is very low—about 150 in a town of more that a quarter of a million.

The business men to whom I have spoken are quite depressed. I wish to quote a letter sent to me by the director of the excellent chamber of commerce, with which I have a good relationship. I am seeking not to use his words against a Conservative Government but merely to repeat them. He said : There is little doubt that business confidence is deteriorating in the Walsall area, the last six weeks having been particularly bad. The returns to our latest Quarterly Economic Survey (March-June 1980), involving manufacturing firms in the borough, are now being returned to the Chamber. Firms report that over the last three months business has dropped dramatically. For example, of the sixty firms that have responded to date, eighty-three per cent, report that home orders are down on three months ago. Only fifteen per cent, of firms are working at full capacity. Not one single firm in Walsall has reported that it intends to take on additional staff over the next three months. Meanwhile, eighty-eight per cent, of firms have reported that lower interest rates are needed to improve their business prospects. This is a sad situation affecting all sides of industry and which threatens to deteriorate. My local newspaper the Express and Star published what it called "the grim table" of the jobs shake-out in the West Midlands. It pointed out that 25,000 jobs have been lost in major redundarles so far this year. The catalogue is devastating, and in my area the situation is deteriorating alarmingly.

There are few large major employers in the area and therefore the trouble comes in a series of droplets in the sense that there may be nothing as dramatic as a major enterprise closing, but when the redundancies in the smaller firms in the Aldridge area are added up the situation is very bleak. A large number of companies—British Industrial Plastics, BRD, Birlec, EZCO Seals, Taylor Woodrow Construction, Crabtree, which recently announced major redundancies, GKN in Darlaston, which is virtually abandoning nuts and bolts, and Bradley and Foster—show a catastrophic decline that has to be reversed.

The main thrust of my argument is that the local authority can play an enormous role in identifying problems and in assisting in the process of regeneration. The role of the local authority is not simply to provide education and to clean the streets. Many people see its role in regeneration merely in terms of supposedly holding down the rates. If a local authority has an experienced staff with knowledge of both sides of industry, it can analyse the situation, liaise between the different elements in the formula, and stimulate, acting as a catalyst, the process of regeneration.

I believe, therefore, that the local authority can play a significant role in this process. It must provide for the infrastructure necessary for development. Companies will not come to a rundown area with poor housing where land remains unreclaimed and where there are no advance factories. A local authority can provide that infrastructure, can provide loans, can assist with the supply of labour and can liaise with industry, the trades council, and the Department of Industry to identfy and solve the problems. I am pleased that a number of authorities have appointed industrial development officers who liaise with all sides of industry in the search for jobs and companies. I hope that they will operate internationally, not confining their trawling to a local or regional context.

In my town the local authority and the council have taken seriously their responsibilities of developing an industrial role. I congratulate them on that. They have done so without a great deal of assistance from the Government. They have developed industrial priority areas. The Labour Government gave us money for nursery units, all of which has been taken. They are using the money that the Labour Government provided to create facilites that will attract industry to the area.

I want my local authority, which is surrounded by local government areas that have received more favourable treatment under the Inner Urban Areas Act, to be considered for inclusion under the provisions of that Act. The Government are seeking to espouse the cause of supporting those who are prepared to help themselves and my local authority is prepared to help itself. However, it needs the support that the Government can provide. It needs legal support to enlarge its powers, and it certainly needs financial support.

More small industrial units must be provided. More advice and information must be made available to prospective employers. We need more industrial priority areas. We need to provide adequate housing for key workers—and such housing is needed for the rest of the population as well. I should like to see more given in the form of urban aid to be used for industrial purposes and more done by way of land reclamation because the local authority and industrialists tell me that the key to the problem of regeneration is to reclaim land, develop it and make it available for prospective tenants and employees.

The local authority can help in training the work force. I visited a local skill-centre recently and was staggered to find vacancies in the engineering programmes. That is in an area that in the past has survived on engineering. It is almost incomprehensible that such vacancies should exist. I do not know whether people dislike working in the industry—perhaps because the industry is a dirty one, or because they have been made redundant from it several times already. Unless we can provide the right training for the jobs that will become available, the position is most serious.

I hope that the Government will see the light. I hope that the debate will not be seen merely as a ritual breast-beating operation in which Members make their speeches and the Government absorb the criticism but carry on in exactly the same way down the road to ruin that they have travelled in the past 12 months. We cannot simply blame the Government. Everyone must share a sense of responsibility for what has happened. I do not think that the position will improve unless we can provide a viable programme of action. A policy that seeks to isolate groups for singular blame is unlikely to enhance the situation.

With our talents, industrial experience, enthusiasm and enormous assets, I cannot believe that we should slip further and further down the industrial league table, eventually to become the first de-industrialised State. We have the talent. I hope that the talent can be improved. The essence has to be right decision making not only by trade unions, chambers of commerce and local authorities but by the Government and Parliament. Regrettably, we have not seen that in central Government for a long time.

12.56 pm
Mr. Nick Budgen (Wolverhampton, South-West)

I wish to make only two substantive points, and later in my remarks I shall be referring to one of the topics touched upon by the hon. Member for Walsall, South (Mr. George).

It seems to me that this is properly an occasion for hon. Members to make constituency speeches. Here, I disagree with my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd). In my view, this is properly an occasion for the Minister of State to carry out the heavy responsibility of opening and winding up the debate. I hope that it will be well understood in all the regions that it is the Government's prime duty to get the general conditions in which the British economy is working right and not to oblige either the Secretary of State or the Prime Minister to listen to every regional debate or even every constituency debate and to pretend that there is a specific nostrum to be applied to each region.

I welcome the part that the Minister of State has played in this debate. I am sure that the Secretary of State will read what he said. I did not agree with the way in which my hon. Friend the Minister for Aldridge-Brownhills twice expressed his regret about the absence of the Secretary of State.

I make it plain at the outset that I support the Government's economic strategy and their desire most of all to rid the country not just of the economic ills of inflation but of the social divisiveness of inflation.

The first matter that I wish to discuss concerns enterprise zones. I hope that the Government will soon announce the criteria which will be used in the allocation of enterprise zones. At the time of his Budget, the Chancellor of the Exchequer said that Bilston was an area which he considered, prima facie, to be one of the more obvious choices for the six enterprise zones. I hope that my right hon. and learned Friend and other Ministers will have in mind the fact that Bilston lost a very large steel works. I note with interest that yesterday the Secretary of State for Industry announced very substantial State—and I would say taxpayers'—aid for other areas which had lost steel works. I hope that that will be borne in mind in deciding whether Bilston shall have its enterprise zone.

