§ Mr. Bruce George (Walsall, South)
As an hon. Member who is desperately anxious about the future of his town, I have used every opportunity to point out to Ministers the serious problems of decline in industry in Walsall and the consequent spiralling unemployment. My previous opportunity was a debate on unemployment in the West Midlands on 30 March.
With my hon. Friend the Member for Walsall, North (Mr. Winnick), I took a delegation from the local authority to meet the Minister and I am grateful to him for listening attentively to what we said. Last week I had the honour to be one of the leaders of a march, by the Walsall Trades Council, through the town against rising unemployment.
I am fortunate to have obtained this debate to raise once again the increasing problems that Walsall is facing. The previous Adjournment debate that I secured was the final debate in Parliament before the election. The situation has deteriorated even further since then. I am delighted to see the hon. Member for Cambridge (Mr. Rhodes James) in the Chamber. His attendance at that previous debate did not go unnoticed in my constituency.
Two years ago the position in Walsall was not so desperate. For example, unemployment in Darlaston in my constituency was much lower, and there was a lot of money available under derelict land clearance schemes and much more aid for industry. A new shopping centre was being built, and it is ironic that two years ago there were a few shops and a lot of industry, whereas today we have a magnificent shopping centre but hardly any factories where people can earn money to spend in those shops.
When my hon. Friend the Member for Nuneaton (Mr. Huckfield), who was then a Minister, came to the town about two years ago, the inflation rate was under 10 per cent. and unemployment was just over 6 per cent. The situation is now much more serious, with unemployment at Walsall at nearly 14 per cent. That is the official figure, but if one adds the numbers on job creation schemes and includes the unemployed of Darlaston, which is not in the Walsall travel-to-work area, and the hundreds or thousands of people who have not registered and those on short time, one realises that the situation is even more desperate than that appalling figure of 14 per cent. unemployed suggests.
What will be the trend in employment one, two or five years from now? The manpower service group at Warwick university has projected that by the mid-1980s one in five males in the West Midlands will be unemployed. One can extrapolate an even more disastrous figure, because the inner urban areas are already bearing the brunt of unemployment and the figure of one in five males unemployed could turn out to be exceptionally optimistic.
The situation is serious and getting worse. Last week, there was an outdoor meeting near the Walsall cenotaph, and behind us was a roll call of the town's glorious dead. One could build another cenotaph nearby showing a list of companies now deceased. They include T.I. Sunhouse, Aluminium Bronze and Eton Axles in Darlaston. I flew to Cleveland in a vain attempt to get that latter decision reversed. Some firms that no longer exist might have been inefficient and deserved to go to the wall, although I do 486 not believe that. If the Government had given more encouragement and adopted different policies, perhaps such companies would still exist.
Many companies have shed labour. That is a euphemism for creating unemployment. I have a list giving an enormous number of such companies. The situation is desparate for the town which I am proud to represent. Not only members of the Labour Party are angry. I have received letters from people who were Conservative voters and from church groups. A man of the cloth joined us in last week's march.
A communication from the local chamber of commerce gives the results of the latest quarterly economic survey. Companies were asked whether they were working at full capacity. Thirteen per cent. said they were. Only 21 per cent. were working at between 80 per cent. and 100 per cent. capacity and 41 per cent. were working at between 60 per cent. and 80 per cent. capacity. A quarter of the companies were working at under 60 per cent. capacity. The answers to the questions make a catalogue of depressing reading.
Nearly half of the companies interviewed had cut their work forces in the last few months. Investment plans are also depressing. A total of 62 per cent. of companies have unchanged investment plans and 22 per cent. have revised their investment plans downwards since the survey three months previously. Turnover and confidence are plummeting. Only 17 per cent. of firms were confident that their profitability would improve. Of the firms questioned, 56 per cent. said that they expected profitability to worsen.
That is a catalogue of disaster. I am sure that the Minister receives similar depressing reports from all over the country. Interest rates should be lowered, according to 85 per cent. of the companies in the survey. I do not entirely agree, but 57 per cent. of the companies called for a reduction in local authority rating. Another 35 per cent. sought some restriction on competition from abroad. The impact of unemployment is obvious.
