HC Deb 01 April 1981 vol 2 cc581-8

Motion made, and Question proposed, That this House do now adjourn.—[Lord James Douglas-Hamilton.]

3 pm

Dr. Shirley Summerskill (Halifax)

I am glad to see such keen interest among hon. Members in the problems of my constituency. I have waited a long time for this debate as, I know, has the Minister. It is important that the problems of my constituency should be brought to his attention even at this rather strange hour of the parliamentary day. I must say, however, that I prefer a daytime Adjournment debate to a middle-of-the-night debate. The Chamber is comparatively crowded for such a debate.

I am asking for the continuance of assisted area status for Calderdale because it is of vital importance to the future of Halifax's industry and to my constituents. The case that I make has strong support from Calderdale council, the West Yorkshire county council, the chamber of commerce in Calderdale, the Calderdale trades council and the Committee for the Economic Regeneration of Calderdale.

Mr. Russell Kerr (Feltham and Heston)

And the Feltham Labour Club.

Dr. Summerskill

I thank my hon. Friend.

One of the first actions of this Government was to deschedule Calderdale's assisted area status, to begin next year. Calderdale had received assistance since 1974. Every Conservative Member voted in favour of the descheduling on 24 July 1979. The practical effects on Calderdale will be the total withdrawal of access to a huge range of funds. The Minister will be aware of these. I shall however, remind him of some of them.

There were the funds available from the European Regional Development Fund, the European Social Fund, other European Community funds, regional development grants, selective financial assistance, and office and service industry grants. The decision also means termination of the advance factory programme and many others. The lower priority rating given to the area will affect many expenditure programmes.

I know that the Government are to review changes of status in some areas later this year. Calderdale is not so far included in the group that it is planned to review. It is to go from an intermediate area direct to a non-assisted area. It will not even qualify for review. With this in mind, I would like the Minister to hear evidence that should impress upon him Calderdale's need for a review of the decision concerning its assisted area status. This evidence shows the serious and rapid deterioration in Calderdale's unemployment and the erosion of its industrial base. This has all taken place since the July 1979 decision. In other words, the arguments for assistance were strong then. I voted against the withdrawal of assistance. The arguments are even stronger now.

The circumstances have drastically changed. I understand that it is a criterion for review by the Minister when circumstances have changed. In the last year alone the unemployment rate in Calderdale has risen by 145 per cent. This is a steeper increase in the last year than in any other part of Yorkshire. It is certainly steeper than the increase in Bradford, which was 63 per cent. Yet Bradford will retain its intermediate status. I shall comment further on the apparent discrepancies in the treatment between one area and another. That figure shows a yawning discrepancy.

In May 1979, when the Conservative Government were elected, Calderdale had, as adult unemployed people, 3.6 per cent. of the population, that is, 2,919 people. In March this year the 3.6 per cent. of the population had risen to 10.2 per cent. of the population unemployed. Instead of 2,919, there are now 8,118 adult unemployed, and there are 47 people chasing every vacancy.

To those figures we must add disguised unemployment. Thousands of women do not register because they are not entitled to unemployment benefit, or because they think that there is no point in trying to find a job. To those figures we must add 5,578 people on our temporary short-time working scheme. That number has gradually increased since September 1979, when it was only 324. In my view, those people are potentially unemployed. If the scheme were taken away they would be unemployed overnight.

We must add to those figures the young people. I did not include young people in the figures that I gave; I gave only the figures for the adult unemployed. There are now about 450 young people to add to that total. The present trend in the country and in Calderdale indicates that unemployment will continue to rise.

I am sure that the hon. Gentleman knows that Calderdale was one of the birthplaces of the Industrial Revolution. Its prosperity since then has depended on a wide range of manufacturing industries, but especially upon wool, textiles, carpets, engineering, and Mackintosh's—the toffee company—which is the largest single private employer in Halifax. Since the 1930s it has never known unemployment of the kind that it faces today, because of this diversity of industry, which has been its strength, But its whole manufacturing base has been gradually eroded. Short-time working, redundancies and closures are hitting every type of firm in the town, over a wide range, and they make almost daily headlines in the Halifax Evening Courier.

The area is becoming deindustrialised week by week and month by month. The process goes on. I fear that the jobs being lost now cannot be recreated. The firms being shut cannot be reopened. They are all irreplaceable. Firms with national and international reputations, and firms that have won the Queen's Award for Exports, are facing serious problems.