At present, there is also a very high level of unemployment in Wolverhampton. My hon. Friend will also have a copy of the document I have received from the Conservative research department, which says that between 1974 and 1979 unemployment in Wolverhampton rose from 2.2 per cent, of the employed population to 5.6 per cent. When those criteria have been announced, there is every reason to hope that Bilston will be one of the enterprise zones in England.

Since I last advocated Wolverhampton's claim to be an enterprise zone, I have noted with great pleasure that a formal application has been made by the local authority. The local authority must apply before consideration can be given. Unhappily, at one stage, there was some doubt whether the local authority would wish to apply. It has done so in a concise and businesslike manner. It is plain that it is serious in wanting this benefit.

I hope that the hon. Member who represents Bilston with such vigour will forgive me for mentioning this matter because it is not just a Bilston matter. I am sure that the hon. Member for Wolverhampton, South-East (Mr Edwards) who is in the Chamber now, will agree that, although this concerns his constituents, it also concerns my constituents, many of whom used to work on the Bilston site. If the enterprise zone becomes successful, I hope that many of my constituents will work there in future.

One of the single most important imposts on industry in the West Midlands is the rates. In Wolverhampton, they rose by 56 per cent, in the last year. Yes—56 per cent. I often do make a mistake, so the Minister of State is right to look at me in surprise. It is an enormous increase. Unlike, for instance, corporation tax, which can often in our present tax system be lawfully avoided, rates are unavoidable.

However, those concerned must understand that the decision to raise the rates by this amount springs not so much from the fact that the council's money market operations have been slightly less good than those of a merchant bank, or from marginal inefficiencies in the use of its labour. They spring from important and highly controversial political decissions. The Wolverhampton council, for instance, has adopted a policy of no redundancy. That has had a major bearing on the increase in the rates.

Ministers have considerable powers of persuasion. I am wholly opposed to improper and unlawful leaning on private citizens, but there is one area in which I think Ministers would properly be able to exercise influence. The Wolverhampton chamber of commerce, in response to that extraordinary increase, has offered its services to monitor local government expenditure. [Laughter.] The hon. Member for Wolverhampton, North-East (Mrs. Short) may laugh, but she will agree with me that it is a fact that the chamber of commerce has made that offer.

I take up the point made by the hon. Member for Walsall, South. There are many Socialist-controlled local authorities which see their activities in encouraging industry as being analogous to those of little NEBs. They want to hand out cheap loans and give subsidised rents in local authority-built factories. We understand that. But chambers of commerce must understand that these are political decisions.

The hon. Member for Wolverhampton, North-East talked about the roll call of firms that have left Wolverhampton or have gone bust in the past. Almost all these were family firms, and you, Mr. Deputy Speaker, will understand the importance of that. They and their leaders played an important part in the political life of Wolverhampton. If the chambers of commerce want to influence political decisions, they must be involved directly in politics. It is a sad fact that the new managerial classes seem to be almost apolitical.

1.6 pm

Miss Sheila Wright (Birmingham, Handsworth)

There seems to be some disagreement about whether this is a debate on the overall economic situation, or on our constituencies and their problems. I do not yield to anyone in fighting my corner for Handsworth, but I see little point in hon. Members going in for a dreary competition as to how badly off their constituencies are if, in the process, we do not pay considerable attention to the overall situation which has led to the difficulties, in the face of accelerating industrial disaster in the West Midlands.

I make one point relating specifically to my constituency. At the end of the summer term in Birmingham just under 13,000 16-year-olds will leave school, as will 2,000 17-year-olds and 2,500 18-year-olds. That means that 17,500 young people will leave, the vast majority of whom are very anxious and willing to work and are desperately concerned about getting a job—preferably one in which they receive training for the future, but basically any job at all.

I was told yesterday by the youth employment officer in Birmingham that there are at present 1,200 vacancies for young people—1,200 out of 17,000. That is a disaster. It is an individual disaster for the young people concerned, and it will be even more disastrous for the economy of the country if year after year a generation of young people are not being trained for industry in the future. We are now suffering from the cutbacks in apprenticeship training in the late 1960s and early 1970s. Now, even in time of industrial turndown, we are still having difficulty in getting the skilled men and women necessary for our industries. If we do nothing, in 15 years we shall not have the skilled people necessary to man our industry. That is one of the effects of Government policies on the West Midlands and the country generally.

In the first five months of this year, in Birmingham there were 13,000 redundancies notified to the Department of Employment. This figure applies to firms employing 10 or more people. Those employing fewer than 10 people are not required to notify. In addition, 3,000 redundancies were notified to the Manpower Services Commission. There is no means of checking the innumerable job losses in small firms or the number of part-time workers who have been made redundant. I am probably understating the position when I say that there have been at least 20,000 job losses in Birmingham in the first five months of this year. About 20,000 people—in many cases the main family breadwinners—who were employed at Christmas are now unemployed. That is another measure of our economic position and the effect of the Government's policies.

As has been said, we must try to look to the future. We are not trying to present a roll call of our constituency problems. We are asking the Government to take action before it is too late to stop what is happening. I shall quote a remark, not from the TUC or the Labour Party, but from the sort of person to whom the Government usually pay attention. The chairman of the CBI in the Midlands said : The high cost of money means that most firms cannot afford to borrow so they are halting or delaying their investment programmes, so the suppliers of capital equipment are not getting orders, and this goes right down the line to the component workers. The chairman hoped that next month's Cabinet review of economic strategy would result in some monetary relief, otherwise some more industries which could be saved will be destroyed. That is yet another measure of our economic position and the effects of Government policies. I hope that the Government will pay attention to that, as it becomes increasingly clear that management, and top management at that, is increasingly doubting whether the Government comprehend the consequences of their industrital policies.

The Minister said that in previous years insufficient capital had been left in industry for investment. That statement is peculiarly irrelevant. If the Government bother to study the results of their policies, they will see that it appears that they are hell bent on ensuring that investment and redevelopment are impossible for an industry struggling to survive in a time of world recession.

Ministers, notably the Prime Minister, are much given to telling us emphatically and in simplistic and often childlike words that we must live within our income and must not spend money that we do not have. It is time that they started to listen to the equally emphatic and simply phrased comments coming from all sides of industry. When firms cannot modernise and, as a consequence, lose orders because they are producing less economically than their foreign competitors, they lose those orders for good. When firms cannot compete or enter new markets because they cannot afford the cost of the initial tooling up, they are unlikely ever to get into that market. When firms close or industries are smashed, as is happening in the West Midlands and the country generally as a direct result of Government policy, they cannot open up again whenever it suits them.