We are creating a bitter generation among our young people. The short-term and long-term consequences of so many disaffected young people will be serious. Much of the blame must be borne by the Government. One hon. Member suggested that the solution was to draft our young people into some form of military service. That solution is bananas. Young children want real jobs. They do not want to be press ganged into military service. That is not an argument against a defence posture. If we want a home guard, we can extend the Territorial Army. To seek forcibly to put unemployed youths into the military in the way suggested is wrong.
The consequences of increasing unemployment on harmonious race relations are serious. Inner city areas with potential race relations problems are at risk. I do not wish to be alarmist, but what happened in Bristol and South London could happen elsewhere, even in areas with good race relations records.
What can be done? There are a number of different answers. The best solution is to have a new Chancellor of the Exchequer and even a new Government. If there is to be no change in the immediate future, what can the present Government do? They could heed the policy of the Association of British Chambers of Commerce in its letter to the Chancellor asking for a reduction in energy costs. The association states further: 487All our chambers' surveys show a continual deterioration in industrial and commercial profitability. That cannot go on.Local authorities can do a great deal if they are given the right support. It is sad that, because of the ending of capital allocations to Walsall, the council cannot continue its programme of small industrial units. During the past two years, 26 were built. The scheme has been highly successful and there was a great demand for it from local businesses. But now, when the last project is finished, that construction programme will be no more than history.
I hope that the Government will do more to encourage new and up-to-date technologies. Whether the blame lies with the Government or locally, I do not know. I helped to organise a conference two years ago at a West Midlands college to encourage the use of microprocessors, but apparently only five companies in the town were given assistance towards the cost of feasibility studies. If the town is to survive, it must adapt new techniques, and the Government can do much more to encourage that process.
I also hope that more encouragement will be given by the local authority. Recently it has been criticised and maligned a great deal. Through its small firms advice unit, much is being done to promote the town more successfully than has happened in the past. Indeed, the local authority commissioned a report by Aston university on the local economy, and many of its recommendations are now being implemented.
I should welcome some restriction on imports to help the leather industry in Walsall, and also the nuts and bolts industry in Darlaston, which is in desperate straits. I welcome the help that is being given to the motor vehicle industry, because many jobs in Walsall depend upon the healthy survival of that industry. I believe that the Government should stop the export of capital, which is draining the lifeblood from our county and town. Perhaps foreign industry should be encouraged to invest, but I do not believe that the policy of seeking crumbs from Japanese tables should be a main plank of any Government's policy.
I want to allow my hon. Friend the Member for Walsall, North time to speak, because he shares the problems of my area. I therefore conclude by saying that we are living in a mixed economy. That means that we have a healthy private sector as well as a healthy public sector. There is no reason why one should be incompatible with the other. It is wrong to blame this Government for all the country's evils and problems, although they have been given an added twist by the foolish policies that have been pursued over the past two years.
I hope that it is not too late for the Government to see the error of some of their ways. I hope that it is not too late to devise an industrial strategy that would not only genuinely create new firms and sustain the important public sector, but reduce unemployment and create a healthy environment in Walsall, thus enabling its inhabitants to make full use of their talents and create something that has been denied to Walsall for some time, namely, a healthy economy. I look even to this Government to provide the necessary support.
§ 2.38 pm.
§ Mr. David Winnick (Walsall, North)
I endorse my hon. Friend's remarks about the plight of local industry in our borough. On 16 March I took a deputation to meet the 488 Under-Secretary of State. That deputation included my hon. Friend as well as leading members of the local authority. We spoke to the Minister about the industrial decline and unemployment in the borough, and stressed the need for the Government action to reverse the decline in Walsall. Perhaps the Minister thought before that we were exaggerating, but after we gave him the figures and showed him how unemployment had grown and how many firms had closed I think that even he accepted that we had and have a strong case.
During the past 20 months, Walsall, like the Black Country as a whole, has been devastated, largely as a result of the economic policies of this Government. We have had redundancies on a large scale, we have had closures, and there has been extensive short-time working. Unemployment in the West Midlands is rising faster than in any other part of Britain, including Northern Ireland. But within the West Midlands unemployment is growing faster in the borough of Walsall than in any other part of the region.
The figures given to me this week in a reply on short-time working illustrate the points that we are making in this debate. For example, in May 1979 there were 12 people on a short-time scheme in Walsall. In February this year the number was 9,892.