Perhaps the most serious problem is the rapid decline in the textile industry since July 1979. I know that it was declining before then, but all the people who work in the industry are agreed that the decline since this Government came to power has been far more serious and far more steep. It is a traditional basic industry in Calderdale. Also in Halifax we have the world-famous Crossley Carpets—now Carpets International. It, too, faces serious problems. Between April 1979 and April 1980, 40,000 textile workers lost their jobs in this country, and West Yorkshire was losing more of those jobs than any other area.

If it were a question only of textiles, it would be a serious problem for the town; but it is not. It can no longer rely on its broad manufacturing base. Machine tools and engineering are being seriously hit. The latest tragedy in Halifax—the announcement was made only at the end of last week—is that Asquiths, a world-famous engineering firm going back many years as an old-established family firm, is due to close.

That is another example of the gradual erosion of the machine tool industry. It is the second of Halifax's major engineering factories to close in less than a year. The town has a record of an industrious and efficient work force, producing high-quality goods.

I should like the Minister to go into more detail about the way in which areas are chosen for assistance. What are the criteria? There appear to be discrepancies and anomalies. An area can be reviewed only if it has gone down two stages. That seems to be a strange rule. An area that has gone down only one stage might have changed drastically in terms of unemployment and other factors, and yet it will not be eligible for review.

Calderdale has changed drastically since July 1979. There is a structural weakness in its economy. That is the phrase for which the Department looks when it decides whether to review. The traditional manufacturing base is at risk. That is one criterion for a review. The other criterion is that unemployment has changed drastically since the original classification.

The Minister will say that unemployment in some areas without assisted area status is higher than it is in Calderdale. I can tell him of areas with unemployment rates lower than Calderdale's 10.2 per cent. that are to retain intermediate assisted area status after next year. Richmond, in North Yorkshire, has an unemployment rate of only 8.2 per cent. and yet that is an intermediate area. Barnstaple, in the South-West, has an unemployment rate of 7.9 per cent. and Bideford has a rate of 9.5 per cent., yet they are to remain intermediate areas.

Other places with unemployment rates lower than 10.2 per cent. have development area status. Unemployment figures alone are obviously not sufficient classification. Changing circumstances should be the criterion. The anomalies should be explained or abolished when the Government review the areas. Since July 1979 Calderdale has experienced a rapid increase of 145 per cent. in unemployment. It has experienced a decline in its manufacturing base, and that is getting worse.

Several remedies are suggested by employers, trade unionists, economists, employers and the Opposition. Examples are lower interest rates, an end to monetarist policies, value added tax off confectionery, which would help Mackintosh's, and selective import controls to help textiles and carpets.

Today I ask for a particular type of help. I ask for a review of the decision to withdraw assisted area status for Calderdale and for that review to result in the retention of assistance. That makes better financial sense than allowing the present position to deteriorate further, so that the area cannot go back to the prosperous base that once existed. Then it might be too late to tackle the problem.

We want to help to preserve jobs and to create new jobs, whether they are in the traditional, new or service industries. We want help to improve the environment, to further economic generation and to provide a basis for future expansion, if that is possible.

Halifax and Calderdale have a reputation for efficient hard work and good industrial relations. That has not changed since July 1979, but all the other criteria have changed.

I hope that I have convinced the Minister that things have changed very much for the worse. We must have a review of the decision about status, and assistance must be retained.

3.15 pm
The Under-Secretary of State for Industry (Mr. John MacGregor)

I am not sure whether I should congratulate or commiserate with the hon. Member for Halifax (Dr. Summerskill) on the day on which she obtained her Adjournment debate, because I know that she has been on tenterhooks throughout most of the night wondering when it was to take place. However, I do congratulate her, especially after the long hours that we have had without sleep, on the coherent way in which she has just put forward her case for a change in the Government's decision on the withdrawal of assisted area status from Calderdale in August 1982.

Towards the end of her speech the hon. Lady ranged fairly widely over much wider economic issues than the question of regional development status, and if I have time towards the end of the debate I shall endeavour to touch on that, but as she concentrated on the question of assisted area status I should like to devote the bulk of my speech to that.

As we have made clear on a number of occasions, we are always ready—and the hon. Lady mentioned that we are committed to a review of assisted area status for certain localities later this year—to discuss the situation of particular areas. I am therefore grateful to her for having given me an opportunity to explain again to the House the Government's approach to regional policy and the application of that policy to Calderdale in particular.

The hon. Lady will not expect me to give any decision now. As she knows, my right hon. Friend the Secretary of State is considering representations about the assisted area status of West Yorkshire that were made to him in February by a deputation from the metropolitan county council. He is also considering a submission which he has recently received from the borough of Calderdale. It would not be right to anticipate the outcome of these considerations, nor would I wish to do so, but I shall bring to my right hon. Friend's attention the points that the hon. Lady has made in this debate.