The message that I and my hon. Friends and many people from both sides of industry wish to get over to the Government is simple. The economy of the West Midlands and of the country is very sick. It needs a blood transfusion and not the stranglehold of the Government's monetarist policies.

1.13 pm
Mr. Iain Mills (Meriden)

It is incorrect to claim that the problems of industry in the West Midlands are the fault of Governments of any party. I have spent nearly two decades working in factories in the West Midlands. I believe that all partners to the industrial machine have been at fault. Opposition Members are incorrect to blame the present decline on the Government. There are faults on all sides, and the Government's contribution is important. However, it is perhaps less important to the ebb and flow of success than that of management, trade unionists and employers generally.

It is sad that over the past two decades the West Midlands has been a scene of lost opportunities. Those opportunities have been lost not by Government policies, but by the partners in industry not being able to grasp those opportunities. The fault can be equally apportioned. It lies first with management, which has often been too slow to react and to identify and seek out opportunities. Management finds it too easy to blame trade unions, to blame the Government, to blame everything. The new farmer for whom it always rains too much or too little is much of Britain's industrial management, to whom I belong, so perhaps I can fairly criticise it. There is always something wrong. The pound is too high or too low, or investment and the cost of borrowing is always too high or too low.

However, it would be wrong to blame everything on management. Certainly it has become much more difficult in the past few years to become a successful manager and I am pleased that companies, Governments and the education system are reacting in formulating better training for competitive managers in the next two decades.

We should also mention the other partner—trade unions and working practices. It has been tragic to see so many opportunities that have been identified by managements in the West Midlands over the past 18 years lost by official strikes and, particularly, by unofficial strikes that are called, often mindlessly—though no doubt those who call them feel that they had grievances—by those who do not know or care about the consequences. How sad it is that so many new ideas and new practices have been stopped by the mindless desire to demonstrate and to withdraw labour. It may be man's right to withdraw his labour, but he should think carefully before doing so in the West Midlands.

Investment in new machinery, new practices and higher productivity has been held up by the lack of identification of opportunities by all the partners. We should say "Forget political differences, political bias and politics. You are in a competitive world, the West Midlands. There are people in Korea, Africa and throughout the world who do not adopt your practices of slow management or restrictive trade union practices".

We have to get out and sell on the basis of the goods, not on the basis of our moral or social beliefs. One does not sell machinery because one has the right moral standards. One sells it if it is good and at the right price. Those should be our priorities and if we have to sacrifice some of our long, dearly held views on the right to withdraw one's labour, that should be the sacrifice.

One cannot gain anything in this world without sacrifice. Those in Korea who are competing against us are sacrificing wages and working for low pay. If we are to succeed, we shall have to sacrifice some of management's right to manage and much of trade unionists' right to withdraw their labour. In innovating, we must grasp the nettle. Managements, trade unionists, trade union officials and employees must look to the future, towards new products and new working practices.

I have been disappointed by the role of the Government in the key area of innovation. Since being elected to the House, I have not been impressed by the Government's action to encourage further innovation. It may be that I am looking for too much, but I shall be grateful if my hon. Friend the Minister of State will comment on the opportunities available to companies and to enterpreneurs with new products.

Having had experience of how companies apply for aid under existing legislation, I assure my hon. Friend that it sounds simple to say that there are existing mechanisms and machinery, but companies applying for aid often find that the priority of the Government machine is ultimate justice and the carrying out of the detailed terms of legislation to the letter. One meets bureaucracy instead of incentive and encouragement.

That is why I strongly urge my hon. Friend to suggest to my right hon. Friend the Minister of Transport that we should encourage as much private enterprise research as possible, particularly in areas related to the motor industry and the motor components industry.

I suggest that the role of the Motor Industry Research Association, which is in my hon. Friend's constituency, though on the border of my own, should be strengthened and that many of the functions of the Government-controlled, £11 million a year Transport and Road Research Laboratory near the South-East could be done by private enterprise, some of it by MIRA.

The Government's philosophy of transferring functions to private enterprise where possible will not only be cheaper but will be related even more closely to the keen and competitive needs of industry. We need to adjust in the West Midlands. We need some form of Government readjustment aid. This has been practised in France and in Holland. When one sees that products once familiar to us are now sold by countries abroad, one sees clearly the need for as much Government aid as possible in making the difficult adjustment in the West Midlands. I urge strongly that we should not wait for the criteria of unemployment in the West Midlands to reach the trigger point of over 8 per cent, before acting. The fires should be put out before they start.

1.20 pm
Mr. Robert Edwards (Wolverhampton, South-East)

I have listened to every speech. I wonder what there is left to say. I feel like saying "ditto" and sitting down. All hon. Members have duties to perform and I shall perform my duty to my constituents. There has been reference to the enterprise zone designated for the town of Bilston. The legislation has not yet passed through the House of Commons. It is at present in Committee and still has to go to the House of Lords. I suppose that it will not come from the Lords until October or November.

The enterprise zone is a modest scheme to help solve some of the problems that have arisen in the town of Bilston, an important part of my constituency. I hope that, when the legislation is passed on to the statute book, the Government will accept the proposals of the Wolverhampton council for protecting and improving the environment, protecting the town shopkeepers and generally making the zone an example to the country of a place where our children and our children's children will be able to enjoy a decent and beautiful environment.

I am sure the Minister agrees that enterprise zones will not meet the problem faced in places such as Wolverhampton. The steel works at Wolverhampton, which employed 2,500 people and which never lost any money, was closed down as if it had never existed. Why it was concluded that a profitable steel works, supplying hot metals and hot ingots to the metal manufacturing industry, which cannot be replaced, should be closed, passes my understanding. That was a big mistake. I hope that we shall not continue to make those mistakes.

We are mesmerised by bigness. We think that we have to get mass production to compete in the markets of the world. Japan and the United States are learning that bigness is not the answer. A great steel plant can produce 10 million tons a year. Unless it works at 80 per cent, capacity, millions of pounds are lost, which has to be made up by smaller firms. Bilston still has the rolling mills, employing 400 workers. Those mills produce high quality iron that is as cheap and as good as any in the country. I hope that the rolling mills will not be closed. If they are closed, the decision will create disillusionment and anger among the people of Bilston and Wolverhampton. Unemployment in Bilston is now at 14 per cent. In Wolverhampton it is 7 per cent. In my constituency it is double the high average in Wolverhampton. For every vacancy in Bilston there are 14 unemployed workers.

