§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Cope.]
2.30 pm§ Mr. Ioan Evans (Aberdare)It is with mixed feelings that I raise the subject of unemployment in the South Wales valleys. I am pleased to speak on behaf of the thousands who have become unemployed in South Wales in recent months, but I am sad that there is now a Government who are desperately worsening the situation. In the past hour or so we have heard the news that more jobs are to go—500 jobs are to be lost at the Alcoa aluminium works in Swansea.
I believe that unemployment will dominate the coming Session of Parliament. If the economic forecasters are correct, it will dominate the political scene for years to come. The October statistics showed that 2,062,866 people were unemployed in the United Kingdom. Of those, 129,144 were in Wales—that is, 11.9 per cent. of the Welsh working population. The vast majority of them are in the valleys of South Wales. In the Cynon valley, which I represent, 3,185 people are unemployed. That is 15.1 per cent. of the male working population and 14 per cent. of the female working force, an average of 14.6 per cent. of the total.
Three months ago the Select Committee on Welsh affairs issued a report on developing employment opportunities in Wales. Although a majority of the Committee's members were Conservatives, it was unequivocal. It said:
The Committee warns Parliament of the risks of serious social disorder if chronic levels of unemployment endure, particularly among the young, and stresses that if condemned to suffer the worklessness of the 1930s Wales is unlikely to respond with the apathy and despair of those days.180 In the evidence given in March this year, Sir Hywel Evans, then the permanent secretary at the Welsh Office, predicted in good faith that unemployment would reach 125,000 by next March. But in October the number was over 130,000, and there is obviously worse to come. What will be the figure when the latest statistics are announced next Tuesday? Unemployment has been a problem for some time, but there has been a massive increase since the Government took office.There are seven major features of unemployment in Wales. Unemployment in the Principality is continually higher than the Great Britain average. Unemployment in the valleys is continually higher then the Welsh average. Changes in the structure of employment in South Wales, the cutback in steel production at Port Talbot and Llanwern, and the consequential effects on the coal industry, combined with the devastating effects on manufacturing industry — the right hon. Member for Sidcup (Mr. Heath) described them as catastrophic—are bound to lead to a massive growth in future unemployment.
The expectation revealed by the Welsh Office to the Select Committee that the labour force in Wales would rise to 179,000 by 1991 shows that we in Wales must be thinking seriously of creating 400,000 new jobs to get us back to full employment.
Unemployment tends to lag behind changes in output, which is still declining. The situation in industry is worse than during the three-day working week under the previous Conservative Government. Some manufacturing industries in Wales are on a one-day working week. The situation is that bad. Vacancies notified to employment offices are much lower than they were 12 or 18 months ago. I have checked with the jobcentre in Aberdare, where there are 3,000 unemployed, and I find that there are only nine notified vacancies in my valley.
One of the characteristics of unemployment in Wales is that some of the many major redundancies that have been announced have not yet been included in the unemployment figures. Some will not be included even in next week's figures, because they will not take effect for a month or so.
My constituency is typical of the many valleys that cover South Wales from Newport to Llanelli. The Cynon valley starts at the Heads of the Valley road, from Hirwaun down the valley to Abercynon and Ynysboeth, taking in the two main towns of Aberdare and Mountain Ash. Unemployment in my constituency has increased to more than 3,000, and more than 2,000 are unemployed men.
Since the Government took office, we have had one piece of bad news after another on jobs. First, we had the closure if the Deep Dyffryn colliery, which was followed by the rejection of proposals for Government investment in the major Phurnacite plant in the valley, which was a large employer. We have also seen in recent months the closure of two major manufacturing engineering firms—Helliwells and Cambrian Castings. One can suffer redundancies if there is the potential for the firm to build up its labour force when an expansion comes, but once a factory or industry is closed it is lost to the valley. Recently, we have seen the closure of the Inega textile factory.
We have also had to bear the effects of the public expenditure cuts imposed on the Mid-Glamorgan council and the Cynon valley borough council. I welcome the proposal for the extention of the youth opportunities 181 programme, which was started by the previous Labour Government, but if youngsters are to get work experience we must have the industries in which they can gain that experience. The Government's financial and economic policies are removing those industries from our valleys.