The hon. Lady asked me to restate the general criteria on which our regional development policy is based, and it might be helpful if I give an indication of the criteria and then deal with some of the points specifically relating to Calderdale that will have to be taken into account in the consideration that my right hon. Friend will give to the views of the deputations that he has received.

As the hon. Lady knows, successive Governments have conducted a regional policy designed to help to regenerate industry in those areas where traditional industries are in decline and which suffer from problems of persistently high unemployment, and especially of unemployment persistently high relative to other areas.

On coming into office we found that no less than 44 per cent. of the employed population were covered by assisted areas. Such a large coverage inevitably weakened the effectiveness of a regional policy designed to alleviate the problems of the worst-hit areas, since it covered such a large area of the country, including many parts that could not be defined as significantly worse than the average.

That is illustrated by comparing an average unemployment rate of 5.5 per cent. in all intermediate areas in 1979 with a Great Britain rate of 5.6 per cent. In addition, we found that the cost of regional aid was planned to rise to over £600 million in 1982–83. The country—that is, the taxpayers—simply could not afford that scale of public expenditure on a policy whose effects were demonstrably not achieving its objectives. There were also problems—I have had this matter drawn to my attention by a number of my hon. Friends of creating unfair competition in certain industries in particular areas that received no regional aid at all. It was against that background that we reviewed our regional policy.

I shall not repeat the statement made by my right hon. Friend the Secretary of State on 17 July 1979, but, as the hon. Lady will know, the objective—indeed, the outcome, of that policy—was to reduce the coverage from about 44 per cent. of the country to 26 per cent., first concentrating on the areas that most needed the help.

The package of measures announced in July 1979, to which the hon. Lady referred, reflects our aim of continuing with a strong but more selective regional industrial policy. As well as making the policy more selective and hence more effective in helping those areas with the severest long-term problems, we seek to reduce the burden on public expenditure by a planned £233 million by 1982–83. That in itself is helping industries, not only in the area to which the hon. Lady refers but throughout the country, as it gradually helps us in our strategy of getting interest rates down, interest rates being one of the main burdens on industry at present. Nevertheless, expenditure on regional incentives will continue to be substantial.

As my right hon. Friend said in making his announcement, regional differences will not be reduced simply and solely by redistributing money from one group of taxpayers to another. Local enterprise and co-operation in making business competitive and profitable must also play a large part. I pay tribute to the type of work force in the hon. Lady's area, to which she referred.

I refer next to the criteria that we use, and must use, in considering assisted area status, on which the hon. Lady asked me to concentrate on today. First, there is the relative level of unemployment. The hon. Lady said that there had been substantial change in the Calderdale area in the levels of unemployment over the past 12 months. She drew attention to the particular rate of increase. I do not wish to minimise that fact.

The Government are deeply concerned about unemployment throughout the country, and not only in Calderdale. They are particularly interested in areas where the world recession has aggravated long-standing problems within British industry and produced rapid increases in unemployment. The hon. lady referred to the restructuring of industry in her area, which is an inevitable process if we are to create a healthy modern economy for the late twentieth century.

I was pleased to note the submission that was made recently by the chief town planning officer to the Department about the situation in Calderdale. He said: The roots of current problems lie in factors which affect a much wider area than Calderdale. The recession is international. That is one of the problems with which we have to deal.

It is not the absolute level of unemployment or the absolute level of unemployment increases that must count, because those are factors that have affected all areas. We must consider the relative levels of unemployment when considering assisted area status. That point has been made clear to the borough, and I believe that the reference to relative levels appeared in the chief town planning officer's letter to us.

Under the Industry Act 1972 it is not only the unemployment figures which are noteworthy and which must count in considering assisted area status. All the circumstances in a given area, both actual and expected—including some expected ones to which the hon. Lady referred—must be considered, including the state of employment, unemployment, population changes, migration, the objectives of regional policies, location and other possible advantages and disadvantages of the area in attracting jobs.

I recently took part in an Adjournment debate on Corby, which at present has development area status. I was able to point out that, notwithstanding the unemployment there, because Corby has development area status and because of other factors it is now attracting many more new jobs. That is happening because the other factors are beneficial to employment.

The third factor is the need for stability and continuity. This is particularly important. I stress the significance of stability in our regional industrial policy. The main purpose of regional policy is to provide incentives to invest. It is important that industry should have confidence in the longer-term availability of those incentives for assisted areas so that it can take them into account when deciding where to locate new investment. Regional policy is a long-term instrument designed to produce long-term solutions to long-term problems. For the incentives to have a real effect on investment intentions, they must be stable and predictable.