The constituency is dominated by big multinational companies. About five huge firms, including the British Steel Corporation, employ more than half the labour in my constituency. Originally the firms were British. Now they have investments and factories all over the world. When difficulties arise such firms cut back in Britain and move production to Latin America, South Africa and areas where there are no wicked trade unions but low wages.

All except two speeches that I heard from the Government Benches criticised the trade unions and blamed most of our troubles on them. Even the hon. Member for Kidderminster (Mr. Bulmer), who is usually moderate about these problems, praised the German trade unions and compared them with ours. Last year 2 million German metal workers went on a bitter six week strike for shorter working hours. German industry has industrial democracy. Trade unionists are on the boards of all companies employing more than 500 workers. If a miracle has occurred in German industry, it is because of the close relationship and consultation with the trade union movement. The present Government have swept that away in favour of confrontation. The Minister might shake his head, but if ever a strike was forced on the workers of Britain, it was the steel strike. To offer 2 per cent, when inflation was running at 20 per cent, made a strike certain. No union leader could accept such an offer and justify it to members. I hope that the Government will learn the lessons of their recent conflicts with the unions.

The most damaging strike in our history is the strike of capital. There is no risk capital. There is no adventure capital. If we are to deal with the recession in the West Midlands, adventure capital is essential. It is not there. It is being invested abroad in tax havens. About 17,000 million Swiss francs worth of British capital is in the Swiss banks. Britain has more deposits in the Swiss banks than any other country. I notice that some Tory Members have cynical smiles on their faces. I am giving the figures.

We need a social revolution. We need to share working hours. We must increase holidays and create facilities for leisure. We need a policy which is entirely opposite to that being followed by the Government. We need growth. We need to spend more money. The present policies were tried in the 1930s and failed. The present policies will blow up in the Government's face. They will have to make a series of U-turns. I hope that they are not leaving it too late.

1.29 pm
Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

Since we all speak for the same area, there has been much repetition about what the West Midlands needs. Above all, the West Midlands—and Birmingham in particular—needs neither more Government interference nor more loans. It does not need special advantages. What it needs is not to suffer from special disadvantages.

Birmingham grew, as did other great cities such as Coventry and areas such as the Black Country, without a single Government grant and without Government encouragement. The same applied to shipbuilding and the textile industry in the North. Those areas prospered because people wished to go there. If we look at Birmingham, Coventry and the Black Country today, we see an object lesson in what Government should not do.

Since 1947 one good-hearted and woolly idealist after another has introduced one good and woolly idea after another in an attempt to get industry to go here, there and everywhere. Industry will not do that. Industry will go only to an area where it believes that it will genuinely prosper.

Birmingham has lost 114,000 jobs to other areas of the country. If I thought that those jobs had stuck and had become like seeds in the areas to which they were bribed and corrupted to go so that Birmingham's 114,000 lost jobs had become 300,000 jobs elsewhere, the sacrifice would have been worth while. What usually happens is that the firms that fell for the siren song of one Government grant after another—Government grants proliferate like holiday brochures—have turned those 114,000 jobs, more likely, into 60,000 jobs today. That is because the place and the trained people have not been right.

If we are to get more investment, we must encourage people to stay in areas—whether Birmingham, Coventry or the North—where they believe that they can do most good. Local authorities and Governments can then sweep away the problems that often abound for companies. They can do that, not by giving more and more grants, and not, if I may say so bluntly, even by the creation of enterprise zones, but by encouraging enterprise itself. That will help people to clear the way so that they can genuinely prosper.

I read today of one institution which I hope will encourage more institutions to follow its example, the Prudential Assurance Company. It is to set up a £20 million company which will invest in high technology companies which it knows will take more than five years to reap a profit. That is good enterprise. It is better enterprise than that shown by British Petroleum in spending £300 million—partly taxpayers' money—in an attempt to buy Selection Trust. It would be better if BP used half that money, not to buy a foreign mineral company, but to support the industry from which it makes its living.

We do not need one dose of Government help after another. The country should learn from what has happened to us in Birmingham. It should learn that good-hearted Governments—not wicked or venal people—and silly, good-minded people have chipped away at the prosperity of Birmingham in the belief that they would make the rest of the country more prosperous by doing so. They have not done that. Birmingham lost, the country lost and we all lost.

Let us do away with the nonsense that Governments can do for us what we cannot do for ourselves. If we do not do it for ourselves, we shall never prosper. Interference by Governments of all complexions can in the end damage our prosperity.

1.33 pm
Mr. Julius Silverman (Birmingham, Erdington)

I do not dissent from some of the comments of the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) concerning regional aid and policy. I must point out, however, in fairness to the Labour Administration, that they endeavoured to shift the balance of aid from the regional to the selective. That was a considerable achievement because an unemployed man in Birmingham is as badly off as an unemployed man in Liverpool or any other place. I do not think that that policy has been continued too enthusiastically by the present Administration.

I must read an extract from a letter I have received from the managing director of a small enterprise in my constituency. To some extent it reflects what has been said today and shows what small industry thinks. It also shows what is happening. The Minister of State referred to the importance of the small business man. The letter says : the situation is going from bad to worse mainly due to high interest rates hindering capital development and inhibiting purchasing power, which together with the strong pound and unrestricted imports is causing absolute havoc, particularly in the vehicle industry and all the engineering firms associated therewith. Very few of the small sub-contracting firms in this area are able to work normally, as the majority are already involved in short-time working for redundancy programmes. The cost of redundancies alone is enough to bankrupt a number of small firms who are likely to disappear for ever and if and when the upturn in trade comes, many companies will already have gone out of business. That letter reflects the position of the small manufacturer. My constituency, like the rest of Birmingham, has been hard hit by the redundancies in and the proposed closure of a large part of British Leyland—there has been a minor reprieve there—and by redundancies in Dunlop, Lucas and other large Birmingham units.

It is true that the problems of the West Midlands did not arise a year ago, or even five or six years ago. They date from a long time ago. What is alarming is the rapid and catastrophic decline that has been taking place and is now continually taking place at a much greater rate than ever. That is what affects us. It is one of the reasons why we have had many discussions in the West Midlands.

Whatever may have happened in the past, I do not think that today regional policy has much to do with the position, because the regions are suffering as much as Birmingham is. I think that the present Government's doctrinal and dogmatic policy, depending on one approach—monetarism—is one of the main factors in the decline. It is true that we are now in the middle of a world recession. That is another factor that we cannot escape, and we cannot blame the Government alone for it. I believe that the Government will be obliged to reverse their policy, and I hope that they will not wait too long. If they do, it will be too late.