There is no doubt that the major factory closures are a direct result of the Government's economic policies of high interest rates, high inflation, high energy costs and the artificially high level of the pound. That is being said not only by trade unionists and the TUC but by industrialists and the CBI. The Government must take note.
When the Labour Government left office in 1979, unemployment was 700,000 less and falling. Now, it is more than 2 million, and it is rising at an accelerating rate. The waste of people and resources is enormous. At current levels, it is costing the economy £10 billion a year in lost production. The Treasury is losing £6 billion in reduced tax revenue and increased unemployment benefit payments. On Monday, the Chancellor of the Exchequer will presumably tell us that more taxes will have to be raised. But the revenue has been lost because of the unemployment that has been inflicted upon the country. The weakest suffer most, and Wales has been hardest hit by this Conservative Government's policies.
In occupational terms, manual workers have been hardest hit. In September, 160 general labourers were registered as unemployed for every notified vacancy—11 times the average rate for all occupations. The level of youth unemployment is a major social disaster. In July, 40 per cent. of unemployed males and 60 per cent. of unemployed females were under 25. Over 400,000 jobs that were lost up to 1980 were in industry. More than one in 20 industrial jobs have disappeared under the Government's policy. The statistics of industrial decline since May 1979 are startling. The number of closures, liquidations, redundancies and suicides is growing. On average, 134 companies a week are going bust. The situation in Wales is worse than in any other employment region in Britain.
The Tories keep saying that there is no alternative and that this is the only way in which they can deal with the problem. But there are alternatives that have been spelt out by previous Prime Ministers—for instance, Mr. Harold Macmillan and the right hon. Member for Sidcup (Mr. Heath). Alternatives have been spelt out by the CBI, the Labour Party and the TUC, which has been pressing the Government to accept its six-point emergency package. It asked the Government to cut interest rates immediately by 4 per cent. They were 12 per cent. when the Labour Government were in office. They were increased to 20 per cent., and they are now at 16 per cent. Why do not the Government bring interest rates down? The TUC asked the Government to bring down the exchange rate to help exports. It is artificially high because of North Sea oil. Why can we not channel the funds from North Sea oil and gas into sustaining our industry rather than seeing it collapse around us?
Today, we have been told of the allocation of money for the youth opportunities programme. That is to be welcomed, but more needs to be done, particularly for young people.
The TUC also asked the Government to set up a fund to channel North Sea oil and gas revenue into industrial investment. Let us expand public expenditure, particularly into capital projects, thus improving services and boosting 182 the economy, as well as providing desperately needed jobs. The TUC also asked the Government to introduce selective import controls to halt the extermination of our trading industries. It has been said that the Prime Minister has done for Welsh industry what myxomatosis did for rabbits. The Welsh Office and the Government should look at the special problems of Wales.
I ask the Under-Secretary of State what action is proposed by the Government to implement the Select Committee report on employment opportunities. I look upon those recommendations as a minimum requirement. We need to go much further, because the situation has worsened since the report was produced last August. What action is to be taken to restore special development area status to those areas that lost it? In particular, when will special development area status be restored to Aberdare? We have seen that the removal of that status has led to a massive increase of unemployment, and at least as a minimum requirement we should seek to have that status restored.
What is to be the future of the coal industry in South Wales? Will there be closures because of the downturn in the economy, or are we, because of the need for energy conservation and sustaining our energy industries, to ensure that the coal industry is to be maintained in the years ahead?
What is to be the future of the steel industry in South Wales? We have had the partial closures in Llanwern and Port Talbot. There are still rumours about the future. Can we have some guarantees that at least those who are employed in the steel industry in South Wales will have their employment maintained in the future?
What is to be the future of manufacturing industry in South Wales? It is useless to bring forward proposals for new advance factories unless the Government ensure that existing factories are not allowed to collapse.
There is deep anxiety in Wales at the moment because of the Government's policies, which we believe have aggravated unemployment. I know that discussions are taking place at Cabinet level. Although there are those who say that there is to be no turn, that we are heading for the precipice and that the policy is to be full speed ahead, let us hope that the saner voices now coming from the Conservative Benches, and from industry outside the House, will make themselves heard by the Cabinet, so that in this new parliamentary Session we can reverse the evil trend that was started in the last Session.