That is a particular problem at present. I find that many hon. Members do not take quite on board the fact that to engage in fine tuning on a regular basis works against that objective. Thus only when a major fault occurs in the fortunes of any areas should we consider a change in assisted area grading itself.

I note that the hon. Member for Whitehaven (Dr. Cunningham), when speaking from the Opposition Front Bench at Question Time, asked: Does the hon. Gentleman agree that whether a regional policy is effective depends largely on companies believing that it will be stable and that it will not continually be altered".—[Official Report, 9 March 1981; Vol. 1000, c. 606.] That is an importance factor that we must take into account. As the hon. Lady pointed out, it sometimes means that some areas that a year and three-quarters ago received intermediate area status will have unemployment levels lower than hers are now. That is an inevitable consequence of not constantly fine-tuning the policy. A few months' or even one year's unemployment figures cannot be used on their own to construct a case for a change of status.

The fourth point is the effect on other areas. The major question is whether, if Calderdale were granted continued assisted area status, it would not lead also to a strong demand from other areas for a regrading of their status. I think that that is very likely, because I have already received several deputations along those lines. The levels of employment in several of these areas have changed since all the assisted areas were last established. Many would therefore argue that if Calderdale were changed they should also be changed.

For example, Calderdale had an unemployment rate of 10.2 per cent. in March, which is noticeably below the average for intermediate areas, let alone the higher-graded areas. There is a whole variety of situations here and there is a real danger that if a change were made in one it could lead to such a demand from other areas that the area that was first changed, let us say Calderdale, might find its position not strengthened but weakened.

That brings me to Calderdale. My hon. Friend the Member for Sowerby (Mr. Thompson) keeps me regularly in touch with the position there. The points that I have made about regional policy being long-term in nature and the need to maintain a stable regional "map" are relevant to Calderdale. The hon. Lady pointed out the steep increase in unemployment, but even with the rapid increase over the last year the provisional March figure for Halifax is 10.2 per cent., while that for Todmorden is 10.4 per cent.—compared with a Great Britain rate of 10.1 per cent. I have a travel-to-work area in my constituency that has never received assisted area status, where the level is 10.9 per cent. The hon. Lady referred to Bradford. The unemployment level there is 10.2 per cent.

The important point is that the average unemployment rate of all those areas that are due to remain intermediate areas after August 1982 was 12.3 per cent. in February—the March figures are not yet available. The statistics show that one view could be that the decision to withdraw assisted area status from Calderdale is still justified on relative levels.

Other factors also have to be taken into account. I accept that there is a need to increase diversification in Calderdale, which is still too dependent upon declining textile industries. I hope very much that small firms will have a big part to play in this. As the hon. Lady knows, I have particular responsibility for the encouragement of small firms, and we have already taken many measures to help them. In parts of the area there are problems of dereliction, difficult terrain and obsolete stone-built multistorey mills that are ill-suited for modern industrial use and are difficult and expensive to remove. Derelict land clearance area status will continue to apply to the area when it loses its assisted area status in 1982. In the longer term Calderdale has many advantages for new developments, including good communications, in particular, access to the M1and M62 motorways, and a varied, skilled work force.

At the heart of the hon. Lady's argument was the plight of the textile industry. I have not the time to elaborate on that now, except to make it clear that we have taken a number of measures to assist the textile industry and that we are committed to a rigorous approach to the multi-fibre arrangement renegotiations.

The hon. Lady said that only the intermediate areas with two changes in status would be firmly reviewed later this year, but we have consistently said that in respect of any area we are prepared to consider evidence of long-term change that debilitates that area's industrial base. Her feelings for her constituents are entirely understandable. They are ones that we all share, and it is legitimate for her to put forward the strongest case that she can, but, without anticipating my right hon. Friend's decision on the representations that he has received, it is important to bear in mind—

Dr. Summerskill

How long is long-term?

Mr. McGregor

Long-term, when looking at structural changes in an area, must be more than one year's relative change.

After 1 August 1982 C'alderdale will continue to be eligible for 100 per cent. grants for approved land reclamation schemes. It has the benefit of a good geographical location with good communications and, perhaps most important of all, it has a heritage of highly-skilled people who, I am sure, are far-sighted and resilient enough to take advantage of the opportunities that will be presented, once current pressures ease, for industrial and commercial enterprise. In the light of all—

The Question having been proposed after Ten o'clock on Wednesday evening, 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 half-past Three o'clock.