Industrial relations have been mentioned. They are a matter for both sides of the industry and not only one side. They are a function of efficient management, A number of companies have good industrial relations, but some have never had good industrial relations. That is not the fault of the workers alone. I entirely agree that we can do without the number of industrial disputes that we have had in the past. But let us not blame one side alone for the difficulties that are arising.

I promised to speak briefly because other hon. Members still want to speak. There are other things that I should have liked to say about import controls. The position here is entirely new in the West. I should like also to have spoken about other matters, but I do not have the time. I simply point out how serious is the situation in my constituency and throughout the Birmingham area.

1.39 pm
Mr. Jahn G. Blackburn (Dudley, West)

Having sat through most of the debate, I am surprised to find myself attending not only a funeral but an inquest. I theologically believe in the resurrection. Anyone who doubts the resurrection of the West Midlands does not understand the people of the Black Country.

I enjoyed the introduction of the hon. Member for Coventry, North-East (Mr. Park) from the Opposition Front Bench. We tripped the light fantastic back to 1860—to the Coventry ribbons.

In the very short time available to me, I shall not go back beyond the last seven days. I should like to breathe into the debate a breath of optimism and hope for the West Midlands. Most hon. Members, very rightly and very honourably, have dealt with their own constituencies. In the last seven days I have been fortunate enough to spend four days in my constituency.

On Monday I spent a day with the Minister of State looking at 510 acres of land, ready and primed to be used, we hope and pray, as an enterprise zone, which will suck in about 14,000 new jobs into the area.

As recently as yesterday I was in my constituency. Was there gloom and despondency? Hardly, because I attended the ceremony of the Queen's Award for Export to a company which could not possibly be in a more competitive and difficult market. It was a steelworks, the Round Oak steelworks at Brierley Hill, which contributes 24 per cent, of all the steel exported from this country. Is that the sign of a decline in the West Midlands?

I read that in the constituency of my hon. and learned Friend the Member for Solihull (Mr. Grieve) in a hotel this week £3 million worth of orders were taken to be delivered between now and November.

The National Exhibition Centre is fully committed for the next 14 months. Is this the sign of decline in the West Midlands, or is it the sign of resurrection and hope, which we all want?

I also have in my constituency the centre of the crystal glass industry with names such as Royal Brierley, Tudor and Webb Corbett. They tell me that then-order books are full and that they are working flat out ; but, equally, they tell me that times are tough.

My constituency is dominated by a twelfth century castle, Dudley castle, which has stood the test of time, the wind, the elements and all the other difficulties. That is typical of the men and women of the Black Country. I believe that on this day from this House they require one thing, a vote of confidence that we have faith in the industry of the West Midlands—that even in tough times we believe that they will survive and come through. I should like to breathe that breath of hope into the debate.

It was interesting that when we had a debate on the motor industry, at the heart of the Midlands belt that we all represent, there were 21 hon. Members present. There were 20 on the Conservative Benches and one on the Labour Benches. It is to his eternal credit that the hon. Member for Nuneaton (Mr. Huckfield) was the only Labour Member who took part in that debate.

I believe that it is not the role of the Government to run industry. It is the role of the Government to create an environment in which business can prosper. It is in that spirit that I look to the Government Front Bench and say that it is then-solemn responsibility to create an environment in which businesses of the West Midlands, across the entire region, can develop and prosper and bring back to this country the wealth that we all want in order that we may have all the benefits that accrue from it.

The most wonderful aspect of the debate has been the common ground. With good will, hon. Members on both sides of the House are trying to solve the problems of the West Midlands. Because of that, the debate is an oasis of civilisation in a desert of democracy. I pay sincere and warm tribute to the fact that the debate has come about through the good offices of the Opposition. Let us not leave this place this day as prophets of doom and despondency. If we do, we shall do our constituents a great disservice. We should leave this place with a spirit of optimism and hope, which will be reflected in our constituencies.

When we all arrive at Euston to travel almost on the same train, we, should on the journey note the number of new businesses that are being established between Birmingham and Wolverhampton. Perhaps we shall then be a little more sober and temperate in our judgment of the industrial position in the West Midlands. I have hope and faith that, with good will on all sides, the matter will come to the fruition for which we all hope.

1.47 pm
Mr. David Winnick (Walsall, North)

I wonder what level of unemployment must be reached in the West Midlands before the hon. Member for Dudley, West (Mr. Blackburn) drops some of his false optimism. It does not do any of us any good, it does not do our constituents any good, and it does not do the unemployed any good to paint a rosy and optimistic picture when there is no justification for it.

The Minister has held out no hope. He took the same attitude that we have seen on previous occasions when we have asked questions about the future of the West Midlands. To a large extent the Minister echoes—as we understand—his superior, the Secretary of State for Industry. In effect, he is saying that there is no need for Government intervention but that it should be left to the market forces. As some of my hon. Friends have pointed out, that recipe was put forward before the war when there was mass unemployment, and when the same attitude was adopted by the Conservative Government of the day. Some Conservative Members, like the Minister, say "No intervention". Others, such as the hon. Member for Meriden (Mr. Mills) plead for Government intervention. Labour Members know the need for intervention from the central authority. If a Labour Government, faced with the crisis at British Leyland, had not intervened, what would have been the position in the West Midlands?

Nationally the Government are intending to use unemployment as a form of incomes policy. They say that there will be no U-turn, and no form of incomes policy. But growing unemployment is a form of incomes policy to discipline the work force and to create a climate of job anxiety which undermines the bargaining strength of the work force.

Despite the remarks of the hon. Member for Dudley, West, there is a great deal of justified gloom and despondency in the West Midlands. Almost daily we read of fresh redundancies and closures, and have to ask "Where is the reason for optimism?" Between 2,000 and 3,000 jobs a month have vanished in the West Midlands. Is there any reason why there should not be despondency and gloom over such figures? There are 145,000 registered unemployed—let alone those who may not be registered. Of that figure 93,000 are in the Black Country, and in the Birmingham and Coventry industrial belt. The West Midlands unemployment figure is 28,000 higher than it was a year ago. Again, I must ask "Is there any reason for optimism?"

Understandably we have been concerned about our constituencies. The unemployment figures in Walsall last month were the worst since records were first kept at the Walsall jobcentre in 1973. The total number of unemployed in my borough stands at 8,089—6.9 per cent. That is an increase of 376 on last month and an overall rise on last year of 2,204. Job vacancies have seriously declined.

The chambers of commerce have been quoted before in the debate and it might be said that they would tend to be proGovernment. However, in its quarterly forecast and economic survey the Walsall Chamber of Commerce says : a grim year is forecast—cash is short, jobs are scarce and inflation is taking a stranglehold … cash injection to boost new investment is at its lowest ebb for 18 months … home orders have slumped and exports are being threatened by the high rate of exchange. This is the background to our debate. Such facts as these could be repeated in respect of areas throughout the West Midlands and the Black Country.