Of course, we are and must be concerned about school leavers unable to get jobs who spend months, if not years, in the dole queues, with the resulting bitterness that arises. But at the same time we must be concerned about men over 45 years of age who become redundant as in Walsall and the Black Country, because they may never find other work during their normal working lives. In April 1979 there were 2,901 men over 45 years of age registered as unemployed. In January this year the figure was 5,700.
With such heavy unemployment—over 13 per cent.—we have seen the return of individual hardship and poverty. When I was elected the Member of Parliament for Walsall, North, most constituents who wrote to me and came to my surgeries were worried about housing. Now at least 40 per cent. of constituents who come to my surgeries are worried about incomes, redundancies, and having to live on reduced incomes because they cannot find work. In many instances they are striving to bring up small children and need more assistance from the DHSS. Therefore, we have seen the return of hardship and deprivation of the kind that we hoped not to see again.
The Minister received a deputation that I headed last month. Apart from listening to our problems again today, I hope that he will come to the borough to see what is happening. No doubt he has already been to various parts of the West Midlands. However, I invite him to come and see what is and has been happening in Walsall in the last 18 to 20 months. It would be a useful lesson not only for him but for his boss, the Secretary of State for Industry.
My council has been criticised for supporting the march from Liverpool to London that is due to take place next month by donating £5,000 towards it. I congratulate, not criticise, my council. I believe that it is right to give whatever support can be given to those who, in a lawful manner, wish to protest against mass unemployment.
As my hon. Friend said, there was a demonstration in Walsall last week. On 15 May the marchers will be coming into Walsall on their way to London. We shall give full support and hospitality to those who, like their predecessors of more than 40 years ago, will bring to the country's notice the problems of joblessness.
489 We make the plea: stop Walsall and the Black Country from becoming outright depressed areas. We have seen the growth of umemployment on a scale that was not thought possible. This has happened in the past 18 to 20 months. Walsall does not want to become a depressed area. The people want to work. They want the opportunities that they had in the post-war years to live with dignity and self-respect. We ask the Government to reverse the industrial decline, to reverse the disastrous policies that have caused such hardship to Walsall and to the country as a whole, and to allow our people to lead proper working and meaningful lives.
§ The Under-Secretary of State for Industry (Mr. John MacGregor)
I am grateful to the hon. Member for Walsall, South (Mr. George) for this opportunity to discuss the industrial situation in Walsall. The Government are aware of the considerable difficulties facing all parts of the West Midlands. They were highlighted in the debate in the House on 30 March. Unfortunately, I was unable to attend that debate because I was on an intensive visit to the Midlands—a visit that enabled me to see a great deal of what was going on and to meet many people in industry.
I do not wish to repeat all the points that were made in that debate, although I have read it, but I accept that within this regional problem Walsall stands out as being particularly hard hit. I understand that that is because of Walsall's above-average dependence on those parts of the manufacturing sector that have faced the worst of the recession. That is especially so because many of them are dependent on the car industry.
As the hon. Member for Walsall, South said, I had the opportunity of discussing the problems that Walsall faces with him and the hon. Member for Walsall, North (Mr. Winnick) when they led a deputation from the area to see me on 16 March. I recognise the problems. I understand them and I have every sympathy for those who are involved,. The hon. Member of Walsall, North put his case about individuals in emotional terms. That was reasonable and I appreciate his feelings. However, there are many who have contributed to the problems that have arisen in the Walsall area apart from Governments. I do not think that the remedies lie only with the Government.
The Government differ from the two hon. Gentlemen not in their sympathy and understanding but in their opinion as to the causes of the problems and the solutions as we see them. The hon. Member for Walsall, South said very fairly that the problems were not of immediate creation. He said in a previous debate:The crisis has not been unexpected but has been coming for some 20 years."—[Official Report, 30 March 1981; Vol 2, c. 94.]I come fairly fresh to the problems of the West Midlands and I believe that is right.
In many ways the dependence of the West Midlands and of large parts of the West Midlands economy, especially that of Walsall, on the car industry, which over the 1970s was declining in comparison with what our competitors overseas were doing with their industries, has brought about many of the present problems not only for the components industry in Walsall but for the other heavy industries that provide many of the raw materials. A large part of the dilemma that we face in the West Midlands, as 490 in Britain generally, is that we have to recreate a competitive car industry to enable many other companies, which may not be inefficient or overmanned, to recover.