§ The Under-Secretary of State for Wales (Mr. Michael Roberts)The hon. Member for Aberdare (Mr. Evans) has been successful in bringing before the house today a subject which has been of real concern to successive Governments for many years. The industrial valleys of South Wales developed rapidly during the last century and the early part of this in the wake of the Industrial Revolution. But for some time now their traditional industries have been in decline. The result for a long time has been high unemployment, outward migration on a significant scale, particularly among young people, lower income per head of the population, and generally inadequate social conditions.
The hon. Member will know that these are deep-rooted problems and have been of concern to his party when it was in office as well as to ours now. Let me assure him that we as a Government are fully aware of the problems 183 and care about them. We have had numerous meetings with local authority representatives to discuss the situation in the area, and in many of those hon. Members have been involved.
During the last 12 months my right hon. Friend the Secretary of State, my hon. Friend the Under-Secretary and I have all met representatives from local authorities representing the valley areas. No one who has attended those meetings could fail to be impressed by the scale of the problem and the genuine wish of all those living in the valleys to preserve their communities. I have to make clear at the outset, therefore, that we are committed to the retention of the valley communities, and we recognise that to do this we have to try to ensure that sufficient job opportunities exist in the valleys. If we fail to do this, we know that there will be a continuation of the shift of population away from these areas, as has been happening for so many years now.
Unemployment in these areas is certainly too high: 16.7 per cent. in Ebbw Vale, 15.9 per cent. in Bargoed, and 14.6 per cent. in Aberdare. These figures compare unfavourably with an average of 8.4 per cent. in Great Britain as a whole. But let there be no misunderstanding and no misrepresentation about the fact that there is nothing new about this. The relative position of some of these areas such as Aberdare, for example, is no worse now than the situation that existed in the 1960s.
The area has, of course, experienced, and is continuing to experience, a change in the structure of employment with a move away from its dependence on the coal and steel industries. The major change took place in the 1960s, when 61 pits closed in South Wales, with the loss of some 25,000 jobs.
The hon. Gentleman said that he was proud to speak for those in his constituency who had become unemployed in recent months. He comes, as I do, from South Wales. I need not remind him that many of them have been unemployed for much longer than the few months to which he referred. It would have been more responsible to admit the deep underlying problems that have engulfed South Wales for so long. I shall give the hon. Gentleman one fact about the coal industry. When the Labour Government were in office between 1964 and 1970, 46 pits were closed in South Wales, with a job loss of 20,000. Those are the problems that we face. The situation is not something new or something that has occurred in the last few months of South Wales' long industrial history.
The trend continued in the 1970s, when 11 pits were closed, with the loss of 3,700 jobs. The closure of steelmaking at Ebbw Vale was also a significant factor. The hon. Gentleman referred to the importance of the steel and coal industries to the valley communities. That is certainly still the case, although it is sometimes hard to grasp, from what Opposition Members say, that the situation has been changing dramatically over the past 20 years and not simply since this Government came to power.
The difficulties of the steel industry are not new. For the past 10 years there have been warning signals. The hon. Gentleman's Administration did not have the courage to take the necessary action at the right time. They always preferred to put off the evil day. It was left to us to face reality and to put the industry on a sound footing.
The hon. Gentleman will know that the British Steel Corporation is reviewing its operations under its new 184 chairman. I understand that the outcome of the review could be presented to the Government before the end of the year. Obviously, it would be premature for me to make any comment at this stage about future operations in South Wales. We shall have to await the completion of the corporate plan.
Similarly, it is for the National Coal Board to decide on the level of its future operations. The industry faces severe problems caused by reduction in demand, stockpiling and rising costs. I am fully aware of the possible implications for Wales. However, there is also good news. I am sure that the hon. Gentleman will welcome the 5 per cent. increase in productivity in the first half of the current year compared with the same period last year. That is a tribute to both men and management.
At the root of any long-term solution to the problems of the valleys is the general economic situation. Wales is part of a wider economy, and we shall not overcome the problems of the South Wales valleys until we have restored health to the national economy. Successive Governments have attempted to deal with the problems of our economy by giving ever-increasing grants to industrialists and by increasing public expenditure generally in order to alleviate our problems. Those policies have failed to induce a real growth in the economy which would bring with it the new and lasting job opportunities that we so badly need. Indeed, the policies of the Labour Government failed Wales badly. It ill becomes the hon. Gentleman to suggest that our present difficulties stem simply from the Government's economic policy.