High interest rates are crippling industry and reports seem to show that there is no possibility of their falling before the autumn. That means that industry will face continued serious difficulty. The exchange rate of the pound has also caused much difficulties for exporting.

The Minister may argue that the situation is unfortunate and unhealthy and a matter of concern. He may say that there are other areas in the United Kingdom worse hit. We know that. We are worried, however, that if effective action is not taken we in the West Midlands and the Black Country could face the same high level of unemployment that exists in the North, the North-West and Scotland. That is why we were so keen to have this debate and why so many of us will continue to press the Government for action.

If the situation persists, what is to be the level of unemployment in the West Midlands next year or the year after? I see no evidence for saying that if we leave it all to the market to create the right sort of economic climate all will be well. There is little proof that that has happened in the past 12 months.

There have been differences even within the Labour movement about whether import controls should be introduced, I see no alternative to selective import controls. Of course, there are difficulties and dangers about retaliation. There is a far greater danger that, if imports continue to flood in, British industry will be undermined to a far greater extent than hitherto. An illustration of the problem is the textile industry. Successive Governments have introduced selective import quotas, but they have come late in the day. If we are to have import controls on cars and other commodities I hope that they will not be delayed so long that, as in the case of the textile industry, when they come they do little good. I urge the Government to think again on that matter.

There is perhaps the feeling on the other side of the House that unemployment is not quite the same as it used to be and that it does not involve the same hardship and misery. But for people who are unemployed there is a drastic decline in their incomes. What is more, they suffer psychologically. They suffer the injury and humiliation of being forced out of work and being unable to find other work. If they happen to be in their fifties, there may even be the fear that they will never find other work. That is the sort of situation to which we have reverted in Britain. What is more, youngsters—whether they are black or white makes no difference—go straight from school on to the dole queue. People can experience that type of unemployment for years when we had hoped that it was a curse of the past that would never return.

The warnings of doom and despondency which have come from my hon. Friends are justified. We want from the Government some effective measures which will save jobs and save industry in the West Midlands.

1.55 pm
Mr. Patrick Cormack (Staffordshire, South-West)

The concern expressed in all parts of the House in this debate is totally genuine, and although there are differences of opinion about the means of tackling the problems, we are at one in believing that the West Midlands is vital to the very survival of our country as an industrial democracy, and we are all deeply troubled by what is going on.

To ascribe blame to any party or Government is too simplistic by half. Much of what has been said today could be seen as a damning indictment of the policies of successive Governments since the war.

I intend to concentrate on one topic. It is the issue of interest rates. I believe that the Government's general strategy is right. The Government are tackling great problems in an imaginative way and with the kind of courage that has not been seen in this country for many generations. However, I also believe that the time has come when there must be a relaxation of interest rates, at least for industrialists, if the industries about which we have talked are to get through the next year.

I do not find it comforting to receive letters of the kind that I got the other day from an industrialist in the construction industry in my constituency. He tells me of a sad day of decision when he had to lay off 30 of his employees. He describes them as hard working, good, steadfast and proud men who have given good service, who have never gone on strike, and so on.

As a constituency Member of Parliament, I do not like to receive that sort of letter. I feel not only for the man who wrote it but much more for the people who are to be thrown out of work. My correspondent ascribes his difficulties almost entirely to the impossibility of funding his company when he has to borrow at 20 per cent, or 20 per cent. plus.

The time has come when there must be a relaxation. It was right for the Government not to knock off ½ per cent, here and ½ per cent, there and have a fluctuating interest rate thereby creating a climate of uncertainty. I have talked to my constituents both in board rooms and on the shop floor, and I believe that they accept that high interest rates were necessary, and they also understand why. But they now say that the crisis rate we have had for getting on for a year must end.

I beg my hon. Friend the Minister of State to discuss with the Secretary of State and the Chancellor of the Exchequer the possibility of taking immediate measures if not right across the board at least by talking with the clearing banks about some form of special incentive scheme for industrialists, especially for small business men and those upon whom the very prosperity of the region depends. It was such as they, after all, who created in our region the cradle of the Industrial Revolution.

If this is not done ; if there are not other schemes on the tax front to give incentives to workers and perhaps some form of tax holiday for those who invest their money over the next five years in industry ; if imaginative gestures of this kind are not adopted—we shall mourn for ever the passing of many more fine companies in the months and years ahead.

The Government do not want that. They have a courageous policy and a broad general strategy of which I approve. But, please, let us have some new incentive, some relaxation, some help and some hope.

I am sorry that I have to curtail my remarks, because it always leads to distortion. There are many more comments that I could make in giving examples and in urging this line on the Government. But my message is essentially a very simple one. Unless there is a reduction in the interest rate during the next two or three months, there will be a dire future for many more people in the West Midlands.

2 pm

Miss Betty Booihroyd (West Bromwich, West)

Understandably, my hon. Friends have spoken today in anger and anxiety about the industrial contraction and growing unemployment in the region we represent. Many have expressed the deep gloom which is felt among our people who are caught up in redundancies, short-time working and plant closures. They have expressed the fears of those whose working future is uncertain.

The hon. and learned Member for Solihull (Mr. Grieve), as he has done before, spoke about IDC policy and the way that it has not helped the West Midlands. From 1974 to the present day, 1,446 IDCs were granted and only 15 refused, the last being in 1975. We are not debating IDC policy in particular, but it is worth recording those figures.

I agree with my hon. Friends that we do not hold the Government totally responsible for the present decline. That would be foolish. There is a recession and there are many reasons for the long-term decline in the West Midlands. What we complain about is the Government's complacency, their lack of initiative in recognising and dealing with the problems.

Unemployment in the West Midlands is now running marginally higher than the average for Great Britain, and has reached over 145,000. There are towns in the region where the rate is accelerating out of all proportion. My hon. Friend the Member for Stoke-on-Trent, North (Mr. Forrester) talked about the area that he represents, the Potteries. It is not simply the motor industry that has slipped out of gear. All manufacturing industry faces difficulties. My right hon. Friend the Member for Dudley, East (Dr. Gilbert) regrets that he cannot be here today because of a long-standing commitment, but if he were here no doubt he would tell the House of the problem in the Dudley-Sandwell travel-to-work area, where the jobless total is now 16,000.