If we examine the statistics over the past few years, it emerges that the West Midlands, including Walsall, has been in relative decline. The process began long before the Government took office. I shall spend no more than a minute on the root of the problems before I turn to Walsall's particular problems, which lie in the toss of competitiveness of the region's manufacturing base. That mirrors the wider industrial problems that we face as a nation. Our industrial decline has been of long standing.
There were many who often warned that we were heading for decline and that the price would have to be paid at some time, as, increasingly, other nations went ahead of us and we fudged or put off the necessary decisions. There are many views on that score. I believe that the origin of the decline can be found partly through the many years for which we have endured high rates of inflation that have been in excess of those of our competitors, often with wage rates in excess of increases in production—we saw that classically in 1976–79—partly through Government overspending and borrowing, partly because of trade union working practices and overmanning, partly through the weaknesses of management and the failure to keep abreast in the development of products and the ability to meet customer requirements, partly because of excessive Government controls and interference, and partly through the burden of taxation and other discouragements imposed on enterprise and effort.
I put those causes on the record because they have been of long standing. It is our attempt to deal with them now that is leading to difficult problems in many areas that are facing industrial restructuring. This historical deterioration has now been brought into the open. It has been exacerbated by the world recession. Competition for orders has become much more intense. These factors lie at the root of the problems facing Walsall and the West Midlands.
The car industry lies at the heart of these problems. It is a specific example of the things that have gone wrong. I pay tribute to Sir Michael Edwardes and his team Over the past four years they have made massive efforts, perhaps belatedly, to pull things round. I pay tribute to the response that they are getting from the work force. It is interesting that the one car that British Leyland is selling well in the total car market is the Metro. That emphasises that new investment in new products, and perhaps most important of all the productivity from the new investment, are the keys to the turnround of the West Midlands economy.
I agree entirely with the hon. Member for Walsall, South in his emphasis on the mixed economy. However, there are some who have advanced an argument—I suspect that the hon. Member for Walsall, North is in this category—that is based on a recipe of increased public expenditure and more Government intervention.
§ Mr. MacGregor
Although to some, including the hon. Member for Walsall, North, that may seem a superficially attractive alternative for the short term, in that it might abate one of the main symptoms of our problem, which is unemployment—although we are spending large sums on that aspect—it does nothing to 491 alleviate the underlying causes of our malaise. In the longer term such palliatives would lead to British industry becoming more uncompetitive and to unemployment rising higher.
On that basis I shall examine one or two of the general national remedies put forward by the hon. Gentleman before I turn to the local scene. I, too, have seen the chamber of commerce survey in the West Midlands. I discussed it with the chamber of commerce, the CBI and others when I was in the West Midlands. It was interesting to see that interest rates and inflation were still at the top of the list. If we are to regenerate business confidence, inflation must be brought down to levels at least on the average—although I would prefer them to be below that—of our international competitors. We need that to remain competitive. Our high rate of inflation is the main cause of the increasing uncompetitiveness of so much of our industry. As inflation comes down and as Government spending is brought under control, interest rates will follow.
It is striking that so many of the remedies urged upon us by others, including the hon. Member for Walsall, North, in terms of greater public expenditure, would add to the problems of Government spending and of Government borrowing, thus putting back up both interest rates and inflation. I do not believe that that is what the vast majority of British industry wants, because it recognises that, if we can succeed in our strategy to bring down inflation and interest rates, that is the best possible prescription for its future success.
The problem of rates features highly in the West Midlands now and among industries in Walsall. The subject was raised perhaps more than any other during my two-day visit last week. The hon. Member may not like the fact that the high level of rates is so high up the league table of complaints from industry, but it is incumbent on all local authorities to play their part in trying to lighten the burdens on industry and commerce by looking rigorously at all their spending programmes, as most of industry and commerce has had to do in the past two years. Therefore, I fully understand the anxiety and anger of many businesses, especially small firms, when they find that they are paying nil or low wage rates this year and that one of the main burdens in their increasing costs is in the rising rates. Therefore, I hope that, as the Government have been constantly urging, local authorities will control their expenditure more than they have—in Walsall there has been an increase of nearly 24 per cent. in the non-domestic rate—not least in order to preserve jobs.
There have been many debates on energy costs in the past few weeks, so I hope that the hon. Gentleman will forgive me if I am fairly brief. I fully understand the anxiety of industry about the level of energy costs. Monopoly nationalised industry prices are difficult for a Government to deal with in the short term. Those are another major feature. As the hon. Gentleman knows, the energy task force reported in March that the majority of industrial customers paid no more than the average European prices for their energy. We recognise, however, that some companies are at a disadvantage. Those are the larger, energy-intensive industrial users. It is for that reason that measures were taken in the Budget to help those industries.