I remind the hon. Gentleman that when we came to power the economy was stagnant. Manufacturing output was in decline, imports were rising and the balance of payments was barely in balance despite a massive contribution from North Sea gas and oil. Under the previous Administration unemployment doubled in Wales, and it was on a rising trend when we came to office. Prospects were bleak unless we could tackle inflation, which hung like an albatross around the necks of our industrialists.
The measures that we have had to take have resulted in a difficult transitional period. Over the past few months, we have seen a substantial fall in the rate of inflation. As the economy begins to recover, the encouragement that we have given to enterprise and initiative through fiscal changes should result in the creation of new industries and with it a real chance to tackle the entrenched problems of the South Wales valleys.
Mention has been made about the need to upgrade the assisted area status of some parts. I shall not comment now on the proposal to upgrade the Aberdare travel-to-work area. As the hon. Gentleman said, the need for review was stressed by the Select Committee on Welsh affairs. I am sure that he will understand that my right hon. Friend intends to report back to the House as soon as possible in the new Session with our considered response to all the issues raised in the report.
I should like to say this, however, about the review of assisted area status undertaken last year. Our objective was to ensure that those parts of the country suffering from long-standing problems of high unemployment and structural change should be better placed to attract new industry. The one way of ensuring the relative attractiveness of those areas was to limit the overall size of the special development areas, thus concentrating the highest levels of assistance on the areas of greatest need.
185 In the South Wales valleys this included areas such as Bargoed and Ebbw Vale where unemployment levels are amongst the highest in the country. We also recognised the deep-seated and long-standing problems of the Rhondda by the retention of SDA status. I can understand why other areas such as Cynon valley may feel that they have a good case, too, but the hon. Member will realise that blanket SDA coverage would detract significantly from the prospects of attracting new jobs to the areas of greatest need.
There is a danger, however, in concentrating solely on regional policy in the fight to stimulate new investment in the valleys. It has a key part to play certainly, but it is only one of the factors which business men take into account in deciding on future investment. The most important factor, to which I have already referred, is the general economic climate at the time. The other important factor is the provision of infrastructure and factory space.
Inevitably in recent years, a great deal of the WDA's effort has been concentrated on the Blaenau Gwent area in view of the difficulties that the area has faced as a result of the closure of steel-making. I am sure that that is right, and we are now beginning to reap the benefits. There are currently 2,500 manufacturing jobs in the pipeline for the Blaenau Gwent area. In addition, the WDA has 22 factories amounting to over 150,000 sq. ft. complete and available in the area. Another 13 units amounting to 137,000 sq. ft. are under construction and there are plans for another two factories amounting to 13,000 sq. ft. to be built, together with a further provision of 50,000 sq. ft. of factory space.
This does not mean that other areas have been neglected. There are seven factories amounting to 45,000 sq. ft. available in the Cynon valley. Another five totaling 186 30,000 sq. ft. are under construction and there are plans for a further six factories to be built, amounting to 18,000 sq. ft., together with a further provision of 50,000 sq. ft. of factory space for Aberdare and the Cynon valley. I am pleased, too, that the WDA is now in a position to move ahead with its derelict land reclamation work in the valleys.
The picture for South Wales is not as bleak as the hon. Member suggested, although I recognise the difficulties facing us. The decision to locate the Inmos plant in the area will, I am sure, go a long way to restoring confidence. Apart from the jobs directly involved, we expect hundreds more to be created as a spin-off. There is the prospect, too, that South Wales will increasingly prove to be attractive to other firms in high technology. Indeed, there are signs of increasing interest being shown by this type of industry in the area.
Contrary to popular belief, the work force of the area also has a good reputation amongst industrialists. My right hon. Friend was particularly pleased, during his recent visit to the United States of America, to learn of the high regard that American companies had for their employees in Welsh plants. I am sure that this, above all else, can help us to attract new foreign investment, which is becoming of increasing importance to us in Wales.
In the interests of Wales and the future of the Welsh economy, it would be better for all concerned if we stressed the value of the Welsh industrial force, its reliability, its skill, its attractiveness—
§ The Question having been proposed at half-past Two o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at Three o'clock.