The hon. Member for Dudley, West (Mr. Blackburn) spoke with great optimism, which we all enjoyed, but he missed the point. I do not take his optimism too seriously. In the last 12 months, an average of 100 people each week have lost their jobs in the Dudley-Sandwell travel-to-work area. I doubt whether those who have been made redundant in the last year would share the hon. Gentleman's views.

My right hon. and learned Friend the Member for Warley, West (Mr. Archer) and my hon. Friend the Member for Warley, East (Mr. Faulds) mentioned youth unemployment and described what the Government's short-term attitude means for engineering apprentices in the Sandwell area and for the future of engineering itself.

The other side of the picture is the sharp fall in job vacancies. The Government must be aware that, on average, for every registered vacancy throughout Great Britain there are nine people registered as unemployed. In the West Midlands there are 16 people for every vacancy. Therefore, the ratio within our region is nearly two to one compared with the rest of the country.

It was with these grim facts in mind that in March I made representations to the Secretary of State for Industry and asked him what plans he had to revitalise the area and improve job prospects. The response came from the Under-Secretary of State who showed concern about the lack of job opportunities. He said in his reply That is why we are putting a high priority on our overall programme to reduce public expenditure and taxation and Government intervention in industry so that we can create an economic climate in which enterprise and skills are rewarded and in which people in industry are encouraged to expand and new firms to start up. In opening the debate today the Minister gave the same glowing, rosy picture. But the reverse is the case. The economic climate that the Government have created has encouraged contraction instead of expansion. The climate has brought plant closures instead of innovation, and, instead of there being reward for skills, those skills are becoming rusty as jobs have vanished at the rate of nearly 2,000 a month in the West Midlands over the past 12 months.

We have been put in a Catch 22 situation. The Government's tough monetary stand has made imports cheaper because of the rapid rise in the value of sterling. Import penetration has increased and the combination of the high pound, high interest rates and soaring inflation has priced many manufacturers out of export markets.

I shall indulge myself for a second and give an example from my constituency. I have a very good manufacturing firm which has always been one step ahead with its order books full. The manufacturer wrote to me the other day and said that it was incongruous that he should receive the Queen's Award for Exports at the same time as he was making redundancies. He said : The situation has occurred due to severe competition, primarily resulting from reduced world trade against the background of a strong pound—in spite of individual efforts by workers and management alike and it is deeply regretted by management and workers alike. Individually an overvalued pound, roaring inflation and high interest rates are harmful enough. When they occur singly they are disastrous, but when they occur together, the combined effects create a crisis which accelerates with the force of a tropical storm. The consequences for employment and capital investment, which lie at the heart of our trading prospects into the 1980s and well beyond, are dire indeed.

About 70 per cent, of all West Midlands manufacturing output is dependent upon the engineering and metal goods sectors. These sectors have experienced some of the sharpest increases in import penetration. Vehicles and component parts have now penetrated the British market to the tune of 41 per cent. Penetration into mechanical and electrical engineering is about 35 per cent. Penetration for cables and component wires, used extensively throughout the manufacturing and construction sectors, is 32 per cent. Peneration in skilled instrument engineering has reached 58 per cent.

A week ago, on 13 June, The Times showed that the import surge had adversely affected the domestic appliance industries. The list is endless and manufacturing industry is being made limbless as a result. Reluctantly I have come to the conclusion that import controls must be considered seriously.

I accept the dangers of protectionism, as do many of my hon. Friends. Used in isolation without other measures, import controls are no solution. However, they can operate successfully when harnessed to additional measures to give those sectors under severest attack a breathing space. The Government's disastrous policies necessitate action against massive import peneration to stop the havoc being caused to our industries.

No longer can we rely on the voluntary exercise of prudence by our trading partners. Trading partners are there to negotiate with, talk to and reach agreement with. The Government have to deal with that. No one else in the country can. The situation demands that we have a temporary respite for adjustment, not in order to sit back and relax but to use beneficially. The Government also need to get involved to see that industry moves one step ahead in new technology, to increase our competitive position and provide a period for training on a massive scale to help our people adjust and provide the mobility that may be necessary. That is the way in which the Government must get involved. It cannot be left entirely to industry.

Industry was left to its own devices when the right hon. Member for Sidcup (Mr. Heath) was Prime Minister. Eventually the right hon. Gentleman had to take industrialists to one side and tell them that, in spite of all the inducements that he had given them, such as floating the pound and coping with inflation, they were not investing enough. It was the Government's job to help, because no one else could.

Over a year ago the right hon. Member for Lowestoft (Mr. Prior), now Secretary of State for Employment, showed commendable sensitivity when he said : People must be trained in a spirit of optimism, secure in the knowledge that they are gaining the right skills and are being educated to participate in the changes—not to be overwhelmed by them. Those sensible words in opposition have been forgotten in office. The Government have excavated a chasm into which large chunks of normally viable manufacturing industry are falling, and, with them, the livelihoods of thousands of working people.

Two important contributions have been made to the debate with regard to the energy policies of other countries, the first from my hon. Friend the Member for Stoke on Trent, North (Mr. Forrester) and the second from the hon. Member for Bromsgrove and Redditch (Mr. Miller). There is the dual energy pricing policy of the United States and the energy subsidies provided by the Governments of many of our competitors. The hon. Member for Bromsgrove and Red-ditch could not be more right when he says that we are attempting to organise our economy with our hands tied behind our backs.

We are today seeking answers to some of the questions. Will the Government consider the problem of energy supplies for industrialists? When will they intervene on a similar basis as do the Governments of our competitors? When will the trend be reversed in the heartland of British manufacturing industry?

I turn briefly to the European regional development fund and its non-quota section. I made representations to the Minister, and he informed me that the non-quota aid may be allocated outside normally assisted areas. The sticking point is that requests for such assistance have to be submitted to the Commission by the member Government. The West Midlands is a steel-making and processing area. As such, it qualifies under article 13. We are not here with a begging bowl. Eligibility can be proved. We require an undertaking from the Minister that some of that £37 million allocated to this country will find its way directly to the West Midlands.

Whatever the Government may say, they cannot say that their actions have advantaged the region. Far from helping the economic climate, they have further damaged it. The position was summed up a couple of weeks ago by the chairman of Brockhouse Engineering in my constituency. Speaking as chairman of the West Midlands CBI—a little while ago, the CBI was likened to the Prime Minister's poodle, but it has grown teeth since then—he said : I doubt whether the Government yet appreciates the plight of manufacturing industry and the speed at which it is being destroyed … There is a great deal of talk about the Phoenix rising from the ashes … What if we are left just with the ashes? We seek answers to such questions. The Opposition raised the debate because of the serious and speedy devastation of industry within the region that my hon. Friends and I represent.