492 The hon. Gentleman referred in particular to the leather goods industry, which I know features substantially in Walsall. I am aware of the problems of import competition currently facing the industry. As we have debated the matter on so many occasions, the hon. Gentleman will know why I could not support a view that import controls, or even selective import controls, are a desirable feature of our battery of economic weapons.
In the end, the solution lies in the ability of the industry to produce goods that the people want at a price that they are prepared to pay. I have great sympathy with the hon. Gentleman on this point. If the industry has evidence of dumping by foreign competitors, it should contact the Department of Trade, which will advise on the procedures for pursuing any complaint with the European Commission. Where there is evidence of dumping or unfair competition, we should see what can be done.
A measure of industrial support is available to encourage new investment and the development and application of new products and processes. We should recollect, however, that grants and subsidies paid to one firm or sector have to come from taxation raised from other sectors of the economy. That is why there must be a limit, particularly as industry places such importance on bringing down Government spending and inflation and interest rates. There must be a limit to the Government expansion of industrial support.
We do not expect industry in the West Midlands to make the transition without help. In Walsall help is needed to diversify the industrial base, particularly through encouraging companies in the growth sectors. The Government can help to stimulate the process.
Let me outline the help available to companies. On industrial assistance, aid is available under section 8 of the Industry Act to help with investment that is either internationally mobile or that will lead to substantial improvements in performance or the introduction of new products. Between the time that we came to power and December 1980, 50 projects in the Walsall travel-to-work area were offered over £1 million under section 8 schemes.
The hon. Gentleman referred to the latest technologies. We are maintaining the schemes of assistance—the microprocessor applications project, the microelectronic industry support programme and the product and process development scheme, all designed to encourage the development and application of microprocessors and other advanced technology. A number of firms in Walsall have benefited from the aid, but I am conscious that relatively few have come forward for support. We discussed the matter when the deputation came to see us, so the hon. Gentleman knows that I am encouraging the Walsall borough council to discuss with the Department of Industry's regional office the scope for increasing local awareness of the aid available through presentations or seminars.
I am also aware of the importance of the small firm sector to Walsall, and there is encouraging news on that front, as, indeed, there is in the West Midlands as a whole, which I saw when I was there last week. The development of small businesses is vital to our industrial base. Small firms often provide the employment prospects that we badly need. Large firms that in the past have been badly overmanned have been shedding—to use a euphemistic term—their labour, and they will achieve increased 493 productivity without taking on many more people. That is why we are making a continuing effort to help the small business man and have introduced 60 practical measures.
My Department's small firms service in Birmingham is experiencing a large increase in inquiries from people who wish to start or to expand small firms, which is also encouraging. It will continue to work closely with the borough council's small business unit.
I refer again to British Leyland, but in a different context. Although it was not mentioned in the debate, some people in the West Midlands have been urging that certain parts that do not have assisted area status should be given it, or should have similar assistance. We should reflect that many companies in Walsall are dependent on the motor industry, so the area is receiving more of the taxpayers' money through Government decisions on BL—which will percolate through to the component industries and small companies—than many regionally assisted areas are getting through their assisted area status. The total of nearly £1,000 million amounts to a great deal more than the amount given to areas of high unemployment that have assisted area status. That fact is not always brought home.
Also, as a derelict land clearance area, Walsall is eligible for 100 per cent. grants from the Department of the Environment for reclamation. In addition, if we manage to attract Nissan to the country, whichever area it goes to, the components industries in the West Midlands will benefit greatly.
I conclude by referring to the substantial Manpower Services Commission training measures and other employment schemes that can help people in the Walsall area. Unfortunately, I do not have time to give the substantial figures that I have, but they show the support that we are trying to give and I shall send them to the hon. Gentleman.
In conclusion, the industrial restructuring after years of decline and increasing competition from overseas is painful, but it is necessary to undertake it for the country as a whole and if Walsall itself is to have a successful future based on a sound economy. That is what the Government measures are designed to achieve. That is the purpose of the Government's strategy. That is the only long-term way of establishing a sound future for Walsall as for the whole of the West Midlands.