The Government have a role to play in all of this. They are responsible for the management of Britain's economy. They cannot abdicate from that responsibility. We seek commitments from the Minister, followed by speedy action which will put the heart of British manufacturing, our once prosperous region, back on course.

2.16 pm
Mr. Adam Butler

By leave of the House, I shall reply to the debate. A number of my hon. Friends have welcomed the fact that the Opposition called for the debate, and that welcome has been justified. The debate has been a sober and genuinely constructive affair. As so frequently happens, it has been a better debate because hon. Members on both sides share a problem.

Many of us have worked in the industries and companies that have been mentioned in the debate. I worked in the East Midlands for 10 years and have lived there for 25 years. I represent a constituency that adjoins the region, and many of my constituents work in the West Midlands. Other hon. Members who may not have worked in the region's industries have been involved in local government, and those who have spoken in the debate can justly feel that they know what they have been talking about. There is no question of anyone dissenting when I say that we all feel strongly about the groups that have been mentioned, particularly the ethnic minorities who have a special problem and the school leavers and young people who face a much more difficult prospect than we or they would like. The difference between us is how to cope with the situation.

The hon. Member for West Bromwich, West (Miss Boothroyd) said that one cannot leave the solution solely to industry. Of course, one cannot, and the Government are not attempting to do so. On the other hand, it is essential that the Government withdraw from areas of activity where not only do they do no good but they can do active harm.

The hon. Member for Coventry, North-East (Mr. Park), who had a long and distinguished industrial career, mostly in Rootes and Chrysler, asked what could be done to help. He gave the impression that many other parts of the country received help but that the West Midlands received none. Let me go—it will have to be quickly—through many of the things that we are doing. A number of my hon. Friends referred to the harm that regional policies, whether of Labour or Conservative Governments, have done. They have described how industries that might otherwise still be situated in the West Midlands were attracted away. We as a Government have tried to cut back on the amount of money available for regional aid as selectively as possible to make the areas where aid is still needed as attractive as possible. The fact that less money is available will perhaps help.

We have also greatly relaxed industrial development certificate control. The hon. Member for West Bromwich, West is right in saying that there have been few, if any, refusals in the West Midlands, but while IDC control continues—we have simply lifted the ceiling to 50,000 sq. ft.—there still remains a doubt in the mind of an industrialist about whether he will get approval. There will also be delay when he applies for approval. Our decision to raise the figure to 50,000 sq. ft. has helped the situation. There has been no refusal of IDCs while this Government have been in power.

Miss Boothroyd

Nor the last.

Mr. Butler

The hon. Lady has made that clear. I was merely confirming that under this Government there have not been any refusals.

Two hon. Members with a special interest in Bilston spoke eloquently of the problems of Bilston. Special reference has been made to enterprise zones. I welcome the fact that the Labour council decided to submit an application. I understand that the council makes out a powerful case. I can only say that Bilston is one of the sites on the short list that my right hon. Friend the Secretary of State for the Environment is considering. I understand that he will make a statement as soon as possible. We believe that this scheme will present a major opportunity for new businesses to operate in a climate as free as possible from many of the controls and restrictions suffered, even under a Conservative Government.

We have reconfirmed our commitment to inner city policy. Birmingham will get about £13 million and Wolverhampton about £3 million of taxpayers' money this year for inner city projects. The Government are continuing to aid British Leyland—an issue central to our debate, as inevitably it should be. Since the general election we have put in £375 million of equity for British Leyland operations generally, but half of the company's operations are in the West Midlands. We are fully aware of the high degree of dependency of component companies on British Leyland. I have made my critcisms of some events that happened in the past, but I was glad to be able to pay a compliment to the management and the work force and to the models now in production that will be seen in the months and years ahead.

Reference has been made to communications. There was some dissent about the need for the M54 and even the M42. The Government's road policy, recently announced, adopts a positive attitude towards the question of communications. An area where communications are bad will not attract industry in comparison with areas where there is a good road network and preferably other communications. One road not mentioned is the M40, which will link Birmingham and Oxford. As it pretty well passes my back door, I know all about it. It is very much on the map. The Government are taking a positive stance on the question of roads and communications.

Small firms were mentioned in many speeches. When there is a decline in metal working industries, it is necessary for small firms to be encouraged to start operating, whether in high technology or in a traditional area, when an individual or company has a new idea for tackling an old problem. We need small firms. We can be proud of what the Government have offered small firms by way of the incentive package and tax benefits. A wide range of measures have been announced in the Government's two Budgets and on other occasions to try to encourage small firms. When I am asked what we should do to encourage innovation, I say that we must encourage the innovators. That is what we have done through the personal taxation reliefs.

Hon. Members asked about the way in which money can be made available to a small firm. I read this morning that the "Pru" is forming a new subsidiary to invest in new technological projects. The company intends to spend about £20 million in the next few years. That is not an isolated example. Many institutions are now prepared to put venture capital into new small businesses.

The hon. Member for Cannock (Mr. Roberts) talked about mining. That is close to my heart—but not to my ministerial heart. Major developments are taking place at a number of collieries in Staffordshire. New reserves of coal are being exploited at Lea Hall, Hem Heath and Florence collieries. Tens of millions of pounds are being invested in the expansion of coal mining in the hon. Gentleman's area.

We are pleased to continue with the two schemes to help the use of microprocessors—the microprocessor applications project scheme and the microelectronics industry support programme. There is scope for help for new developments, preferably aid for the private sector and its ideas.

Mrs. Renée Short

What about Inmos?

Mr. Butler

Inmos might be more attracted to Wolverhampton if the local council had not increased its rates by 56 per cent.

The important issues of research and development and public purchasing policy have been raised. The Government have a positive policy on research and devolopment. Money is going into research centres and in the private sector. The Government intend to continue doing that. We wish to pursue a policy of enlightened public purchasing because clearly it benefits our manufacturing industries.

I shall not have time to complete what I wish to say, but I must return to the question of the Government's economic policy because it is central to the debate. I have been asked, as the Government's representative, to bring down interest rates. I went through the arguments in my opening speech. Interest rates will come down at the appropriate time, but I have to agree with my hon. Friends the Members for Burton (Mr. Lawrence), Staffordshire, South-west (Mr. Cormack) and Halesowen and Stourbridge (Mr. Stokes) that a premature reduction in interest rates would be very much worse than continuing for the necessary length of time to ensure that the policy has succeded. I believe that that is absolutely right.

The policy is to beat inflation. The policy is to reduce the public sector borrowing requirement and to release more funds for the private sector.

It being half-past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.